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Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable following the effectiveness of this registration statement.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. o


(1)	Determined in accordance with Rule 457(f) promulgated under the Securities Act.
(2)	No separate consideration will be received for the Guarantees, and, therefore, no additional registration fee is required.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

*The address and telephone number of the principal executive offices of each of the co-registrants is c/o VICORP Restaurants, Inc., 400 West 48th Avenue, Denver, Colorado, 80216, (303) 296-2121.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

We are offering to exchange $126,530,000 aggregate principal amount of our 10 1/2% Senior Notes due 2011 that have been registered under the Securities Act of 1933, as amended, which we refer to as the “exchange notes,” for our existing 10 1/2% Senior Notes due 2011, which we refer to as the “original notes.” We refer to both the original notes and the exchange notes as the “notes.” We are offering to issue the exchange notes to satisfy our obligations contained in a registration rights agreement entered into when the original notes were sold in transactions exempt from registration under the Securities Act of 1933, as amended, and therefore not registered with the Securities and Exchange Commission.

The terms of the exchange notes are substantially identical to the original notes, except that some of the transfer restrictions and registration rights relating to the original notes will not apply to the exchange notes.


	•	The exchange offer will expire at 5:00 p.m., New York City time, on , 2004, unless extended.

	•	The exchange offer is not subject to any conditions other than that it not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission.

	•	Subject to the satisfaction or waiver of specified conditions, we will exchange the exchange notes for all original notes that are validly tendered and not withdrawn prior to the expiration of the exchange offer.

	•	Tenders of original notes may be withdrawn at any time before the expiration of the exchange offer.

	•	Tenders of original notes may be made, in whole or in part, in integral multiples of $1,000 principal amount.

	•	We will not receive any proceeds from the exchange offer.

See “Risk factors” beginning on page 16 for a discussion of certain risks that you should consider in connection with a decision to tender original notes in the exchange offer.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Except as described below, based on interpretations of the staff of the Securities and Exchange Commission set forth in no-action letters issued to third parties, we believe that the exchange notes issued in exchange for original notes may be offered for resale, resold, and otherwise transferred by a holder without further registration under the Securities Act of 1933, as amended (the “Securities Act”), and without delivering a prospectus in connection with any resale of the exchange notes, provided that the holder:


	•	is acquiring the exchange notes in the ordinary course of its business;

	•	is not engaging nor intends to engage, and has no arrangement or understanding with any person to participate, in the distribution of the exchange notes; and

	•	is not an “affiliate” of VICORP Restaurants, Inc. within the meaning of Rule 405 under the Securities Act.

Holders wishing to tender their original notes in the exchange offer must represent to us that these conditions have been met.

Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the exchange notes cannot rely on these interpretations by the Securities and Exchange Commission staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Unless an exemption from registration is otherwise available, any secondary resale by a holder intending to distribute exchange notes should be covered by an effective

Each broker-dealer who holds original notes acquired for its own account as a result of market-making or other trading activities may exchange the original notes pursuant to the exchange offer. However, the broker-dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with its initial resale of each exchange note received in the exchange offer. The letter of transmittal states that by acknowledging and delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

Under existing interpretations of the Securities and Exchange Commission and for so long as the registration statement of which this prospectus is a part is effective under the Securities Act, a broker-dealer may use this prospectus, as it may be amended or supplemented from time to time, in connection with its resales of exchange notes received for its account in exchange for original notes that were acquired by the broker-dealer as a result of market-making or other trading activities. The Securities and Exchange Commission may change these interpretations at any time. We have agreed that until the earlier of (i) the close of business 180 days after the expiration date of the exchange offer or (ii) the date on which all broker-dealers have sold all such exchange notes, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of distribution.” If we do not receive any letters of transmittal from broker-dealers requesting to use this prospectus in connection with resales of exchange notes, we intend to terminate the effectiveness of the registration statement as soon as practicable after the consummation or termination of the exchange offer. After we terminate the effectiveness of the registration statement, broker-dealers will not be able to use this prospectus in connection with resales of exchange notes. As a result, any broker-dealers intending to use this prospectus in connection with resales of exchange notes must deliver to us a letter of transmittal so stating.

The original notes and the exchange notes constitute new issues of securities with no established public trading market. We do not intend to apply for listing of the original notes or the exchange notes on any securities exchange or for inclusion of the original notes or the exchange notes in any automated quotation system. We cannot assure you that:


	•	an active public market for the exchange notes will develop;

	•	any market that may develop for the exchange notes will be liquid; or

	•	holders will be able to sell the exchange notes at all or at favorable prices.

Future trading prices of the exchange notes will depend on many factors, including among other things, prevailing interest rates, our operating results, our credit rating and the market for similar securities.

The exchange offer is not being made to, nor will we accept surrenders for exchange from, holders of original notes in any jurisdiction in which the exchange offer or the acceptance thereof would violate the securities or blue sky laws of that jurisdiction.

Unless otherwise noted, in this prospectus, “we,” “us” and “our” refer to VI Acquisition Corp. and its subsidiaries, including VICORP Restaurants, Inc.

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS

This prospectus includes industry data and forecasts that we obtained from Technomic, Inc., industry publications and surveys and internal company surveys. As noted in this prospectus, Technomic, Inc. was the primary source for third-party industry data and forecasts. Industry publications and surveys, and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein.

This prospectus includes statements that are, or may be deemed to be, “forward-looking statements” within the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

The following listing represents some, but not necessarily all, of the factors that may cause actual results to differ from those anticipated or predicted:


	•	our level of indebtedness;

	•	our development and expansion plans;

	•	our ability to profitably implement our growth strategy;

	•	competitive pressures and trends in the restaurant industry;

	•	our exposure to commodity prices;

	•	our dependence upon frequent deliveries of food and other supplies;

	•	food-borne illness incidents;

	•	adverse publicity and litigation;

	•	seasonality of our business and weather conditions;

	•	government regulation;

	•	our vulnerability to changes in consumer preferences and economic conditions;

	•	integration of future acquisitions into our business;

	•	our reliance in part on our franchisees;

	•	our ability to attract and retain employees;

	•	our liquidity and capital resources;

	•	the loss of key employees; and

	•	the impact of having a controlling stockholder.

You should also read carefully the factors described in the “Risk factors” section of this prospectus to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

Any forward-looking statements which we make in this prospectus speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

This summary highlights material information about our business and about this exchange offer. This summary of material information contained elsewhere in this prospectus is not complete and does not contain all of the information that may be important to you. For a more complete understanding of our business and this exchange offer, you should read this entire prospectus, including the section entitled “Risk factors” and our consolidated financial statements and related notes included elsewhere in this prospectus. All references to years in this prospectus relating to our financial information refer to the fiscal year ending on the last Sunday of October of each year (e.g., “2003” refers to our fiscal year ended on October 26, 2003). Unless otherwise indicated, all references to Village Inn restaurant operations in this prospectus refer to our company-operated restaurants and not our franchised restaurants.

We operate family-dining restaurants under two proven and well-recognized brands, Village Inn and Bakers Square. As of June 1, 2004, our company, which was founded in 1958, had 373 restaurants in 25 states, consisting of 269 company-operated restaurants and 104 franchised restaurants. Our restaurant locations are concentrated in particular regions in order to maximize operating efficiencies, including regional management, purchasing and advertising penetration. In addition to our restaurants, we operate three strategically located pie production facilities that produce premium pies that are offered in our restaurants and sold to third-party customers. With established brands and strong operational execution, we have delivered consistent financial performance. Our revenues increased from $359.3 million in 1999 to $389.2 million in 2003, while same unit sales increased an average of 0.3% per year during that same period. Both of our restaurant concepts operate in the stable family-dining segment of the restaurant industry. Over our 45-year history, we have concentrated on providing our customers great-tasting, high-quality food at reasonable prices with fast and friendly service. Our commitment to an attractive price-to-value relationship has enabled us to develop a stable base of repeat customers.

We opened our first Village Inn restaurant in 1958, and as of June 1, 2004 we had 223 locations, 119 of which were operated by our company and 104 of which we franchised. Our Village Inn restaurants are located in 21 states throughout the United States, primarily in the Rocky Mountain region, the Midwest, the Northwest and Florida, including attractive markets such as Denver (26 units), Phoenix (17 units), Omaha (13 units) and Salt Lake City (11 units). Village Inn is focused on family dining and appeals to a large segment of the population, and we believe it has a strong reputation for fast and friendly service, fresh food and reasonable prices. We are known for serving fresh breakfast items throughout the day, including our Ultimate Skillet meals, Pecan Roll French Toast, made-from-scratch buttermilk pancakes and fluffy three-egg omelets. Breakfast items accounted for 48% of Village Inn sales in 2003. We have also successfully leveraged our strong breakfast heritage to establish a well-developed brand platform encompassing a broad selection of traditional American fare for lunch and dinner, at price points that position us in the mid-range of the family-dining segment.

Attractive new store growth opportunity. We believe that our existing markets provide an opportunity to leverage the regional strength of the Village Inn and Bakers Square brands to generate efficient, low-risk growth. Within our existing markets we believe we can increase market share by adding new restaurants and gain operational efficiencies by clustering them with our already established restaurants. We believe that opening new restaurants in our existing markets enables us to reduce the risks associated with growth because of our familiarity with competitive conditions, consumer tastes and demographics in existing markets.

Experienced management team. Our executive management team has extensive restaurant industry experience. Debra Koenig, our Chief Executive Officer, joined us in June 2003 after a 25-year career with McDonald’s Corporation. As President of the Southeast region, she was responsible for McDonald’s largest U.S. division, with approximately $4 billion in annual sales, consisting of approximately 2,675 franchised restaurants and 290 owned restaurants. The balance of the senior management team consists of career restaurant executives who have an average of 27 years experience in the industry.

Increase same unit sales growth. We have recently undertaken various initiatives to increase same unit sales in our existing restaurants, including menu engineering and targeted marketing programs. We intend to grow sales by increasing the frequency of seasonal, regional and other menu features. In addition, we are placing greater emphasis on food and menu promotion in our marketing and advertising, which we believe will be more effective in generating additional sales. Our other marketing initiatives include the introduction of new customer loyalty programs, such as our successful electronic gift card program introduced in 2003, and increasing the use of traffic building promotions. Additionally, from time to time, we raise menu prices while being careful to maintain an attractive price-to-value relationship. We also

Continue improving operating margins. While we believe we currently have strong operating margins, continued implementation of best practices in food cost management and labor efficiency can help enhance our margins. We have also focused on menu engineering by increasing the prominence of higher margin items on our menus and increasing the frequency of specials, many of which have higher margins. In addition, the expansion of our restaurant base and increased third-party sales will result in greater absorption of fixed costs and therefore increase margins in our pie production operations.

Maintain an attractive price-to-value relationship. We believe one of the hallmarks of our Village Inn and Bakers Square restaurants is the attractive value we provide our customers. Our broad offering of appetizing and affordable breakfast, lunch, dinner and dessert items is designed to appeal to a demographically diverse customer base, including families, senior citizens and other value-oriented diners. In order to maintain our relatively low average per-person check while providing high quality food, we must operate our restaurants in a very efficient manner. We believe our efficient operations and value focus enable us to provide high quality food at reasonable prices, giving us a competitive advantage in attracting new diners and maintaining our loyal customer base.

Continue disciplined expansion. We plan to continue our expansion in a disciplined manner by strategically adding restaurants in both of our concepts within existing and contiguous markets. By clustering restaurants, we spread costs and leverage our regional management, marketing, purchasing and hiring capabilities. While we presently intend to focus our expansion efforts on company-operated restaurants, we may also pursue selected franchise opportunities.

Opportunistically pursue competitors’ units for conversion and acquire franchise restaurant territories. We believe that acquiring selected competitors’ units for conversion is an effective way to economically add new restaurants. These units can often be acquired and converted at substantially lower costs and opened more quickly than newly constructed restaurants. They also provide an opportunity to expand in markets where attractive open sites are not available. We rigorously assess potential conversions against our pre-established criteria to reduce the risks associated with opening restaurants at these sites. Acquisition opportunities also arise as franchisees retire or seek liquidity. For example, in 2003, we acquired a Village Inn franchise territory in the Albuquerque, New Mexico area encompassing eight restaurants.

On April 14, 2004, we completed the private offering of an aggregate principal amount of $126.53 million of original notes at an issue price of 98.791% of face value, resulting in proceeds of $125.0 million. We entered into a registration rights agreement with the initial purchasers of the original notes in which we agreed, among other things, to deliver to you this prospectus and to offer to exchange your original notes for exchange notes with substantially identical terms. You should read the discussion under the heading “Description of notes” for further information regarding the exchange notes.

We believe the exchange notes issued in the exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act of 1933, subject to certain conditions. You should read the discussion under the heading “The exchange offer” for further information regarding the exchange offer and resale of the exchange notes.

Simultaneously with the closing of the offering of the original notes, we and our parent guarantor and subsidiary guarantor entered into a new senior secured credit facility, consisting of a $15.0 million term senior secured term loan facility and a $30.0 million senior secured revolving credit facility (including a $15.0 million letter of credit subfacility) (the “new senior secured credit facility”). We used the proceeds of the offering of original notes and borrowings under our new senior secured credit facility to repay amounts owing under our prior senior secured credit facility and mezzanine debt. We refer in this prospectus to these transactions, collectively, as the “refinancing.”

The following chart illustrates the corporate organization of VI Acquisition Corp. and its active subsidiaries as of April 15, 2004.

(1) VI Acquisition Corp. and Village Inn Pancake House of Albuquerque, Inc. have guaranteed the notes and have also guaranteed our new senior secured credit facility on a senior secured basis. We have one inactive subsidiary that has not guaranteed the notes or the new senior secured credit facility. In connection with the refinancing, Midway Investors Holdings Inc. was merged into VI Acquisition Corp.

We are a Colorado corporation. Our principal executive offices are located at 400 West 48th Avenue, Denver, Colorado 80216, and our telephone number at that address is (303) 296-2121. Our website is located at www.vicorpinc.com. The information on our website is not part of this prospectus.

On April 14, 2004, we completed a private offering of the original notes. We entered into a registration rights agreement with the initial purchasers in the private offering in which we agreed, among other things, to use commercially reasonable efforts to complete this exchange offer. The following summary highlights selected information from this prospectus concerning the exchange offer and may not contain all of the information that is important to you. We encourage you to read the entire prospectus carefully.


	•	you are not our “affiliate” as defined in Rule 405 under the Securities Act;

	•	any exchange notes you receive in the exchange offer are being acquired by you in the ordinary course of your business;

	•	at the time of commencement of the exchange offer, neither you nor, to your knowledge, anyone receiving exchange notes from you, has any arrangement or understanding with any person to participate in the distribution of the exchange notes, as defined in the Securities Act, in violation of the Securities Act;

	•	you have full power and authority to tender, exchange, sell, assign and transfer the tendered original notes;

	•	we will acquire good, marketable and unencumbered title to the tendered original notes, free and clear of all liens, restrictions, charges and encumbrances;

	•	the original notes tendered for exchange are not subject to any adverse claims or proxies;

	•	if you are not a participating broker-dealer, you are not engaged in, and do not intend to engage in, the distribution of the exchange notes, as defined in the Securities Act; and

	•	if you are a broker-dealer, you will receive the exchange notes for your own account in exchange for original notes that were acquired by you as a result of your market-making or other trading activities and that you will deliver a prospectus in connection with any resale of the exchange notes you receive. For further information regarding resales of the exchange notes by participating broker-dealers, see the discussion below under the caption “Plan of distribution.”


		notes by following the procedures described below under the caption “The exchange offer— Guaranteed delivery procedures.”

Special procedures for beneficial owners		If you are a beneficial owner whose original notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your original notes in the exchange offer, you should promptly contact the person in whose name the original notes are registered and instruct that person to tender on your behalf.

		If you wish to tender in the exchange offer on your own behalf, prior to completing and executing the letter of transmittal and delivering your original notes, you must either make appropriate arrangements to register ownership of the original notes in your name or obtain a properly completed bond power from the person in whose name the original notes are registered.

United States federal income and estate tax considerations		We believe that the exchange of exchange notes for original notes in the exchange offer will not be a taxable transaction for United States federal income tax purposes. See the discussion below under the caption “Certain United States federal income and estate tax considerations” for more information regarding the tax consequences to you of the exchange offer.

Use of proceeds		We will not receive any cash proceeds from the exchange offer.

Exchange agent		Wells Fargo Bank, National Association is the exchange agent for the exchange offer. You can find the addresses and telephone number of the exchange agent below under the caption “The exchange offer— Exchange agent.”

If you do not exchange your original notes in the exchange offer, your original notes will continue to be subject to the restrictions on transfer described in the legend on the certificate for your original notes. In general, you may offer or sell your original notes only:


	•	if they are registered under the Securities Act and applicable state securities laws;

	•	if they are offered or sold under an exemption from registration under the Securities Act and applicable state securities laws; or

	•	if they are offered or sold in a transaction not subject to the Securities Act and applicable state securities laws.

We do not currently intend to register the original notes under the Securities Act.

The terms of the exchange notes and the original notes are substantially identical except that the transfer restrictions and registration rights relating to the original notes do not apply to the exchange notes. The summary below describes the principal terms of the exchange notes. The terms and conditions described below are subject to important limitations and exceptions. The “Description of notes” section of this prospectus contains a more detailed description of the terms and conditions of the exchange notes.


		compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:

		• you are not our “affiliate,” as defined in Rule 405 under the Securities Act;

		• you are acquiring the exchange notes in the exchange offer in the ordinary course of your business; and

		• you do not have an arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act of the exchange notes, you will receive in the exchange offer.

		Our belief is based on interpretations by the staff of the Securities and Exchange Commission, as set forth in no-action letters issued to third parties unrelated to us. The staff of the Securities and Exchange Commission has not considered the exchange offer in the context of a no-action letter, and we cannot assure you that the staff of the Securities and Exchange Commission would make a similar determination with respect to the exchange offer. If our belief is not accurate and you transfer a exchange note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from such requirements, you may incur liability under the Securities Act. We do not and will not assume, or indemnify you against, such liability. Each broker-dealer that receives exchange notes for its own account in exchange for original notes that such broker-dealer acquired as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale or other transfer of exchange notes. A broker-dealer may use this prospectus for an offer to sell, resell or otherwise transfer exchange notes. See the section entitled “Plan of distribution.”

		The exchange notes will be new securities for which there is no established public trading market. We cannot assure you that:

		• an active public market for the exchange notes will develop;

		• any market that may develop for the exchange notes will be liquid; or

		• holders will be able to sell the exchange notes at all or at favorable prices.

		Future trading prices of the exchange notes will depend on many factors, including among other things, prevailing interest rates, our operating results, our credit rating and the market for similar securities. We do not intend to apply for a listing of the original notes or the exchange notes on any securities exchange or for inclusion of the original notes or the exchange notes in any automated dealer quotation system.

In evaluating the exchange offer, you should carefully consider, along with the other information in this prospectus, the specific factors set forth under “Risk factors.”

The table below presents summary historical consolidated financial and operating data. In the summary historical consolidated financial data presented below, we combine (i) the periods from October 30, 2000 to May 13, 2001 and from May 14, 2001 to October 28, 2001 into one fiscal period (the “Combined 2001 Period”) and (ii) the periods from October 28, 2002 to June 13, 2003 and from June 14, 2003 to October 26, 2003 into one fiscal period (the “Combined 2003 Period”) to aid the understanding of financial information. The combined periods are not necessarily comparable and should not be given more emphasis than the individual components which are presented elsewhere in this prospectus.

The summary historical consolidated financial data for, and as of the end of, the periods from October 30, 2000 to May 13, 2001, from May 14, 2001 to October 28, 2001, the fiscal year ended October 27, 2002, and the periods from October 28, 2002 to June 13, 2003 and from June 14, 2003 to October 26, 2003 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary historical consolidated financial data presented below for, and as of the end of, the twenty-four week fiscal periods ended April 13, 2003 and April 15, 2004 have been derived from our unaudited consolidated financial statements as of those dates and for those periods included elsewhere in this prospectus. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the interim periods have been included. Results for the twenty-four week period ended April 15, 2004 are not necessarily indicative of results to be expected for the full fiscal year or any future period.

On May 14, 2001, Midway Investors Holdings Inc. purchased VICORP Restaurants, Inc., which was a publicly-owned company prior to the acquisition. On June 14, 2003, VI Acquisition Corp. purchased Midway Investors Holdings Inc. Neither of these holding companies has had any independent operations, and consequently, the consolidated statements of operations of VI Acquisition Corp. and Midway Investors Holdings Inc. are substantially equivalent to those of the issuer of the notes. However, as a result of applying the required purchase accounting rules to these acquisitions, our financial statements for periods following the transactions were significantly affected. The application of purchase accounting rules required us to revalue our assets and liabilities at the two respective acquisition dates which resulted in different accounting bases being applied in different periods. As a result of these changes, the summary financial information presented below relate to the entity specified below for the following periods:

The following data should be read in conjunction with “Unaudited pro forma combined and consolidated financial data,” “Selected financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus.


(1)	Other operating expenses consist primarily of rent, utilities, depreciation and marketing expenses.

(2)	We adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” effective in fiscal 2002. Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer


	amortized but are subject to annual impairment tests. We completed our transitional goodwill impairment evaluation and our first annual impairment evaluation in fiscal 2002 and determined that no impairment of goodwill was necessary.

(3)	We incurred various expenses directly related to the May 2001 and June 2003 acquisitions. The components of the transaction expenses and debt extinguishment costs are as follows:


	(a)	We recognized $6.0 million of compensation expense associated with the exercise of stock options in connection with the May 2001 acquisition. In connection with the June 2003 acquisition, we paid senior employees a total of $2.1 million to terminate their existing employment contracts and recognized $3.5 million of compensation expense associated with the exercise of stock options.

	(b)	We made severance payments totaling $1.2 million, primarily related to our former chief executive officer, pursuant to contractual provisions triggered by the June 2003 acquisition.

	(c)	We settled two class-action legal claims and one individual labor-related legal claim for $8.9 million, offset by $0.6 million of insurance proceeds received in respect of those claims, as a condition to the May 2001 acquisition.

	(d)	In connection with the June 2003 acquisition, we incurred $6.5 million of debt extinguishment costs, including prepayment penalties of $1.3 million relating to the prepayment of existing debt, $3.3 million of noncash write-offs of unamortized deferred debt financing costs related to existing credit facilities and $1.9 million of costs related to terminating interest rate swaps effected to hedge interest rate risk on existing debt.

	(e)	In connection with the April 2004 refinancing, we incurred $6.9 million of debt extinguishment costs, including prepayment penalties of $2.3 million, $4.4 million of noncash write-offs of unamortized deferred financing costs and $0.2 million of costs relating to terminating interest rate swaps.


(4)	Working capital is defined as current assets less current liabilities.

(5)	Total debt at the end of each of the periods presented represents the following:

Midway Investors Holdings Inc.— Term loan and revolving borrowings under a senior credit facility, subordinated debt (net of original issue discounts), capital lease obligations and redeemable preferred stock;

VI Acquisition Corp. (historical)— Term loan and revolving borrowings under our prior senior secured credit facility, subordinated debt (net of original issue discounts) and capital lease obligations; and

VI Acquisition Corp. (pro forma)— Term loan and revolving borrowings under our new senior secured credit facility, the notes and capital lease obligations.

(6)

EBITDA represents net income (loss) before interest expense, income taxes, depreciation on property plant and equipment and amortization of deferred debt financing costs and original issue discount. Adjusted EBITDA excludes the transaction expenses and debt extinguishment costs discussed above in footnote 3, non-cash compensation costs related to option issuances, non-cash impairment expense and amortization of rent-related purchase accounting adjustments. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net income as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, these presentations of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. We believe that the inclusion of the supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about certain unusual items that we do not expect to incur in the future and certain noncash items.


(7)	Increases in net rent expense over the periods presented are primarily due to the sale-leaseback transactions that were entered into in connection with the May 2001 acquisition, relating to 48 restaurants, and the June 2003 acquisition, relating to ten restaurants. Net rent expense also includes the effects of recording the known escalations in our rent expense on a straight-line basis over the committed term of the lease. Additionally, net rent expense includes non-cash amortization of the fair market rent adjustments which we were required to recognize under purchase accounting at the time of each of the May 2001 and June 2003 acquisitions.

(8)	Capital expenditures includes capital spent for new stores, remodeling projects, restaurant maintenance and corporate capital projects.

In addition to the other information set forth in this prospectus, you should carefully consider the following risks. If any of the following risks actually occur, our business, financial condition and/or operating results could be materially adversely affected, which, in turn, could adversely affect our ability to pay interest and/or principal on the notes. The value of the notes could decline, and you could lose all or part of your investment. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

If you do not exchange your original notes for exchange notes, your original notes will continue to be subject to restrictions on transfer.

If you do not exchange your original notes for exchange notes in the exchange offer, you will continue to be subject to the restrictions on transfer described in the legend on your original notes. The restrictions on transfer of your original notes arise because we issued the original notes in a transaction not subject to the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the original notes if they are registered under the Securities Act and applicable state securities laws or offered or sold pursuant to an exemption from those requirements. If you are still holding any original notes after the expiration date of the exchange offer and the exchange offer has been consummated, you will not be entitled to have those original notes registered under the Securities Act or to any similar rights under the registration rights agreement, subject to limited exceptions, if applicable. After the exchange offer is completed, we will not be required, and we do not intend, to register the original notes under the Securities Act. In addition, if you exchange your original notes in the exchange offer for the purpose of participating in a distribution of the exchange notes, you may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. To the extent original notes are tendered and accepted in the exchange offer, the trading market, if any, for the original notes would be adversely affected.

You are responsible for complying with all exchange offer procedures. If you do not comply with the exchange offer procedures, you will be unable to obtain the exchange notes. We will issue exchange notes in exchange for your original notes only after we have timely received your original notes, along with a properly completed and duly executed letter of transmittal or an agent’s message instead of the letter of transmittal, and all other required documents. Therefore, if you want to tender your original notes in exchange for exchange notes, you should allow sufficient time to ensure timely delivery. Neither we nor the exchange agent has any duty to inform you of any defects or irregularities in the tender of your original notes for exchange. The exchange offer will expire at 5:00 p.m., New York City time, on , 2004, or on a later extended date and time as we may decide. See “The exchange offer— Procedures for tendering original notes.”

Requirements for transfer of exchange notes may adversely affect your ability to exchange the original notes for the exchange notes.

Based on interpretations by the staff of the Securities and Exchange Commission set forth in no-action letters issued to third parties, we believe that you may offer for resale, resell and otherwise transfer the exchange notes without compliance with the registration and prospectus delivery provisions of the Securities Act, subject to certain limitations. These limitations include that you are not an “affiliate” of ours within the meaning of Rule 405 under the Securities Act, that you acquired your exchange notes in the ordinary course of your business and that you are not engaging in and do not intend to engage in, and have no arrangement or understanding with any person to participate in, the distribution of your exchange

notes. However, we have not submitted a no-action letter to the Securities and Exchange Commission regarding this exchange offer and we cannot assure you that the Securities and Exchange Commission would make a similar determination with respect to this exchange offer. If you are an affiliate of ours, are engaged in or intend to engage in, or have any arrangement or understanding with respect to, a distribution of the exchange notes to be acquired in the exchange offer, you will be subject to additional limitations. See “The exchange offer— Resale of the exchange notes.”

Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under the notes.

Following the refinancing on April 14, 2004, we are significantly leveraged. The following chart shows our level of indebtedness and certain other information as of April 15, 2004:

(1)

Does not include $10.5 million of outstanding letters of credit that were issued under the new senior secured revolving credit facility as of April 15, 2004. We are able to borrow under the new senior secured revolving credit facility the lesser of (a) $30.0 million and (b) 1.2 times trailing twelve months Adjusted EBITDA (as defined in the new senior secured credit facility) minus the original principal amount of our new senior secured term loan. Our new senior secured revolving credit facility has a $15.0 million sublimit for letters of credit. As of April 15, 2004, our borrowing base would have supported $30.0 million of borrowings. As of April 15, 2004, we had no outstanding borrowings under our new senior secured revolving credit facility.

Our substantial degree of leverage could have important consequences for you, including the following:


	•	it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, new restaurant development, debt service requirements, acquisitions and general corporate or other purposes;

	•	a substantial portion of our cash flows from operations must be dedicated to the payment of principal and interest on our indebtedness and is not available for other purposes, including our operations, capital expenditures and future business opportunities;

	•	the debt service requirements of our other indebtedness could make it more difficult for us to make payments on the notes;

	•	certain of our borrowings, including borrowings under our senior secured credit facility, are at variable rates of interest, exposing us to the risk of increased interest rates;

	•	it may limit our ability to adjust to changing market conditions and place us at a competitive disadvantage compared to our competitors that have less debt; and

	•	we may be vulnerable in a downturn in general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth.

Our ability to open new restaurants is dependent upon a number of factors, many of which are beyond our control, including our ability to:


	•	find suitable locations;

	•	reach acceptable agreements regarding the lease or purchase of prospective locations for our restaurants;

	•	comply with applicable zoning, land use and environmental regulations;

	•	raise or have available an adequate amount of money for construction and opening costs;

	•	hire, train and retain the skilled management and other employees necessary to meet staffing needs in a timely and cost-effective manner;

	•	obtain required permits and approvals; and

	•	efficiently manage the amount of time and money used to build and open each new restaurant.

Historically, there is a “ramp-up” period of time before we expect a new restaurant location to achieve our targeted level of performance. This phenomenon is due to higher operating costs caused by start-up and other temporary inefficiencies associated with opening new restaurants, such as lack of market familiarity and acceptance when we enter new markets and unavailability of experienced staff. We may not be able to attract enough customers to new restaurants because potential customers may be unfamiliar with our restaurants or our restaurants’ atmosphere or menus might not appeal to them.

We may not be able to open new restaurants profitably, which could negatively affect our growth strategy.

We have historically added, and plan to continue to add, new restaurants through new construction, acquisitions and conversions. We have traditionally used cash flow from operations and sale-leaseback transactions as the primary funding sources for additional restaurants. We cannot guarantee that our cash flows will be sufficient to achieve the desired development levels if our revenues, profitability or cash flow from operations decline. Opening a new restaurant in an existing market also could reduce the revenue of our existing restaurants in that market.

Our restaurants may not be able to compete successfully with other restaurants.

We operate in a highly competitive industry. Price, restaurant location, food quality and type, service and attractiveness of facilities are important aspects of competition in the restaurant industry, and the competitive environment is often affected by factors beyond a particular restaurant management’s control, including changes in the public’s taste and eating habits, population, traffic patterns and general economic conditions. Competitive pressures may have the effect of limiting our ability to increase prices, which may adversely affect our operating earnings. This competitive environment makes it more difficult for us to continue to provide high levels of service while maintaining our reputation for value without adversely affecting operating margins. Additionally, to the extent we raise prices, our customer traffic may decline. For example, when we increased prices at Bakers Square in 2002 such that the average per-person check increased by 7.4%, Bakers Square experienced a 5.4% decline in entrées sold, which is indicative of customer traffic. Our restaurants compete with a large number of other restaurants, including national and regional restaurant chains and franchised restaurant operations, as well as independently owned restaurants, for customers, restaurant locations, qualified management and other restaurant staff. Many of our competitors have greater financial and other resources than we have. In addition, the restaurant industry has few non-economic barriers to entry, and therefore new competitors may emerge at any time. We may not be able to compete successfully against our competitors in the future, and competition may have a material adverse effect on our operations.

The success of our company-operated and franchised restaurants is significantly influenced by location. There can be no assurance that our current locations will continue to be attractive, as demographic patterns change and the economic conditions where our restaurants are located could change. The success of new restaurants that we open will be substantially dependent on the locations that we select and the availability of desirable locations.

We are vulnerable to fluctuations in the cost, availability and quality of our ingredients.

The cost, availability and quality of the ingredients we use to prepare our food are subject to a range of factors, many of which are beyond our control. We depend on frequent deliveries of fresh ingredients, thereby subjecting us to the risk of shortages or interruptions in supply. Fluctuations in economic and political conditions, weather and demand could adversely affect the cost of our ingredients. Our efforts to pass along price increases may be subject to delays associated with our cycle of updating our menus. We have no control over fluctuations in the price of commodities, and we may be unable to pass through cost increases to our customers. For example, we did not pass on to our customers the recent 75% increase in the price of eggs, which is one of our largest food costs. We currently do not enter into futures contracts with respect to potential price fluctuations in the cost of food and other supplies, which we purchase at prevailing market or contracted prices. Although we at times enter into arrangements locking in the price of certain ingredients for a specified period of time, we typically do not rely on long-term written contracts with our suppliers. Our suppliers could implement significant price increases. All of these factors could adversely affect our financial results.

We currently purchase our raw materials from various suppliers. Most of our suppliers drop-ship directly to our restaurants, as well as to our pie production facilities. Our reliance on our suppliers subjects us to a number of risks, including possible delays or interruptions in delivery of supplies, diminished control over quality and a potential lack of adequate raw material capacity. If any of these suppliers do not perform adequately or otherwise fail to distribute products or supplies to our restaurants or pie production facilities, we may be unable to replace the suppliers in a short period of time on acceptable terms. For example, labor disputes at any of our suppliers could result in those suppliers being unable to provide us with raw materials or supplies that we depend upon to run our business. Our inability to replace the suppliers in a short period of time on acceptable terms could increase our costs and could cause shortages at our restaurants or pie production facilities of food and other items.

We depend on our distribution system to distribute our food products to our restaurant locations. If there is any disruption in our distribution system, it could have a material adverse effect on our results of operations.

Food-borne illness incidents, claims of food-borne illness and adverse publicity could reduce our restaurant sales.

Claims of illness or injury relating to food quality or food handling are common in the food service industry, and a number of these claims may exist at any given time. We cannot guarantee that our internal controls and training will be effective in preventing all food-borne illnesses. Some food-borne illness incidents could be caused by third-party food suppliers and transporters outside of our control. New illnesses resistant to our current precautions may develop in the future, or diseases with long incubation periods could arise, such as Bovine Spongiform Encephalopathy (also known as Mad Cow Disease), that could give rise to claims or allegations on a retroactive basis. We could be adversely affected by negative publicity resulting from food quality or handling claims at one or more of our restaurants. Food-borne illnesses spread at restaurants have generated significant negative publicity at other restaurant chains in the past, which has had a negative impact on their results of operations. One or more instances of food-borne

In addition, the impact of adverse publicity relating to one of our restaurants may extend beyond that restaurant to affect some or all of our other restaurants. The risk of negative publicity is particularly great with respect to our franchised restaurants because we have limited ability to control their operations, especially on a real-time basis. A similar risk exists with respect to unrelated food service businesses if customers mistakenly associate them with our operations.

We are from time to time the subject of complaints or litigation from our consumers alleging illness, injury or other food quality, health or operational concerns. Adverse publicity resulting from these allegations may materially adversely affect us, regardless of whether the allegations are valid or whether we are ultimately held liable. In addition, employee claims against us based on, among other things, discrimination, harassment, wrongful termination or wage, rest break and meal break issues, including those relating to overtime compensation, may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. We have been subject to such claims from time to time.

In 2001, we settled an individual labor-related legal claim and two class actions relating to overtime and other wage payments at our Bakers Square restaurants in California for a total of $8.9 million plus attorneys’ fees and expenses. We are currently defendants in two purported class action claims of this type in California. The first class action claim was brought in October 2003 by two former employees and one current employee of ours, and the second class action claim was brought in May 2004 by two former employees of ours. The complaints allege that we violated California law with regard to rest and meal periods, bonus payment calculations (in the October 2003 complaint), overtime payments (in the May 2004 complaint) and California law regarding unfair business practices. The classes and subclasses alleged in the actions have not been certified by the respective courts at the current stages of the litigation, but generally are claimed in the 2003 complaint to include persons who have been employed by us in California since October 17, 1999 in the positions of food server, restaurant general manager and assistant restaurant manager, and generally are claimed in the 2004 complaint to include persons who have been employed by us in California since May 21, 2000 in the positions of restaurant general manager and restaurant associate manager. No dollar amount in damages is requested in either complaint, and the complaints seek statutory damages, compensatory damages, interest and attorneys’ fees in unspecified amounts. A significant increase in the number of these claims or an increase in the number of successful claims would materially adversely affect our financial condition. See “Business— Legal proceedings.”

Our operating results may fluctuate significantly due to the seasonality of our business and weather conditions.

Our business is subject to seasonal fluctuations that may vary depending upon the region in which a particular restaurant is located. In addition, the sales of our pies typically increase during holiday periods, in particular during November and December of each year, and decrease significantly following holiday periods. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year. Adverse weather conditions can also negatively impact our financial results. For example, unusually cold temperatures or above-average rainfall tends to adversely affect sales in affected markets. These fluctuations can make it more difficult for us to predict accurately and address in a timely manner factors that may have a negative impact on our business.

We may incur additional costs or liabilities and lose revenues and profits as a result of government regulation.

Our business is subject to extensive federal, state and local government regulation, including regulations related to the preparation and sale of food, the sale of alcoholic beverages, the use of tobacco, zoning and

building codes, land use and employee, health, sanitation and safety matters. One or more of our restaurants could be subject to litigation and governmental fine, censure or closure in connection with issues relating to our food and/or our facilities. Our franchise operations are also subject to regulation by the Federal Trade Commission. We and our franchisees must also comply with state franchising laws and a wide range of other state and local rules and regulations applicable to our business. The failure to comply with federal, state and local rules and regulations could impair our ability to continue operating our business.

All of our restaurants located in California sell beer and wine. Typically, each restaurant’s license to sell alcoholic beverages must be renewed annually and may be suspended or revoked at any time for cause. Alcoholic beverage control regulations relate to various aspects of daily operations of our restaurants, including the minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing and inventory control, handling and storage.

Our restaurants that sell beer and wine are also subject to “dram shop” laws, which allow a person to sue us if that person was injured by a legally intoxicated person who was wrongfully served alcoholic beverages at one of our restaurants. A judgment against us under a dram shop law could exceed our liability insurance coverage policy limits and could result in substantial liability for us and have a material adverse effect on our profitability.

To the extent that governmental regulations impose material additional obligations on our suppliers, including, without limitation, regulations relating to the inspection or preparation of meat, food and other products used in our business, product availability could be limited and the prices that our suppliers charge us could increase. The costs of operating our restaurants may also increase if there are changes in laws and regulations such as those governing access for the disabled, including the Americans with Disabilities Act. If any of these costs increased and we were unable to offset the increase by increasing our menu prices or by other means, we would generate lower profits, which could have a material adverse effect on our business and results of operations. See “Business— Governmental regulation.”

We may be locked into long-term and non-cancelable leases that we want to cancel, and may be unable to renew leases that we want to extend at the end of their terms.

Many of our current leases are non-cancelable and typically have terms ranging from 15 to 20 years and renewal options for terms ranging from ten to 20 years. Leases that we enter into in the future likely will also be long-term and non-cancelable and have similar renewal options. If we close a restaurant, we may remain committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base rent for the balance of the lease term. As of June 1, 2004, we were responsible for lease payments at three closed restaurant locations. Additionally, the potential losses associated with our inability to cancel leases may result in our keeping open restaurant locations that are performing significantly below targeted levels. As a result, ongoing lease operations at closed or underperforming restaurant locations could impair our results of operations.

In addition, at the end of the lease term and any renewal period for a restaurant, we may be unable to renew the lease without substantial additional cost, if at all. As a result, we may be required to close or relocate a restaurant, which could subject us to construction and other costs and risks, and could have a material adverse effect on our business and results of operations.

Changing consumer preferences and discretionary spending patterns could have an adverse effect on our business.

Food service businesses are often affected by changes in consumer tastes, national, regional and local economic conditions and demographic trends. Factors such as traffic patterns, local demographics and the type, number and location of competing restaurants may adversely affect the performance of individual locations. In addition, inflation and increased food and energy costs may harm the restaurant industry in general and our locations in particular. Adverse changes in any of these factors could reduce consumer traffic or impose practical limits on pricing, which could harm our business. Our continued success will

The success of our restaurants is significantly influenced by the attractiveness and condition of our facilities. We periodically update the exterior and interior of our locations. If we temporarily close a restaurant for renovation, we will lose the revenue that the restaurant would otherwise receive had it remained open. In addition, renovated restaurants may also experience a significant reduction in revenue after they reopen if our existing customers change their dining habits as a result of the temporary closing of the restaurants.

In addition, our business may be adversely affected by laws restricting smoking in restaurants, particularly in areas where smoking is only allowed in restaurants that serve alcohol, since most of our restaurants do not serve alcohol. Adverse changes involving any of these factors could further reduce our guest traffic and impose practical limits on pricing, which could further reduce our revenues and operating income.

If we make acquisitions in the future, we may experience assimilation problems and dissipation of management resources, and we may need to incur additional indebtedness.

Our future growth may be a function, in part, of acquisitions of other restaurants. To the extent that we grow through acquisitions, we will face the operational and financial risks commonly encountered with that type of a strategy. We would also face operational risks, such as failing to assimilate the operations and personnel of the acquired businesses, disrupting our ongoing business, dissipating our limited management resources and impairing relationships with employees and customers of the acquired business as a result of changes in ownership and management. Additionally, we may incur additional indebtedness to finance future acquisitions, as permitted under our new senior secured credit facility and our indenture, in which case we would also face certain financial risks associated with the incurrence of this indebtedness, such as reductions in our liquidity, access to capital markets and financial stability.

Any prolonged disruption in our pie manufacturing business could harm our business.

We operate three pie manufacturing plants which produce pies for Bakers Square and Village Inn as well as third-party customers that account for a portion of current production. Any prolonged disruption in the operations of any of these plants, whether as a result of technical or labor difficulties, destruction or damage to the facilities or other reasons, could result in increased costs and reduced revenues, and our relationships with third-party customers could be harmed.

We rely in part on our Village Inn franchisees and the manner in which they operate their locations to develop, promote and operate our Village Inn business. Our Village Inn franchises generated revenues to us of $7.3 million during the 2003 fiscal year. Although we have developed criteria to evaluate and screen prospective franchisees, there can be no assurance that franchisees will have the business acumen or financial resources necessary to operate successful franchises in their franchise areas. The failure of franchisees to operate franchises successfully could have a material adverse effect on Village Inn’s reputation and its brands. While we try to ensure that the quality of the Village Inn brand is maintained by all of our franchisees, franchisees could take actions that adversely affect the value of our intellectual property or reputation.

We could face labor shortages that could slow our growth and increase our labor costs.

Our success depends in part upon our ability to attract, motivate and retain qualified employees, including restaurant managers, kitchen staff and servers, in quantities sufficient to keep pace with our expansion schedule and meet the needs of our existing restaurants. A sufficient number of qualified individuals of the requisite caliber to fill these positions may be in short supply in some areas. Additionally, competition for qualified employees could require us to pay higher wages, which could result in higher labor costs. Any future inability to recruit and retain qualified individuals may delay the planned openings of new

restaurants and could adversely impact our existing restaurants. Any such delays, any material increases in employee turnover rates in existing restaurants or any widespread employee dissatisfaction could have a material adverse effect on our operations. Additionally, any labor disruption resulting from unionization efforts or otherwise could result in increased costs and reduced revenues. In 2003, employees at one of our pie manufacturing facilities conducted an election to unionize our workforce of 338 employees at that facility. This effort was unsuccessful; however, future unionization efforts could result in our being subject to collective bargaining agreements that are on terms that are not as economically attractive as our current arrangements with our employees.

Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime and tip credits, working conditions, unemployment tax rates, workers’ compensation rates and citizenship requirements. Significant additional government-imposed increases in the following areas could materially affect our results of operations:


	•	minimum wages;

	•	mandated health benefits;

	•	paid leaves of absence;

	•	tax reporting; or

	•	revisions in the tax payment requirements for employees who receive gratuities.

We may not be able to protect our trademarks, service marks, logos and other proprietary rights.

We believe that our trademarks, service marks, logos and other proprietary rights are important to our success and our competitive position. Accordingly, we protect our trademarks, service marks, logos and proprietary rights. However, the actions taken by us may be inadequate to prevent imitation of our products and concepts by others or to prevent others from claiming violations of their trademarks, service marks, logos and proprietary rights by us. In addition, our intellectual property rights may not have the value that we believe they have. If we are unsuccessful in protecting our intellectual property rights, or if another party prevails in litigation against us relating to our intellectual property rights, we may incur significant costs and may be required to change certain aspects of our operations.

We are subject to federal, state and local laws, regulations and ordinances that:


	•	govern activities or operations that may have adverse environmental effects, such as discharges to air and water, as well as handling and disposal practices for solid and hazardous wastes; and

	•	impose liability for the costs of cleaning up, and certain damages resulting from, sites of past spills, disposals or other releases of hazardous materials.

In particular, under applicable environmental laws, we may be responsible for remediation of environmental conditions and may be subject to associated liabilities resulting from lawsuits brought by private litigants, relating to our restaurants and the land on which our restaurants are located, regardless of whether we lease or own the restaurants or land in question and regardless of whether such environmental conditions were created by us or by a prior owner or tenant. Some of our properties are located on or adjacent to sites that we know or suspect to have been used by prior owners or operators as retail gas stations or industrial facilities. Such properties previously contained underground storage tanks, and some of these properties may currently contain abandoned underground storage tanks. It is possible that petroleum products and other contaminants may have been released at or migrated beneath our properties into or through the soil or groundwater. Under applicable federal and state environmental laws, we, as the current owner or operator of these sites, may be jointly and severally liable for the costs of investigation

and remediation of any contamination. If we are found liable for the costs of remediation of contamination at any of these properties, our operating expenses would likely increase and our operating results would be materially adversely affected. Environmental conditions relating to our prior, existing or future restaurants or restaurant sites could have a material adverse effect on our business and results of operations.

We depend on the services of key executives, the loss of whom could materially harm our business.

Our senior executives are important to our success because they have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could adversely affect our business until a suitable replacement could be found. See “Management.”

We are controlled by affiliates of Wind Point, and their interests as equity holders may conflict with your interests as a creditor.

As a result of their control of VI Acquisition Corp., which is our parent, investment funds affiliated with Wind Point have the power to elect a majority of our directors, to appoint members of management, to approve all actions requiring the approval of the holders of our common stock, including adopting amendments to our certificate of incorporation and approving mergers, acquisitions or sales of all or substantially all of our assets, and to direct our operations.

The interests of Wind Point may not in all cases be aligned with your interests as a holder of the notes. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of Wind Point as a holder of equity might conflict with your interests as a holder of the notes. Wind Point also may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in its judgment, could enhance its equity investment, even though such transactions might involve risks to you, as holders of the notes.

We have only one independent director (as defined under the federal securities laws) on our Board of Directors and, as a result, our Board of Directors and Audit Committee have not met, and do not meet, the standard “independence” requirements that would be applicable if our equity securities were traded on the Nasdaq National Market or the New York Stock Exchange.

We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, legislative and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. See “Forward-looking statements” and “Management’s discussion and analysis of financial condition and results of operations— Liquidity and capital resources.”

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In addition, the terms of existing or future debt agreements, including our working capital facility and the indenture, may restrict us from adopting some or all of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The new senior secured credit facility and the indenture restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds which we could realize from them and these proceeds may not be

The indenture governing the notes contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability to, among other things:


	•	incur additional debt, provide guarantees in respect of obligations of other persons or issue redeemable preferred stock;

	•	pay dividends or repurchase capital stock or subordinated debt;

	•	make some types of investments;

	•	incur liens;

	•	engage in sale-leaseback transactions;

	•	restrict dividends, distributions or other payments from our subsidiaries;

	•	sell our assets or the assets or capital stock of our subsidiaries;

	•	consolidate or merge with or into, or sell substantially all of our assets to, another person;

	•	enter into new lines of business; or

	•	otherwise conduct necessary corporate activities.

In addition, our new senior secured credit facility contains restrictive covenants and requires us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those tests. A breach of any of these covenants could result in a default under our new senior secured credit facility and/or the notes. Upon the occurrence of an event of default under our new senior secured credit facility, the lenders could elect to declare all amounts outstanding under our new senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under our new senior secured credit facility could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under our new senior secured credit facility. If the lenders under our new senior secured credit facility accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay our new senior secured credit facility and our other indebtedness, including the notes, or borrow sufficient funds to refinance such indebtedness. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us. See “Description of other indebtedness.”

Borrowings under our new senior secured credit facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.

If we default on our obligations to pay our indebtedness we may not be able to make payments on the notes.

Any default under the agreements governing our indebtedness, including a default under our new senior secured credit facility that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the notes and substantially decrease the market value of the notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including covenants in our indenture and our new senior secured credit facility), we could be in default under the terms of the

agreements governing such indebtedness, including our new senior secured credit facility and our indenture. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our new senior secured credit facility could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines we may in the future need to obtain waivers from the required lenders under our new senior secured credit facility to avoid being in default. If we breach our covenants under our new senior secured credit facility and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under our new senior secured credit facility, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. See “Description of other indebtedness” and “Description of notes.”

The notes and the guarantees are effectively subordinate to all of our secured debt, and if a default occurs, we may not have sufficient funds to fulfill our obligations under the notes and the guarantees.

The notes are general senior unsecured obligations that rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The notes are effectively subordinate to all our and our guarantors’ secured indebtedness to the extent of the value of the assets securing that indebtedness. As of April 15, 2004, we had approximately $15.0 million of secured indebtedness (all of which is indebtedness under our new senior secured credit facility and which does not include availability of $30.0 million under the new senior secured revolving credit facility and $3.9 million of capitalized lease obligations), and our guarantors had no secured indebtedness (other than guarantees of our indebtedness under our new senior secured credit facility). In addition, the indenture governing the notes will, subject to some limitations, permit us to incur additional secured indebtedness, and your exchange notes will be effectively junior to any additional secured indebtedness we may incur.

In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure our secured indebtedness will be available to pay obligations on the notes only after all secured indebtedness, together with accrued interest, has been repaid in full from our assets. Likewise, because our new senior secured credit facility is a secured obligation, our failure to comply with the terms of the new senior secured credit facility would entitle those lenders to declare all the funds borrowed thereunder, together with accrued interest, immediately due and payable. If we were unable to repay such indebtedness, the lenders could foreclose on substantially all of our assets which serve as collateral. In this event, our secured lenders would be entitled to be repaid in full from the proceeds of the liquidation of those assets before those assets would be available for distribution to other creditors, including holders of the notes. Holders of the notes will participate in our remaining assets ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the notes, and potentially with all of our other general creditors. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the notes then outstanding. The guarantees of the notes will have a similar ranking with respect to secured and unsecured senior indebtedness of our guarantors as the notes do with respect to our secured and unsecured senior indebtedness, as well as with respect to any unsecured obligations expressly subordinated in right of payment to the guarantees.

Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of their principal amount, together with any accrued and unpaid interest and additional interest, if any, from the date of purchase of the notes. We may not be able to repurchase the notes upon a change of control because we may not have sufficient funds. Further, we may be contractually restricted under the terms of our new senior secured credit facility or other future senior indebtedness from repurchasing all of the notes tendered by holders upon a change of control. Accordingly, we may not be able to satisfy our obligations to purchase the notes unless we are able to refinance or obtain waivers under our new senior secured credit facility. Our failure to repurchase the notes upon a change of control would cause a default under the indenture and a cross-default under the new senior

secured credit facility. Our new senior secured credit facility also provides that the events that constitute a change of control under the indenture may constitute a default that permits our lenders to accelerate the maturity of borrowings thereunder, and, if such debt is not paid, to enforce security interests in the collateral securing such debt, thereby limiting our ability to raise cash to purchase the notes, and reducing the practical benefit of the offer-to-purchase provisions to the holders of the notes. Any of our future debt agreements may contain similar provisions.

In addition, the change of control provisions in the indenture may not protect you from certain important corporate events, such as a leveraged recapitalization (which would increase the level of our indebtedness), reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a “Change of Control” under the indenture. Such a transaction may not involve a change in voting power or beneficial ownership or, even if it does, may not involve a change that constitutes a “Change of Control” as defined in the indenture which would trigger our obligation to repurchase the notes. Therefore, if an event occurs that does not constitute a “Change of Control” as defined in the indenture, we will not be required to make an offer to repurchase the notes and you may be required to continue to hold your notes despite the event. See “Description of other indebtedness” and “Description of notes— Change of Control.”

Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate the risks described above.

We and our guarantors may be able to incur substantial additional indebtedness in the future. The terms of the indenture do not fully prohibit us or our guarantors from doing so. If we incur any additional indebtedness that ranks equally with the notes, including trade payables, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of us. This may have the effect of reducing the amount of proceeds paid to you. Additionally, our new senior secured revolving credit facility provides commitments up to $30.0 million. All of those borrowings would be secured indebtedness. If new debt is added to our current debt levels, the related risks that we and our guarantors now face could increase.

There are restrictions on your ability to transfer or resell the notes without registration under applicable securities laws.

The original notes were offered and sold pursuant to an exemption from registration under U.S. and applicable state securities laws. Therefore, you may transfer or resell the original notes in the United States only in a transaction registered under or exempt from the registration requirements of the U.S. and applicable state securities laws, and you may be required to bear the risk of your investment for an indefinite period of time. We are obligated to use our reasonable best efforts to commence an offer to exchange the original notes for equivalent notes registered under U.S. securities laws or, in certain circumstances, register the reoffer and resale of the original notes under U.S. securities laws. The Securities and Exchange Commission, however, has broad discretion to declare any registration statement effective and may delay, defer or suspend the effectiveness of any registration statement for a variety of reasons. See “Exchange offer; registration rights” and “Transfer restrictions.”

Your ability to transfer the notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market will develop for the notes.

The notes are a new issue of securities for which there is no established public market. We do not intend to have the notes listed on a national securities exchange, although we expect that they will be eligible for trading in the PORTAL market. The initial purchasers have advised us that they intend to make a market in the original notes, and the exchange notes, if issued, as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in the original notes or the exchange notes, and they may discontinue their market-making activities at any time without notice. Therefore, we cannot assure you that an active market for the original notes or exchange notes will develop or, if developed, that it will continue. Historically, the market for non-investment grade debt has been subject to

disruptions that have caused substantial volatility in the prices of securities similar to the notes. We cannot assure you that the market, if any, for the original notes or exchange notes will be free from similar disruptions or that any such disruptions may not adversely affect the prices at which you may sell your notes. In addition, subsequent to their initial issuance, the original notes or exchange notes may trade at a discount from their initial offering price, depending upon the number of holders of notes, the interest of securities dealers in making a market in the notes, prevailing interest rates, the market for similar notes, our performance, our ability to complete the offer to exchange the original notes for the exchange notes and other factors.

Federal and state fraudulent transfer laws permit a court to void the notes and the guarantees, and, if that occurs, you may not receive any payments on the notes.

The issuance of the notes and the guarantees may be subject to review under federal and state fraudulent transfer and conveyance statutes. While the relevant laws may vary from state to state, under such laws the payment of consideration will be a fraudulent conveyance if (1) we paid the consideration with the intent of hindering, delaying or defrauding creditors or (2) we or any of our guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for issuing either the notes or a guarantee, and, in the case of (2) only, one of the following is also true:


	•	we or any of our guarantors were or was insolvent or rendered insolvent by reason of the incurrence of the indebtedness;

	•	payment of the consideration left us or any of our guarantors with an unreasonably small amount of capital to carry on the business; or

	•	we or any of our guarantors intended to, or believed that we or it would, incur debts beyond our or its ability to pay as they mature.

If a court were to find that the issuance of the notes or a guarantee was a fraudulent conveyance, the court could void the payment obligations under the notes or such guarantee or further subordinate the notes or such guarantee to presently existing and future indebtedness of ours or such guarantor, or require the holders of the notes to repay any amounts received with respect to the notes or such guarantee. In the event of a finding that a fraudulent conveyance occurred, you may not receive any repayment on the notes. Further, the voidance of the notes could result in an event of default with respect to our other debt and that of our guarantors that could result in acceleration of such debt.

Generally, an entity would be considered insolvent if, at the time it incurred indebtedness:


	•	the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets;

	•	the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts and liabilities, including contingent liabilities, as they become absolute and mature; or

	•	it could not pay its debts as they become due.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time, or regardless of the standard that a court uses, that the issuance of the notes and the guarantees would not be subordinated to our or any guarantor’s other debt.

If the guarantees were legally challenged, any guarantee could also be subject to the claim that, since the guarantee was incurred for our benefit, and only indirectly for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration. A court could thus void the obligations under the guarantees, subordinate them to the applicable guarantor’s other debt or take other action detrimental to the holders of the notes.

In connection with the sale of the original notes, we entered into a registration rights agreement with the initial purchasers, pursuant to which we agreed to file and use our best efforts to cause to become effective with the Securities and Exchange Commission a registration statement with respect to the exchange of the original notes for the exchange notes. A copy of the registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part. Unless the context requires otherwise, the term “holder” means any person in whose name original notes are registered on the books of VICORP Restaurants, Inc. or any other person who has obtained a properly completed bond power from the registered holder, or any participant in The Depository Trust Company (“DTC”) whose name appears on a security position listing as a holder of original notes (which, for purposes of the exchange offer, include beneficial interests in the original notes held by direct or indirect participants in DTC and original notes held in definitive form).

By tendering original notes in exchange for exchange notes, each holder represents to us that:


	•	any exchange notes to be received by such holder are being acquired in the ordinary course of such holder’s business;

	•	such holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of exchange notes;

	•	such holder is not an “affiliate” of VICORP Restaurants, Inc. (within the meaning of Rule 405 under the Securities Act), or if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable;

	•	such holder has full power and authority to tender, exchange, sell, assign and transfer the tendered original notes;

	•	we will acquire good, marketable and unencumbered title to the tendered original notes, free and clear of all liens, restrictions, charges and encumbrances; and

	•	the original notes tendered for exchange are not subject to any adverse claims or proxies.

Each tendering holder also warrants and agrees that it will, upon request, execute and deliver any additional documents deemed by us or the exchange agent to be necessary or desirable to complete the exchange, sale, assignment and transfer of the original notes tendered pursuant to the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for original notes pursuant to the exchange offer, where such original notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of distribution.”

The exchange offer is not being made to, nor will we accept tenders for exchange from, holders of original notes in any jurisdiction in which the exchange offer or the acceptance of the exchange notes would be in violation of the securities or blue sky laws of that jurisdiction.

We hereby offer, upon the terms and subject to the conditions described in this prospectus and in the accompanying letter of transmittal, to exchange $1,000 principal amount of exchange notes for each $1,000 principal amount of original notes, properly tendered before the expiration date and not properly withdrawn according to the procedures described below. Holders may tender their original notes in whole or in part in integral multiples of $1,000 principal amount.

The form and terms of the exchange notes are the same as the form and terms of the original notes, except that:


	•	the exchange notes have been registered under the Securities Act and therefore are not subject to the restrictions on transfer applicable to the original notes; and

	•	holders of exchange notes will not be entitled to some of the rights of holders of the original notes under the registration rights agreement.

The exchange notes evidence the same indebtedness as and replace the original notes, and will be issued pursuant to, and entitled to the benefits of, the indenture.

The exchange offer is not conditioned upon any minimum principal amount of original notes being tendered for exchange. We reserve the right in our sole discretion to purchase or make offers for any original notes that remain outstanding after the expiration date or, as described under the heading “—Conditions to the exchange offer,” to terminate the exchange offer and, to the extent permitted by applicable law, purchase original notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the exchange offer. As of the date of this prospectus, $126,530,000 principal amount of original notes is outstanding.

Holders of original notes do not have any appraisal or dissenters’ rights in connection with the exchange offer. Original notes that are not tendered for, or are tendered but not accepted in connection with, the exchange offer will remain outstanding. See the section “Risk factors— You are responsible for compliance with exchange offer procedures.”

If any tendered original notes are not accepted for exchange because of an invalid tender, the occurrence of particular other events described in this prospectus or otherwise, certificates for any such unaccepted original notes will be returned, without expense, to the tendering holder thereof promptly after the expiration date.

Holders who tender original notes in connection with the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of the original notes in connection with the exchange offer. We will pay all charges and expenses, other than specified applicable taxes. See the heading “—Fees and expenses.”

We make no recommendation to the holders of original notes as to whether to tender or refrain from tendering all or any portion of their original notes in the exchange offer. In addition, no one has been authorized to make any such recommendation. Holders of original notes must make their own decision as to whether to tender pursuant to the exchange offer, and, if so, the aggregate amount of original notes to tender, after reading this prospectus and the letter of transmittal and consulting with their advisors, if any, based on their financial positions and requirements.

The expiration date shall be 5:00 p.m., New York City time, on , 2004, unless we, in our sole discretion, extend the exchange offer, in which case the expiration date shall be the latest date and time to which the exchange offer is extended.

In order to extend the exchange offer, we will notify the exchange agent of any extension by oral notice (confirmed in writing) or written notice and will make a public announcement thereof prior to 9:00 a.m., New York City time, on the next business day after each previously scheduled expiration date.

We reserve the right in our sole discretion, subject to applicable law, at any time and from time to time:


	•	to delay the acceptance of the original notes for exchange;

	•	to terminate the exchange offer (whether or not any original notes have already been accepted for exchange) if we determine, in our sole discretion, that any of the events or conditions referred to


		under the heading “—Conditions to the exchange offer” has occurred or exists or has not been satisfied;

	•	to extend the expiration date and retain all original notes tendered pursuant to the exchange offer, subject, however, to the right of holders of the original notes to withdraw their tendered original notes as described under the heading “—Withdrawal rights”; and

	•	to waive any condition or otherwise amend the terms of the exchange offer in any respect.

If we amend the exchange offer in a manner that we determine constitutes a material change, or if we waive a material condition of the exchange offer, we will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered holders of the affected original notes, and we will extend the exchange offer to the extent required by Rule 14e-1 under the Exchange Act.

Any such delay in acceptance, termination, extension or amendment will be followed promptly by oral or written notice thereof to the exchange agent (any such oral notice to be promptly confirmed in writing) and by making a public announcement, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Without limiting the manner in which we may choose to make any public announcement, and subject to applicable laws, we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to an appropriate news agency.

Upon the terms and subject to the conditions of the exchange offer, we will exchange, and will issue to the exchange agent, exchange notes for original notes validly tendered and not withdrawn (pursuant to the withdrawal rights described under the heading “—Withdrawal rights”) promptly after the expiration date.

In all cases, delivery of exchange notes in exchange for original notes tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of:


	•	original notes or a book-entry confirmation of a book-entry transfer of original notes into the exchange agent’s account at DTC;

	•	the letter of transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an agent’s message instead of the letter of transmittal; and

	•	any other documents required by the letter of transmittal.

Accordingly, the delivery of exchange notes might not be made to all tendering holders at the same time, and will depend upon when original notes or book-entry confirmations with respect to original notes and other required documents are received by the exchange agent. The term “book-entry confirmation” means a timely confirmation of a book-entry transfer of original notes into the exchange agent’s account at DTC. The term “agent’s message” means a message, transmitted by DTC and received by the exchange agent and forming a part of the book-entry confirmation, which states that DTC has received an express acknowledgment from you that you have received and have agreed to be bound by the letter of transmittal. If you use this procedure, we may enforce the letter of transmittal against you.

Subject to the terms and conditions of the exchange offer, we will be deemed to have accepted for exchange, and thereby exchanged, original notes validly tendered and not withdrawn as, if and when we give oral or written notice to the exchange agent (any such oral notice to be promptly confirmed in writing) of our acceptance of such original notes for exchange pursuant to the exchange offer. Our acceptance for exchange of original notes tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering holder and us upon the terms and subject to the conditions of the exchange offer. The exchange agent will act as agent for us for the purpose of receiving tenders of original notes, letters of transmittal and related documents, and as agent for tendering holders for the purpose of receiving original notes, letters of transmittal and related documents and transmitting exchange notes to holders who validly tendered original notes. Such exchange will be made promptly after

the expiration date of the exchange offer. If for any reason the acceptance for exchange or the exchange of any original notes tendered pursuant to the exchange offer is delayed (whether before or after our acceptance for exchange of original notes), or we extend the exchange offer or are unable to accept for exchange or exchange original notes tendered pursuant to the exchange offer, then, without prejudice to our rights set forth in this prospectus and in the letter of transmittal, the exchange agent may, nevertheless, on our behalf and subject to Rule 14e-1(c) under the Exchange Act, retain tendered original notes and such original notes may not be withdrawn except to the extent tendering holders are entitled to withdrawal rights as described under the heading “—Withdrawal rights.”

Except as set forth below, in order for original notes to be validly tendered pursuant to the exchange offer, either:


	•	a properly completed and duly executed letter of transmittal (or facsimile thereof), with any required signature guarantees, or an agent’s message instead of the letter of transmittal, and any other required documents, must be received by the exchange agent at the address set forth under the heading “—Exchange agent” prior to the expiration date, and tendered original notes must be received by the exchange agent, or such original notes must be tendered pursuant to the procedures for book-entry transfer set forth below and a book-entry confirmation must be received by the exchange agent, in each case prior to the expiration date; or

	•	the guaranteed delivery procedures set forth below must be complied with.

If less than all of the original notes are tendered, a tendering holder should fill in the amount of original notes being tendered in the appropriate box on the letter of transmittal. The entire amount of original notes delivered to the exchange agent will be deemed to have been tendered unless otherwise indicated.

If any letter of transmittal, endorsement, bond power, power of attorney or any other document required by the letter of transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing. Unless waived by us, evidence satisfactory to us of such person’s authority to so act must also be submitted.

Any beneficial owner of original notes that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian is urged to contact such entity promptly if such beneficial holder wishes to participate in the exchange offer.

The method of delivery of original notes, the letter of transmittal, agent’s messages and all other required documents is at the option and sole risk of the tendering holder. Delivery will be deemed made only when actually received by the exchange agent. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery and proper insurance should be obtained. No letter of transmittal, agent’s messages or original notes should be sent to VICORP Restaurants, Inc. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect these transactions for them.

The exchange agent will make a request to establish an account with respect to the applicable original notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC’s book-entry transfer facility system may make a book-entry delivery of the original notes by causing DTC to transfer such original notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfers. However, although delivery of original notes may be effected by book-entry transfer into the exchange agent’s account at DTC, the letter of transmittal (or facsimile thereof), properly completed and duly executed, any required signature

guarantees, or an agent’s message instead of the letter of transmittal, and any other required documents must in any case be delivered to and received by the exchange agent at its address set forth under the heading “—Exchange agent” prior to the expiration date, or the guaranteed delivery procedure set forth below must be complied with.

Delivery of documents to DTC does not constitute delivery to the exchange agent.

Original notes need not be endorsed and signature guarantees on a letter of transmittal or a notice of withdrawal, as the case may be, are unnecessary unless: (1) the original notes are registered in a name other than that of the person surrendering the certificate; or (2) a registered holder completes the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” in the letter of transmittal.

In the case of (1) or (2) above, original notes must be duly endorsed or accompanied by a properly executed bond power, with the endorsement or signature on the bond power and on the letter of transmittal or the notice of withdrawal, as the case may be, guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an “eligible guarantor institution,” including (as such terms are defined therein): (a) a bank, (b) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer, (c) a credit union, (d) a national securities exchange, registered securities association or clearing agency or (e) a savings association that is a participant in a Securities Transfer Association.

If a holder desires to tender original notes pursuant to the exchange offer and the certificates for such original notes are not immediately available or time will not permit all required documents to reach the exchange agent before the expiration date, or the procedures for book-entry transfer cannot be completed on a timely basis, such original notes may nevertheless be tendered, provided that all of the following guaranteed delivery procedures are complied with:


	•	such tenders are made by or through an eligible guarantor institution;

	•	prior to the expiration date, the exchange agent receives from such eligible guarantor institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form accompanying the letter of transmittal, setting forth the name and address of the holder of original notes and the amount of original notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, all physically tendered original notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible guarantor institution with the exchange agent. The notice of guaranteed delivery may be delivered by hand, or transmitted by facsimile or mail to the exchange agent and must include a guarantee by an eligible guarantor institution in the form set forth in the notice of guaranteed delivery; and

	•	all tendered original notes (or book-entry confirmation), in proper form for transfer, together with a properly completed and duly executed letter of transmittal, with any required signature guarantees, or an agent’s message instead of the letter of transmittal, and any other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

All questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tendered original notes will be determined by us, in our sole discretion, which determination will be final and binding on all parties. We reserve the right, in our sole discretion, to reject any and all tenders we determine not to be in proper form or the acceptance for exchange of which may,

in the view of our counsel, be unlawful. We also reserve the right, subject to applicable law, to waive any of the conditions of the exchange offer as set forth under the heading “—Conditions to the exchange offer” or any defect or irregularity in any tender of original notes of any particular holder, whether or not similar defects or irregularities are waived in the case of other holders.

Our interpretation of the terms and conditions of the exchange offer (including the letter of transmittal and its instructions) will be final and binding on all parties. No tender of original notes will be deemed to have been validly made until all defects or irregularities with respect to such tender have been cured or waived. None of VICORP Restaurants, Inc., any of our affiliates, the exchange agent or any other person will be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification.

Based on interpretations by the staff of the Securities and Exchange Commission, as set forth in the no-action letters Exxon Capital Holding Corp. (available May 13, 1988), Morgan Stanley & Co. (available June 5, 1991) and Shearman & Sterling (available July 2, 1993), we believe that holders of original notes who exchange their original notes for exchange notes may offer for resale, resell and otherwise transfer such exchange notes without compliance with the registration and prospectus delivery provisions of the Securities Act. This would not apply, however, to any holder that is a broker-dealer that acquired original notes as a result of market-making activities or other trading activities or directly from us for resale under an available exemption under the Securities Act. Also, resale would only be permitted for exchange notes that (1) are acquired in the ordinary course of a holder’s business, (2) where such holder has no arrangement or understanding with any person to participate in the distribution of such exchange notes and (3) such holder is not an “affiliate” of VICORP Restaurants, Inc. The staff of the Securities and Exchange Commission has not considered the exchange offer in the context of a no-action letter, and there can be no assurance that the staff of the Securities and Exchange Commission would make a similar determination with respect to the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for original notes under the exchange offer, where such original notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See the section “Plan of distribution.”

Except as otherwise provided herein, tenders of original notes may be withdrawn at any time prior to the expiration date of the exchange offer. In order for a withdrawal to be effective, such withdrawal must be in writing and timely received by the exchange agent at its address set forth under the heading “—Exchange agent” prior to the expiration date. Any such notice of withdrawal must specify the name of the person who tendered the original notes to be withdrawn, and (if such original notes have been tendered) the name of the registered holder of the original notes as set forth on the original notes, if different from that of the person who tendered such original notes. If certificates for original notes have been delivered or otherwise identified to the exchange agent, the notice of withdrawal must specify the serial numbers on the particular original notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an eligible guarantor institution, except in the case of original notes tendered for the account of an eligible guarantor institution. If original notes have been tendered pursuant to the procedures for book-entry transfer set forth under the heading “—Procedures for tendering original notes,” the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of original notes and must otherwise comply with the procedures of DTC. Withdrawals of tenders of original notes may not be rescinded. Original notes properly withdrawn will not be deemed validly tendered for purposes of the exchange offer, but may be retendered at any subsequent time prior to the expiration date of the exchange offer by following any of the procedures described above under the heading “—Procedures for tendering original notes.”

All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by us, in our sole discretion, which determination will be final and binding on all parties. Neither VICORP Restaurants, Inc., any of our affiliates, the exchange agent or any other person will be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any original notes that have been tendered but that are withdrawn will be returned to the holder promptly after withdrawal.

If any of the following conditions has occurred or exists or has not been satisfied, as the case may be, prior to the expiration date, we will not be required to accept for exchange any original notes and will not be required to issue exchange notes in exchange for any original notes:


	•	a change in the current interpretation by the staff of the Securities and Exchange Commission that permits resale of exchange notes as described above under the heading “—Resales of the exchange notes;”

	•	the institution or threat of an action or proceeding in any court or by or before any governmental agency or body with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer;

	•	the adoption or enactment of any law, statute, rule or regulation that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer;

	•	the issuance of a stop order by the Securities and Exchange Commission, any state securities authority or any gaming or racing authority suspending the effectiveness of the registration statement, or proceedings for that purpose;

	•	failure to obtain any governmental approval that we consider necessary for the consummation of the exchange offer as contemplated hereby; or

	•	any change or development involving a prospective change in our business or financial affairs that we think might materially impair our ability to proceed with the exchange offer.

If we determine in our sole discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied, as the case may be, at any time prior to the expiration date, we may, subject to applicable law, at any time and from time to time, terminate the exchange offer (whether or not any original notes have already been accepted for exchange) or waive any such condition or otherwise amend the terms of the exchange offer in any respect. If such waiver or amendment constitutes a material change to the exchange offer, we will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to the registered holders of the original notes. In this case, we will extend the exchange offer to the extent required by Rule 14e-1 under the Exchange Act.

Wells Fargo Bank, National Association has been appointed as the exchange agent. Delivery of the letter of transmittal, agent’s messages and any other required documents, questions, requests for assistance and requests for additional copies of this prospectus or of the letter of transmittal, agent’s messages or notices of guaranteed delivery should be directed to the exchange agent addressed as follows:

Delivery to other than the above address or facsimile number will not constitute a valid delivery.

We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail. Additional solicitation may be made personally or by telephone or other means by our officers, directors or employees.

We have not retained any dealer-manager or similar agent in connection with the exchange offer and will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer. We have agreed to pay the exchange agent reasonable and customary fees for its services and will reimburse it for reasonable out-of-pocket expenses in connection therewith. We will also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus and related documents to the beneficial owners of original notes, and in handling or tendering for their customers.

Holders who tender their original notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that if exchange notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the original notes tendered, or if a transfer tax is imposed for any reason other than the exchange of original notes in connection with the exchange offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such transfer tax or exemption therefrom is not submitted with the letter of transmittal, the amount of such transfer tax will be billed directly to such tendering holder.

The exchange offer is intended to satisfy certain obligations of VICORP Restaurants, Inc. under the registration rights agreement. We will not receive any proceeds from the issuance of the exchange notes or the closing of the exchange offer.

In consideration for issuing the exchange notes as contemplated in this prospectus, we will receive in exchange an equal number of original notes in like principal amount. The form and terms of the exchange notes are identical in all material respects to the form and terms of the original notes, except as otherwise described in the section “The exchange offer” under the heading “Terms of the exchange offer.” The original notes surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued.

The net proceeds of the offering of the original notes were used, together with term loan borrowings under our new senior secured credit facility, to repay outstanding indebtedness under our prior term loans and mezzanine debt, pay certain fees and expenses related to the offering and for general corporate purposes.

The following table sets forth the sources and uses of funds for the refinancing transaction consummated on April 14, 2004.


(1)	Does not include up to $10.5 million of outstanding letters of credit that were issued under the new senior secured revolving credit facility. We have the ability to borrow under the new senior secured revolving credit facility the lesser of (a) $30.0 million and (b) 1.2 times trailing twelve months Adjusted EBITDA (as defined in the new senior secured credit facility) minus the original principal amount of the new senior secured term loan. Our new senior secured revolving credit facility will have a $15.0 million sublimit for letters of credit. As of April 15, 2004, our borrowing base would have supported $30.0 million of borrowings.

(2)	The fees and expenses include the prepayment penalty on $46.1 million aggregate principal amount of mezzanine debt that was refinanced on April 14, 2004 (including $1.1 million of accrued payment-in-kind interest), the initial purchasers’ discount and legal and accounting fees. These fees and expenses also include approximately $0.3 million payable to Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. under our professional services agreement, which amount represents a deferral of a portion of the transaction fee payable to Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. in connection with the June 2003 acquisition. See “Certain relationships and related party transactions.”

In addition to the fees and expenses described above, we incurred $4.4 million of noncash write-offs of unamortized debt financing costs in the second fiscal quarter of 2004 related to debt that was repaid in connection with the refinancing.

The following table sets forth our actual capitalization as of April 15, 2004. This table should be read in conjunction with “Use of proceeds,” “Selected financial data,” “Management’s discussion and analysis of financial condition and results of operations” and with our consolidated financial statements and the notes thereto included elsewhere in this prospectus.


(1)	Our new senior secured credit facility consists of a $15.0 million term loan and a $30.0 million revolving credit facility, with a $15.0 million sublimit for letters of credit. On April 15, 2004, we had issued letters of credit aggregating $10.5 million and had no borrowings outstanding under the senior secured revolving credit facility. The senior secured revolving credit facility permits borrowings equal to the lesser of (a) $30.0 million and (b) 1.2 times trailing twelve months Adjusted EBITDA (as defined in the senior secured credit agreement) minus the original principal amount of the new senior secured term loan. Under this formula, as of April 15, 2004, we had the ability to borrow the full $30 million, less the amount of outstanding letters of credit, under the senior secured revolving credit facility. The amounts set forth in the table above exclude the face amount of $10.5 million of outstanding letters of credit, which reduce available borrowings under our new senior secured revolving credit facility.

(2)	Shares of common and preferred stock held by members of management subject to redemption upon death at the option of the stockholder’s estate. Pursuant to SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, we are required to classify these shares as mezzanine equity.

The following unaudited pro forma combined and consolidated financial data have been prepared to give effect to the acquisition of Midway Investors Holdings Inc. by VI Acquisition Corp. on June 14, 2003. This unaudited pro forma combined and consolidated financial data is presented for informational purposes only and does not purport to be indicative of the results of operations for future periods or the results that actually would have been realized had the June 2003 acquisition been completed on the first day of the period presented.

We accounted for the June 2003 acquisition using the purchase method of accounting. We have allocated the total purchase price to the assets and liabilities of our predecessor company based on estimates of their fair values by independent valuation specialists assisting us in determining the fair value of intangible assets.

The historical consolidated financial statements of Midway Investors Holdings Inc. reflect the results of operations of the predecessor company for the period from October 28, 2002 through June 13, 2003. The unaudited pro forma combined and consolidated statements of operations give effect to the June 2003 acquisition as if such transaction had occurred at October 28, 2002.

The unaudited pro forma combined and consolidated financial data, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, our historical consolidated financial statements and the historical consolidated financial statements of our predecessor companies and the notes thereto included elsewhere in this prospectus and the information set forth in “Management’s discussion and analysis of financial condition and results of operations.”

See accompanying notes to unaudited pro forma combined and consolidated financial data.


	(a)	Reflects the net increase in depreciation expense resulting from fair value adjustments to property and equipment.

	(b)	Reflects the additional rent expense resulting from operating leases entered into in connection with the sale-leaseback transaction used to partially finance the June 2003 acquisition, net of depreciation expense of the assets sold.

	(c)	At the date of the June 2003 acquisition, rents payable under leases were revalued to their fair market value. Amount represents the increase in expense as a result of the amortization of this purchase accounting adjustment.


(2)	At the date of the June 2003 acquisition, the estimated value of franchise rights was established and is being amortized over the terms of the franchise agreements. The adjustment represents the amortization expense of the franchise rights under the new basis less the franchise rights amortization previously reflected in the predecessor financial statements.


	(a)	At the date of the June 2003 acquisition, compensation was paid to former executives to cancel existing employment contracts. Additionally, common stock purchased by employees through the exercise of stock options was repurchased by the predecessor in connection with the acquisition.

	(b)	The predecessor company incurred legal, accounting and professional fees in connection with marketing itself for sale and the closing of the acquisition. We made severance payments totaling $1.2 million, primarily related to our former chief executive officer, pursuant to contractual provisions triggered by the June 2003 acquisition. These payments were not eliminated in the pro forma adjustments given that, although the departure of the executives was a result of the transaction, it was not contemplated at the date of the transaction.


(4)	Reflects the adjustment to interest expense in connection with the June 2003 acquisition as follows:


	(a)	Reflects pro forma interest expense resulting from the June 2003 capital structure based on an assumed LIBOR rate of 1.15%, net of the historical interest costs of debt repaid in connection with the June 2003 acquisition.

	(b)	In connection with the June 2003 acquisition, we terminated an interest rate swap agreement relating to borrowings bearing floating interest rates under Midway Investors Holdings Inc.’s senior credit agreement.

	(c)	Reflects the pro forma amortization of deferred debt financing costs capitalized from the June 2003 capital structure, net of the amortization of deferred financing costs related to debt repaid in connection with the June 2003 acquisition.


	(a)	Reflects the termination of the derivative which hedged the indebtedness of Midway Investors Holdings Inc. in connection with the June 2003 acquisition.


(6)	Reflects the pro forma tax effect of the above adjustments at the combined statutory federal and state tax rate of 39.9%.

(7)

Until the June 14, 2003 acquisition, Midway Investors Holdings Inc. had outstanding preferred stock with a $36.0 million liquidation preference that accrued dividends at a rate of 8.94% per annum. In connection with the June 2003 acquisition, Midway Investors Holdings Inc. redeemed all of these preferred shares, and we issued new shares of VI Acquisition Corp.’s preferred stock. These new preferred shares have a redemption value of $69.7 million and began accruing and compounding dividends at a rate of 10% per annum at issuance. Adjustments to reflect the redemption of the Midway Investors Holdings Inc. preferred stock and issuance of our preferred stock are as follows:

The table below presents selected historical consolidated financial data. The selected historical consolidated financial data for, and as of the end of, the periods from October 30, 2000 to May 13, 2001, from May 14, 2001 to October 28, 2001, the fiscal year ended October 27, 2002, and the periods from October 28, 2002 to June 13, 2003 and June 14, 2003 to October 26, 2003 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial data for the fiscal year ended October 31, 1999 and October 29, 2000 have been derived from our audited consolidated financial statements for those years which are not included in this prospectus. The selected historical financial data presented below for, and at the end of, the twenty-four week fiscal periods ended April 13, 2003 and April 15, 2004 have been derived from our unaudited consolidated financial statements as of that date and for those periods, included elsewhere in this prospectus. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the interim periods have been included. Results for the twenty-four week fiscal period ended April 15, 2004 is not necessarily indicative of results to be expected for the full year or any future period.

On May 14, 2001, Midway Investors Holdings Inc. purchased VICORP Restaurants, Inc., which was a publicly-owned company prior to the acquisition. On June 14, 2003, VI Acquisition Corp. purchased Midway Investors Holdings Inc. Neither of these holding companies has had any independent operations, and consequently the consolidated statements of operations of VI Acquisition Corp. and Midway Investors Holdings Inc. are substantially equivalent to those of the issuer of the notes. However, as a result of applying the required purchase accounting rules to these acquisitions, our financial statements for periods following the transactions were significantly affected. The application of purchase accounting rules required us to revalue our assets and liabilities at the two respective acquisition dates which resulted in different accounting bases being applied in different periods. As a result of these changes, the summary financial information presented below relate to the entity specified below for the following periods:

The following data should be read in conjunction with “Unaudited pro forma combined and consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and notes thereto included elsewhere in this prospectus.


(1)	Other operating expense consists primarily of rent, utilities, depreciation and marketing expenses.

(2)	We adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” effective in fiscal 2002. Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. We completed our transitional goodwill impairment evaluation and our first annual impairment evaluation in Fiscal 2002 and determined that no impairment of goodwill was necessary.

(3)	We incurred various expenses directly related to the May 2001 and June 2003 acquisitions of the predecessor companies. The components of the transaction expenses are as follows:


	(a)	We recognized $6.0 million of compensation expense associated with the exercise of stock options in connection with the May 2001 acquisition. In connection with the June 2003 acquisition we paid senior employees a total of $2.1 million to terminate their existing employment contracts and recognized $3.5 million of compensation expense associated with the exercise of stock options.

	(b)	We made severance payments totaling $1.2 million, primarily related to our former chief executive officer, pursuant to contractual provisions triggered by the June 2003 acquisition.

	(c)	We settled two class-action legal claims and one individual labor-related legal claim for $8.9 million, offset by $0.6 million of insurance proceeds received in respect of those claims, as a condition to the May 2001 acquisition.

	(d)	In connection with the June 2003 acquisition, we incurred $6.5 million of debt extinguishment costs, including prepayment penalties of $1.3 million relating to the prepayment of existing debt, $3.3 million of noncash write-offs of unamortized deferred debt financing costs related to existing credit facilities and $1.9 million of costs related to terminating interest rate swaps effected to hedge interest rate risk on existing debt.

	(e)	In connection with the April 2004 refinancing, we incurred $6.9 million of debt extinguishment costs, including prepayment penalties of $2.3 million, $4.4 million of noncash write-offs of unamortized deferred financing costs and $0.2 million of costs relating to terminating interest rate swaps.

(5) Total debt at the end of each of the periods presented represents the following:


	VICORP Restaurants, Inc.— Capital lease obligations and other long-term debt;

	Midway Investors Holdings Inc.— Term loan and revolving borrowings outstanding under a senior secured credit facility, subordinated debt (net of original issue discounts), capital lease obligations and redeemable preferred stock; and VI Acquisition Corp. (historical)— Term loan and revolving borrowings under our prior senior secured credit facility, subordinated debt (net of original issue discounts), capital lease obligations and a letter of credit secured by our capital stock.

	VI Acquisition Corp. (pro forma)— Term loan and revolving borrowings under our new senior secured credit facility, the notes and capital lease obligations.

(6)

EBITDA represents net income (loss) before interest expense, income taxes, depreciation on property plant and equipment and amortization for deferred debt financing costs and original issue discount. Adjusted EBITDA excludes the transaction expenses and debt extinguishment costs discussed above in footnote 3, noncash compensation costs related to option issuances, and noncash impairment expense and amortization of rent-related purchase accounting adjustments. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net income as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, these presentations of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about certain unusual items that we do not expect to incur in the future and certain noncash items.


(7)	Increases in net rent expense over the periods presented are primarily due to the sale-leaseback transactions that were entered into in connection with the May 14, 2001 acquisition of VICORP Restaurants, Inc., relating to 48 restaurants, and the June 14, 2003 acquisition of Midway Investors Holdings Inc., relating to ten restaurants. Net rent expense also includes the effects of recording the known escalations in our rent expense on a straight-line basis over the committed term of the lease. Additionally, net rent expense includes amortization of the fair market rent adjustments which we were required to recognize under purchase accounting at the time of each of the May 2001 and June 2003 acquisitions.

(8)	Capital expenditures include capital spent for new stores, remodeling projects, restaurant maintenance and corporate capital projects.

(9)	For purposes of calculating the ratio of earnings to fixed charges, earnings represent earnings before income taxes, plus fixed charges (excluding amortization of capitalized interest). Fixed charges include interest expense (including amortization of deferred debt financing costs), capitalized interest and the portion of operating rental expense, which management believes is representative of the interest component of rent expense.

The following discussion contains forward-looking statements that involve numerous risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements as a result of these risks and uncertainties, including those set forth in this prospectus under “Forward-looking statements” and under “Risk factors.” You should read the following discussion in conjunction with “Unaudited pro forma combined and consolidated financial data,” “Selected financial data” and our consolidated financial statements and notes appearing elsewhere in this prospectus. You should also read the following discussion in conjunction with the unaudited pro forma combined condensed financial data and notes appearing elsewhere in this prospectus.

We operate family-dining restaurants under two well-recognized brands, Village Inn and Bakers Square. Our company, founded in 1958, had, as of June 1, 2004, 373 restaurants in 25 states, consisting of 269 company-operated restaurants and 104 franchised restaurants. We also produce premium pies at three strategically located facilities that we serve in our restaurants or sell to third parties.

Our Village Inn restaurants are known for serving fresh breakfast items throughout the day, and we have leveraged our breakfast heritage to include traditional American fare at lunch and dinner. Our Bakers Square restaurants have built upon the reputation of our signature pies to offer quality meals at breakfast, lunch and dinner. Our broad offering of affordable menu items is designed to appeal to a demographically diverse customer base, including families, senior citizens and other value-oriented diners.

The following table sets forth the changes to the number of company-operated and franchised restaurants for the periods presented below.

Our Village Inn and Bakers Square concepts operate in the “family-dining” segment of the full service restaurant category. Full service restaurants offer broad menu choices that are served to patrons by a waitstaff, while restaurants operating in the “limited service” segment serve customers at a counter or through a drive-thru window. We believe the family-dining category has a loyal customer base and stable characteristics. According to Technomic, Inc., the family-dining segment grew at a compound growth rate of 1.6% from 1997 to 2002 and is projected to continue to grow at 1.0% per year over the next four years. In the family-dining category, the average per-person check generally ranges from $6 to $9, and diners in this category are sensitive to changes in price. In 2003, the average per-person check at Village Inn was $7.50 and the average per person check at Bakers Square was $8.32. One of the important elements of our business strategy is to provide our customers with an attractive value by offering quality food at reasonable prices. As a result, we continually strive to maintain and improve the efficiency of our operations.

Our restaurant revenues are affected by restaurant openings and closings and same unit sales performance. Same unit sales is a measure of the percentage increase or decrease of the sales of units open at least 18 months relative to the same period in the prior year. We do not use new restaurants in our calculation of same unit sales until they are open for 18 months in order to allow a new restaurant’s operations and sales time to stabilize and provide more meaningful results.

Within both Village Inn and Bakers Square, the restaurant count has remained relatively stable over the last three years. With the increased financial flexibility we expect to have after completing the refinancing contemplated by this offering, we intend to increase the number of company-operated Village Inn and Bakers Square restaurants.

Like much of the restaurant industry, we view same unit sales as a key performance metric, at the individual unit level, within regions, across each chain and throughout our company. With our field-level and corporate information systems, we monitor same unit sales on a daily, weekly and four-week period basis from the chain level down to the individual unit level. The primary drivers of same unit sales performance are changes in the average per-person check and changes in the number of customers, or customer count. Average check performance is primarily affected by menu price increases and changes in the purchasing habits of our customers. We also monitor entrée count, exclusive of take-out business, and sales of whole pies, which we believe is indicative of overall customer traffic patterns. To increase average unit sales, we focus marketing and promotional efforts on increasing customer visits and sales of particular products. We also selectively increase prices, but are constrained by the price sensitivity of customers in our market segment and our desire to maintain an attractive price-to-value relationship that is a fundamental characteristic of our concepts. For example, we raised prices in our Bakers Square units in fiscal 2002 and fiscal 2003, and while some unit sales increased in fiscal 2003, guest traffic declined. As a result, we generally have increased prices in line with increases in the consumer price index, and expect to continue to do so in the future. Same unit sales performance is also affected by other factors, such as food quality, the level and consistency of service within our restaurants, the attractiveness and physical condition of our restaurants, as well as local and national economic factors. From fiscal 1999 through fiscal 2003, Village Inn and Bakers Square have attained average annual same unit sales growth of 0.3% and 0.9%, respectively.

As of June 1, 2004, we had 104 franchised Village Inn restaurants in eight states, operated by 26 franchisees which operate one to eleven restaurants each. Our revenue attributable to franchise operations, consisting primarily of royalty income and revenues from sales of equipment to our franchisees, has averaged approximately 2.0% of our total revenues over the last three years. On February 24, 2003, we acquired eight restaurants from a franchisee in Albuquerque, New Mexico for $4.6 million, which subsequently reduced our franchise revenue and increased our company-operated restaurant revenue. Although we may increase franchise revenues by increasing the number of franchised Village Inn restaurants, we expect that our franchise revenues will decline as a percentage of our total revenue as we emphasize growth in the number of company-operated units.

In addition to unit sales, the other major factor affecting the performance of our restaurants is the cost associated with operating our restaurants. We monitor and assess these costs principally as a percentage of a restaurant’s revenues, or on a margin basis. The operating margin of a restaurant is the profitability, expressed as a percentage of sales, of the restaurant after accounting for all direct expenses of operating the restaurant. Another key performance metric is the prime margin, which is the profitability, expressed as a percentage of sales, of the restaurants after deducting the two most significant costs, labor and food. Due to the importance of both labor cost and food cost, we closely monitor prime margin from the chain level down to the individual restaurant. We have systems in place at each restaurant to assist the restaurant managers in effectively managing these costs to improve prime margin.

Labor is our largest cost element. The principal drivers of labor cost are wage rates, particularly for the significant number of hourly employees in our restaurants, and the number of labor hours utilized in serving our customers and operating our restaurants, as well as health insurance costs for our employees. Wage rates are largely market driven, with increases to minimum wage rates causing corresponding increases in our pay scales. Differences in minimum wage laws among the various states impact the relative profitability of the restaurants in those states. While the wage rates are largely externally determined, labor utilization within our restaurants is more subject to our control and is closely monitored. We seek to staff each restaurant to provide a high level of service to our customers, without incurring more labor cost than is needed. We have included labor scheduling tools in each of our company-operated restaurants’ back office systems to assist our managers in improving labor utilization. We monitor labor hours actually incurred in relation to sales and customer count on a restaurant-by-restaurant basis throughout each week. We have been able to modestly reduce our labor cost percentage from 32.1% in fiscal 2001 to 32.0% in fiscal 2003 as a result of modifying our internal processes to provide our restaurant managers greater control over employee utilization and overtime. For the twenty-four weeks of fiscal 2004, labor costs as a percentage of total revenue were 31.1%.

In managing prime margin, we also focus on percentage food cost, which is food cost expressed as a percentage of total revenues. Our food cost is affected by several factors, including market prices for the food ingredients, our effectiveness at controlling waste and proper portioning, and shifts in our customers’ buying habits between low-food-cost and high-food-cost menu items. Our ReMACS food cost management system within each restaurant measures actual ingredient costs and actual customer product purchases against an “ideal” food cost standard. Ideal food cost is calculated within each restaurant based on the cost of ingredients used, assuming proper portion size, adherence to recipes, limited waste and similar factors. We track variances from ideal food cost within each restaurant and seek to address the causes of such variances, to the extent they are within our control, in order to improve our percentage food cost. In addition, our centralized purchasing department buys a majority of the products used in both Village Inn and Bakers Square (as well as our pie production operations), leveraging the purchasing volumes of our restaurants and our franchisees to obtain favorable prices. We attempt to stabilize potentially volatile prices for certain high-cost ingredients such as chicken, beef, coffee and dairy products for three to twelve month periods by entering into purchase contracts when we believe that this will improve our food cost. We also use “menu engineering” to promote menu items which have a lower percentage food cost. However, we are vulnerable to fluctuations in food costs. For example, the cost of eggs, which is one of our largest food costs, increased by approximately 75% in fiscal 2003 due to the greater demand for powdered eggs by the U.S. armed services in connection with the recent Gulf War and increased costs of egg production. Given our customers’ sensitivity to price increases and since we only reprint our full menus every six months, our ability to adjust prices and featured menu items in response to rapidly changing commodity prices is limited.

Since we produce a majority of our pies for Village Inn and Bakers Square and since our third-party pie sales historically have not had, and currently do not have, a material impact on our operating profit, we include the net results of our pie manufacturing operations as an offset to our food costs. As a result, any profit (or loss) from third-party pie sales has the effect of reducing (or increasing) our total food cost. As part of our overall effort to optimize total company food cost, we have been focusing on various measures to improve the net margins within our pie manufacturing operations, including increasing third-party sales,

As a result of our efforts, we lowered our consolidated food cost percentage at our restaurants by 2.1% to 26.6% of total revenues for fiscal 2003 from 28.7% of total revenues for fiscal 2001, which also reflects menu price increases of 7.8% over this period. For the first twenty-four weeks of fiscal 2004, food costs as a percentage of revenues were 26.9%, largely as a result of an increase in the price of eggs. Controlling food costs presents ongoing challenges.

Other operating expenses principally include occupancy costs, utility costs, marketing expenses, insurance expenses and workers’ compensation costs. Historically, these costs have increased over time and are not directly related to the level of sales in our restaurants. We have experienced increases in many of these items throughout fiscal 2002 and fiscal 2003, particularly utility costs and insurance expenses. In order to maintain our operating performance levels, and to address expected cost increases, we will be required to increase efficiency in restaurant operations and increase sales, although there is no assurance that we will be able to offset future cost increases.

On May 14, 2001, Midway Investors Holdings Inc., a newly created holding company, purchased VICORP Restaurants, Inc., which was a publicly owned company prior to the acquisition. On June 14, 2003, VI Acquisition Corp., a newly created holding company, purchased Midway Investors Holdings Inc. Neither of these holding companies has had any independent operations, and consequently the consolidated statements of operations of Midway Investors Holdings Inc. and VI Acquisition Corp. are substantially equivalent to those of the issuer of the notes. As a result of applying the required purchase accounting rules to these acquisitions, our financial statements for periods following the transactions were significantly affected. The application of purchase accounting rules required us to revalue our assets and liabilities at the two respective acquisition dates, which resulted in different accounting bases being applied in different periods. In particular, occupancy expense increased as existing rent escalator accruals were eliminated as part of purchase accounting and the amount of future rent escalator accruals were recalculated based upon the lease escalator provisions applicable over the remaining life of the leases at each acquisition date. In addition, depreciation expense increased as a result of the increase in the valuation of our assets, which correspondingly increased our depreciable base. As a result, the financial information for the periods from October 30, 2000 through May 13, 2001, from May 14, 2001 through June 13, 2003, from October 28, 2002 to April 13, 2003, from June 14, 2003 through October 26, 2003 and from October 27, 2003 through April 15, 2004 are not comparable to one another in certain respects. The term “predecessors” refers to Midway Investors Holdings Inc. and VICORP Restaurants, Inc., as applicable. Midway Investors Holdings Inc. was merged into VI Acquisition Corp. in connection with the refinancing.

As a result of these changes, the historical financial information in this prospectus and related discussion relate to the entity specified below for the following periods:

In our analysis, we combine partial periods into fiscal periods to aid the discussion of financial information. The combined periods are not necessarily comparable and should not be given more emphasis than the individual components.

At the time of each of the two acquisitions, we also sold certain properties under sale-leaseback transactions to help finance the acquisitions. Specifically, we sold 48 properties in May 2001 for an aggregate of $57.2 million and an additional ten properties in June 2003 for an aggregate of $13.9 million. As discussed below, the sale-leaseback transactions have resulted in higher rent expense and lower depreciation expense subsequent to the transactions.

On February 24, 2003, we purchased one of our franchisees which owned and operated eight Village Inn restaurants in the Albuquerque, New Mexico area for $4.6 million. After the acquisition, revenue associated with these restaurants was included in our restaurant revenues, and since the date of the acquisition we have not earned franchise revenues from those units. Please refer to the table above for information on unit openings during the relevant periods.

Our fiscal year, which historically ended on the last Sunday in October, is comprised of 52 or 53 weeks divided into four fiscal quarters of 12 or 13, 12, 12, and 16 weeks. Beginning January 22, 2004, we changed our fiscal year so that it ends on the Thursday nearest to October 31st of each year. This increased the first quarter in fiscal 2004 by an extra four days (88 days in the first quarter of fiscal 2004 versus 84 days in the first fiscal quarter of 2003). This change was made to facilitate restaurant operations by moving the end of our fiscal periods and weekly reporting and payroll periods away from weekends when our restaurants are busier.

In the ordinary course of business, our company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States. Actual results could differ significantly from those estimates and assumptions. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results and require management judgment about the effect of matters that are uncertain.

On an ongoing basis, management evaluates its estimates and assumptions, including those related to recoverability of long-lived assets, revenue recognition and goodwill. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable at the time the estimates and assumptions are made. Actual results may differ from these estimates and assumptions under different circumstances or conditions.

We have discussed the development and selection of critical accounting policies and estimates with our audit committee. The following is a summary of our critical accounting policies and estimates:

Inventories are stated at the lower of cost or market value. Cost is principally determined by the first-in, first-out method. The valuation of inventory requires us to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. Both our manufactured pie inventories and individual store food inventories are subject to spoilage. We use estimates of future demand as well as historical trend information to schedule manufacturing and ordering. If our demand forecast for specific products is greater than actual demand, we could be required to record additional inventory reserves or losses which would have a negative impact on our gross margin.

Property and equipment is recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of such assets. The useful lives of assets range from 20 to 40 years for buildings and three to ten years for equipment and improvements. Changes in circumstances such as the closing of units within underproductive markets or changes in our capital structure could result in the actual useful lives of these assets differing from our estimates.

We review long-lived assets, including land, buildings and building improvements, for impairments on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Management evaluates groups of assets together or individual restaurants, which is considered to be the lowest level for which there are identifiable cash flows. A specific restaurant is deemed to be impaired if a forecast of undiscounted future operating cash flows directly relating to that restaurant, including disposal value, if any, is less than the carrying amount of that restaurant. If a restaurant is determined to be impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Management determines fair value based on quoted market prices in active markets, if available. If quoted market prices are not available, management estimates the fair value of a restaurant based on either the estimates provided by real estate professionals and/or our past experience in disposing of restaurant properties. Our estimates of undiscounted cash flows may differ from actual cash flows due to economic conditions or changes in operating performance.

Following both the May 2001 and June 2003 acquisitions, we analyzed fixed assets and adjusted these assets to their fair market values as of the date of the transaction. Asset fair market values were determined through receipt of third party real estate appraisals as well as the application of management judgment for those properties for which external valuations could not be obtained. These procedures resulted in our increasing the value of property and equipment by $1.6 million following the May 2001 acquisition and $6.2 million following the June 2003 acquisition.

We capitalize costs associated with customized software, including both external and internal costs incurred during the application and development stage. Costs incurred during the preliminary project stage and the post-implementation stage, and for training and application maintenance, are expensed as incurred. Costs capitalized for software projects may not be fully recoverable due to technological changes or changes in our business model.

We are the prime lessee under various land, building and equipment leases for company-operated and some franchisee-operated locations, pie manufacturing facilities and other non-company-operated locations, which include warehouse space and parking facilities. Actual cash rents are charged to the operating units on a daily basis as incurred.

Following both the May 2001 and June 2003 acquisitions, we analyzed all capital and operating leases which had not been initiated or renewed in the past 18 months to determine the fair market value of these agreements. Lease fair market values were determined by obtaining comparable rents for select locations through third-party advisors and reviewing sale-leaseback transactions within the past 18 months to determine an average rent as a percentage of unit sales. This average was applied to each location to determine fair value rents. As a result, we booked an additional rent obligation of $3.1 million in May 2001, and an additional $8.0 million was booked in June 2003. These additional rents are amortized over the remaining life of the underlying lease agreement.

We self-insure a significant portion of our employee medical insurance, workers’ compensation and general liability insurance plans. For fiscal 2004, our anticipated claim costs are $6.6 million for employee medical claims, $3.1 million for workers’ compensation and $0.8 million for general liability claims. We have obtained stop-loss insurance policies to protect from individual losses over specified dollar values ($175,000 for employee health insurance claims, $250,000 workers’ compensation and $150,000 for general liability for fiscal 2004). The full extent of certain claims, especially workers’ compensation and general liability claims, may not become fully determined for several years. Therefore, we estimate potential obligations for liabilities that have been incurred but not yet reported based upon historical data and experience. Although management believes that the amounts accrued for these obligations are sufficient, any significant increase in the number of claims or costs associated with claims made under these plans could have a material adverse effect on our financial results.

Deferred income tax assets and liabilities are recognized for the expected future income tax consequences of carryforwards and temporary differences between the book and tax basis of assets and liabilities. Valuation allowances are established for deferred tax assets that are deemed unrealizable.

We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, valuation allowances are established. The valuation allowance is based on our estimates of taxable income by each jurisdiction in which we operate, tax planning strategies and the period over which our deferred tax assets will be recoverable. In the event that actual results differ from these estimates, we are unable to implement certain tax planning strategies or we adjust these estimates in future periods, we may need to establish an additional valuation allowance which could have a material negative impact on our statement of operations and our balance sheet.

Significant judgment is required in determining our effective tax rate and in evaluating our tax positions. We establish reserves when, despite our belief that our tax return positions are supportable, we believe that certain positions are likely to be successfully challenged. We adjust these reserves in light of changing facts and circumstances, such as the progress of a tax audit. Our effective tax rate includes the impact of reserve provisions and changes to reserves that we consider appropriate.

Twenty-four weeks ended April 15, 2004 (172 days) compared to twenty-four weeks ended April 13, 2003 (168 days)

Total revenues increased by $12.0 million to $193.8 million in the first twenty-four weeks of fiscal 2004, from $181.8 million for the same twenty-four weeks of fiscal 2003, which represented a 6.6% increase over the prior period. Of this increase, $3.4 million was attributable to the net addition of five restaurants since April 13, 2003. We experienced a 1.9% increase in same unit sales for the first twenty-four weeks of fiscal 2004 over the first twenty-four weeks of fiscal 2003. Village Inn same unit sales for the first twenty-four weeks of fiscal 2004 increased 2.3% over the first twenty-four weeks of fiscal 2003, and Bakers Square same unit sales increased 1.2% over the same period. Contributing to our increase in same unit sales, we experienced a 3.1% increase in average per-person check amount and a 0.1% increase in the number of entrées sold (which is an indication of traffic patterns) for our Village Inn restaurants in the first twenty-four weeks of fiscal 2004 as compared to the first twenty-four weeks of fiscal 2003. We also experienced a 4.4% increase in average per-person check size and a 4.1% decrease in entrée count for our Bakers Square restaurants in the first twenty-four weeks of fiscal 2004 as compared to the first twenty-four weeks of fiscal 2003.

Food costs increased by $3.4 million to $52.1 million in the first twenty-four weeks of fiscal 2004, from $48.7 million for the same twenty-four weeks of fiscal 2003. Food costs as a percentage of total revenues increased from 26.8% to 26.9% over these periods. The gross increase in food costs is the result of both higher volume sales due to our additional operating units, as well as increased food costs, particularly the price of eggs. Food costs as a percentage of total sales have remained relatively consistent between the periods, primarily as a result of improving margins which have been achieved through menu engineering and menu price increases and which offset generally higher food costs.

Labor costs increased by $2.4 million to $60.3 million in the first twenty-four weeks of fiscal 2004, from $57.9 million for the same twenty-four weeks of fiscal 2003. Labor costs as a percentage of total revenues declined from 31.9% to 31.1% over these periods. The gross increase was primarily due to the addition of five operating units between the periods. Labor costs as a percentage of total sales have decreased between the periods as the result of an increase in menu prices as well as a decrease in management bonuses paid as a result of revisions in the management incentive bonus programs implemented at the beginning of fiscal 2004, which established more conservative bonus qualifier thresholds and limited the eligibility to participate in the bonus program based upon completion of specified training programs.

Other operating expenses increased by $6.1 million to $54.6 million in the first twenty-four weeks of fiscal 2004, from $48.5 million for the same twenty-four weeks of fiscal 2003. Other operating expenses as a percentage of total revenues increased from 26.7% to 28.1% over these periods. This increase was primarily due to an increase in occupancy costs of $3.2 million resulting from the sale and leaseback of 13 locations in 2003 and the fair market value adjustments to operating and capital leases associated with our June 2003 acquisition. Other operating expenses also increased by $0.6 million due to an increase in utility expense as a result of higher natural gas prices and higher consumption due to the cold weather in many of our markets, $1.5 million due to an increase in marketing costs and $0.4 million due to higher supply costs.

General and administrative expenses decreased $0.7 million from $12.6 million in the first twenty-four weeks of fiscal 2003, to $11.9 million for the same twenty-four weeks of fiscal 2004. This decrease is the result of $0.4 million in deferred compensation charges recorded in the first twenty-four weeks of 2003 and $0.3 million of legal and professional service fees associated with the June 2003 acquisition.

Operating profit increased by $1.9 million to $12.9 million in the first twenty-four weeks of fiscal 2004, from $11.0 million for the same twenty-four weeks of fiscal 2003. Operating profit as a percentage of total revenues for the first twenty-four weeks of fiscal 2004 increased from 6.1% to 6.7% over the same period in fiscal 2003. This increase in profit margin was primarily due to improved labor costs and general and administrative expenses. These improvements were partially offset by increases in other operating expenses due to the June 2003 sale-leaseback transactions and fair market value rent adjustments in June 2003. We

Interest expense increased by $2.5 million to $6.6 million in the first twenty-four weeks of fiscal 2004, from $4.1 million for the same twenty-four weeks of fiscal 2003. Interest expense as a percentage of total revenues increased from 2.2% to 3.4% over these periods. This increase was due to larger outstanding debt balances during the second quarter of fiscal 2004 ($140.0 million as of April 15, 2004 as compared to $80.0 million as of April 13, 2003). The increase in debt in 2004 is the result of the borrowings made in June 2003 to help finance the acquisition of our company.

During the first twenty-four weeks of fiscal 2004, we also incurred debt extinguishment costs of $6.9 million in connection with the refinancing of our debt that closed April 14, 2004. These expenses included $2.3 million of prepayment penalties, a write-off of deferred financing costs of $4.4 million associated with the previous obligations and settlement of outstanding derivative obligations in the amount of $0.2 million.

Provision for income taxes (benefit) for the first twenty-four weeks of fiscal 2004 was a benefit of $0.1 million, or an effective tax rate of 31%. For the first twenty-four weeks of fiscal 2003, the provision for income taxes of $2.5 million reflects a tax provision rate of 35%. These rates differ from our statutory rate of 39.9% due to general business credits that we earn from FICA taxes paid on employee tips, partially offset by nondeductible amortization related to franchise rights.

Net income (loss) decreased by $5.0 million to a $0.3 million loss in the first twenty-four weeks of fiscal 2004, from $4.7 million of net income for the same twenty-four weeks of fiscal 2003. Net income as a percentage of total revenues decreased from 2.6% to (0.2)% over these periods. This decrease in net income is primarily the result of debt extinguishment costs of $6.9 million incurred in the second quarter of 2004 and an increase in interest expense of $2.5 million as a result of increased outstanding debt balances between the periods. These increases have been offset by an increase of $1.9 million in operating profit as the result of increased sales between the periods and a tax benefit of $2.7 million.

Preferred stock dividends and accretion increased by $2.0 million to $3.5 million in the first twenty-four weeks of fiscal 2004, from $1.5 million for the same twenty-four weeks of fiscal 2003 as a result of the redemption of $36.5 million liquidation preference of preferred stock of Midway Investors Holdings Inc. that accrued dividends at a rate of 8.94% per annum and the issuance of $69.7 million liquidation preference of preferred stock of VI Acquisition Corp. that accrue dividends at a rate of 10.0% per annum in connection with the June 2003 acquisition. Until the June 2003 acquisition, Midway Investors Holdings Inc. had, and following the June 2003 acquisition VI Acquisition Corp. has, outstanding preferred stock. Dividends on VI Acquisition Corp.’s preferred stock accumulate and compound but are not payable until dividends are declared by us. Covenants contained in our new senior secured credit agreement and the indenture governing our 10 1/2% notes will restrict our ability to declare dividends on our preferred stock.

Combined periods beginning October 28, 2002 through June 13, 2003 and beginning June 14, 2003 through October 26, 2003 (together, the “Combined 2003 Period”) compared to fiscal 2002

Total revenues increased by $4.3 million to $389.2 million for the Combined 2003 Period, from $384.9 million in fiscal 2002, which represents a 1.1% increase over the prior period expressed as a percentage of total revenues. The increase in revenues was principally due to revenues from ten new company-operated restaurants acquired or opened during the Combined 2003 Period, slightly offset by a decrease in pie sales of $0.3 million. We experienced a 1.4% decrease in same unit sales for the Combined 2003 Period compared to fiscal 2002. Village Inn same unit sales for the Combined 2003 Period increased 0.1% over fiscal 2002, and Bakers Square same unit sales decreased 2.5%. Affecting the change in same unit sales, we experienced a 3.5% increase in average per-person check size and a 3.5% decrease in entrée count for our Village Inn restaurants in the Combined 2003 Period as compared to fiscal 2002. We also experienced a 2.7% increase in average per-person check size and a 5.1% decrease in entrée count for our

Food costs decreased by $0.9 million to $103.4 million in the Combined 2003 Period, from $104.3 million in fiscal 2002. Food cost as a percentage of total revenues declined from 27.1% to 26.6% over these periods with improvements of 0.5% at both concepts. The decrease resulted from increased management of the cost of food which reduced the difference between actual food cost and ideal food cost. Menu price increases of approximately 3.1% exceeded food cost inflation and contributed to the decline as a percentage of revenues.

Labor costs increased by $1.7 million to $124.5 million in the Combined 2003 Period, from $122.8 million for fiscal 2002. Labor costs as a percentage of total revenues were consistent at 32.0% during these periods. $1.6 million of the increase was associated with increased store count resulting from our acquisition of the eight New Mexico units. Employee benefit costs increased $0.5 million and were offset by lower bonus payouts for the Bakers Square managers due to a change in their incentive program. Village Inn reduced overtime expense by $0.2 million due to our modifying internal processes to provide our restaurant managers greater control over employee utilization and overtime.

Other operating expenses increased by $6.2 million to $106.2 million in the Combined 2003 Period, from $100.0 million in fiscal 2002. Other operating expenses as a percentage of total revenues increased from 25.9% to 27.3% during these periods. $2.0 million of this increase was due to increased occupancy expense resulting from our sale-leaseback transactions. We also increased advertising programs expenditures by $1.7 million in an effort to increase customer traffic. In addition, we experienced a $1.2 million increase in utility costs across all of our markets, incurred $0.4 million in repair and maintenance expenses and incurred $0.3 million of incremental pre-opening expense over fiscal 2002 as a result of new unit openings.

General and administrative expenses decreased by $0.5 million to $26.1 million in the Combined 2003 Period, from $26.6 million in fiscal 2002. General and administrative expenses expressed as a percentage of total revenues declined from 6.9% to 6.7% during these periods. This decrease was primarily the result of a decrease of $1.3 million in bonuses paid in connection with our corporate management incentive plan, partially offset by a $0.4 million increase in compensation costs associated with options and warrants and a $0.1 million increase in the cost of providing benefits to employees.

Operating profit decreased by $12.4 million to $12.9 million for the Combined 2003 Period from $25.3 million in fiscal 2002. Operating profit as a percentage of total revenues declined from 6.6% to 3.3% over these periods. The decrease in operating profit and operating margin for the Combined 2003 Period versus fiscal 2002 was primarily attributable to transaction expenses incurred in connection with the acquisition of our company on June 14, 2003, which decreased operating profit by $10.7 million, or 2.7% of total revenues, during the Combined 2003 Period. Excluding the impact of the transaction-related costs of $10.7 million and $0.3 million in the Combined 2003 Period and fiscal 2002, respectively, operating profit during the Combined 2003 Period would have been $23.6 million, or 6.2% of total revenues, compared to $25.6 million, or 6.6% of total revenues, during fiscal 2002.

In addition, the sale-leaseback transaction entered into in June 2003 resulted in additional cash rent expense of $0.4 million during the period from June 14, 2003 to October 26, 2003, and additional noncash rent expenses of $0.3 million which were recorded to reflect the estimated fair market value of leases as required by purchase accounting, partially offset by a decrease in depreciation expense of $0.1 million. Additionally, we incurred compensation costs related to the issuance of options to purchase shares of our predecessor’s common stock that were $0.4 million greater in the Combined 2003 Period than in fiscal 2002. These increased costs, totaling $1.1 million, decreased operating margin by 0.3% during the Combined 2003 Period.

Debt extinguishment costs of $6.5 million were recorded for the Combined 2003 Period as a result of costs related to terminating financing arrangements prior to their maturity in connection with the June 2003 acquisition of our company. No such charges were incurred for fiscal 2002. Included within the

Provision for income taxes (benefit) for the Combined 2003 Period was a benefit of $2.3 million. This benefit reflects the loss before provision for income taxes for the Combined 2003 Period of $3.9 million and a tax benefit rate of 58.2%. For fiscal 2002, the provision for income taxes of $5.8 million reflects a tax provision rate of 35.4%. These rates differ from our statutory rate of 39.9% due to tax credits that we earn by paying FICA taxes on employee tips, partially offset by amortization relating to franchise rights that is nondeductible for tax purposes.

Net income (loss) decreased by $12.1 million to a net loss of $1.6 million for the Combined 2003 Period, from net income of $10.5 million for fiscal 2002. This decrease in profits was primarily the result of $10.7 million in transaction expenses and $6.5 million in debt elimination costs which were incurred in connection with the sale of our company.

Preferred stock dividends and accretion increased by $1.3 million to $4.9 million for the Combined 2003 Period, from $3.6 million for fiscal 2002, as a result of the redemption of $36.5 million liquidation preference of Midway Investors Holdings Inc. preferred stock that accrued dividends at a rate of 8.94% per annum and the issuance of $67.9 million liquidation preference of preferred stock of VI Acquisition Corp. that accrue dividends at a rate of 10.0% per annum in connection with the June 2003 acquisition.

Fiscal 2002 compared to combined periods beginning October 30, 2000 through May 13, 2001 and beginning May 14, 2001 through October 28, 2001 (together, the “Combined 2001 Period”)

Total revenues increased by $2.8 million to $384.9 million in fiscal 2002, from $382.1 million for the Combined 2001 Period, which represented a 0.7% increase over the prior period. In fiscal 2002, same unit sales increased 1.1% compared to the Combined 2001 Period. Village Inn same unit sales for fiscal 2002 increased 0.2% over the Combined 2001 Period, and Bakers Square same unit sales increased 1.8%. Approximately $2.4 million of this increase was due to management’s strategic decision to increase menu prices on food entrees and pies. Village Inn increased prices of some items late in 2001, and Bakers Square increased prices of some items in 2001 in response to higher operating costs discussed below and increased prices again in fiscal 2002. Contributing to the change in same unit sales, we experienced a 1.9% increase in average per-person check size and a 1.9% decrease in entrée count for our Village Inn restaurants in fiscal 2002 as compared to the Combined 2001 Period. We also experienced a 7.4% increase in average per-person check size and a 5.4% decrease in entrée count for our Bakers Square restaurants in fiscal 2002 as compared to the Combined 2001 Period. We believe that Bakers Square guest traffic declined in fiscal 2002 as customers reacted negatively to the higher prices. To help drive customer traffic in fiscal 2002, we increased our marketing spending by focusing on radio and television advertising.

Food costs decreased by $5.4 million to $104.3 million in fiscal 2002, from $109.7 million in the Combined 2001 Period. Food costs as a percentage of total revenues declined from 28.7% to 27.1% during these periods. This reduction was primarily due to improvements in purchasing efficiencies and reductions in waste combined with menu price increases during fiscal 2002.

Labor costs increased by $0.1 million to $122.9 million in fiscal 2002, from $122.8 million in the Combined 2001 Period. Labor cost as a percentage of total revenues decreased from 32.1% to 31.9%. Labor costs related to our restaurant hourly employees decreased by $1.1 million in fiscal 2002 compared to the Combined 2001 Period, and overtime cost decreased $0.5 million for the same period. These decreases resulted from our modification of our internal processes to provide our restaurant managers greater control over employee utilization and overtime. Management expense increased by $2.0 million in fiscal 2002 to $28.8 million, largely as a result of an increase in performance-based compensation payments.

Other operating expenses increased by $3.7 million to $100.0 million in fiscal 2002, from $96.3 million in the Combined 2001 Period. Other operating expenses as a percentage of total revenues increased from 25.2% to 25.9%. This increase was due to several factors, including an increase in cash occupancy costs of $5.2 million resulting from the May 2001 sale-leaseback transaction, an increase in marketing costs of $1.4 million and an increase in workers’ compensation costs of $1.0 million. Partially offsetting these increases were a $2.3 million decrease in non-cash occupancy costs and a $1.5 million decrease in utility expense caused by lower natural gas prices.

General and administrative expenses decreased by $0.8 million to $26.6 million in fiscal 2002, from $27.4 million in the Combined 2001 Period. General and administrative expenses as a percentage of total revenues decreased from 7.2% to 6.9% during these periods. This decrease is primarily the result of a $0.2 million decrease in compensation paid to members of our Board of Directors following the change of ownership, which was recorded in the Combined 2001 Period. We ceased amortization of goodwill in accordance with a change in generally accepted accounting principles in fiscal 2002, resulting in a decrease in expenses of $0.6 million in fiscal 2002 as compared to the Combined 2001 Period. These decreases in expenses were offset by an increase in corporate bonuses paid in the amount of $1.0 million for fiscal 2002 as the result of exceeding established operating plan thresholds for fiscal 2002. Following the change in ownership, management incentive options were offered to key employees resulting in additional compensation expense of $0.3 million for fiscal 2002.

Transaction expenses decreased by $15.7 million to $0.3 million in fiscal 2002, from $16.0 million in the Combined 2001 Period. Transaction expenses as a percentage of total revenues decreased from 4.2% to 0.1% during these periods. The transaction expenses in the Combined 2001 Period were the result of the acquisition of our company in a “going-private” transaction in May 2001, including settlements of two class actions and one individual labor- related claim for $8.9 million, offset by $0.6 million of insurance proceeds in respect of those claims, as a condition to the closing of the May 2001 acquisition, legal and other professional fees of $2.5 million, stock based compensation expenses of $4.2 million and other compensation and severance expenses of $1.7 million. Transaction expenses for fiscal 2002 consisted of legal and other professional fees of $0.3 million incurred in preparation for the anticipated June 2003 sale of our company.

Operating profit increased by $21.1 million to $25.3 million in fiscal 2002, from $4.2 million in the Combined 2001 Period. Operating profit as a percentage of total revenues increased from 1.1% to 6.6% during these periods. The lower operating profit in the Combined 2001 Period is primarily attributable to transaction expense of $16.0 million, or 4.2% of total revenues, incurred in connection with the acquisition of VICORP Restaurants, Inc. by Midway Investors Holdings Inc. on May 14, 2001. Other operating expense was also adversely affected in both years by higher rents incurred as a result of increased rent expense due to the sale-leaseback of 48 of our properties. The increased rent expense was partially offset by the reduction in depreciation associated with the properties sold ($5.8 million net effect in fiscal 2002 versus $1.2 million net effect for the Combined 2001 Period). Excluding the transaction-related costs of $16.0 million in the Combined 2001 Period, operating profit during the Combined 2001 Period would have been $20.2 million, or 5.0% of total revenues, compared to $25.6 million or 6.7% of total revenues for fiscal 2002. This improvement in fiscal 2002 over the adjusted Combined 2001 Period was primarily due to favorable food prices from suppliers and menu engineering throughout fiscal 2002 as well as cost efficiencies derived from reduced waste and correct portioning.

Interest expense increased by $5.0 million to $9.8 million in fiscal 2002, from $4.8 million for the Combined 2001 Period. Interest expense as a percentage of total revenues increased from 1.3% to 2.5% during such periods. The increase in interest expense for fiscal 2002 is the result of borrowings of $91.7 million under the senior revolving credit and term loan agreement and the subordinated debt agreement which were used to finance the May 2001 acquisition, compared to borrowings of less than $1.0 million prior to the May 2001 acquisition of our company by Midway Investors Holdings Inc. Interest expense for the Combined 2001 Period represents six months of interest at the increased borrowing base as compared to twelve months of interest at the increased borrowing base for fiscal 2002.

Provision for income taxes (benefit) for fiscal 2002 of $5.8 million represents a tax provision rate of 35.4% compared to a tax benefit of $2.1 million for the Combined 2001 Period. These rates differ from our statutory rate of 39.9% due to tax credits that we earn by paying FICA taxes on employee tips, a tax deduction for severance pay that was not expensed under purchase accounting and expiring general business credits which were not expensed for book purposes, partially offset by nondeductible transaction expenses and amortization.

Net income (loss) increased by $8.3 million to $10.5 million in fiscal 2002, from $2.2 million for the Combined 2001 Period. Net income as a percentage of total revenues increased from 0.5% to 2.7% during these periods. This improvement in net income for fiscal 2002 is primarily the result of a decrease in transaction expenses between the periods of $15.7 million, as well as an increase in revenues of $2.8 million and a decrease in operating expenses of $3.7 million for fiscal 2002. The decrease in expenses was offset by increases in costs associated with management fees of $0.5 million, interest expense of $5.0 million and an increase in income tax expense of $7.9 million.

Preferred stock dividends and accretion increased by $1.9 million to $3.6 million for fiscal 2002, from $1.7 million for the Combined 2001 Period, as a result of the issuance of $36.5 million liquidation preference of Midway Investors Holding Inc. preferred stock that accrued dividends at a rate of 8.94% per annum in connection with the May 2001 acquisition.

Our principal liquidity requirements are to continue to finance our operations, service our debt and fund capital expenditures for maintenance and expansion. Cash flow from operations has historically been sufficient to finance continuing operations and meet normal debt service requirements. Our ability to repay borrowings at maturity is likely to depend in part on our ability to refinance the debt when it matures, which will be contingent on our continued successful operation of the business as well as other factors beyond our control, including the debt and capital market conditions at that time.

During the remainder of fiscal 2004, we anticipate spending up to $5.6 million for new restaurants, $5.5 million for the remodeling of existing restaurants and $3.7 million on expenditures required to maintain our existing asset base.

In connection with our new restaurant development program, we have entered into development agreements whereby third parties will purchase property, fund the costs to develop new restaurant properties for us and lease the properties to us upon completion. Under these agreements, we generally are responsible for the construction of the restaurant, and remitting payments to the contractors on the projects, which are subsequently reimbursed by the property owner. These amounts advanced and subsequently reimbursed are not included in the anticipated capital spending totals above. On April 15, 2004, we had outstanding receivables of $0.6 million relating to these types of agreements. In certain of these agreements, we are obligated to purchase the property in the event that we are unable to complete the construction within a specified time frame, and are also responsible for cost overruns above specified amounts.

On April 14, 2004, we completed a private placement of $126,530,000 aggregate principal amount of 10 1/2% senior unsecured notes maturing on April 15, 2011. The notes were issued at a discounted price of 98.791% of face value, resulting in proceeds of $125.0 million. The senior unsecured notes were issued by VICORP Restaurants, Inc. and are guaranteed by VI Acquisition Corp. and our subsidiary Village Inn Pancake House of Albuquerque, Inc.

Concurrently with the issuance of the 10 1/2% senior unsecured notes, we entered into an amended and restated senior secured credit facility consisting of a $15.0 million term loan and a $30.0 million revolving credit facility, with a $15.0 million sublimit for letters of credit. On April 15, 2004, we had issued letters

of credit aggregating $10.5 million and had no borrowings outstanding under the senior secured revolving credit facility. The senior secured revolving credit facility permits borrowings equal to the lesser of (a) $30.0 million and (b) 1.2 times trailing twelve months Adjusted EBITDA (as defined in the senior secured credit agreement) minus the original amount of the new senior secured term loan. Under this formula, as of April 15, 2004, we had the ability to borrow the full $30 million, less the amount of outstanding letters of credit, under the senior secured revolving credit facility. Borrowings under both the revolving credit facility and the term loan bear interest at floating rates tied to either the base rate of the agent bank under the credit agreement or LIBOR rates for a period of one, two or three months, in each case plus a margin that will adjust based on the ratio of our Adjusted EBITDA to total indebtedness, as defined in the new senior secured credit agreement. Both facilities are secured by a lien of all of the assets of VICORP Restaurants, Inc., and guaranteed by VI Acquisition Corp. and our subsidiary Village Inn Pancake House of Albuquerque, Inc. The guarantees also secured by the pledge of all of the outstanding capital stock of VICORP Restaurants, Inc. by VI Acquisition Corp. The term loan does not require periodic principal payments, but requires mandatory repayments under certain events, including proceeds from sale of assets, issuance of equity, and issuance of new indebtedness. Both facilities mature on April 14, 2009.

Our new senior secured credit facility and the indenture governing the senior unsecured notes contain a number of covenants that, among other things, restrict, subject to certain exceptions, our ability and the ability of our subsidiaries, to sell assets, incur additional indebtedness or issue preferred stock, repay other indebtedness, pay dividends and distributions or repurchase our capital stock, create liens on assets, make investments, loans or advances, make certain acquisitions, engage in mergers or consolidations, enter into sale-leaseback transactions, engage in certain transactions with affiliates, amend certain material agreements governing our indebtedness, change the business conducted by us and our subsidiaries and enter into hedging agreements. In addition, our new senior secured credit facility requires us to maintain or comply with a maximum total leverage ratio, a minimum interest coverage ratio and a maximum capital expenditures limitation. On April 15, 2004, we were in compliance with these requirements.

We are subject to capital lease obligations related to 12 of our leased properties. The principal component of our capital lease obligations was $3.9 million as of April 15, 2004. These capital leases have expiration dates ranging from June 2004 to May 2021.

We are the prime lessee under various operating leases for land, building and equipment for company-operated and franchised restaurants, pie production facilities and locations subleased to non-affiliated third parties. These leases have initial terms ranging from 15 to 35 years and, in most instances, provide for renewal options ranging from five to 20 years. These leases expire at various dates through September 2023.

We have guaranteed certain leases for restaurant properties sold in 1986 and restaurant leases of certain franchisees. Estimated minimum future rental payments remaining under these leases were approximately $2.6 million as of April 15, 2004.

On April 15, 2004, our commitments with respect to the above obligations were as follows:


(1)	Represents amounts remaining to be paid during the period from April 16, 2004 through the end of our 2004 fiscal year.

(2)	Amounts payable under capital leases represent gross lease payments, including both principal and interest components.

Our previous credit facilities consisted of a $25.0 million revolving credit facility, a term A loan, and a term B loan issued pursuant to a credit agreement dated June 13, 2003. In addition, we had outstanding subordinated indebtedness in the original principal amount of $45.0 million issued pursuant to an investment agreement dated June 13, 2003. The existing term loans and the existing subordinated debt were paid in full from a portion of the proceeds of the senior unsecured notes and the new senior secured term loan. In addition, a portion of these proceeds were used to pay an early redemption premium of $2.3 million on the subordinated debt, and to pay $0.2 million to terminate an interest rate swap agreement pursuant to which we agreed to make fixed rate payments in exchange for receiving quarterly floating rate payments at the three month LIBOR rate that applied to the borrowings under our previous senior secured credit facility. In addition, in connection with the refinancing, we wrote off $4.4 million of unamortized debt financing costs in the second fiscal quarter of 2004 related to the prior debt.

Cash flow from operating activities consists primarily of net income adjusted for certain noncash expenses, changes in working capital items and changes in certain long-term assets and liabilities. For the twenty-four week period ended on April 15, 2004, cash flows from operating activities totaled $15.1 million, a decrease of $3.3 million from cash flows of $18.4 million from operating activities during the twenty-four week period ended April 13, 2003. The decrease resulted primarily from lower net income (loss), which is in part the result of debt extinguishment costs of $2.6 million, and from timing differences in working capital accounts.

For the Combined 2003 Period, we generated $14.1 million of cash from operations, compared to $29.1 million in fiscal 2002 and $12.0 million in the Combined 2001 Period. The decrease in cash from operations in the Combined 2003 Period is largely related to expenses incurred in connection with the June 2003 acquisition, and the increase in fiscal 2002 results from transaction expenses incurred in the Combined 2001 Period from the May 2001 acquisition.

Cash used as a result of changes in working capital totaled $6.7 million in the Combined 2003 Period, compared to $3.2 million in fiscal 2002 and $1.1 million in the Combined 2001 Period. During the Combined 2003 Period, accounts receivable and inventories increased by a total of $3.3 million over fiscal 2002, as a result of increased third-party pie sales during the fourth quarter of the Combined 2003 Period, as well as accumulating inventory for expected higher sales in the first quarter of fiscal 2004. In addition,

accrued compensation decreased by $1.3 million during the Combined 2003 Period due to decreased bonus expense. In addition, in fiscal 2002 we made the final $5.5 million payment of the legal settlements we were required to enter into as a condition to the May 2001 acquisition, which payments had been included in accrued expenses at the end of 2001. In the Combined 2001 Period, the use of cash was affected by a $1.6 million decrease in accounts payable, which was largely driven by a reduction in payment terms imposed by one of our principal suppliers.

Changes in other non-current assets and liabilities generated cash of $1.6 million in the Combined 2003 Period, $2.9 million in fiscal 2002, and resulted in a use of cash of $3.0 million in the Combined 2001 Period. Effective August 1, 2001, we began to retain a significant portion of our workers’ compensation and general liability exposures due to changes in the insurance markets, and began to accrue these liabilities for claims associated with these programs. In 2002, we accrued $2.2 million of these claims which are anticipated to be paid in future periods.

Investing activities are primarily capital expenditures related to maintenance and remodeling of our existing restaurants and other facilities, and for new restaurant development. During the twenty-four week period ended April 15, 2004, our capital expenditures totaled $3.9 million for restaurant maintenance and remodeling and $1.3 million for new restaurant development. Cash used in investing activities was $3.6 million less than the comparable period in the prior year, primarily as a result of spending in the prior year related to the upgrade of our point-of-sale system and the acquisition in the prior year of eight previously franchised Village Inn restaurants, partially offset by proceeds from sale-leaseback transactions associated with two new restaurants.

For the Combined 2003 Period, we used cash in investing activities totaling $150.9 million, an increase of $140.6 million over cash used of $10.3 million in fiscal 2002. The increase consisted of $157.2 million used for the June 2003 acquisition of our company and our acquisition of Village Inn Pancake House of Albuquerque, Inc., a former Village Inn franchisee. We also increased capital spending by $10.6 million to $20.7 million. These increases were offset by $17.8 million received from the sale-leaseback of certain restaurant properties. Capital spending in the Combined 2003 Period included $6.0 million for completion of the installation of a new POS system in company-operated restaurants, $5.7 million for new restaurant locations and $6.3 million for restaurant maintenance and remodeling.

In fiscal 2002, we used $10.3 million of cash in investing activities in fiscal 2002, principally for the purchase of property and equipment. In the Combined 2001 Period, we used $174.2 million in connection with the acquisition of our company, offset by $57.5 million of proceeds from the sale-leaseback transaction that partially funded the May 2001 acquisition.

We used cash in financing activities of $7.7 million during the first twenty-four weeks of 2004, consisting principally of the net proceeds from our April 2004 debt refinancing, offset by the periodic principal payments on the previous term debt made during the first quarter of 2004 and the repayment of $9.8 million on our previous revolving line of credit.

During the Combined 2003 Period, we generated cash from financing activities of $139.5 million from borrowings under our senior secured credit facility and $72.8 million from the issuance of new capital stock in connection with the June 2003 acquisition, all of which was used to repay existing indebtedness and partially fund the acquisition. We also generated $5.3 million from borrowings under our new senior secured revolving credit facility. During the Combined 2003 Period we used $2.8 million of cash to repay a portion of our new senior secured term loans. We also had $5.0 million of debt financing costs incurred in the June 2003 acquisition. In addition, we used cash of $1.0 million to redeem the shares of our former chief executive officer during the Combined 2003 Period.

In fiscal 2002, we used $8.4 million in financing activities, consisting of scheduled principal payments on our debt and capital leases.

During the Combined 2001 Period, we incurred $91.7 million of debt and issued $37.2 million of capital stock and warrants, the proceeds of which were partially used to fund the May 2001 acquisition. We also had $4.9 million in debt financing costs associated with this debt.

We have historically funded the majority of our capital expenditures out of cash from operations. We have on occasion obtained, and may in the future obtain, capitalized lease financing for certain expenditures related to equipment. Our investment requirements for new restaurant development include requirements for acquisition of land, building and equipment. Historically we have either acquired all of these assets for cash, or purchased building and equipment assets for cash and acquired a leasehold interest in land. We have entered into sale-leaseback arrangements for many of the land and building assets that we have purchased in the past. Since the initial investment required for leased units is significantly lower than for owned properties, we intend to focus on leasing sites for future growth so that we only have to fund the equipment portion of our new restaurant capital costs from our cash flows. We believe that this will reduce our upfront cash requirements associated with new restaurant growth and enable us to increase our return on these investments, although it will result in significant long term obligations under either operating or capital leases.

Our risk related to the inherent risk in market-risk sensitive instruments and positions relates primarily to potential losses arising from adverse changes in interest rates. We are subject to changes in interest rates on borrowings under our new senior secured credit facility that bear interest at floating rates.

As of April 15, 2004, $15.0 million, or 10.3% of our total indebtedness of $145.5 million, bears interest at a floating rate. A hypothetical 10% unfavorable change in the interest rates for our variable rate borrowings, as of April 15, 2004, would increase our future interest expense by approximately $0.08 million per year. This sensitivity analysis does not factor in potential changes in the level of our variable interest rate borrowings, or any actions that we might take to mitigate our exposure to changes in interest rates.

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees. FIN 45 requires guarantors to recognize, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in issuing the guarantee. FIN 45 also requires guarantors to disclose certain information for guarantees. The disclosure provisions of FIN 45 were effective immediately upon issuance in 2002. We adopted the recognition and measurement provisions of FIN 45 on a prospective basis with respect to guarantees issued or modified after December 31, 2002. The adoption of the recognition and measurement provisions of FIN 45 had no effect on our consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 requires an investor with a majority of the variable interests in a variable interest entity to consolidate the entity and also requires majority and significant variable interest investors to provide certain disclosures. A variable interest entity is an entity in which the equity investors do not have a controlling interest or the equity investment at risk is insufficient to finance the entity’s activities without receiving additional subordinated financial support from the other parties. FIN 46 was effective January 1, 2004 for private companies with variable interest entities created on or after such date. FIN 46 is effective at the beginning of the first annual period beginning after December 15, 2004 for all other variable interest entities of private companies. We believe we created no variable interest entities on or after January 1,

In March 2003, the Emerging Issues Task Force (“EITF”) reached consensus on EITF Issue No. 02-16, Accounting by a Customer for Certain Consideration Received from a Vendor. EITF Issue No. 02-16 requires that certain cash consideration (rebates) received by a customer from a vendor be classified in the customer’s statements of operations as a reduction of cost of sales. The consensus was required to be applied to new arrangements entered into after December 31, 2002. We already account for rebates in cost of sales.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“SFAS No. 149”). SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133. SFAS No. 149 was effective for contracts entered into or modified after June 30, 2003. The implementation of SFAS No. 149 did not have a material impact on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“SFAS No. 150”). SFAS No. 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities (or assets in certain circumstances) in statements of financial position. SFAS No. 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities whose shares are mandatorily redeemable. SFAS No. 150 is generally effective for all financial instruments entered into or modified after May 31, 2003. In November 2003, the FASB agreed to defer indefinitely the application of the guidance in SFAS No. 150 (recognition, measurement and disclosure requirements) to shares of nonpublic companies that are deemed mandatorily redeemable because of an event certain to occur, such as death or retirement of the holder, subject to certain exceptions. Our adoption of SFAS No. 150 requires that certain financial instruments that we would have otherwise classified as equity be reflected outside of stockholders’ equity in our consolidated balance sheets.

We continually seek to increase the efficiency of our operations, increase customer visits and sales per customer, provide new menu options for our guests and increase sales of higher margin items. Significant investments in our brands and operational improvements, including an investment of approximately $6.0 million to upgrade our information and restaurant point-of-sale (“POS”) systems in 2003, ongoing remodeling of our restaurants and reductions in purchasing and manufacturing costs have enabled us to improve our prime margin, which is our profitability expressed as a percentage of restaurant sales after deducting our two most significant costs, food and labor. Prime margin improved from 37.8% in 1999 to 41.4% in 2003. In addition, we have increased our margins by providing our managers with extensive training and the tools necessary to effectively operate our business, such as on-line ordering and bill processing and real-time information on key business metrics. We continually engage in selective menu engineering and the development of new menu items for our restaurants such as our signature oven-roasted focaccia sandwiches in our Village Inn restaurants, seasonal offerings such as artisan-style bread bowls filled with hearty soups and stews in our Bakers Square restaurants and a “Carb Counter” menu in our Village Inn restaurants. Our other efforts to drive sales growth include creative marketing programs, such as our successful new electronic gift card program, and expansion of our third-party customer base for our pies, which includes new accounts such as Albertsons and Darden Restaurants.

Our Village Inn restaurants are free-standing units which average approximately 5,000 square feet in size and can seat between 120 and 180 people. We are typically open from 6 a.m. to 12 a.m., allowing us to effectively generate revenue in all three dayparts. Our typical entrée prices range from $4.19 to $9.59 for breakfast items and from $4.69 to $10.49 for lunch and dinner items, with an average per-person check of $7.50 overall in 2003. In order to improve our efficiency and purchasing power, our menus are standardized throughout the United States, with some variations driven by regional preferences. In 2003, Village Inn’s average unit sales were $1.5 million, and corresponding average restaurant operating cash flow was $271,000, representing an 18.6% margin.

The Bakers Square concept began in 1983 when we acquired 59 Poppin Fresh Pies restaurants from the Pillsbury Restaurant Group. Since then, we have grown Bakers Square to 150 company-operated restaurants as of June 1, 2004. Our Bakers Square restaurants are located in eight states, including California (53 units), Illinois (43 units) and Minnesota (25 units). The foundation of the Bakers Square concept is our signature freshly-baked pies, which accounted for 25% of Bakers Square’s sales in 2003. Building upon our reputation for quality pies, we have extended our offerings to include popular traditional American fare for breakfast, lunch and dinner. Bakers Square offers dozens of varieties of multi-layer specialty pies made from premium ingredients, which differentiates the concept from our family-dining competitors. Many of our customers complement their lunch or dinner with a serving of pie, while others purchase whole pies for at-home consumption throughout the year, particularly around the holidays. As with Village Inn, we use our team of in-house research and development chefs to regularly update the Bakers Square menu offerings to attract a wider demographic range of diners and increase repeat business from existing customers. For example, we have successfully promoted our artisan-style bread bowls filled with hearty soups and stews, along with popular menu favorites like our Stir-Fry Chicken Pita, Slow-Roasted Turkey Focaccia, Honey Mustard Chicken and Portabella Pot Roast.

Our Bakers Square restaurants are free-standing units which average approximately 4,500 square feet in size and can seat between 120 and 160 people. We are typically open from 7 a.m. to 11 p.m., with our highest traffic generated at lunch and dinner. Our typical entrée prices range from $3.79 to $8.99 for breakfast items and from $4.69 to $8.99 for lunch and dinner items, with an average per-person check of $8.32 overall in 2003. As with Village Inn, our menus are standardized across the United States, with some variations driven by regional preferences. In 2003, Bakers Square’s average unit sales were $1.5 million, and corresponding average restaurant operating cash flow was $184,000, representing a 12.6% margin.

Complementing our restaurant operations, we produce premium pies for the Bakers Square and Village Inn restaurants and for sale to select third-party customers such as Bob Evans Farms, Market Day and Albertsons. In 2003, we produced 18 million premium pies. By producing pies at our three strategically located facilities, we are able to control the quality, consistency and freshness of our pies and enhance our distribution capabilities. We differentiate ourselves from other pie manufacturers by producing multi-layer pies, using premium ingredients such as whole cream, fresh fruits and high quality pie crusts, and maintaining a strict shelf life policy of no more than three days for the pies in our restaurants. At the 2003 National Pie Championships, we won 21 blue-ribbon awards, which was more than any other competitor.

We have recently improved the efficiency of our pie production operations and increased sales of our pies to third parties, including the addition of several new accounts such as Albertsons and Darden Restaurants. We have used our enterprise resource planning system to manage inventory and costs, concentrated our frozen pie production in our high volume Chaska, Minnesota facility to achieve economies of scale and restructured our delivery arrangements to obtain substantial savings.

The restaurant industry is a significant contributor to the U.S. economy, with total 2002 sales of $279 billion, the eleventh consecutive year of real growth. We believe this growth can be attributed to several key lifestyle and demographic trends, including the continued increase in spending on food consumed away from home and restaurant dining, and the continued growth in disposable incomes and key age groups of the population. The restaurant industry can be divided into two primary operating segments: full service restaurants (“FSR”) and limited service restaurants (“LSR”). Restaurants operating in the FSR segment present broad menu choices that are served to patrons by a waitstaff, while restaurants operating in the LSR segment serve customers at a counter or through a drive-thru window.

Our Village Inn and Bakers Square concepts operate in the “family-dining” category of the FSR segment. The family-dining category is the largest category in the FSR segment, with approximately $32 billion in sales in 2002. Family-dining sales grew at a compound annual growth rate of 1.6% from 1997 to 2002 and are projected to grow at a 1.0% compound annual growth rate for the period from 2002 to 2007, according to Technomic, Inc. The family-dining category is relatively fragmented, with the top 100 chains representing approximately 33% of total category sales in 2002. While not exhibiting the higher growth of certain other segments, we believe the family-dining category has a loyal customer base and stable characteristics. We believe that family-dining restaurants offer consumers a consistent dining experience with quality food at a lower cost per check than other FSR dining options.

Strong, well-operated base of restaurants. We are committed to consistently serving high-quality food while operating our restaurants efficiently. In focusing on the efficient operation of our restaurants, we pay strict attention to food costs, labor utilization and use of advanced technology. From 1999 to 2003, these efforts contributed to a reduction of our food costs (including the effects of increases in menu prices and third-party pie sales) as a percentage of revenue from 29.8% to 26.6% and a reduction of our labor costs as a percentage of revenue from 32.4% to 32.0% over that same period. Consistent with our commitment to maximize efficiency, over the last five years we have invested approximately $15.5 million in our SAP enterprise resource planning system, ReMACS information system and POS system. In addition, the geographic diversification of our restaurants mitigates our exposure to regional economic downturns. Despite a challenging economic environment, our revenues and Adjusted EBITDA increased from $382.1 million and $38.9 million in 2001, respectively, to $389.2 million and $39.3 million in 2003, respectively, while average unit sales were stable at $1.5 million during that same period.

Proven, well-recognized brands with a loyal customer base. We believe our customers are attracted to our consistently high level of food quality and our attractive price-to-value relationship, which are key attributes of our brands. With an average per-person check between $6 and $9, we are positioned between the limited service and casual dining restaurant segments and attract customers that are seeking consistent quality and variety at reasonable prices. The great-tasting food, excellent service and affordable prices at our Village Inn restaurants have helped us establish and maintain a loyal customer base, a significant number of whom are long-term patrons who visit our restaurants three or more times per month. Bakers Square is distinguished by its selection of award-winning, freshly-baked premium pies that reflect the slogan “The Best Pie in America®.” Bakers Square has strong customer awareness as a destination for freshly baked pies, which accounted for 25% of its sales in 2003, and also offers a wide selection of breakfast, lunch and dinner specialties.

operating profits as a percentage of initial cash investment averaging over 44% for the last six restaurants we have opened during the last three fiscal years. We seek to reduce construction costs through the use of our in-house development team of real estate, design and legal professionals. With an average projected investment of approximately $450,000 for leased units, we believe we have a low-cost economic model for the continued development of new restaurants.

Significant investment in infrastructure and brands. We invest a significant amount of capital to implement up-to-date technology, and we are focusing on remodeling our restaurant base on average every seven years. We recently created new exterior and interior restaurant designs for Village Inn and Bakers Square that we intend to utilize at selected sites. In 2004, we plan to spend approximately $11.2 million on the maintenance and remodeling of our existing restaurants. We also have invested $15.5 million in technology over the last five years to increase our efficiency. At the unit level, we implemented a ReMACS information system for managing our back office operations, which provides managers with enhanced electronic food ordering, inventory, ideal and actual food cost reporting, cash control and labor management tools. In 2003, we invested approximately $6.0 million to implement an improved POS system and related hardware upgrades in all our restaurants. Our POS system enhances our ability to track sales, product mix, labor dollars and hours, and payment information for each of our restaurants on a daily basis. In addition, we have invested capital to upgrade the quality and cost effectiveness of our pie production operations. We have also implemented an SAP enterprise resource planning system in all of our pie production plants which allows us to measure and reduce waste, labor costs and inventory levels.

Proprietary, high quality pie manufacturing capability. Premium pie production is a core competency and key point of differentiation for us. We use quality ingredients to produce multi-layer pies for our Bakers Square and Village Inn restaurants, and we also sell pies to third parties such as Market Day and Bob Evans Farms. By producing our award-winning pies at company-operated baking facilities, we are able to control the quality and consistency of our pies and retain greater control over delivery. Our current pie manufacturing facilities can support additional growth, which will support increased sales internally to our restaurants as well as to third parties. We have recently realigned our frozen pie manufacturing operations to gain economies of scale from our highly-automated Chaska, Minnesota facility, positioning ourselves to increase sales to third parties.

Increase same unit sales growth. We have recently undertaken various initiatives to increase same unit sales in our existing restaurants, including menu engineering and targeted marketing programs. We intend to grow sales by increasing the frequency of seasonal, regional and other menu features such as our successful new artisan-style bread bowl soup specials at Bakers Square, skillet meals such as the Carnitas Skillet at Village Inn and our “Carb Counter” menu at Village Inn. In addition, we are placing greater emphasis on food and menu promotion in our marketing and advertising, which we believe will be more effective in generating additional sales. Our other marketing initiatives include the introduction of new customer loyalty programs, such as our successful electronic gift card program introduced in 2003, and increasing the use of traffic building promotions. Additionally, from time to time, we raise menu prices while being careful to maintain an attractive price-to-value relationship.

We also intend to increase sales growth through our remodeling program, in which we seek to modernize our existing units on average every seven years. From 2001 to 2003, we remodeled 53 of our company-operated restaurants at a total cost of $6.4 million. We have designed and are implementing an updated exterior design for our Village Inn and Bakers Square concepts to heighten exterior curb appeal and provide for more visually attractive restaurants. Our remodeling efforts, such as the recent addition of outdoor patios to several of our restaurants in Florida, are intended to increase our appeal with existing customers and also attract new customers.

Continue improving operating margins. While we believe we currently have strong operating margins, continued implementation of best practices in food cost management and labor efficiency can help enhance our margins. For example, we modified our internal processes to give our restaurant managers greater control over employee utilization and overtime, which has reduced our overtime costs by 40.4% from 2001 to 2003. We have also focused on menu engineering by increasing the prominence of higher margin items on our menus and increasing the frequency of specials, many of which have higher margins. In addition, the expansion of our restaurant base and increased third-party sales will result in greater absorption of fixed costs and therefore increase margins in our pie production operations. We have successfully instituted cost controls in our pie production and delivery processes and are expanding our third-party customer base.

Maintain an attractive price-to-value relationship. We believe one of the hallmarks of our Village Inn and Bakers Square restaurants is the attractive value we provide our customers. Our broad offering of appetizing and affordable breakfast, lunch, dinner and dessert items is designed to appeal to a demographically diverse customer base, including families, senior citizens and other value-oriented diners. In order to maintain our relatively low average per-person check while providing high quality food, we must operate our restaurants in a very efficient manner. Some recent examples of our continuing efforts to increase our efficiency include upgrades to our information and restaurant POS systems, reductions in purchasing and manufacturing costs, daily monitoring of the performance of each of our restaurants and extensive employee training. We believe our efficient operations and value focus enable us to provide high quality food at reasonable prices, giving us a competitive advantage in attracting new diners and maintaining our loyal customer base.

Continue disciplined expansion. We plan to continue our expansion in a disciplined manner by strategically adding restaurants in both of our concepts within existing and contiguous markets. By clustering restaurants, we spread costs and leverage our regional management, marketing, purchasing and hiring capabilities. We have a team of dedicated in-house professionals focused on site selection, design and construction of new restaurants in a timely and cost-effective manner. While we presently intend to focus our expansion efforts on company-operated restaurants, we may also pursue selected franchise opportunities.

In addition, we believe that acquisitions of current Village Inn franchises are an attractive avenue for growth. Acquisition opportunities arise as franchisees retire or seek liquidity. For example, in 2003, we acquired a Village Inn franchise territory in the Albuquerque, New Mexico area encompassing eight restaurants.

We opened our first restaurant under the name “Village Inn Pancake House” in Denver, Colorado in 1958. Due to the success of the Village Inn concept, we began franchising the brand, and our first franchise restaurant opened in 1961. We introduced the Bakers Square concept in 1983 when we acquired

59 Poppin Fresh Pies restaurants from the Pillsbury Restaurant Group. We transformed the Poppin Fresh Pies restaurants, all of which were located in the Midwest, into the Bakers Square concept. In 1984, we acquired 175 former Sambo’s restaurants in California, Florida and Arizona. We converted these restaurants in California into Bakers Square restaurants, which served as the basis for our expansion to the West Coast, and we converted the Florida and Arizona restaurants into Village Inn restaurants.

We completed an initial public offering in 1982 and changed our name from Village Inn Pancake House, Inc. to VICORP Restaurants, Inc. Following our initial public offering, we were publicly traded until we were acquired in a going-private transaction led by the private equity firms Goldner Hawn Johnson & Morrison and BancBoston Capital in May 2001. In June 2003, we were acquired in a transaction led by the private equity firm Wind Point Partners.

Wind Point Partners is a private equity investment firm that manages over $1 billion in commitments from pension funds and has invested in more than 75 companies since its founding in 1983. Wind Point’s strategy is to partner with top caliber CEOs and to align its economic interests closely with those of company management teams through significant equity participation. Wind Point typically invests between $20 million and $70 million in transactions such as leveraged buyouts, recapitalizations, industry consolidations and expansion capital transactions involving companies with revenue between $50 million and $500 million.

To maintain a consistently high level of food quality and service in our restaurants, we have established uniform operational standards relating to the quality of ingredients, preparation of food, menu selection, maintenance of premises and employee conduct. We require each of our restaurants to operate in accordance with these rigorous standards, and our managers are responsible for implementing these standards.

To reduce costs and improve the management of our restaurant and pie production operations, we have recently updated our information systems, including our ReMACS back-office system, our POS system and our enterprise resource planning system. Our ReMACS information system provides our restaurant managers with improved electronic food ordering, inventory, ideal and actual food cost reporting, cash control and labor management tools. By using our recently upgraded POS system in our restaurants, we are able to track sales, product mix, labor dollars and hours, and credit card and cash deposit information for each of our restaurants on a daily basis. We use an SAP enterprise resource planning system in our pie production facilities to measure and reduce waste, labor costs and inventory levels. In addition, to enable us to better understand and manage our operations, we maintain a central database of information and data relating to decisions support, cash and sales, enterprise resource planning and our vital systems.

We believe that the locations of our restaurants are critical to our long-term success, and we devote significant time and resources to analyzing each prospective site. We plan to expand in a number of ways, including through the development of new sites, the conversion of competitors’ sites, and the purchase of franchised sites from franchisees. The costs of opening a Bakers Square or Village Inn restaurant may vary by restaurant depending upon, among other factors, the location of the site, the method of acquisition and the amount of construction required. With an average projected investment of approximately $450,000 for leased units, we believe we have a low-cost economic model for the continued development of new restaurants. At times, we receive landlord development and/or rent allowances for leasehold improvements, furniture, fixtures and equipment. In addition, we anticipate that we will enter into sale-leaseback transactions and other leasing arrangements with respect to our newly constructed restaurant properties. The standardized decor and interior design of each of our restaurant concepts can be readily adapted to accommodate different types of building configurations.

We use our in-house development team, including real estate, design and legal professionals, to find, evaluate and negotiate new sites for our restaurants. We evaluate potential sites based on a number of criteria, including surrounding population density, demographic information, median household income and size, location, area restaurant competition, traffic, access, visibility, potential restaurant size, parking and signage capability. We also selectively use outside consultants who specialize in site evaluation to provide independent validation of our sales potential estimates for new sites. Since January 2003, we have opened two newly constructed restaurants.

We may also purchase our competitors’ sites and convert them to our restaurant concepts. We evaluate each potential conversion site using the same criteria that we use to evaluate new restaurant sites. We believe that conversion can be a cost-effective method for adding new restaurants. Since January 2003, we have converted five of our competitors’ restaurants to our concepts.

We also may grow by purchasing franchised Village Inn restaurants from our franchisees. These opportunities may arise as our franchisees retire or seek liquidity for their investment. For example, in 2003 we acquired eight franchised Village Inn restaurants located in the Albuquerque, New Mexico area.

Attraction and retention of quality employees, continuous employee development, regular communication of expectations and regular performance feedback are critical factors that help us achieve customer satisfaction. We believe we distinguish ourselves by the quality of personnel and longevity of service among our Regional Managers, restaurant general managers and hourly staff. We attribute much of our success in retaining our management and employees to our extensive training programs, attractive cash incentive compensation program and competitive benefit programs.

Each of our restaurants is typically managed by one general manager, one associate manager and one assistant manager. On average, general managers possess over eight years of experience with us. Each of our general managers has primary responsibility for day-to-day operations in one of our restaurants, including hiring/firing, scheduling, cleanliness of the restaurant and restaurant cash flows. The restaurant managers are supported by Regional Managers, Regional Vice Presidents (or District Managers in California) and our corporate office. As of June 1, 2004, we had 32 Regional Managers, each of whom is responsible for managing approximately nine restaurants in a designated geographic region in a manner consistent with our strategies, policies and standards of quality. The Regional Managers report to one of three Regional Vice Presidents of Operations or two District Managers (in California). Our Regional Vice Presidents of Operations participate in every aspect of our restaurant operations, from organizing quality management teams for the restaurants to routine visits to each location.

Our training programs are designed to equip our employees and franchisees with the skills necessary to help us achieve our objectives. We focus on outcome-based training, emphasizing the acquisition of basic skills and behavior that result in desired performance for specific positions. The average time in training for a manager new to our company is eight to ten weeks. At the successful completion of training they are placed in a restaurant as an assistant manager. At this point the manager continues to be trained and developed, utilizing a program called Management Development Criteria. This ongoing training challenges the new manager to thoroughly understand and demonstrate proficiency in all facets of management of our restaurants. Upon completion, the manager is eligible to participate in our bonus program. In addition to these programs, we conduct field training for our restaurant managers covering a variety of topics such as new products, food safety and management development. For each of our franchised restaurants, we require that a minimum of two managers receive certification through our management training program. Additionally, we require our franchisees to successfully complete our management training program prior to the scheduled opening of any of our franchised restaurants.

The family-dining segment in which our restaurant concepts operate attracts customers seeking quality, consistency, variety and value, with an average per-person check between $6 and $9. Our mid-range price positioning in the family-dining segment provides the competitive advantage of flexibility in menu choices by offering higher or lower priced items based on customer preferences. We use various marketing techniques, such as television and radio (in geographic markets where we have sufficient market penetration), newspaper, direct mail and point-of-purchase materials to promote our restaurant concepts and gain market share. Other marketing initiatives include our successful electronic gift card program. We have sold $2.2 million worth of gift cards from the introduction of this program in November 2003 through June 1, 2003. We produce our advertising in-house, which we believe allows us to present advertising and marketing materials that are consistent with the characteristics of our Village Inn and Bakers Square concepts in a cost-effective manner.

In our ongoing effort to maximize our sales and profitability, we engage in careful menu engineering and the development of new menu items. We maintain a modern test kitchen at our headquarters staffed by highly qualified food professionals who create new menu offerings as well as new pie recipes. Before new items are introduced, a program of testing is undertaken to assess customer acceptance and implementation considerations. In preparing menu items, we emphasize quality and freshness, as well as trends in the family-dining segment as illustrated by our introduction of “Carb Counter” menu items in our Village Inn restaurants. New items may be offered on a promotional or seasonal basis, serve as special items to provide variety to our regular menus, or become a permanent part of our offerings.

Our ability to maintain consistent quality throughout our restaurants depends in large part upon our ability to acquire food products and related items from reliable sources in accordance with our specifications. We make centralized, national purchasing decisions for most menu ingredients to gain favorable prices and maintain quality and freshness levels. We negotiate directly with our major suppliers to obtain competitive prices and use purchase agreements in an effort to stabilize the potentially volatile pricing associated with certain commodities. We also routinely negotiate with prospective suppliers in an effort to obtain competitive pricing. We believe that we have good relationships with our suppliers and that alternative supply sources are readily available if necessary.

We depend on multiple third parties, including traditional food distributors such as Sysco, to deliver our pies from our three pie manufacturing facilities to all of our restaurants and to our third-party customers in refrigerated trucks to ensure quality and freshness. We recently restructured our delivery and distribution arrangements to obtain substantial savings.

We established our first Village Inn franchise in 1961. As of June 1, 2004 we had a total of 104 franchised Village Inn restaurants, operated by 26 franchisees, each with one to eleven restaurants. We believe that we currently enjoy solid working relationships with our franchisees. We presently intend to focus our expansion efforts on company-operated restaurants but may pursue selected franchising opportunities.

We generally seek franchisees that have related business experience and access to capital to build out and support the Village Inn concept. We also provide our franchisees with access to training, marketing, quality control, purchasing/distribution and operations assistance. A franchisee is required to pay an initial franchise fee for a 15 year franchise term. Until the end of their first year of operation, our franchisees also pay us a royalty fee of $1,154 a week and a marketing fee of $577 a week. A franchisee is also typically obligated to pay a fee for renewal of a franchise agreement beyond the initial term. After the first year of operation, our franchisees are required to pay royalty fees of 4% of gross sales as well as marketing fees of 2% of gross sales. Our standard franchise agreement gives our franchisees the right to use our trademarks, service marks, trade dress and our recipes, systems, manuals, processes and related items. Our

The restaurant industry is highly competitive with respect to price, quality and speed of service, and quality and value of the food products offered. The number and location of units, attractiveness of facilities, effectiveness of advertising and marketing programs, and new product development are also important competitive factors. Changes in consumer tastes and preferences, economic conditions or population demographics as well as shifts in traffic patterns, can also impact operations and profitability.

We compete in the family-dining category within the full-service segment of the restaurant industry. Key competitors in this category for Village Inn include Denny’s, International House of Pancakes (“IHOP”), Perkins, and, to a lesser extent, Country Kitchen, Cracker Barrel, Shoney’s and Waffle House. Our Midwest Bakers Square restaurants face competition from Denny’s, IHOP, independent restaurants and, to a lesser extent, Bob Evans, Embers and Perkins. Competitors for our California Bakers Square restaurants include Coco’s, Denny’s, Marie Callender’s and, to a lesser extent, Carrow’s, Hof’s Hut and Polly’s. Some of these competitors have greater financial, distribution and brand resources than we do. Our restaurants, like all other restaurants, also face heightened competition from supermarkets, many of which are increasing the breadth of their meal offerings in the form of fresh entrées and side dishes.

We have an extensive portfolio of registered service marks, trademarks and logos, including “Bakers Square®,” “Village Inn®,” “Village Inn Pancake House®,” “Best Pie in America®,” “Great Food. Unbelievable Pie.®,” “The Skillet Experts®,” “Good Food ... Good Feelings®,” “The Breakfast Experts®” and “J. Horner’s®.” We believe that our service marks, trademarks and logos are valuable to the operation of our restaurants and are important to our marketing strategy. Our policy is to actively pursue and maintain registration of our service marks, trademarks and logos where our business strategy requires us to do so and to oppose vigorously any infringement or dilution of our service marks, trademarks or logos. However, we cannot predict whether steps taken by us to protect our proprietary rights will be adequate to prevent misappropriation of these rights or the use by others of restaurant features based upon, or otherwise similar to, our concepts. It may be difficult for us to prevent others from copying elements of our concepts, and any litigation to enforce our rights will likely involve significant costs.

Our operations are subject to federal, state and local laws and regulations relating to environmental protection, including regulation of discharges into the air and water. Under various federal, state and local laws, an owner or operator of real estate may be liable for the costs of removal or remediation of hazardous or toxic substances on or in such property. Such liability may be imposed without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances.

Some of our properties are located on or adjacent to sites that we know or suspect to have been used by prior owners or operators as retail gas stations or industrial facilities. Such properties previously contained underground storage tanks, and some of these properties may currently contain abandoned underground storage tanks. We do not believe that we have contributed to the contamination at any of our properties. It is possible that petroleum products and other contaminants may have been released at or migrated beneath our properties into or through the soil or groundwater. Under applicable federal and state environmental laws, we, as the current owner or operator of these sites, may be jointly and severally liable for the costs of investigation and remediation of any contamination. While we seek to obtain certain assurances relating to environmental issues at the properties that we purchase from the prior owners of the properties or from third parties, we cannot assure you that we will not be liable for environmental conditions relating to our prior, existing or future restaurants or restaurant sites. If we are found liable for the costs of remediation of

We are subject to various federal, state and local laws affecting the operation of our business, as are our franchisees, including various health, sanitation, fire and safety standards. Each of our restaurants and pie production facilities is subject to licensing and regulation by a number of governmental authorities, which include zoning, health, safety, environmental, sanitation, building and fire agencies in the jurisdiction in which the restaurant is located. We are also subject to the rules and regulations of the Federal Trade Commission and various state laws regulating the offer and sale of franchises. In addition, all of our restaurants located in California sell beer and wine. As a result, we are required to comply with applicable alcohol licensing requirements and alcoholic beverage control regulations.

We also are subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986 and various federal and state laws governing such matters as minimum wages, overtime and other working conditions. A significant portion of our hourly staff is paid at rates consistent with the applicable federal or state minimum wage and, accordingly, increases in the minimum wage will increase our labor cost.

The federal Americans with Disability Act prohibits discrimination on the basis of disability in public accommodations and employment. We are required to comply with the Americans with Disabilities Act and regulations relating to accommodating the needs of the disabled in connection with the construction of new facilities and with significant renovations of existing facilities.

As of June 1, 2004, we had 11,413 employees, consisting of 7,289 part-time employees and 4,124 full-time employees. We employ 174 employees at our corporate headquarters. Our employees are not covered by any collective bargaining agreement, and we consider our employee relations to be good. In 2003, employees at one of our pie manufacturing facilities conducted an election to unionize our 338 employees at that facility. This effort was unsuccessful; however, our employees could engage in future unionization efforts that may succeed.

We own our executive offices consisting of approximately 93,050 square feet in Denver, Colorado, subject to a mortgage. In addition we own two pie production facilities, each with approximately 63,000 square feet, located in Chaska, Minnesota and Oak Forest, Illinois, and we lease a pie production facility consisting of approximately 68,000 square feet located in Santa Fe Springs, California, each of which is subject to a mortgage. We believe that our current office and operating space is suitable and adequate for its intended purposes and that we have the ability to increase production at our pie production facilities without significant capital expenditures.

Our restaurants for both Village Inn and Bakers Square provide seating capacity for approximately 120 to 180 customers. Our typical restaurant averages 5,000 square feet. We currently own 35 properties in whole or in part. Of our 35 owned properties, we own both the land and the building for twelve of these locations, we own the building and lease the land for 21 of these locations, and we own the land on two properties which are currently undeveloped. All of our owned properties are subject to mortgages, except for the two properties which are currently undeveloped. We have operating restaurants located on 29 of these properties (eight restaurants on properties where we own both the building and land, and 21 restaurants on properties where we own the building and lease the land), pie production facilities located on two of these properties, and our executive offices located on one of these properties. In addition, we lease both the building and the land for 240 properties on which we operate restaurants. 176 of our leased properties are subject to leasehold mortgages. We also lease 12 restaurants that we sublease to franchisees. All of our other franchise restaurants are leased or owned directly by the respective franchisees.

Locations. As of June 1, 2004, we and our franchisees operated 373 restaurants as follows

We are parties to lawsuits, revenue agent reviews by taxing authorities and legal proceedings, of which the majority involve workers’ compensation, employment practices liability and general liability claims arising in the ordinary course of business. We are currently defendants in two purported class action claims of this

type in California. The first class action claim was brought in October 2003 by two former employees and one current employee of ours, and the second class action claim was brought in May 2004 by two former employees of ours. The complaints allege that we violated California law with regard to rest and meal periods, bonus payment calculations (in the October 2003 complaint), overtime payments (in the May 2004 complaint) and California law regarding unfair business practices. The classes and subclasses alleged in the actions have not been certified by the respective courts at the current stages of the litigation, but generally are claimed in the 2003 complaint to include persons who have been employed by us in California since October 17, 1999 in the positions of food server, restaurant general manager and assistant restaurant manager, and generally are claimed in the 2004 complaint to include persons who have been employed by us in California since May 21, 2000 in the positions of restaurant general manager and restaurant associate manager. No dollar amount in damages is requested in either complaint, and the complaints seek statutory damages, compensatory damages, interest and attorneys’ fees in unspecified amounts. We believe that these matters, individually and in the aggregate, will not have a significant adverse effect on our financial condition. However, a significant increase in the number of these claims or an increase in the number of successful claims would materially adversely affect our business, prospects, financial condition, operating results or cash flows.

The following table sets forth certain information regarding our Board of Directors and executive officers as of June 1, 2004.

Debra Koenig has been our Chief Executive Officer and one of our directors since June 2003. She joined us after a 25 year career with McDonald’s Corporation. Ms. Koenig’s most recent position was President of the Southeast Division from 1997 to 2001. In this role she was responsible for McDonald’s largest U.S. division, with $4 billion in sales, consisting of approximately 2,675 franchised restaurants and 290 company-operated restaurants in 14 states.

Robert Kaltenbach has been our Chief Operating Officer since November 2000, after serving as President of our Village Inn division since December 1994. Mr. Kaltenbach began his career with us in 1988 as Vice President of Franchise Operations of Village Inn. Mr. Kaltenbach’s professional career includes over 33 years of management experience in several aspects of the foodservice industry, including extensive experience with new concept development and positioning.

Anthony Carroll has been our Chief Financial Officer since February 2004. From June 2000 until December 2002 Mr. Carroll was Chief Financial Officer of ProcureZone.com, LLC, which provided an Internet-based procurement tool for the utility industry. Mr. Carroll was Chief Financial Officer for Au Bon Pain Co., Inc. and its successor, ABP Corporation, from October 1988 until June 2000. Mr. Carroll began his career with PriceWaterhouseCoopers and is a Certified Public Accountant.

Walter Van Benthuysen has been one of our directors and Chairman of the Board since June 2003. Mr. Van Benthuysen served as a member of the Board of Directors of Value Added Bakery Holding Company and as its Chairman of the Board from December 1998 until December 2003. He also served as Chairman of the Board of Hazelwood Farms, a subsidiary of Supervalu, Inc., from September 1995 to December 1998. Previously, Mr. Van Benthuysen was the Executive Vice President of Quaker Oats Company until he retired in October 1995. Mr. Van Benthuysen is also a director of Nonni’s Food Company, Inc.

Robert Cummings has been one of our directors since June 2003. Mr. Cummings has been a Managing Director of Wind Point Advisors LLC, a private equity investment firm, since 1987. Investment funds affiliated with Wind Point Advisors LLC control our company. He is also a director of Procyon Technologies, Inc., Nonni’s Food Company, Inc. and Qualitor, Inc.

Wayne Kocourek has been one of our directors since June 2003. He is Chairman, Chief Executive Officer and Managing Member of Mid Oaks Investments LLC, a private equity investment company that he founded in 1997. He is also currently a director of Little Rapids Corporation, Liquid Container Inc., Profile Products LLC, Environmental Materials LLC and Peak Sensor Systems LLC.

Michael Solot has been one of our directors since June 2003. He has been employed by Wind Point Advisors LLC, a private equity investment firm, since 1999, most recently as a Principal. Investment funds affiliated with Wind Point Advisors LLC control our company. Prior to joining Wind Point, Mr. Solot

Ms. Koenig, Mr. Van Benthuysen, Mr. Cummings, Mr. Solot and Mr. Kocourek were elected as directors in June 2003 pursuant to the stockholders agreement described in “Certain relationships and related party transactions.” Our directors serve until their successors have been elected and qualified or until their earlier resignation or removal. Our executive officers are elected by and serve at the discretion of our Board of Directors.

Our Board of Directors has an Audit Committee that is responsible, among other things, for overseeing our accounting and financial reporting processes and audits of our financial statements. The Audit Committee is comprised solely of Messrs. Kocourek and Van Benthuysen. Our Board of Directors has determined that Mr. Kocourek qualifies as an “audit committee financial expert” and that Mr. Van Benthuysen is “independent” as defined in federal securities laws.

VICORP Restaurants, Inc., VI Acquisition Corp. and Village Inn Pancake House of Albuquerque, Inc. have entered into separate indemnification agreements with their directors under which each company has agreed to indemnify, and to advance expenses to, each of that company’s directors to the fullest extent permitted by applicable law with respect to liabilities they may incur in their capacities as that company’s directors and officers.

The following table discloses the compensation awarded by us for services rendered during our last fiscal year to the chief executive officer and to the other named executive officers.

(1) The shares represented by the restricted stock award were purchased by the executive at a price equal to $1.00 per share, the fair market value on the date of purchase, and are subject to certain repurchase rights upon termination of employment. The shares vest over a five year period at the rate of 20% per year, beginning on June 13, 2004, and will become fully vested upon a change in control. The number of restricted shares of common stock held by Ms. Koenig at the end of 2003 was 86,250 and the dollar value of such shares at the end of last year was $86,250, which is equal to the total amount paid for the shares by Ms. Koenig. The number of restricted shares of common stock held by Mr. Kaltenbach at the end of 2003 was 45,000 and the dollar value of such shares at the end of last year was $45,000, which is equal to the total amount paid for the shares by Mr. Kaltenbach. To the extent dividends are paid on the common stock, dividends shall also be paid on shares represented by the restricted stock awards.

(2) Prior to 2003, Mr. Kaltenbach and Mr. Trungale were granted options to purchase shares of Midway Investors Holdings Inc. Upon the acquisition of Midway by VI Acquisition Corp., Mr. Kaltenbach and Mr. Trungale exchanged their options to purchase shares of Midway for options to purchase preferred stock of VI Acquisition Corp. As a result of such exchange, Mr. Kaltenbach has an option to purchase 458.57 shares of the preferred stock of VI Acquisition Corp. at an exercise price of $24.80 per share. The option is fully vested and exercisable. Mr. Trungale received an option to purchase 947.39 shares of the preferred stock of VI Acquisition Corp. Mr. Trungale’s option is no longer outstanding.

(4) Consists of payments to Ms. Koenig totaling $62,938 for relocation expenses and payment of $619 in term life insurance premiums on Ms. Koenig’s behalf.

(5) Mr. Trungale’s employment terminated on September 2, 2003. Consists of severance payments totaling $14,531, a change in control payment of $1,000,000, payment of accrued vacation totaling $27,945, payment of COBRA premiums of $1,172, and payment of $2,600 in term life insurance premiums on Mr. Trungale’s behalf.

(6) Consists of our contribution of $4,000 to Mr. Kaltenbach’s 401(k) plan maintained by us, a change in control payment of $500,000, and payment of $2,308 in term life insurance premiums on Mr. Kaltenbach’s behalf.

(7) Mr. Hoppe’s employment terminated on July 31, 2003. Consists of severance payments totaling $112,500, payment of accrued vacation totaling $3,654, and payment of $479 in term life insurance provisions on Mr. Hoppe’s behalf.

We have entered into employment agreements with Ms. Koenig, Mr. Kaltenbach and Mr. Carroll. Under Ms. Koenig’s employment agreement, she is entitled to receive a minimum base salary of $400,000, less applicable tax withholding, as well as an annual performance bonus targeted at 50% of base salary. The annual performance bonus is based upon achievement of our annual budget that is determined by our Board in its sole discretion.

If Ms. Koenig’s employment is terminated by us without “cause”, she is entitled to a severance payment equal to 12 months of her base salary, which severance is payable over the 12 month period immediately following the termination of her employment. In addition, during the 12 month severance period, we will pay the cost of Ms. Koenig’s health care continuation coverage under COBRA at the same rate that we pay for health insurance for our active employees, if Ms. Koenig elects COBRA continuation coverage. Ms. Koenig will also be entitled to the foregoing severance payments if she terminates her employment for “good reason,” which is generally defined as a diminution in her duties or position that is not remedied after notice or a breach of her employment contract by us (which includes any decrease in Ms. Koenig’s base salary without her consent or a required relocation outside of the Denver area) that is not remedied after notice.

Mr. Kaltenbach’s employment agreement is substantially the same as Ms. Koenig’s, except that he is entitled to receive a minimum base salary of $430,560, less applicable tax withholding. In addition, if Mr. Kaltenbach’s employment is terminated by us without “cause” (or by him for “good reason”), his severance payment will be an amount equal to $500,000, payable in equal installments over a period of 12 months. In addition, Mr. Kaltenbach received an option to purchase 458.57 shares of our preferred stock at an exercise price of $24.80 per share. The option is fully vested and will expire on June 12, 2013, subject to earlier termination in the event Mr. Kaltenbach’s employment is terminated.

Mr. Carroll’s employment agreement is substantially the same as Ms. Koenig’s, except that he is entitled to receive a minimum annual base salary of $225,000, less applicable tax withholding, and his annual performance bonus is targeted at 40% of base salary. In addition, if Mr. Carroll’s employment is terminated by us without “cause” (or by him for “good reason”), he is entitled to receive as severance the continuation of his base salary then in effect for a period of one month for each month in which he was employed by us, up to a maximum of 12 months, payable in accordance with our payroll policy.

Ms. Koenig, Mr. Kaltenbach and Mr. Carroll are also each subject to noncompetition restrictions for a period of at least twelve months following termination of their employment and nonsolicitation restrictions for a period of two years following employment termination. We may, in our discretion, extend the noncompetition period up to a maximum period of twelve additional months by similarly extending the period for which they are entitled to receive severance.

Ms. Koenig, Mr. Kaltenbach and Mr. Carroll have entered into certain Management Agreements with us pursuant to which they purchased restricted shares of our common stock at a price equal to $1.00 per share. The shares vest over a period of five years at the rate of 20% per year and are subject to certain repurchase rights upon termination of employment. Upon termination of employment, all vesting ceases and the unvested shares may be repurchased by us at their original cost and the vested shares may be repurchased at fair market value (unless termination is for “cause” or voluntarily by the employee without “good reason”, in which event all of the shares may be repurchased by us at the lesser of original cost or fair market value). In addition, pursuant to the Management Agreements, following the termination of Ms. Koenig’s or Mr. Kaltenbach’s employment, we may elect, or, in the event of their deaths, their respective estates may compel us, to repurchase certain shares of our preferred stock and common stock previously acquired by Ms. Koenig and Mr. Kaltenbach. The purchase price for such shares will be equal to fair market value with respect to the common stock and original cost with respect to the preferred stock, unless the purchase is pursuant to Ms. Koenig’s or Mr. Kaltenbach’s put right following death, in which case the purchase price will be the lesser of the foregoing amounts or the original cost of the shares.

We entered into severance agreements with Mr. William Hoppe, our former Chief Financial Officer, and with Mr. Joseph Trungale, our former President and Chief Executive Officer. Mr. Hoppe’s employment terminated on June 27, 2003. Pursuant to the terms of his agreement, we continued to pay Mr. Hoppe his base salary until December 26, 2003. In addition, we paid a portion of the cost of Mr. Hoppe’s health care

Mr. Trungale’s employment terminated on September 2, 2003. Pursuant to the terms of his severance agreement, we have continued to pay Mr. Trungale his base salary and a portion of the cost of his health care continuation coverage under COBRA until March 2, 2004. In addition, we exercised our right to repurchase certain shares of our common stock and preferred stock that had been previously acquired by Mr. Trungale. The aggregate purchase price paid to Mr. Trungale in connection with such repurchase was approximately $1,000,000. In exchange for his severance payments, Mr. Trungale executed a release of all claims against us. Mr. Trungale is subject to an agreement that prohibits him from soliciting our employees or customers for a period of two years following the termination of his employment.

All of the outstanding capital stock of VICORP Restaurants, Inc. is held by VI Acquisition Corp. The following table sets forth information with respect to the beneficial ownership of all of the common stock of VI Acquisition Corp. as of June 1, 2004 by:


	•	each person (or group of affiliated persons) who is known by us to beneficially own 5% or more of VI Acquisition Corp.’s common stock;

	•	each of the named executive officers;

	•	each of our directors; and

	•	all of our directors and executive officers as a group.

To our knowledge, each of the holders of shares listed below has sole voting and investment power as to the shares owned unless otherwise noted. Our equity securities are privately held and no class of our voting securities is registered pursuant to Section 12 of the Exchange Act. The information set forth herein does not describe the ownership of our preferred stock, which is nonvoting.


(1)	The addresses for the beneficial owners and certain directors and executive officers are as follows: for Wind Point Partners V, L.P., Wind Point Partners IV, L.P., and Mr. Cummings, One Towne Square, Suite 780, Southfield, Michigan 48076; for Mr. Solot, 676 North Michigan Avenue, Suite 3700, Chicago, Illinois 60611; for Mid Oaks Investments LLC and Mr. Kocourek, 750 Lake Cook Road, Suite 440, Buffalo Grove, Illinois 60089; for Mr. Van Benthuysen, 17 Tartan Lakes Drive, Westmont, Illinois 60559; and for each other director or executive officer, c/o VICORP Restaurants, Inc., 400 West 48th Avenue, Denver, Colorado 80216.

(2)	As of June 1, 2003, VI Acquisition Corp. had 1,421,800 issued and outstanding shares of common stock.

(3)	Wind Point Investors V, L.P. is the general partner of Wind Point Partners V, L.P. (“WPP V”). Wind Point Advisors LLC is the general partner of Wind Point Investors V, L.P., and therefore possesses sole voting and investment power with respect to all of the common shares held by WPP V. Mr. Cummings, as a managing member of Wind Point Advisors LLC, may be deemed to beneficially own the common shares held by WPP V. Mr. Cummings disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest.

(4)	Wind Point Investors IV, L.P. is the general partner of Wind Point Partners IV, L.P. (“WPP IV”). Wind Point Advisors LLC is the general partner of Wind Point Investors IV, L.P., and therefore possesses sole voting and investment power with respect to all of the common shares held by WPP IV. Mr. Cummings, as a managing member of Wind Point Advisors LLC, may be deemed to beneficially own the common shares held by WPP IV. Mr. Cummings disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest.

(5)	Includes 4,298 shares held by Donald Piazza and 1,289 shares held by Matthew Lynn for which Mid Oaks Investments LLC (“Mid Oaks”) holds sole voting power. Mr. Kocourek, as the Chairman, Chief Executive Officer and managing member of Mid Oaks may be deemed to beneficially own the common shares held by Mid Oaks. Mr. Kocourek disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest.

(6)	Wind Point Investors IV, L.P. is the general partner of Wind Point IV Executive Advisor Partners, L.P. (“WPP IV EAP”). Wind Point Advisors LLC is the general partner of Wind Point Investors IV, L.P., and therefore possesses sole voting and


	investment power with respect to all of the common shares held by WPP IV EAP. Wind Point Investors IV, L.P. is the general partner of Wind Point Associates IV, L.P. (“WPP Associates IV”). Wind Point Advisors LLC is the general partner of Wind Point Investors IV, L.P., and therefore possesses sole voting and investment power with respect to all of the common shares held by WPP Associates IV. Wind Point Investors V, L.P. is the general partner of Wind Point V Executive Advisor Partners, L.P. (“WPP V EAP”). Wind Point Advisors LLC is the general partner of Wind Point Investors V, L.P., and therefore possesses sole voting and investment power with respect to all of the common shares held by WPP V EAP. Includes 947,690 shares held by WPP V, WPP IV, WPP IV EAP, WPP Associates IV, WPP V EAP and Wind Point Advisors LLC that Mr. Cummings may be deemed to beneficially own. Mr. Cummings disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest.

(7)	Includes 171,939 shares held by Mid Oaks that Mr. Kocourek may be deemed to beneficially own. Mr. Kocourek disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest.

In June 2003, VI Acquisition Corp. entered into a professional services agreement with Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. pursuant to which they provide services relating to corporate strategy, acquisition and divestiture strategy and advice regarding debt and equity financings. In exchange for such services, Wind Point Investors IV, L.P. is entitled to an annual management fee of $231,668 plus its reasonable out-of-pocket expenses, and Wind Point Investors V, L.P. is entitled to an annual management fee of $618,332 plus its reasonable out-of-pocket expenses. In addition, upon repayment in full of all amounts owing under VI Acquisition Corp.’s prior senior secured credit agreement and its prior subdebt credit agreement, Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. was paid a fee equal to the sum of $250,000 plus the product of $70,000 multiplied by the result of a fraction, the numerator of which is the number of days from June 13, 2003 until such repayment and the denominator of which is 365. We paid Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. approximately $309,000 pursuant to this provision upon repayment of our existing senior credit facility in connection with the April 2004 refinancing.

The professional services agreement will continue until the occurrence of a change of control of VI Acquisition Corp.; provided that if at such time VI Acquisition Corp. pays in full all amounts owing under its existing senior secured credit facility and mezzanine credit agreement, the professional services agreement shall remain in effect as long as VI Acquisition Corp.’s current stockholders own at least 10% of the common stock or preferred stock of VI Acquisition Corp. The professional services agreement, however, may be terminated by VI Acquisition Corp. if either Wind Point Investors IV, L.P. or Wind Point Investors V, L.P. is in material breach and has not cured such breach within 60 days of notice thereof. In June 2003, VI Acquisition Corp. paid Wind Point Investors IV, L.P. professional service fees of $89,122 and paid Wind Point Investors V, L.P. professional service fees of $234,248. VI Acquisition Corp. also paid Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. expense reimbursement of $22,208 in 2003. The professional services agreement contains customary indemnification provisions in favor of Wind Point Investors IV, L.P., Wind Point Investors V, L.P. and their affiliates. Mr. Cummings is a managing director and Mr. Solot is a principal of Wind Point Advisors LLC, an affiliate of Wind Point Investors IV, L.P. and Wind Point Investors V, L.P.

In November 2003, Wind Point Partners IV, L.P. purchased 1,324 shares of our common stock for $1,324 and 61.075 shares of our series A preferred stock for $61,075, Wind Point Partners V, L.P. purchased 3,520 shares of our common stock for $3,520 and 162.331 shares of our series A preferred stock for $162,331, Wind Point IV Executive Advisor Partners, L.P. purchased ten shares of our common stock for $10 and 0.459 shares of our series A preferred stock for $459, Wind Point Associates IV, LLC purchased 5 shares of our common stock for $5 and 0.226 shares of our series A preferred stock for $226, Mid Oaks Investments LLC purchased 629 shares of our common stock for $629 and 29.028 shares of our series A preferred stock for $29,028 and Walter Van Benthuysen purchased 72 shares of our common stock for $72 and 3.325 shares of our series A preferred stock for $3,325.

In February and March 2004, Walter Van Benthuysen purchased 10,000 shares of our common stock for $10,000, Debra Koenig purchased 3,575 shares of our common stock for $3,575 and Anthony Carroll purchased 14,295 shares of our common stock for $14,295.

In June 2003, VI Acquisition Corp. entered into a stock purchase agreement with Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Wind Point IV Executive Advisor Partners, L.P., Wind Point Associates IV, LLC and certain other parties, including Robert Kaltenbach, pursuant to which VI

Acquisition Corp. issued common stock and series A preferred stock. In exchange for certain services in connection with the capitalization of VI Acquisition Corp. and VI Acquisition Corp.’s purchase of all of the capital stock of Midway Investors Holdings Inc., VI Acquisition Corp. paid Wind Point Partners IV, L.P. and Wind Point Partners V, L.P. a transaction fee of $749,994 and fees and expense reimbursement in the amount of $60,000. Mid Oaks Investments LLC also received reimbursement of $120,000 of its fees and expenses associated with the June 2003 transaction. Wayne Kocourek, one of our directors, is the Chairman and Chief Executive Officer of Mid Oaks Investments LLC.

In June 2003, VI Acquisition Corp. and all of the equity holders of VI Acquisition Corp. (including Debra Koenig, Robert Kaltenbach, Walter Van Benthuysen and investment funds affiliated with Wayne Kocourek, Robert Cummings and Michael Solot) entered into a stockholders agreement that, among other things, provides for tag-along rights, drag-along rights, restrictions on the transfer of shares held by parties to the stockholders agreement and preemptive rights for the stockholders. Pursuant to the stockholders agreement, (a) there must be at least five but no more than seven members of the Board of Directors of each of VI Acquisition Corp. and VICORP Restaurants, Inc. and (b) investment funds affiliated with Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. have the power to elect up to six directors of each of VI Acquisition Corp. and VICORP Restaurants, Inc. for as long as such investment funds and their affiliates own shares representing at least 20% of VI Acquisition Corp.’s common stock. One of the directors designated by the Wind Point entities must be an executive officer of VI Acquisition Corp., and if the Wind Point entities designate more than three directors, such additional directors must not be employees or officers of VI Acquisition Corp. or affiliates of the Wind Point entities. In addition, Mid Oaks Investments LLC has the power to elect one director for as long as Mid Oaks Investments LLC owns at least 85,655 shares of VI Acquisition Corp.’s common stock. At such time as Mid Oaks Investments LLC loses its right to designate a board member, the investment funds affiliated with Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. shall have the right to designate such director.

In connection with the June 2003 acquisition of VICORP Restaurants, Inc., Debra Koenig, our Chief Executive Officer, received a loan from Harris Bank in the principal amount of $540,000 with an interest rate of 4.0% in order to fund her purchase of shares of VI Acquisition Corp.’s capital stock. The loan was secured by a letter of credit obtained by VI Acquisition Corp. The largest aggregate amount of indebtedness under the loan to Ms. Koenig during 2003 was $540,000. Ms. Koenig repaid the loan in full on February 12, 2004. We paid approximately $8,000 of expenses in connection with this letter of credit.

The following summary of certain provisions of our new senior secured credit facility does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the provisions of the corresponding agreements, including the definitions of certain terms therein that are not otherwise defined in this prospectus.

In connection with the offering of original notes, we amended and restated our existing senior secured credit facility. Our new senior secured credit facility has been provided by Wells Fargo Foothill, Inc. The new senior secured credit facility consists of:


	•	a term loan facility of $15.0 million in term loans; and

	•	a revolving credit facility of up to $30.0 million (including a $15.0 million letter of credit subfacility).

Borrowings under the revolving credit facility are permitted up to the lesser of (a) $30.0 million and (b) 1.2 times trailing twelve months Adjusted EBITDA (as defined in the senior secured credit agreement) minus the original amount of the new senior secured term loan.


	•	guaranteed by VI Acquisition Corp., our parent corporation;

	•	guaranteed by each of our present and future domestic subsidiaries, other than subsidiaries that are deemed immaterial by the administrative agent;

	•	secured by a first priority lien in all of our now owned and future acquired property and assets; and

	•	secured by a pledge of all our capital stock and the capital stock of our present and future domestic subsidiaries, other than domestic subsidiaries that are deemed immaterial by the administrative agent.

Our new senior secured credit facility requires us to meet financial tests, including, without limitation, a minimum level of adjusted EBITDA, a minimum fixed charge coverage ratio and a maximum growth capital expenditures test. In addition, our new senior secured credit facility contains negative covenants limiting, among other things, additional liens and indebtedness, capital expenditures, transactions with affiliates, mergers and consolidations, liquidations and dissolutions, sales of assets, dividends, investments and joint ventures, loans and advances, prepayments and modifications of debt instruments, and other matters customarily restricted in such agreements. Our new senior secured credit facility contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the new senior secured credit facility to be in full force and effect, and a change of control of our business. Our new senior secured credit facility allows us to engage Wells Fargo Foothill, Inc. and its affiliates for various services such as credit card processing and hedging activities and to grant liens to secure our obligations thereunder.

Both the revolving credit facility and the term loan facility will mature on April 14, 2009.

Our borrowings under the new senior secured credit facility bear interest at a floating rate, which may be maintained, at our option, as base rate loans or as London Interbank Offered Rate (“LIBOR”) loans. Base rate loans bear interest at the base rate plus the applicable base rate margin, as defined in the new senior secured credit facility. Base rate is defined as the rate of interest announced from time to time by Wells Fargo Bank at its principal office in San Francisco as its “prime rate.” The LIBOR rate means the rate determined by Wells Fargo Foothill, Inc. at which dollar deposits are offered to major banks in the London interbank market, adjusted by the reserve percentage prescribed by governmental authorities.

The applicable margins with respect to the term loan facility and the revolving credit facility will vary from time to time in accordance with the terms thereof and agreed-upon pricing grids based on our leverage ratio. The initial applicable margin with respect to the term loan facility and the revolving credit facility is:


	•	1.5% in the case of base rate loans; and

	•	3.5% in the case of LIBOR loans.

We are also required to pay a commitment fee on the undrawn amount of the revolving credit facility of between 0.25% and 0.50% and a fee on outstanding letters of credit equal to the LIBOR margin then in effect. As of June 1, 2004, the interest rate on the term loan facility was 4.7%, the commitment fee on the undrawn revolving credit facility was 0.5% and the letter of credit fee was 3.5%.

Voluntary prepayments of our new senior secured credit facility are permitted at any time, but under certain circumstances our new senior secured credit facility may require us to pay a pre-payment premium to Wells Fargo Foothill, Inc.

The Company will issue the Notes under the Indenture (the “Indenture”) among itself, the Note Guarantors and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The terms of the Notes include those expressly set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The Indenture is unlimited in aggregate principal amount, although the issuance of Notes will initially be limited to $126,530,000. We may issue an unlimited principal amount of additional notes having identical terms and conditions as the Notes (the “Additional Notes”). We will only be permitted to issue such Additional Notes if at the time of such issuance, we were in compliance with the covenants contained in the Indenture. Any Additional Notes will be part of the same issue as the Notes and will vote on all matters with the holders of the Notes.

This description of notes is intended to be a useful overview of the material provisions of the Notes and the Indenture. Since this description of notes is only a summary, you should refer to the Indenture for a complete description of the obligations of the Company and your rights.

You will find the definitions of capitalized terms used in this description under the heading “Certain definitions.” For purposes of this description, references to “the Company,” “we,” “our” and “us” refer only to VICORP Restaurants, Inc. and not to its subsidiaries.


	•	are general unsecured, senior obligations of the Company;

	•	are limited to an aggregate principal amount of $126,530,000, subject to our ability to issue Additional Notes;

	•	mature on April 15, 2011;

	•	will be issued in denominations of $1,000 and integral multiples of $1,000;

	•	Will be represented by one or more registered Notes in global form, but in certain circumstances may be represented by Notes in definitive form. See “Book-entry settlement and clearance;”

	•	Rank equally in right of payment to any senior Indebtedness of the Company;

	•	will be effectively junior to the extent of the value of the assets securing such debt;

	•	are unconditionally guaranteed on a senior basis by Holdings, our parent company, and all of the entities providing guarantees under our Senior Secured Credit Agreement or guarantees of future Indebtedness of the Company or Notes Guarantors. See “Note Guarantees;” and

	•	are expected to be eligible for trading in the PORTAL market.


	•	accrue at the rate of 10 1/2% per annum;

	•	accrue from the date of original issuance or, if interest has already been paid, from the most recent interest payment date;

	•	be payable in cash semi-annually in arrears on April 15 and October 15, commencing on October 15, 2004;


	•	be payable to the holders of record on the April 1 and October 1 immediately preceding the related interest payment dates; and

	•	be computed on the basis of a 360-day year comprised of twelve 30-day months.

We also will pay additional interest to holders of the Notes if we fail to complete the Exchange Offer described in the Registration Rights Agreement within 180 days or if certain other conditions contained in the Registration Rights Agreement are not satisfied. See the section entitled “Exchange offer; registration rights.”

We will pay principal of, premium, if any, and interest on the Notes at the office or agency designated by the Company in the Borough of Manhattan, The City of New York, except that we may, at our option, pay interest on the Notes by check mailed to holders of the Notes at their registered address as it appears in the Registrar’s books. We have initially designated the corporate trust office of the Trustee in New York, New York to act as our Paying Agent and Registrar. We may, however, change the Paying Agent or Registrar without prior notice to the holders of the Notes, and the Company or any of its Restricted Subsidiaries may act as Paying Agent or Registrar.

We will pay principal of, premium, if any, and interest on, Notes in global form registered in the name of or held by The Depository Trust Company or its nominee in immediately available funds to The Depository Trust Company or its nominee, as the case may be, as the registered holder of such global Note.

A holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge will be imposed by the Company, the Trustee or the Registrar for any registration of transfer or exchange of Notes, but the Company may require a holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period beginning (1) 15 days before the mailing of a notice of an offer to repurchase or redeem Notes and ending at the close of business on the day of such mailing or (2) 15 days before an interest payment date and ending on such interest payment date.

The registered holder of a Note will be treated as the owner of it for all purposes.

Except as described below, the Notes are not redeemable until April 15, 2008. On and after April 15, 2008, the Company may redeem all or, from time to time, a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest on the Notes, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

Prior to April 15, 2007, the Company may on any one or more occasions redeem up to 35% of the original principal amount of the Notes with the Net Cash Proceeds received by the Company of one or more


	(1) at least 65% of the original principal amount of the Notes remains outstanding after each such redemption; and

	(2) the redemption occurs within 90 days after the closing of such Qualified Equity Offering.

If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business, on such record date, and no additional interest will be payable to holders whose Notes will be subject to redemption by the Company.

In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Note of $1,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Note.

In addition, at any time prior to April 15, 2008, within 90 days following the occurrence of a Change of Control, the Company may redeem the Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Notice of redemption of the Notes pursuant to this paragraph shall be mailed to holders of the Notes not more than 60 days following the occurrence of a Change of Control, which notice shall state the redemption date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed).

“Applicable Premium” means, with respect to a Note at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at April 15, 2008 (such redemption price being described under “Optional Redemption”) plus (2) all required interest payments due on such Note through April 15, 2008, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Note.

“Treasury Rate” means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two business days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to April 15, 2008; provided, however, that if the period from the Redemption Date to April 15, 2008 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to April 15, 2008 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

The Company is not required to make mandatory redemption payments or sinking fund payments with respect to the Notes.

The Notes will be general unsecured obligations of the Company that rank senior in right of payment to all existing and future Indebtedness that is expressly subordinated in right of payment to the Notes. The Notes will rank equally in right of payment with all existing and future liabilities of the Company that are not so subordinated and will be effectively subordinated to all of our secured Indebtedness and liabilities of our Subsidiaries that do not guarantee the Notes. In the event of bankruptcy, liquidation, reorganization or other winding up of the Company or the Note Guarantors or upon a default in payment with respect to, or the acceleration of, any Indebtedness under the Senior Secured Credit Agreement or other Secured Indebtedness, the assets of the Company and the Note Guarantors that secure Secured Indebtedness will be available to pay obligations on the Notes and the Note Guarantees only after all Indebtedness under the Senior Secured Credit Agreement and other Secured Indebtedness has been repaid in full from such assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the Notes and the Note Guarantees then outstanding.

As of April 15, 2004, outstanding Indebtedness of the Company and the Note Guarantors (excluding intercompany obligations, guarantees under the Senior Secured Credit Agreement and the Note Guarantees) was $145.5 million, $15.0 million of which was secured (excluding Capitalized Lease Obligations), and Restricted Subsidiaries would have no indebtedness (excluding intercompany obligations).

The Note Guarantors will, jointly and severally, unconditionally guarantee on a senior basis the Company’s obligations under the Notes and all obligations under the Indenture. Such Note Guarantors will agree to pay, in addition to the amount stated above, any and all costs and expenses (including reasonable counsel fees and expenses) Incurred by the Trustee or the holders in enforcing any rights under the Note Guarantees. The obligations of Note Guarantors under the Note Guarantees will rank equally in right of payment with other Indebtedness of such Note Guarantor, except to the extent such other Indebtedness is expressly subordinate to the obligations arising under the Note Guarantee.

As of April 15, 2004, the Note Guarantors had no outstanding Indebtedness (excluding the Note Guarantees and Guarantees under the Senior Secured Credit Agreement).

Although the Indenture will limit the amount of indebtedness that Restricted Subsidiaries may Incur, such indebtedness may be substantial.

The obligations of each Note Guarantor under its Note Guarantee will be limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law.

In the event a Subsidiary Guarantor is sold or disposed of (whether by merger, consolidation, the sale of its Capital Stock or the sale of all or substantially all of its assets (other than by lease)) and whether or not the Subsidiary Guarantor is the surviving corporation in such transaction to a Person which is not the Company or a Restricted Subsidiary of the Company, such Subsidiary Guarantor will be released from its obligations under its Note Guarantee if:


	(1) the sale or other disposition is in compliance with the Indenture, including the covenants “—Limitation on sales of assets and Subsidiary stock,” “—Limitation on sales of capital stock of Restricted Subsidiaries” and “—Merger and consolidation;” and

	(2) all the obligations of such Subsidiary Guarantor under all Credit Facilities and related documentation and any other agreements relating to any other Indebtedness of the Company or its Restricted Subsidiaries terminate upon consummation of such transaction.

In addition, a Subsidiary Guarantor will be released from its obligations under the Indenture, its Note Guarantee and the Registration Rights Agreement if the Company designates such Subsidiary as an

If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Notes as described under “Optional redemption,” each holder will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

Within 30 days following any Change of Control, unless the Company has exercised its right to redeem all of the Notes as described under “Optional redemption,” the Company will mail a notice (the “Change of Control Offer”) to each holder, with a copy to the Trustee, stating:


	(1) that a Change of Control has occurred and that such holder has the right to require the Company to purchase such holder’s Notes at a purchase price in cash equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on a record date to receive interest on the relevant interest payment date) (the “Change of Control Payment”);

	(2) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Change of Control Payment Date”); and

	(3) the procedures determined by the Company, consistent with the Indenture, that a holder must follow in order to have its Notes repurchased.


	(1) accept for payment all Notes or portions of Notes (in integral multiples of $1,000) properly tendered pursuant to the Change of Control Offer;

	(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes so tendered; and

	(3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

The paying agent will promptly mail to each holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof.

If the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders who tender pursuant to the Change of Control Offer.

The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

Prior to mailing a Change of Control Offer, and as a condition to such mailing (i) the requisite holders of each issue of Indebtedness issued under an indenture or other agreement that may be violated by such payment shall have consented to such Change of Control Offer being made and waived the event of

default, if any, caused by the Change of Control or (ii) the Company will repay all outstanding Indebtedness issued under an indenture or other agreement that may be violated by a payment to the holders of Notes under a Change of Control Offer or the Company must offer to repay all such Indebtedness, and make payment to the holders of such Indebtedness that accept such offer, and obtain waivers of any event of default from the remaining holders of such Indebtedness. The Company covenants to effect such repayment or obtain such consent within 30 days following any Change of Control, it being a default of the Change of Control provisions of the Indenture if the Company fails to comply with such covenant. A default under the Indenture may result in a cross-default under the Senior Secured Credit Agreement.

The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in the Indenture by virtue of the conflict.

The Company’s ability to repurchase Notes pursuant to a Change of Control Offer may be limited by a number of factors. The occurrence of certain of the events that constitute a Change of Control would constitute a default under the Senior Secured Credit Agreement. In addition, certain events that may constitute a change of control under the Senior Secured Credit Agreement and cause a default under that agreement may not constitute a Change of Control under the Indenture. Future Indebtedness of the Company and its Subsidiaries may also contain prohibitions of certain events that would constitute a Change of Control or require such Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by the holders of their right to require the Company to repurchase the Notes could cause a default under such Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company’s ability to pay cash to the holders upon a repurchase may be limited by the Company’s then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases.

Even if sufficient funds were otherwise available, the terms of the Senior Secured Credit Agreement will and future Indebtedness may prohibit the Company’s prepayment of Notes before their scheduled maturity. Consequently, if the Company is not able to prepay the Bank Indebtedness and any such other Indebtedness containing similar restrictions or obtain requisite consents, as described above, the Company will be unable to fulfill its repurchase obligations if holders of Notes exercise their repurchase rights following a Change of Control, resulting in a default under the Indenture. A default under the Indenture may result in a cross-default under the Senior Secured Credit Agreement.

The Change of Control provisions described above may deter certain mergers, tender offers and other takeover attempts involving the Company by increasing the capital required to effectuate such transactions. The definition of “Change of Control” includes a disposition of all or substantially all of the property and assets of the Company and its Restricted Subsidiaries taken as a whole to any Person other than a Permitted Holder or its Related Parties. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of the property or assets of a Person. As a result, it may be unclear as to whether a Change of Control has occurred and whether a holder of Notes may require the Company to make an offer to repurchase the Notes as described above.

The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Company and the Subsidiary Guarantors may Incur Indebtedness if on the date thereof:


	(1) the Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is at least 2.00 to 1.00;

	(2) the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries is less than 6.50 to 1.00; and

	(3) no Default or Event of Default will have occurred or be continuing or would occur as a consequence of Incurring the Indebtedness or transactions relating to such Incurrence.

The first paragraph of this covenant will not prohibit the Incurrence of the following Indebtedness:


	(1) Indebtedness of the Company Incurred pursuant to a Credit Facility in an aggregate amount up to $50.0 million less the aggregate principal amount of all principal repayments with proceeds from Asset Dispositions utilized in accordance with clause (3)(a) of “—Limitation on sales of assets and Subsidiary stock” that permanently reduce the commitments thereunder;

	(2) Guarantees by the Company or the Subsidiary Guarantors of Indebtedness Incurred in accordance with the provisions of the Indenture; provided that in the event such Indebtedness that is being Guaranteed is a Subordinated Obligation or a Guarantor Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to Notes or the applicable Note Guarantee, as applicable;

	(3) Indebtedness of the Company owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any Wholly-Owned Subsidiary; provided, however,


	(a) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;

	(b) if a Subsidiary Guarantor is the obligor on such Indebtedness and the Company or another Subsidiary Guarantor is not the obligee, such Indebtedness is subordinated in right of payment to the Note Guarantee of such Subsidiary Guarantor; and

	(c)(i) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Company or a Wholly-Owned Subsidiary of the Company; and

	(ii) any sale or other transfer of any such Indebtedness to a Person other than the Company or a Wholly-Owned Subsidiary of the Company;

	shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be;


	(4) Indebtedness represented by (a) the Notes issued on the Issue Date, the Note Guarantees and the exchange notes issued in a registered exchange offer pursuant to the Registration Rights Agreement and the Note Guarantees, (b) any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8), (9) and (10)) outstanding on the Issue Date and (c) any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (4) or clause (5) or Incurred pursuant to the first paragraph of this covenant;

	(5) Indebtedness of a Subsidiary Guarantor Incurred and outstanding on the date on which such Subsidiary Guarantor was acquired by the Company (other than Indebtedness Incurred (a) to provide


	all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Subsidiary Guarantor became a Restricted Subsidiary or was otherwise acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Restricted Subsidiary is acquired by the Company, the Company would have been able to Incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the Incurrence of such Indebtedness pursuant to this clause (5);

	(6) Indebtedness under Currency Agreements and Interest Rate Agreements; provided, that in the case of Currency Agreements, such Currency Agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business or in the case of Currency Agreements and Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Company) and substantially correspond in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Company or its Restricted Subsidiaries Incurred without violation of the Indenture;

	(7) the Incurrence by the Company or any Subsidiary Guarantors of Attributable Indebtedness and Indebtedness represented by Capitalized Lease Obligations, mortgage financings or purchase money obligations with respect to assets other than Capital Stock or other Investments, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvements of property used in the business of the Company or such Subsidiary Guarantor, in an aggregate principal amount not to exceed $15.0 million at any time outstanding;

	(8) Indebtedness Incurred in respect of workers’ compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or a Restricted Subsidiary in the ordinary course of business;

	(9) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary, provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition;

	(10) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five business days of Incurrence; and

	(11) in addition to the items referred to in clauses (1) through (10) above, Indebtedness of the Company and its Subsidiary Guarantors in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not exceed $10.0 million at any time outstanding.

The Company will not Incur any Indebtedness under the preceding paragraph if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations of the Company unless such Indebtedness will be subordinated to the Notes to at least the same extent as such Subordinated Obligations. No Subsidiary Guarantor will Incur any Indebtedness if the proceeds thereof are used, directly or indirectly, to refinance any Guarantor Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness will be subordinated to the obligations of such Subsidiary Guarantor under its Note Guarantee to at least the same extent as such Guarantor Subordinated Obligations. No Restricted Subsidiary may Incur any Indebtedness if the proceeds are used to refinance Indebtedness of the Company.

For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant:


	(1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, the Company, in its sole discretion, will classify such item of Indebtedness on the date of Incurrence and only be required to include the amount and type of such Indebtedness in one of such clauses;

	(2) all Indebtedness outstanding on the date of the Indenture under the Senior Secured Credit Agreement shall be deemed initially Incurred on the Issue Date under clause (1) of the second paragraph of this covenant and not the first paragraph or clause (4) of the second paragraph of this covenant;

	(3) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

	(4) if obligations in respect of letters of credit are Incurred pursuant to a Credit Facility and are being treated as Incurred pursuant to clause (1) of the second paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

	(5) the principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

	(6) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and

	(7) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

In addition, the Company will not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this “Limitation on Indebtedness” covenant, the Company shall be in Default of this covenant).

For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company and the Subsidiary Guarantors may Incur pursuant to this

covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

The Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to:


	(1) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) except:


	(a) dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Company; and

	(b) dividends or distributions payable to the Company or a Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis);


	(2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company held by Persons other than the Company or a Restricted Subsidiary (other than in exchange for Capital Stock of the Company (other than Disqualified Stock));

	(3) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations or Guarantor Subordinated Obligations (other than the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); or

	(4) make any Restricted Investment in any Person;

(any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) shall be referred to herein as a “Restricted Payment”), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:


	(a) a Default shall have occurred and be continuing (or would result therefrom); or

	(b) the Company is not able to Incur an additional $1.00 of Indebtedness pursuant to the first paragraph under the “Limitation on Indebtedness” covenant (without giving effect to clause (2) thereof) after giving effect, on a pro forma basis, to such Restricted Payment; or

	(c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date would exceed the sum of:


	(i) 50% of Consolidated Net Income for the period (treated as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Indenture to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are in existence (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit);

	(ii) 100% of the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to


	the Issue Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination);

	(iii) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair market value of any other property, distributed by the Company upon such conversion or exchange); and

	(iv) the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries in any Person resulting from:


	(A) repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to the Company or any Restricted Subsidiary; or

	(B) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary,

	which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income.


	(1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that (a) such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale of Capital Stock will be excluded from clause (c)(ii) of the preceding paragraph;

	(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of Subordinated Obligations of the Company or any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Guarantor Subordinated Obligations made by exchange for or out of the proceeds of the substantially concurrent sale of Guarantor Subordinated Obligations that, in each case, is permitted to be Incurred pursuant to the covenant described under “—Limitation on Indebtedness” and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments;

	(3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for or out of the


	proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to the covenant described under “—Limitation on Indebtedness” and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments;

	(4) so long as no Default or Event of Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations or Guarantor Subordinated Obligations of a Subsidiary Guarantor from Net Available Cash to the extent permitted under “—Limitation on Sales of Assets and Subsidiary Stock” below; provided, however, that such purchase or redemption will be excluded in subsequent calculations of the amount of Restricted Payments;

	(5) dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividends will be included in subsequent calculations of the amount of Restricted Payments;

	(6) so long as no Default or Event of Default has occurred and is continuing,


	(a) the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of the Company or any Restricted Subsidiary or any parent of the Company held by any existing or former employees or management of the Company or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause will not exceed $2.0 million in the aggregate during any calendar year (with 50% of unused amounts in any calendar year being carried over to the next succeeding calendar year) and $4.0 million in the aggregate for all such redemptions and repurchases; provided, however, that the amount of any such repurchase or redemption will be included in subsequent calculations of the amount of Restricted Payments provided, further, however, that such amount in any calendar year may be increased by an amount not to exceed the cash proceeds of key man life insurance policies received by the Company or any Restricted Subsidiary after the Issue Date, which amounts will be excluded in subsequent calculations of Restricted Payments; and

	(b) loans or advances to employees or directors of the Company or any Restricted Subsidiary of the Company the proceeds of which are used to purchase Capital Stock of the Company, in an aggregate amount not in excess of $1.0 million at any one time outstanding; provided, however, that the amount of such loans and advances will be included in subsequent calculations of the amount of Restricted Payments; provided, however, that the Company and its Subsidiaries will comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances;


	(7) so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued in accordance with the terms of the Indenture to the extent such dividends are included in the definition of “Consolidated Interest Expense”; provided that the payment of such dividends will be excluded from the calculation of Restricted Payments;

	(8) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however, that such repurchases will be excluded from subsequent calculations of the amount of Restricted Payments;


	(a) the amounts required for Holdings to pay any Federal, state or local income taxes to the extent that such income taxes are directly attributable to the income of the Company and its Restricted Subsidiaries and to pay franchise taxes and other fees required to maintain its legal existence;

	(b) the amounts required to enable Holdings to effect any transaction permitted under clause (6) of this paragraph, to the extent permitted by such clause, in lieu of the Company or any Restricted Subsidiary;

	(c) an amount not to exceed $0.1 million in any fiscal year to permit Holdings to pay its corporate overhead expenses Incurred in the ordinary course of business, and to pay salaries or other compensation of employees who perform services for both Holdings and the Company; and

	(d) the amounts Holdings is required to pay pursuant to the terms of the Professional Services Agreement, in an amount not to exceed in any fiscal year the greater of (i) $850,000 and (ii) 2% of Consolidated EBITDA for the immediately preceding fiscal year;

	provided, that such dividends or loans will be excluded from subsequent calculations of the amount of Restricted Payments;


	(10) the payment of dividends on the Company’s Common Stock (or dividends, distributions or advances to Holdings to allow Holdings to pay dividends on Holdings’ Common Stock) following the first Public Equity Offering of the Company’s Common Stock or of Holdings’ Common Stock, as the case may be, after the Issue Date, of, whichever is earlier, (i) in the case of the first public offering of the Company’s Common Stock, up to 6% per annum of the Net Cash Proceeds received by the Company in such Public Equity Offering or (ii) in the case of the first public offering of Holdings’ Common Stock, up to 6% per annum of the amount contributed by Holdings to the Company from the Net Cash Proceeds received by Holdings in such public offering, in each case, other than public offerings of the Company or Holdings’ Common Stock registered on Form S-4 or S-8; provided, however, that such payment will be included in subsequent calculations of the amount of Restricted Payments;

	(11) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to the “—Change of Control” covenant or (ii) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to the “—Limitation on sales of assets and Subsidiary stock” covenant; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such covenant with respect to the Notes and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; and

	(12) the declaration and payment of dividends in an amount not to exceed $46.1 million to repay existing subordinated indebtedness of Holdings being refinanced on the Issue Date with proceeds from the offering of the Notes and the Senior Secured Credit Agreement, provided that such dividends or loans will be excluded from subsequent calculations of the amount of Restricted Payments;

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national

standing if such fair market value is estimated in good faith by the Board of Directors of the Company to exceed $5.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant “Restricted Payments” were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Restricted Subsidiaries), whether owned on the date of the Indenture or acquired after that date, which Lien is securing any Indebtedness, unless contemporaneously with the Incurrence of such Liens effective provision is made to secure the Indebtedness due under the Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary’s property or assets, any Note Guarantee of such Restricted Subsidiary, equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations or Guarantor Subordinated Obligations, as the case may be) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale/ Leaseback Transaction with respect to any property unless:


	(1) the Company or such Restricted Subsidiary, as the case may be, receives consideration in respect of such Sale/ Leaseback Transaction at least equal to the fair market value, as measured for the transaction taken as whole (as evidenced by a resolution of the Board of Directors of the Company), of the property subject to such transaction;

	(2) the Company or such Restricted Subsidiary could have Incurred Indebtedness in an amount equal to the Attributable Indebtedness in respect of such Sale/ Leaseback Transaction pursuant to the covenant described under “—Limitation on Indebtedness” (without giving effect to clause (2) of the first paragraph thereof);

	(3) the Company or such Restricted Subsidiary would be permitted to create a Lien on the property subject to such Sale/ Leaseback Transaction without securing the Notes by the covenant described under “—Limitation on Liens;” and

	(4) the Sale/ Leaseback Transaction is treated as an Asset Disposition and all of the conditions of the Indenture described under “—Limitation on sales of assets and Subsidiary stock” (including the provisions concerning the application of Net Available Cash) are satisfied with respect to such Sale/ Leaseback Transaction, treating all of the consideration received in such Sale/ Leaseback Transaction as Net Available Cash for purposes of such covenant; provided, that in the case of assets disposed of in a Sale/ Leaseback Transaction that occurs within 270 days of the acquisition of such assets by the Company or any Restricted Subsidiary, such Net Available Cash shall be reduced by the amount paid (or payable) by the Company and its Restricted Subsidiaries for such assets.

The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any Restricted Subsidiary (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock);


	(2) make any loans or advances to the Company or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or

	(3) transfer any of its property or assets to the Company or any Restricted Subsidiary.

	The preceding provisions will not prohibit:


	(i) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the date of the Indenture and identified in an annex to the Indenture, including, without limitation, the Indenture and the Senior Secured Credit Agreement in effect on such date;

	(ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Capital Stock or Indebtedness Incurred by a Restricted Subsidiary on or before the date on which such Restricted Subsidiary was acquired by the Company (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company or in contemplation of the transaction) and outstanding on such date, provided that any such encumbrance or restriction shall not extend to any assets or property of the Company or any other Restricted Subsidiary other than the assets and property so acquired;

	(iii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of this paragraph or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or (ii) of this paragraph or this clause (iii); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are no less favorable in any material respect to the holders of the Notes than the encumbrances and restrictions contained in such agreements referred to in clauses (i) or (ii) of this paragraph on the Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary, whichever is applicable;

	(iv) in the case of clause (3) of the first paragraph of this covenant, any encumbrance or restriction:


	(a) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract;

	(b) contained in mortgages, pledges or other security agreements permitted under the Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or

	(c) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary;


	(v) (a) purchase money obligations for property acquired in the ordinary course of business and (b) Capitalized Lease Obligations permitted under the Indenture, in each case, that impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired;

	(vi) any restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition;


	(vii) net worth provisions in leases and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business; and

	(viii) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order.

The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless:


	(1) the Company or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the fair market value (such fair market value to be determined on the date of contractually agreeing to such Asset Disposition), as determined in good faith by the Board of Directors of the Company (including as to the value of all noncash consideration), of the shares and assets subject to such Asset Disposition;

	(2) at least 75% of the consideration from such Asset Disposition received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and

	(3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company or such Restricted Subsidiary, as the case may be:


	(a) first, to the extent the Company or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of any Indebtedness), to prepay, repay or purchase secured Indebtedness of the Company (other than any Disqualified Stock or Subordinated Obligations) or secured Indebtedness of a Wholly-Owned Subsidiary (other than any Disqualified Stock or Guarantor Subordinated Obligation of a Subsidiary Guarantor) (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (a), the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; and

	(b) second, to the extent of the balance of such Net Available Cash after application in accordance with clause (a), to the extent the Company or such Restricted Subsidiary elects, to invest in Additional Assets within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash;

provided that pending the final application of any such Net Available Cash in accordance with clause (a) or clause (b) above, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the Indenture.

Any Net Available Cash from Asset Dispositions that are not applied or invested as provided in the preceding paragraph will be deemed to constitute “Excess Proceeds.” On the 361st day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be required to make an offer (“Asset Disposition Offer”) to all holders of Notes and to the extent required by the terms of other Pari Passu Indebtedness, to all holders of other Pari Passu Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Pari Passu Indebtedness with the proceeds from any Asset Disposition (“Pari Passu Notes”), to purchase the maximum principal amount of Notes and any such Pari Passu Notes to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Notes and Pari Passu Notes plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the Indenture or the agreements governing the Pari Passu Notes, as applicable, in each case in integral multiples of $1,000. To the extent that the aggregate amount of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant

to an Asset Disposition Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Indenture. If the aggregate principal amount of Notes surrendered by holders thereof and other Pari Passu Notes surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and Pari Passu Notes to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Notes. Upon completion of such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero.

The Asset Disposition Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Asset Disposition Offer Period”). No later than five Business Days after the termination of the Asset Disposition Offer Period (the “Asset Disposition Purchase Date”), the Company will purchase the principal amount of Notes and Pari Passu Notes required to be purchased pursuant to this covenant (the “Asset Disposition Offer Amount”) or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Notes and Pari Passu Notes validly tendered in response to the Asset Disposition Offer.

If the Asset Disposition Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders who tender Notes pursuant to the Asset Disposition Offer.

On or before the Asset Disposition Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Notes and Pari Passu Notes or portions of Notes and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Notes so validly tendered and not properly withdrawn, in each case in integral multiples of $1,000. The Company will deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this covenant and, in addition, the Company will deliver all certificates and notes required, if any, by the agreements governing the Pari Passu Notes. The Company or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail or deliver to each tendering holder of Notes or holder or lender of Pari Passu Notes, as the case may be, an amount equal to the purchase price of the Notes or Pari Passu Notes so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon delivery of an Officers’ Certificate from the Company, will authenticate and mail or deliver such new Note to such holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple of $1,000. In addition, the Company will take any and all other actions required by the agreements governing the Pari Passu Notes. Any Note not so accepted will be promptly mailed or delivered by the Company to the holder thereof. The Company will publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date.


	(1) the assumption by the transferee of Indebtedness (other than Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness of a Wholly-Owned Subsidiary (other than Guarantor Subordinated Obligations or Disqualified Stock of any Wholly-Owned Subsidiary that is a Subsidiary Guarantor) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition (in which case the Company will, without further action, be deemed to have applied such deemed cash to Indebtedness in accordance with clause (a) above); and

	(2) securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are promptly converted within 90 days by the Company or such Restricted Subsidiary into cash or Cash Equivalents.

The Company will not, and will not permit any Restricted Subsidiary to, engage in any Asset Swaps, unless:


	(1) at the time of entering into such Asset Swap and immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

	(2) in the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Board of Directors of the Company in good faith, in excess of $5.0 million, the terms of such Asset Swap have been approved by a majority of the members of the Board of Directors of the Company; and

	(3) in the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Board of Directors of the Company in good faith, in excess of $10.0 million, the Company has received a written opinion from an independent investment banking firm of nationally recognized standing that such Asset Swap is fair to the Company or such Restricted Subsidiary, as the case may be, from a financial point of view.

The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue of any conflict.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless:


	(1) the terms of such Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate;

	(2) in the event such Affiliate Transaction involves an aggregate consideration in excess of $5.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company and by a majority of the members of such Board of Directors having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (1) above); and

	(3) in the event such Affiliate Transaction involves an aggregate consideration in excess of $10.0 million, the Company has received a written opinion from an independent investment banking, accounting or appraisal firm of nationally recognized standing that such Affiliate Transaction is not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate.


	(1) any Restricted Payment (other than a Restricted Investment) permitted to be made pursuant to the covenant described under “Limitation on Restricted Payments;”

	(2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Capital Stock of the Company, restricted stock plans, long-term incentive plans, stock appreciation rights plans, expense reimbursement, severance or other employment related agreements, participation plans or similar employee benefits plans and/or indemnity provided on behalf of officers and employees approved by the Board of Directors of the Company;


	(3) loans or advances to employees, officers or directors in the ordinary course of business of the Company or any of its Restricted Subsidiaries but in any event not to exceed $1.0 million in the aggregate outstanding (without giving effect to the forgiveness of any such loans) at any one time with respect to all loans or advances made since the Issue Date; provided, however, that the Company and its Subsidiaries will comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances;

	(4) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and Guarantees issued by the Company or a Restricted Subsidiary for the benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance with “Certain covenants— Limitations on Indebtedness;”

	(5) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, directors of the Company or any Restricted Subsidiary;

	(6) the performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any agreement to which the Company or any of its Restricted Subsidiaries is a party as of or on the Issue Date and identified on a schedule to the Indenture on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be permitted to the extent that its terms are not more disadvantageous, taken as a whole, to the holders of the Notes than the terms of the agreements in effect on the Issue Date; and

	(7) the payment of amounts contemplated by the Professional Services Agreement, in an amount not to exceed in any fiscal year the greater of (i) $850,000 and (ii) 2% of Consolidated EBITDA for the immediately preceding fiscal year.

The Company will not, and will not permit any Restricted Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any Restricted Subsidiary or to issue any of the Voting Stock of a Restricted Subsidiary (other than, if necessary, shares of its Voting Stock constituting directors’ qualifying shares) to any Person except:


	(1) to the Company or a Wholly-Owned Subsidiary; or

	(2) in compliance with the covenant described under “—Limitation on sales of assets and Subsidiary stock” and immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary.

Notwithstanding the preceding paragraph, the Company or any Restricted Subsidiary may sell all the Voting Stock of a Restricted Subsidiary as long as the Company or such Restricted Subsidiary complies with the terms of the covenant described under “—Limitation on sales of assets and Subsidiary stock.”

Notwithstanding that Holdings may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act, Holdings will file with the SEC, and make available to the Trustee and the registered holders of the Notes, the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act within the time periods specified therein. In the event that Holdings is not permitted to file such reports, documents and information with the SEC pursuant to the Exchange Act, Holdings will nevertheless make available such Exchange Act information to the Trustee and the holders of the Notes as if Holdings were

If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes to the financial statements and in Management’s Discussion and Analysis of Results of Operations and Financial Condition, of the financial condition and results of operations of Holdings, the Company and the Restricted Subsidiaries of the Company.

The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless:


	(1) the resulting, surviving or transferee Person (the “Successor Company”) will be a corporation organized and existing under the laws of the United States of America, any State of the United States or the District of Columbia and the Successor Company (if not the Company) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture;

	(2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

	(3) immediately after giving effect to such transaction, the Successor Company would be able to Incur at least an additional $1.00 of Indebtedness pursuant to the first paragraph of the “Limitation on Indebtedness” covenant (without giving effect to clause (2) thereof);

	(4) each Note Guarantor (unless it is the other party to the transactions above, in which case clause (1) shall apply) shall have by supplemental indenture confirmed that its Note Guarantee shall apply to such Person’s obligations in respect of the Indenture and the Notes and its obligations under the Registration Rights Agreement shall continue to be in effect; and

	(5) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

For purposes of this covenant, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

The predecessor company will be released from its obligations under the Indenture and the Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, but, in the case of a lease of all or substantially all its assets, the predecessor Company will not be released from the obligation to pay the principal of and interest on the Notes.

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a Person.

Notwithstanding the preceding clause (3), (x) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (y) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to

In addition, the Company will not permit any Note Guarantor to consolidate with, merge with or into any person (other than another Note Guarantor) and will not permit the conveyance transfer or lease of substantially all of the assets of any Note Guarantor unless:


	(1) (a) the resulting, surviving or transferee Person will be a corporation, partnership, trust or limited liability company organized and existing under the laws of the United States of America, any State of the United States or the District of Columbia and such Person (if not such Note Guarantor) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, all the obligations of such Note Guarantor under its Note Guarantee; (b) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of such transaction as having been Incurred by such Person or such Restricted Subsidiary at the time of such transaction), no Default of Event of Default shall have occurred and be continuing; and (c) the Company will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture; or

	(2) in the case of a Note Guarantor that is a Subsidiary Guarantor, the transaction is made in compliance with the covenant described under “—Limitation on sales of assets and Subsidiary stock” and “—Limitation on sale of capital stock of Restricted Subsidiaries.”

After the Issue Date, the Company will cause each Restricted Subsidiary that Guarantees any Indebtedness of the Company or any of its Subsidiary Guarantors to execute and deliver to the Trustee a Note Guarantee pursuant to which such Restricted Subsidiary will unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any and interest on the Notes on a senior basis and all other obligations under the Indenture. Notwithstanding the foregoing, in the event the Subsidiary Guarantor’s obligations with respect to Indebtedness so Incurred are satisfied in full and discharged or the Subsidiary Guarantor is released and discharged in full from all of its obligations under Guarantees of (1) any Credit Facility and (2) all other Indebtedness of the Company and its Restricted Subsidiaries, then the Subsidiary Guarantee of such Note Guarantor shall be automatically and unconditionally released or discharged; provided, that such Restricted Subsidiary has not Incurred any Indebtedness in reliance on its status as a Subsidiary Guarantor under the covenant “—Limitation on Indebtedness” unless such Subsidiary Guarantor’s obligations under such Indebtedness so Incurred are satisfied in full and discharged.

On the Issue Date, Village Inn Pancake House of Canada Limited will not be required to Guarantee obligations under the Senior Secured Credit Agreement in existence on the Issue Date by virtue of being an inactive Subsidiary of the Company, and, as a result, will not be required to issue a Note Guarantee on the Issue Date, but may be required to do so in the future pursuant to the foregoing paragraph.

The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Related Business. Holdings will not, and will not permit any of its Subsidiaries other than the Company and its Subsidiaries to, engage in any business other than investing directly in the Capital Stock of the Company.

Neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fees or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or


	(1) default in any payment of interest or additional interest (as required by the Registration Rights Agreement) on any Note when due, continued for 30 days;

	(2) default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

	(3) failure by the Company or any Note Guarantor to comply with its obligations under “Certain Covenants— Merger and Consolidation;”

	(4) failure by the Company or any Note Guarantor to comply for 30 days after notice with any of its obligations under the covenants described under “Change of Control” above or under the covenants described under “Certain covenants” above (in each case, other than a failure to purchase Notes which will constitute an Event of Default under clause (2) above and other than a failure to comply with “Certain covenants— Merger and consolidation” which is covered by clause (3));

	(5) failure by the Company or any Note Guarantor to comply for 60 days after notice with its other agreements contained in the Indenture;

	(6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default:


	(a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness within the grace period provided in such Indebtedness (“payment default”); or

	(b) results in the acceleration of such Indebtedness prior to its maturity (the “cross acceleration provision”);

	and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $10.0 million or more;


	(7) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary (the “bankruptcy provisions”);

	(8) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days (the “judgment default provision”); or

	(9) any Note Guarantee ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Note Guarantor denies or disaffirms its obligations under the Indenture or its Note Guarantee, and such Note Guarantor fails to cure such default for 30 days after notice.

However, a default under clauses (4), (5) and (9) of this paragraph will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified in clauses (4), (5) and (9) of this paragraph after receipt of such notice.

If an Event of Default (other than an Event of Default described in clause (7) above) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may, and the Trustee at the request of such holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest will be due and payable immediately. In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (6) under “Events of Default” has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to clause (6) shall be remedied or cured by the Company or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. If an Event of Default described in clause (7) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders. The holders of a majority in principal amount of the outstanding Notes may waive all past defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.

Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder may pursue any remedy with respect to the Indenture or the Notes unless:


	(1) such holder has previously given the Trustee notice that an Event of Default is continuing;

	(2) holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy;

	(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;

	(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

	(5) the holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

Subject to certain restrictions, the holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Indenture provides that in the event an Event of Default has occurred and is continuing, the Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The Trustee, however, may refuse to follow any direction that conflicts with law or the

Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a trust officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold notice if and so long as a committee of trust officers of the Trustee in good faith determines that withholding notice is in the interests of the holders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events which would constitute certain Defaults, their status and what action the Company is taking or proposing to take in respect thereof.

In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company or any Note Guarantor with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture or was required to repurchase the Notes, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to April 15, 2008 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company or any Note Guarantor with the intention of avoiding the prohibition on redemption of the Notes prior to April 15, 2008, the maximum premium specified in the Indenture shall also become immediately due and payable (or if no premium is contemplated for the time at which such Event of Default occurs, the premium will be calculated in accordance with the fifth paragraph of “Optional redemption”) to the extent permitted by law upon the acceleration of the Notes.

Subject to certain exceptions, the Indenture and the Notes may be amended or supplemented with the consent of the holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) and, subject to certain exceptions, any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). However, without the consent of each holder of an outstanding Note affected, no amendment may, among other things:


	(1) reduce the amount of Notes whose holders must consent to an amendment;

	(2) reduce the stated rate of or extend the stated time for payment of interest on any Note;

	(3) reduce the principal of or extend the Stated Maturity of any Note;

	(4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed or repurchased as described above under “Optional redemption,” “Change of Control,” or “Certain covenants— Limitation on sales of assets and Subsidiary stock,” whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

	(5) make any Note payable in money other than that stated in the Note;

	(6) impair the right of any holder to receive payment of, principal of premium, if any, and interest on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes;


	(7) make any change in the amendment provisions which require each holder’s consent or in the waiver provisions; or

	(8) modify the Note Guarantees in any manner adverse to the holders of the Notes.

Notwithstanding the foregoing, without the consent of any holder, the Company, the Note Guarantors and the Trustee may amend the Indenture and the Notes to:


	(1) cure any ambiguity, omission, defect or inconsistency;

	(2) provide for the assumption by a successor corporation of the obligations of the Company or any Note Guarantor under the Indenture;

	(3) provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);

	(4) add Guarantees with respect to the Notes or release a Note Guarantor upon its designation as an Unrestricted Subsidiary; provided, however, that the designation is in accord with the applicable provisions of the Indenture;

	(5) secure the Notes;

	(6) add to the covenants of the Company and the Note Guarantors for the benefit of the holders or surrender any right or power conferred upon the Company;

	(7) make any change that does not adversely affect the rights of any holder; or

	(8) comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act;

	(9) provide for the issuance of exchange securities which shall have terms substantially identical in all respects to the Notes (except that the transfer restrictions contained in the Notes shall be modified or eliminated as appropriate) and which shall be treated, together with any outstanding Notes, as a single class of securities; or

	(10) provide for the appointment of a successor trustee, provided that the successor trustee be otherwise qualified and eligible to act as such under the terms of the Indenture.

The consent of the holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. A consent to any amendment or waiver under the Indenture by any holder of Notes given in connection with a tender of such holder’s Notes will not be rendered invalid by such tender. After an amendment under the Indenture becomes effective, the Company is required to mail to the holders a notice briefly describing such amendment. However, the failure to give such notice to all the holders, or any defect in the notice will not impair or affect the validity of the amendment.

The Company at any time may terminate all its obligations under the Notes and the Indenture (“legal defeasance”), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. If the Company exercises its legal defeasance option, the Note Guarantees in effect at such time will terminate.

The Company at any time may terminate its obligations under covenants described under “Certain covenants” (other than “Merger and consolidation”), the operation of the cross-default upon a payment default, cross acceleration provisions, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision and the Note Guarantee provision described under “Events of Default” above

The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect to the Notes. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4), (5), (6), (7) (with respect only to Significant Subsidiaries), (8) or (9) under “Events of Default” above or because of the failure of the Company to comply with clause (3) under “Certain covenants— Merger and consolidation” above.

In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the “defeasance trust”) with the Trustee money or U.S. Government Obligations for the payment of principal, premium, if any, and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel (subject to customary exceptions and exclusions) to the effect that holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. In the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law.

No director, officer, employee, incorporator or stockholder of Holdings or the Company, as such, shall have any liability for any obligations of the Company under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

Wells Fargo Bank, National Association will be the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes.

The Indenture provides that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York.

Secondary trading in long-term notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, the Notes are expected to be eligible to trade in the PORTAL Market and to trade in the Depository Trust Company’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in the Notes will therefore be required by the Depository Trust Company to be settled in immediately available funds. No assurance can be given as to the effect, if any, of such settlement arrangements on trading activity in the Notes.

“Acquired Indebtedness” means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition.


	(1) any property, plant or equipment, including improvements on property, plant and equipment, to be used by the Company or a Restricted Subsidiary in a Related Business;

	(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary; or

	(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

provided, however, that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Related Business.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, through one or more intermediaries, of the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control.

“Asset Disposition” means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions:


	(1) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary;

	(2) the sale of Cash Equivalents in the ordinary course of business;

	(3) a disposition of inventory in the ordinary course of business;

	(4) a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business;

	(5) transactions permitted under “Certain covenants— Merger and consolidation”;

	(6) an issuance of Capital Stock by a Restricted Subsidiary to the Company or to a Wholly-Owned Subsidiary;

	(7) for purposes of “Certain covenants— Limitation on sales of assets and Subsidiary stock” only, the making of a Permitted Investment or a disposition subject to “Certain covenants— Limitation on Restricted Payments”;

	(8) an Asset Swap effected in compliance with “Certain Covenants— Limitation on sales of assets and Subsidiary stock”;

	(9) dispositions of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than $1.0 million (with unused amounts in any calendar


	year being carried over to the next succeeding calendar year subject to maximum dispositions of $2.0 million in such next succeeding fiscal year);

	(10) dispositions in connection with Permitted Liens;

	(11) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements

	(12) the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims;

	(13) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Company and its Restricted Subsidiaries; and

	(14) foreclosure on assets.

“Asset Swap” means concurrent purchase and sale or exchange of Related Business Assets between the Company or any of its Restricted Subsidiaries and another Person; provided that any cash received must be applied in accordance with “Limitation on Sales of Assets and Subsidiary Stock.”

“Attributable Indebtedness” in respect of a Sale/ Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded semi-annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/ Leaseback Transaction (including any period for which such lease has been extended).

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Bank Indebtedness” means any and all amounts, whether outstanding on the Issue Date or Incurred after the Issue Date, payable by the Company under or in respect of the Senior Secured Credit Agreement and any related notes, collateral documents, letters of credit and guarantees and any Interest Rate Agreement entered into in connection with the Senior Secured Credit Agreement, including principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company at the rate specified therein whether or not a claim for post filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof.

“Board of Directors” means, as to any Person, the board of directors of such Person or any duly authorized committee thereof.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

“Capitalized Lease Obligations” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.


	(1) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States (provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than one year from the date of acquisition;

	(2) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition of the United States (provided that the full faith and credit of the United States is pledged in support thereof) and, at the time of acquisition, having a credit rating of “A” or better from either Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc.;

	(3) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by Standard & Poor’s Ratings Services, or “A” or the equivalent thereof by Moody’s Investors Service, Inc., and having combined capital and surplus in excess of $250 million;

	(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into with any bank meeting the qualifications specified in clause (3) above;

	(5) commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by Standard & Poor’s Ratings Services or “P-2” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and

	(6) interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above.


	(1) prior to the first public offering of Common Stock of the Company or Holdings, the Permitted Holders cease to be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority in the aggregate of the total voting power (whether by ownership of Voting Stock or contractual arrangements to vote such Voting Stock) of the Voting Stock of the Company or Holdings, whether as a result of the issuance of securities of the Company or Holdings, any merger, consolidation, liquidation or dissolution of the Company or Holdings, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (1) and clause (2) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of an entity (the “specified entity”) held by any other entity (the “parent entity”) so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity); or

	(2) on the date of or after the first public offering of Common Stock referred to in clause (1), (A) any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company or Holdings (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of the Company or Holdings held by a parent entity, if such person or group “beneficially


	owns” (as defined above), directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent entity); and (B) the Permitted Holders “beneficially own” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company or Holdings, as the case may be, (or its successor by merger, consolidation or purchase of all or substantially all of its assets) than such other person or group and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of the Company or Holdings or such successor (for the purposes of this clause, such other person or group shall be deemed to beneficially own any Voting Stock of a specified entity held by a parent entity, if such other person or group “beneficially owns” directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent entity and the Permitted Holders “beneficially own” directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent entity); or

	(3) the first day on which a majority of the members of the Board of Directors of the Company or Holdings are not Continuing Directors; or

	(4) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company or Holdings and its Restricted Subsidiaries taken as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; or

	(5) the adoption by the stockholders of the Company or Holdings of a plan or proposal for the liquidation or dissolution of the Company or Holdings.

“Common Stock” means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.

“Consolidated Coverage Ratio” means as of any date of determination, with respect to any Person, the ratio of (x) the aggregate amount of Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are in existence to (y) Consolidated Interest Expense for such four fiscal quarters, provided, however, that:


	(a) has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or

	(b) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the

transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period;

(2) if since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition, including, without limitation, by way of Sale/ Leaseback Transaction, or disposed of any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is such an Asset Disposition:


	(a) the Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and

	(b) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);


	(3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business, group of related assets or line of business, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and

	(4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have Incurred any Indebtedness or discharged any Indebtedness, made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such transactions occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). If any Indebtedness that is being given pro forma effect bears an interest rate at the option of the Company, the interest rate shall be calculated by applying such optional rate chosen by the Company.

“Consolidated EBITDA” for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income:


	(1) Consolidated Interest Expense;

	(2) Consolidated Income Taxes;

	(3) consolidated depreciation expense;

	(4) consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 “Goodwill and Other Intangibles”;

	(5) other noncash charges reducing Consolidated Net Income (excluding any such noncash charge to the extent 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 not included in the calculation).

Notwithstanding the preceding sentence, clauses (2) through (5) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (2) through (5) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“Consolidated EBITDAR” for any period means, without duplication, the Consolidated EBITDA for such period, plus Consolidated Rent Expense, to the extent deducted in calculating Consolidated Net Income. Notwithstanding the preceding sentence, solely for the purposes of calculating Consolidated EBITDAR, Consolidated Rent Expense relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent Consolidated Rent Expense is in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental authority.

“Consolidated Interest Expense” means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the extent not included in such interest expense:

(1) (a) interest expense attributable to Capitalized Lease Obligations and (b) the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with GAAP and the interest component of any deferred payment obligations; provided however, that if Attributable Indebtedness is classified as a Capitalized Lease Obligation, interest expense shall be calculated in accordance with subclause (a) above, rather than subclause (b);


	(2) amortization of debt discount and debt issuance cost (provided that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense);

	(3) noncash interest expense;

	(4) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

	(5) the interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries;

	(6) costs associated with Hedging Obligations (including amortization of fees) provided, however, that if Hedging Obligations result in net benefits rather than costs, such benefits shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated Net Income;

	(7) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period;

	(8) the product of (a) all dividends paid or payable, in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on Preferred Stock of its Restricted Subsidiaries payable to a party other than the Company or a Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP;

	(9) Receivable Fees; and

	(10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company and its Restricted Subsidiaries) in connection with Indebtedness Incurred by such plan or trust.

For the purpose of calculating the Consolidated Coverage Ratio in connection with the Incurrence of any Indebtedness described in the final paragraph of the definition of “Indebtedness”, the calculation of Consolidated Interest Expense shall include all interest expense (including any amounts described in clauses (1) through (10) above) relating to any Indebtedness of the Company or any Restricted Subsidiary described in the final paragraph of the definition of “Indebtedness.”

For purposes of the foregoing, total interest expense will be determined (i) after giving effect to any net payments made or received by the Company and its Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance sheet of the Company. Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the Company or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense.

“Consolidated Leverage Ratio” as of any date of determination, means the ratio of:

(1) the sum of (A) the aggregate outstanding Indebtedness of the Company and its Restricted Subsidiaries (assuming all committed amounts under any revolving credit facility are fully drawn) and (B) the product of (i) eight and (ii) the Consolidated Rent Expense of the Company and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of determination, each as of the date of calculation on a consolidated basis in accordance with GAAP to


	(2) Consolidated EBITDAR of the Company and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination; provided, however, that:

	(3) if the Company or any Restricted Subsidiary:


	(a) has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio is an Incurrence of Indebtedness, Indebtedness at the end of such period and Consolidated EBITDAR and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be: (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or

	(b) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Indebtedness at the end of such period and Consolidated EBITDAR and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period;

(4) if since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition, including, without limitation, by way of Sale/ Leaseback Transactions, or disposed of any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Leverage Ratio is such an Asset Disposition:


	(a) Indebtedness at the end of such period will be reduced by an amount equal to the Indebtedness discharged, defeased or retired with the Net Available Cash of such Asset Disposition and the assumption of Indebtedness by the Transferee;

	(b) the Consolidated EBITDAR for such period will be reduced by an amount equal to the Consolidated EBITDAR (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDAR (if negative) directly attributable thereto for such period; and

	(c) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);


	(5) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person which becomes


	a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business or group of related assets or line of business, Indebtedness at the end of such period and Consolidated EBITDAR, Consolidated Interest Expense and Consolidated Rent Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and

	(6) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have Incurred any Indebtedness, discharged any Indebtedness, made any Asset Disposition or any Investment or acquisition of assets, or Incurred or discharged any obligations relating to operating leases that would have required an adjustment pursuant to clause (3), (4) or (5) above if made by the Company or a Restricted Subsidiary during such period, Indebtedness at the end of such period and Consolidated EBITDAR and Consolidated Rent Expense for such period will be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period.

The pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act).

“Consolidated Net Income” means, for any period, the net income (loss) of the Company and its consolidated Restricted Subsidiaries determined in accordance with GAAP; provided, however, that there will not be included in such Consolidated Net Income:


	(1) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that:


	(a) subject to the limitations contained in clauses (3), (4) and (5) below, the Company’s equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below); and

	(b) the Company’s equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary;


	(2) any net income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:


	(a) subject to the limitations contained in clauses (3), (4) and (5) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and

	(b) the Company’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;


	(3) any gain (loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Restricted Subsidiaries (including pursuant to any Sale/ Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person;


	(4) any extraordinary gain or loss; and

	(5) the cumulative effect of a change in accounting principles.

“Consolidated Rent Expense” for any period means the total rental expense relating to operating leases of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, less cash rent income received by the Company and its consolidated Restricted Subsidiaries; provided that for the purposes of calculating the Consolidated Leverage Ratio of the Company and its consolidated Restricted Subsidiaries, Consolidated Rent Expense will exclude any rental expense that would be classified as Indebtedness.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company or Holdings, as the case may be, who: (1) was a member of such Board of Directors on the date of the Indenture; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the relevant Board at the time of such nomination or election.

“Credit Facility” means, with respect to the Company or any Subsidiary Guarantor, one or more credit facilities, including, without limitation, the Senior Secured Credit Agreement or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders and whether provided under the original Senior Secured Credit Agreement or any other credit or other agreement or indenture).

“Currency Agreement” means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:


	(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

	(2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or

	(3) is redeemable at the option of the holder of the Capital Stock in whole or in part,

in each case on or prior to the date that is 91 days after the earlier of the date (a) of the Stated Maturity of the Notes or (b) on which there are no Notes outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in the Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with the provisions of the Indenture described under the

“Earn-Out Payment” means any contingent consideration based on future operating or other performance relating to an Investment of the type described in clause (1) or (2) of the definition “Permitted Investment,” following the consummation of such Investment, based on criteria set forth in the documentation governing or relating to such Investment.

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the date of the Indenture, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in the Indenture will be computed in conformity with GAAP.

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:


	(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

	(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

“Guarantor Subordinated Obligation” means, with respect to a Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate in right of payment to the obligations of such Subsidiary Guarantor under its Note Guarantee pursuant to a written agreement.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

“holder” means a Person in whose name a Note is registered on the Registrar’s books.

“Holdings” means VI Acquisition Corp., a Delaware corporation, and the parent company of the Company.

“Incur” means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):


	(1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

	(2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

	(3) the principal component of all obligations of such Person in respect of letters of credit (not cash collateralized), bankers’ acceptances or other similar instruments (including reimbursement obligations with respect, in either case, thereto except to the extent such reimbursement obligation relates to


	(i) a trade payable or (ii) the ordinary course operations of the Company or any of its Restricted Subsidiaries; provided that the underlying obligation would not otherwise constitute Indebtedness, and such obligation is satisfied within 30 days of Incurrence);

	(4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto, excluding any Earn-Out Payment obligation relating to any Investment made in accordance with clause (1) or (2) of the definition of “Permitted Investment”;

	(5) Capitalized Lease Obligations and all Attributable Indebtedness of such Person;

	(6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Restricted Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock;

	(7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons;

	(8) the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person; and

	(9) to the extent not otherwise included in this definition, net obligations of such Person under Currency Agreements and Interest Rate Agreements (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time).

The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Notwithstanding the foregoing, money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of interest on such Indebtedness shall not be deemed to be “Indebtedness” provided that such money is held to secure the payment of such interest.

In addition, “Indebtedness” of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if:


	(1) such Indebtedness is the obligation of a partnership or joint venture that is not a Restricted Subsidiary (a “Joint Venture”);

	(2) such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a “General Partner”); and

	(3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of such Person; and then such Indebtedness shall be included in an amount not to exceed:


	(a) the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or

	(b) if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount.

“Interest Rate Agreement” means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate

“Investment” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment:


	(1) Hedging Obligations entered into in the ordinary course of business and in compliance with the Indenture;

	(2) endorsements of negotiable instruments and documents in the ordinary course of business; and

	(3) an acquisition of assets, Capital Stock or other securities by the Company or a Restricted Subsidiary for consideration to the extent such consideration consists of Common Stock of the Company.


	(1) “Investment” will include the portion (proportionate to the Company’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary; and

	(2) any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value (as conclusively determined by the Board of Directors of the Company in good faith) of the Capital Stock of such Subsidiary not sold or disposed of.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal (but not interest) pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the


	(1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred (including severance and relocation costs and expenses), and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition;

	(2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition;

	(3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and

	(4) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition.

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).


	(1) as to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise);

	(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

	(3) the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries.

“Note Guarantee” means, individually, any Guarantee of payment of the Notes and exchange notes issued in a registered exchange offer pursuant to a Registration Rights Agreement by a Note Guarantor pursuant to the terms of the Indenture and any supplemental indenture thereto. Each such Note Guarantee will be in the form prescribed by the Indenture.

“Note Guarantor” means Holdings, and each Subsidiary of the Company in existence on the Issue Date that provides a guarantee under the Senior Secured Credit Agreement and any other Subsidiary of the Company that provides a Note Guarantee in accordance with the Indenture; provided that upon the release or discharge of such Person from its Note Guarantee in accordance with the Indenture, such Person ceases to be a Note Guarantor.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company. Officer of any Note Guarantor has a correlative meaning.

“Officers’ Certificate” means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

“Pari Passu Indebtedness” means Indebtedness that ranks equally in right of payment to the Notes.

“Permitted Holders” means Wind Point Partners IV, L.P., Wind Point Partners V, L.P. and any Affiliate or Related Person thereof.

“Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:


	(1) the Company or a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business;

	(2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person’s primary business is a Related Business;

	(3) cash and Cash Equivalents;

	(4) receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

	(5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

	(6) loans or advances to employees (other than executive officers) made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary;

	(7) Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

	(8) Investments made as a result of the receipt of noncash consideration from an Asset Disposition that was made pursuant to and in compliance with “Certain Covenants— Limitation on Sales of Assets and Subsidiary Stock”;

	(9) Investments in existence on the Issue Date;

	(10) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with “Certain covenants— Limitation on Indebtedness”;

	(11) Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the time of such Investment not to exceed $5.0 million outstanding at any one time (with the fair market value of such Investment being measured at the time made and without giving effect to subsequent changes in value);

	(12) Guarantees issued in accordance with “Certain covenants— Limitations on Indebtedness”; and

	(13) any Asset Swap made in accordance with “Certain covenants— Limitation on sales of assets and Subsidiary stock.”


	(1) Liens securing Indebtedness and other obligations under the Senior Secured Credit Agreement and related Hedging Obligations and liens on assets of Restricted Subsidiaries securing Guarantees of Indebtedness and other obligations of the Company under the Senior Secured Credit Agreement permitted to be Incurred under the Indenture in an aggregate principal amount at any one time outstanding not to exceed $50.0 million;

	(2) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

	(3) Liens imposed by law, including carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof;

	(4) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves required pursuant to GAAP have been made in respect thereof;

	(5) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness;

	(6) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

	(7) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligation;

	(8) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

	(9) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

	(10) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, purchase money obligations or other payments Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business provided that;


	(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and does not exceed the cost of the assets or property so acquired or constructed; and


	(b) such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;


	(11) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that:


	(a) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

	(b) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;


	(12) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

	(13) Liens existing on the Issue Date;

	(14) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary;

	(15) Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

	(16) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or a Wholly-Owned Subsidiary;

	(17) Liens securing the Notes and Guarantees;

	(18) Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

	(19) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease;

	(20) Liens on property of the Company or any Restricted Subsidiary that are the subject of a Sale/ Leaseback Transaction securing Attributable Indebtedness Incurred in connection with such Sale/ Leaseback Transaction; provided that the Net Available Cash from such Sale/ Leaseback Transaction is applied in accordance with “—Certain covenants— Limitation on sales of assets and Subsidiary stock.”

	(21) Liens securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at any one time not to exceed 10% of Total Tangible Assets at the time of determination.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity.

“Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

“Professional Services Agreement” means the Professional Services Agreement, dated as of June 13, 2003, among Holdings, Wind Point Investors IV, L.P. and Wind Point Investors V, L.P., as amended from time to time.

“Public Equity Offering” means a primary public offering for cash by the Company or Holdings, as the case may be, of its Common Stock, or options, warrants or rights with respect to its Common Stock made pursuant to a registration statement that has been declared effective by the SEC, other than public offerings with respect to the Company’s or Holdings’ Common Stock, or options, warrants or rights, registered on Form S-4 or S-8.

A “Public Market” exists at any time with respect to the Common Stock of the Company or Holdings, as the case may be, if:


	(1) the Common Stock of the Company or Holdings, as the case may be, is then registered with SEC pursuant to Section 12(b) or 12(g) of Exchange Act and traded either on a national securities exchange or in the National Association of Securities Dealers Automated Quotation System; and

	(2) at least 15% of the total issued and outstanding Common Stock of the Company or Holdings, as the case may be, has been distributed prior to such time by means of an effective registration statement under the Securities Act of 1933, as amended.

“Qualified Equity Offering” means a primary public or private sale for cash by the Company or Holdings, as the case may be, of its Common Stock, or options, warrants or rights with respect to its Common Stock, other than a public offering with respect to the Company’s or Holdings’ Common Stock, or options, warrants or rights, registered on Form S-4 or S-8.

“Receivable” means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an “account,” “chattel paper,” “payment intangible” or “instrument” under the Uniform Commercial Code as in effect in the State of New York and any “supporting obligations” as so defined.

“Receivables Fees” means any fees or interest paid to purchasers or lenders providing the financing in connection with a factoring agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a factoring agreement or other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off-balance sheet or through a Restricted Subsidiary or an Unrestricted Subsidiary.

“Refinancing Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, “refinance,” “refinances,” and “refinanced” shall have a correlative meaning) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that:

(1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Notes;


	(2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced;

	(3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees Incurred in connection therewith); and

	(4) if the Indebtedness being refinanced is subordinated in right of payment to the Notes or the Note Guarantee of a Subsidiary Guarantor, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Note Guarantee of a Subsidiary Guarantor on terms at least as favorable to the holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

“Registration Rights Agreement” means that certain registration rights agreement dated as of the date of the Indenture by and among the Company, the Note Guarantors and the initial purchasers set forth therein; and with respect to any Additional Notes, one or more substantially similar registration rights agreement among the Company and the other parties thereto, as such agreement(s) may be amended from time to time.

“Related Business” means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the date of the Indenture.


	(1) any controlling stockholder or a majority (or more) owned Subsidiary of such Permitted Holder or, in the case of an individual, any spouse or immediate family member of such Permitted Holder, any trust created for the benefit of such individual or such individual’s estate, executor, administrator, committee or beneficiaries; or

	(2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority (or more) controlling interest of which consist of such Permitted Holder and/or such other Persons referred to in the immediately preceding clause (1).

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

“Sale/ Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

“Senior Secured Credit Agreement” means the Credit Facility entered into among the Company, Wells Fargo Foothill, Inc. as Administrative Agent and the lenders parties thereto from time to time, as the same may be amended, supplemented or otherwise modified from time to time.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

“Subordinated Obligation” means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Notes pursuant to a written agreement.

“Subsidiary” of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

“Subsidiary Guarantor” means each Subsidiary of the Company that is a Note Guarantor.

“Total Tangible Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company, less goodwill, patents, trademarks, franchise rights and other intangible assets as determined in accordance with GAAP.


	(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

	(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:


	(1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

	(2) all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt;

	(3) such designation and the Investment of the Company in such Subsidiary complies with “Certain Covenants— Limitation on Restricted Payments;”

	(4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries;

	(5) such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation:


	(a) to subscribe for additional Capital Stock of such Person; or

	(b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and


	(6) on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company.

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.

The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Company could Incur at least $1.00 of additional Indebtedness under the first paragraph of the “Limitation on Indebtedness” covenant (without giving effect to clause (2) thereof) on a pro forma basis taking into account such designation.

“U.S. Government Obligations” means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

“Voting Stock” of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors.

“Wholly-Owned Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.

We and our subsidiary guarantor and parent guarantor have entered into a registration rights agreement with the initial purchasers on the closing date of the sale of the original notes. In that agreement, we have agreed for the benefit of the holders of the original notes that we will use our reasonable best efforts to file with the Securities and Exchange Commission and cause to become effective a registration statement relating to an offer to exchange the original notes for an issue of Securities and Exchange Commission-registered exchange notes that evidence the same indebtedness and have terms identical to the original notes (except that the exchange notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below).

When the Securities and Exchange Commission declares the exchange offer registration statement effective, we will offer the exchange notes in return for the original notes. The exchange offer will remain open for at least 20 business days after the date we mail notice of the exchange offer to noteholders. For each original note surrendered to us under the exchange offer, the noteholder will receive an exchange note evidencing an equal principal amount of indebtedness of the note surrendered. Interest on each exchange note will accrue from the last interest payment date on which interest was paid on the original notes or, if no interest has been paid on the original notes, from the closing date of the sale of the original notes. Under current Securities and Exchange Commission interpretations, the exchange notes will generally be freely transferable after the exchange offer, except that any broker-dealer that participates in the exchange must deliver a prospectus meeting the requirements of the Securities Act when it resells the exchange notes.

If applicable interpretations of the staff of the Securities and Exchange Commission do not permit us to effect the exchange offer, we will use our reasonable efforts to cause to become effective a shelf registration statement relating to resales of the original notes and to keep that shelf registration statement effective until the expiration of the time period referred to in Rule 144(k) under the Securities Act, or such shorter period that will terminate when all notes covered by the shelf registration statement have been sold. We will, in the event of such a shelf registration, provide to each noteholder copies of a prospectus, notify each noteholder when the shelf registration statement has become effective and take certain other actions to permit resales of the original notes. A noteholder that sells original notes under the shelf registration statement generally will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with those sales and will be bound by the provisions of the registration rights agreement that are applicable to such a noteholder (including certain indemnification obligations). Under applicable interpretations of the staff of the Securities and Exchange Commission, our affiliates will not be permitted to exchange their original notes for registered notes in the exchange offer.

If the exchange offer is not completed (or, if required, the shelf registration statement is not declared effective) on or before the date that is 180 days after the closing date of the sale of the original notes, the annual interest rate borne by the original notes will be increased by 0.25% per annum (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that such additional interest continues to accrue, provided that the rate at which such additional interest accrues may in no event exceed 1.0% per annum) until the exchange offer is completed or the shelf registration statement is declared effective.

If we effect the exchange offer, we will be entitled to close the exchange offer 20 business days after its commencement, provided that we have accepted all original notes validly surrendered in accordance with the terms of the exchange offer. Original notes not tendered in the exchange offer shall bear interest at the rate set forth on the cover page of this prospectus and be subject to all the terms and conditions specified in the indenture, including transfer restrictions.

This summary of the provisions of the registration rights agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the registration rights agreement, a copy of which is available from us upon request.

The original notes were issued in the form of several registered notes in global form, without interest coupons (the “original global notes”), as follows:


	•	notes sold to qualified institutional buyers under Rule 144A were represented by the Rule 144A original global note;

	•	notes sold in offshore transactions to non-U.S. persons in reliance on Regulation S were represented by the Regulation S original global note; and

	•	any notes sold in the secondary market to institutional accredited investors were represented by the Institutional Accredited Investor original global note.

Upon issuance, each of the original global notes was deposited with the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee of DTC. The exchange notes issued in exchange for original notes will be represented by one or more global notes in registered form without interest coupons attached (collectively, the “global notes”). The global notes representing the exchange notes will be deposited with the Trustee, as custodian for DTC, and registered in the name of Cede & Co., as nominee of DTC.

Ownership of beneficial interests in each global note will be limited to persons who have accounts with DTC (“DTC participants”) or persons who hold interests through DTC participants. We expect that under procedures established by DTC:


	•	upon deposit of each global note with DTC’s custodian, DTC will credit portions of the principal amount of the global note to the accounts of the DTC participants designated by the initial purchasers; and

	•	ownership of beneficial interests in each global note will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC (with respect to interests of DTC participants) and the records of DTC participants (with respect to other owners of beneficial interests in the global note).

Beneficial interests in the global notes may not be exchanged for notes in physical, certificated form except in the limited circumstances described below. In addition, while the exchange notes are in global form, holders of beneficial interests in the global notes will not be considered the owners or “holders” of exchange notes for any purpose.

So long as the exchange notes are held in global form, DTC (or its nominee), will be considered the sole holder of global notes for all purposes under the indenture. In addition, DTC participants must rely on the procedures of DTC, and indirect participants must rely on the procedures of DTC and the DTC participants through which they own beneficial interests, to transfer their interests or to exercise any rights of holders under the indenture.

All interests in the global notes will be subject to the operations and procedures of DTC. We provide the following summaries of those operations and procedures solely for the convenience of investors. The operations and procedures of DTC are controlled by DTC and may be changed at any time. Neither we nor the initial purchasers are responsible for those operations or procedures.


	•	a limited purpose trust company organized under the laws of the State of New York;

	•	a “banking organization” within the meaning of the New York State Banking Law;


	•	a member of the Federal Reserve System;

	•	a “clearing corporation” within the meaning of the Uniform Commercial Code; and

	•	a “clearing agency” registered under Section 17A of the Exchange Act.

DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC’s participants include securities brokers and dealers, including the initial purchasers; banks and trust companies; and clearing corporations and other organizations. Indirect access to DTC’s system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC.

So long as DTC’s nominee is the registered owner of a global note, that nominee will be considered the sole owner or holder of the notes represented by that global note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global note:


	•	will not be entitled to have notes represented by the global note registered in their names;

	•	will not receive or be entitled to receive physical, certificated notes; and

	•	will not be considered the owners or holders of the notes under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee under the indenture.

As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC to exercise any rights of a holder of notes under the indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest).

Payments of principal, premium (if any) and interest with respect to the notes represented by a global note will be made by the Trustee to DTC’s nominee as the registered holder of the global note. Neither we nor the Trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests.

Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC.

Transfers between participants in DTC will be effected under DTC’s procedures and will be settled in same-day funds.

Notes in physical, certificated form will be issued and delivered to each person that DTC identifies as a beneficial owner of the related notes only if:


	•	DTC notifies us at any time that it is unwilling or unable to continue as depositary for the global notes and a successor depositary is not appointed within 90 days;

	•	DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days;

	•	we, at our option, notify the Trustee that we elect to cause the issuance of certificated notes; or

	•	certain other events provided in the indenture should occur.

The following summary of the material U.S. federal income tax consequences of the purchase, ownership, disposition and exchange of the notes is based on the Internal Revenue Code of 1986, as amended (which we refer to in this prospectus as the “Code”), the Treasury regulations under the Code (which we refer to in this prospectus as the “Treasury Regulations”), and administrative and judicial interpretations of the Code, as of the date of this prospectus, all of which are subject to change, possibly on a retroactive basis. This summary is for general information only and does not consider all aspects of U.S. federal income taxation that may be relevant to the purchase, ownership and disposition of the notes by a prospective investor in light of his, her or its personal circumstances.

This discussion generally is limited to the U.S. federal income tax consequences to investors who are beneficial owners of the notes and who hold the notes as capital assets within the meaning of Section 1221 of the Code. This discussion does not address the U.S. federal income tax consequences to investors subject to special treatment under the U.S. federal income tax laws, such as dealers in securities or foreign currency, tax-exempt entities, banks, thrifts, insurance companies or persons who hold the notes as part of a “straddle,” as part of a “hedge” against currency risk or as part of a “conversion transaction,” have a “functional currency” other than the U.S. dollar, trade in securities and elect to use a mark-to-market method of accounting for their securities holdings, are liable for alternative minimum tax, or are investors in pass-through entities that hold the notes. If a partnership holds the notes, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding the notes, you should consult your tax advisor. In addition, this discussion is generally limited to the tax consequences to initial holders that purchase the notes at the “issue price,” and does not describe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction, or, except to a limited extent, any possible applicability of U.S. federal gift or estate tax.

We have not sought any rulings from the Internal Revenue Service (which we refer to in this prospectus as the “IRS”), nor an opinion of counsel with respect to the U.S. federal income tax consequences discussed below. The discussion below is not binding on the IRS or the courts. Accordingly, there can be no assurance that the IRS will not take, or that a court will not sustain, a position concerning the tax consequences of the purchase, ownership or disposition of the notes different from that discussed below.

Persons considering the purchase of notes should consult their own tax advisors concerning the application of U.S. federal tax laws, as well as the law of any state, local or foreign taxing jurisdiction, to their particular situations.

As used in this summary, the term “United States Holder” means any beneficial owner of notes who is:


	•	a citizen or resident of the United States for U.S. federal income tax purposes;

	•	a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

	•	an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

	•	a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (2) the trust has in effect a valid election to be treated as a domestic trust for U.S. federal income tax purposes.

A “Non-United States Holder” is an individual, corporation, estate or trust that is not a United States Holder.

Stated interest. Interest received on the notes by a United States Holder will generally be taxable as ordinary income. A United State Holder generally must pay United States federal income tax with respect to the interest on the notes: (i) when it accrues, if the holder uses the accrual method of accounting for United States federal income tax purposes; or (ii) when the holder receives or is treated as receiving it, if the holder uses the cash method of accounting for United States federal income tax purposes.

Additional interest/repurchase options. Our failure to comply with the registration rights agreement, as described under “Exchange offer; registration rights,” will cause the annual interest rate on the notes to increase. According to applicable Treasury Regulations, the possibility of a change in the interest rate on the notes will not affect the amount or timing of interest income recognized by a United States Holder of a note if the likelihood of the change, as of the date the notes are issued, is remote or incidental. We intend to take the position that the potential payments resulting from the failure to comply with the registration rights agreement will not affect the yield to maturity of the notes (for purposes of the original issue discount provisions of the Code). Accordingly, any such increase in interest payable to a holder should be includible in such holder’s gross income as interest income at the time the payment is paid or accrues in accordance with such holder’s regular method of tax accounting.

In the event that there is a change of control, holders of notes will have the right to require us to repurchase their notes at 101% of the principal amount plus accrued and unpaid interest, if any (see “Description of notes— Optional redemption”). Further, under certain circumstances we are allowed to redeem notes for an amount in excess of the principal amount of notes at our option (see “Description of notes— Optional redemption”). As with the possibility of our failure to comply with the registration rights agreement, we similarly do not intend to treat these possibilities as affecting the yield to maturity of the notes (for purposes of the original issue discount provisions of the Code).

Our determination that the contingencies discussed in the above two paragraphs do not affect the yield to maturity of the notes is binding on a holder, unless such holder discloses its contrary position in the manner required by applicable Treasury Regulations. Our determination is not, however, binding on the IRS. Thus, there is no assurance that the IRS would not take a contrary position.

Sale or other disposition of the notes. Except as discussed below under “Receipt of exchange notes,” a United States Holder generally will recognize gain or loss on the sale, exchange, redemption, repurchase, retirement or other taxable disposition of a note. The amount of a United States Holder’s gain or loss equals the difference between the amount received for the note (in cash or other property, valued at fair market value), minus the amount attributable to accrued interest on the note (which will be taxable as ordinary income if not previously included in gross income), and the holder’s adjusted tax basis in the note. A United States Holder’s initial tax basis in a note equals the price paid for the note. Special rules may apply to notes redeemed in part.

Any such gain or loss on a taxable disposition of a note as described in the foregoing paragraph will generally constitute capital gain or loss and will be long-term capital gain or loss if such note was held by the United States Holder for more than one year. Under current law, net long-term capital gains of non-corporate holders generally are taxed at a maximum rate of 15%. Capital gain of a non-corporate holder that is not long-term capital gain will be taxed at ordinary income tax rates. The deduction of capital losses is subject to certain limitations.

Receipt of exchange notes. The exchange of exchange notes for original notes described elsewhere in this prospectus should not constitute a taxable exchange. As a result:


	•	a holder will not recognize taxable gain or loss solely by reason of the receipt of exchange notes in exchange for original notes;

	•	the holding period in the exchange notes will include the holder’s holding period in the original notes; and


	•	the basis in the exchange notes will equal the holder’s basis in the original notes.

Information reporting and backup withholding. A United States Holder will generally be subject to information reporting and may also be subject to backup withholding tax, currently at a rate of 28%, when such holder receives interest payments on the note or proceeds upon the sale or other disposition of a note. Certain United States Holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to information reporting or backup withholding. In addition, the backup withholding tax will not apply to a United States Holder if such holder provides its taxpayer identification number (“TIN”) in the prescribed manner unless:


	•	the IRS notifies us or our agent that the TIN the holder provides is incorrect;

	•	the holder fails to report interest and dividend payments that the holder receives on its tax return and the IRS notifies us or our agent that withholding is required; or

	•	the holder fails to certify under penalties of perjury that (i) the holder provides to us its correct TIN, (ii) the holder is not subject to backup withholding and (iii) the holder is a U.S. person (including a U.S. resident alien).

If the backup withholding tax does apply to a particular United States Holder, such holder may use the amounts withheld as a refund or credit against its United States federal income tax liability as long as the holder provides certain information to the IRS.

The following is a summary of certain United States federal income and estate tax consequences of the ownership of notes as of the date hereof by Non-United States Holders. Except where noted, this summary deals only with notes that are held as capital assets by a non-United States Holder who acquired the notes upon original issuance at their initial offering price.

United States federal withholding tax. The 30% United States federal withholding tax will not apply to any payment of principal and, under the “portfolio interest rule,” interest on the notes, provided that:


	•	interest paid on the notes is not effectively connected with the holder’s conduct of a trade or business in the United States;

	•	the holder does not actually (or constructively) own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of the Code and applicable United States Treasury regulations;

	•	the holder is not a controlled foreign corporation that is related to us through stock ownership;

	•	the holder is not a bank whose receipt of interest on the notes is described in section 881(c)(3)(A) of the Code; and

	•	either (a) the holder provides its name and address on an IIRS Form W-8BEN (or other applicable form), and certifies, under penalties of perjury, that it is not a United States person or (b) the holder holds the notes through certain foreign intermediaries and satisfy the certification requirements of applicable United States Treasury regulations.

Special rules may apply to certain Non-United States Holders (or their beneficial owners), such as “controlled foreign corporations, “passive foreign investment companies,” “foreign personal holding companies” and certain expatriates, that are subject to special treatment under the Code. Such Non-United States Holders (or their beneficial owners) should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.

If a holder cannot satisfy the requirements described above, payments of interest made to a Non-United States Holder will be subject to the 30% United States federal withholding tax, unless the holder provides us with a properly executed:


	•	IRS Form W-8BEN (or other applicable form) claiming an exemption from or reduction in withholding under the benefit of an applicable income tax treaty; or

	•	IRS Form W-8ECI (or other applicable form) stating that interest paid on the notes is not subject to withholding tax because it is effectively connected with the holder’s conduct of a trade or business in the United States (as discussed below under “United States federal income tax”).

The 30% United States federal withholding tax generally will not apply to any gain that a holder realizes on the sale, exchange, retirement or other disposition of a note.

United States federal income tax. If a Non-United States Holder is engaged in a trade or business in the United States and interest on the notes is effectively connected with the conduct of that trade or business and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment, then the holder will be subject to United States federal income tax on that interest on a net income basis (although the holder will be exempt from the 30% United States federal withholding tax, provided the certification requirements discussed above in “United States federal withholding tax” are satisfied) in the same manner as if the Non-United States Holder were a United States person as defined under the Code. In addition, if the holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or lower applicable income tax treaty rate) of such interest, subject to adjustments.

Any gain realized on the disposition of a note generally will not be subject to United States federal income tax unless:


	•	the gain is effectively connected with the holder’s conduct of a trade or business in the United States, and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment; or

	•	the holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met.

United States federal estate tax. An individual’s estate will not be subject to United States federal estate tax on notes beneficially owned by an individual at the time of his or her death, provided that any payment to the individual holder on the notes would be eligible for exemption from the 30% United States federal withholding tax under the “portfolio interest rule” described above under “United States federal withholding tax” without regard to the statement requirement described in the fifth bullet point.

Information reporting and backup withholding. Generally, we must report to the IRS and to the Non-United States Holder the amount of interest paid to the holder and the amount of tax, if any, withheld with respect to those payments. Copies of the information returns reporting such interest payments and any withholding may also be made available to the tax authorities in the country in which the holder resides under the provisions of an applicable income tax treaty.

In general, a Non-United States Holder will not be subject to backup withholding with respect to payments on the notes that we make to it provided that we do not have actual knowledge or reason to know that a Non-United States Holder is a United States person, as defined under the Code, and we have received from the holder the statement described above in the fifth bullet point under “United States federal withholding tax.”

In addition, no information reporting or backup withholding will be required regarding the proceeds of the sale of a note made within the United States or conducted through certain United States-related financial intermediaries, if the payor receives the statement described above and does not have actual knowledge or reason to know that the holder is a United States person, as defined under the Code, or otherwise establishes an exemption.

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a Non-United States Holder United States federal income tax liability provided the required information is furnished to the IRS.

THE PRECEDING DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF PURCHASING, HOLDING AND DISPOSING OF NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.

The following is a summary of certain considerations associated with the purchase of the original notes and exchange notes by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements (each, a “Plan”).

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the original notes and exchange notes of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of notes by an ERISA Plan with respect to which the issuer, the underwriter, or the guarantor is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to the acquisition and holding of the notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers, although there can be no assurance that all of the conditions of any such exemptions will be satisfied.

Because of the foregoing, the original notes and exchange notes should not be purchased or held by any person investing “plan assets” of any Plan, unless such purchase and holding (and the exchange of original notes for exchange notes) will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable Similar Laws.

Accordingly, by acceptance of an original note or an exchange note each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire and hold the notes constitutes assets of any Plan or (ii) the purchase and holding of the original notes (and the exchange of original notes for exchange notes) by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the original notes (and holding the original notes or exchange notes) on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase and holding of the notes.

Except as described below, based on interpretations of the Securities and Exchange Commission staff set forth in no-action letters issued to third parties, we believe that the exchange notes issued in exchange for original notes may be offered for resale, resold, and otherwise transferred by a holder without further registration under the Securities Act and without delivering a prospectus in connection with any resale of the exchange notes, provided that the holder:


	•	is acquiring the exchange notes in the ordinary course of its business;

	•	is not engaging nor intends to engage, and has no arrangement or understanding with any person to participate, in the distribution of the exchange notes; and

	•	is not an “affiliate” of VICORP Restaurants, Inc. within the meaning of Rule 405 under the Securities Act.

Holders wishing to tender their original notes in the exchange offer must represent to us that these conditions have been met.

We, however, have not sought, and do not intend to seek, our own no-action letter and there can be no assurance that the Securities and Exchange Commission staff would make a similar determination with respect to our exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the exchange notes cannot rely on these interpretations by the Securities and Exchange Commission staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for original notes where such original notes were acquired as a result of market-making activities or other trading activities. We and the parent and subsidiary guarantors have agreed that, until the earlier of (i) the close of business 180 days after the expiration date of the exchange offer and (ii) the date on which all broker-dealers have sold all exchange notes held by them, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale.

We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit of any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For the period of time specified in the registration rights agreement, we and the parent and subsidiary guarantors will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer other than commissions or concessions of any brokers or dealers and will indemnify the holders of the exchange notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

Certain legal matters in connection with the exchange offer covered by this prospectus will be passed upon for us by our legal counsel.

The consolidated financial statements of VI Acquisition Corp. as of October 26, 2003 and for the period from June 14, 2003 through October 26, 2003, of Midway Investors Holdings Inc. (the predecessor company to VI Acquisition Corp.) as of October 27, 2002 and for the period from October 28, 2002 through June 13, 2003, the year ended October 27, 2002 and the period from May 14, 2001 through October 28, 2001, and of VICORP Restaurants, Inc. (the predecessor company to Midway Investors Holdings Inc.) for the period from October 30, 2000 through May 13, 2001, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, an independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

In connection with the commencement of the exchange offer, we will file with the Securities and Exchange Commission, to the extent such filings are accepted by the Securities and Exchange Commission, the annual reports, quarterly reports and other documents that we would be required to file if we were subject to the reporting requirements of the Exchange Act.

Any materials filed with the Securities and Exchange Commission may be read and copied at the Securities and Exchange Commission’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. We expect that any materials filed by us with the Securities and Exchange Commission will be filed electronically.

We have filed with the Securities and Exchange Commission a registration statement on Form S-4 (the “Registration Statement”) with respect to the exchange notes and related subsidiary guarantees. This prospectus, which is a part of the Registration Statement, omits certain information and exhibits included in the Registration Statement. Statements made in this prospectus as to the contents of any contract, agreement or other document are only summaries and are not complete. We refer you to these exhibits for a more complete description of the matter involved. Each statement regarding the exhibits is qualified by the actual documents.

We are “incorporating by reference” all documents that we file with the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until the termination of this offering, which means we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus.

You may request a copy of those filings, at no cost, by writing or telephoning us at the following:

To obtain timely delivery of those materials, you must request the information no later than five business days before the expiration of the exchange offer. The date by which you must request the information is , 2004.

Information that we file later with the Securities and Exchange Commission and that is incorporated by reference in this prospectus will automatically update and supersede information contained in this prospectus as if that information were included in this prospectus.

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any person to provide you with any information or represent anything not contained in this prospectus, and, if given or made, any such other information or representation should not be relied upon as having been authorized by us. We are not making an offer to sell these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.

We have audited the accompanying consolidated balance sheet of VI Acquisition Corp. as of October 26, 2003, and the related consolidated statements of operations, stockholders’ equity and cash flows for the period from June 14, 2003 through October 26, 2003. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of VI Acquisition Corp. at October 26, 2003 and the consolidated results of its operations and its cash flows for the period from June 14, 2003 through October 26, 2003, in conformity with U.S. generally accepted accounting principles.

We have audited the accompanying consolidated balance sheet of Midway Investors Holdings Inc. (the predecessor company to VI Acquisition Corp.) as of October 27, 2002 and the related consolidated statements of operations, stockholders’ equity and cash flows for the period from October 28, 2002 through June 13, 2003, the year ended October 27, 2002, and the period from May 14, 2001 through October 28, 2001. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Midway Investors Holdings Inc. at October 27, 2002, and the consolidated results of its operations and its cash flows for the period from October 28, 2002 through June 13, 2003, the year ended October 27, 2002, and the period from May 14, 2001 through October 28, 2001, in conformity with U.S. generally accepted accounting principles.

We have audited the accompanying consolidated statements of operations, stockholders’ equity and cash flows of VICORP Restaurants, Inc. (the predecessor company to Midway Investors Holdings Inc.) for the period from October 30, 2000 through May 13, 2001. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of VICORP Restaurants, Inc. for the period from May 14, 2001 through October 28, 2001, in conformity with U.S. generally accepted accounting principles.

VI Acquisition Corp. (the “Company” or “VI Acquisition”), a Delaware corporation, was organized by Wind Point Partners and other individual co-investors.

On June 14, 2003, the Company acquired Midway Investors Holdings Inc. (“Midway”) in a stock purchase transaction accounted for under the purchase method of accounting pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”). Midway’s active wholly-owned subsidiaries are VICORP Restaurants, Inc. (“VICORP”) and Village Inn Pancake House of Albuquerque, Inc.

Midway is a Delaware corporation originally organized by BancBoston Ventures, Inc., Goldner Hawn Johnson & Morrison, Incorporated (“Goldner Hawn”), Fairmont Capital, Inc. and other affiliates. Midway acquired VICORP in May 2001 in a stock purchase transaction accounted for under the purchase method of accounting pursuant to SFAS No. 141. Prior to the acquisition of VICORP by Midway, VICORP operated as a publicly-traded company.

VICORP operates family-dining restaurants under the names “Bakers Square” and “Village Inn,” and franchises restaurants under the Village Inn brand name. At October 26, 2003, VICORP operated 267 restaurants in 15 states. Of the Company-operated restaurants, 149 were Bakers Squares and 118 were Village Inns, with an additional 105 franchised Village Inn restaurants in 19 states. The Company-operated and franchised restaurants are concentrated in Arizona, California, Florida, the Rocky Mountain region, and the upper Midwest. The Company operates three pie manufacturing facilities to support the restaurants and to produce pies for select third parties. The Company’s pie production facilities are located in Santa Fe Springs, California; Oak Forest, Illinois; and Chaska, Minnesota.

In connection with the June 14, 2003 purchase of Midway, the assets (including specifically identifiable intangible assets) and liabilities of the acquired company were recorded at the estimated fair value with the excess of the purchase price over these amounts being recorded as goodwill of $82.8 million. Capitalization of the acquired company was funded by new senior and subordinated debt under the terms of newly executed credit and investment agreements dated as of June 13, 2003. See Note 7 (“Debt”). In connection with the closing of the purchase and subject to the terms of the stock purchase agreement, the following transactions occurred:


	•	Fixed assets were adjusted to their fair market value, resulting in an increase to the assets’ value of $6.2 million;

	•	Trademarks and tradenames were recorded at an estimated fair value of $42.6 million;

	•	Repayment of all indebtedness, including the prior Senior Term A and B loans, subordinated debt, mortgage loan obligations and letters of credit. Prepayment penalties of $1.3 million were also paid in association with the early repayment of this indebtedness and recorded as an expense in the period ended June 13, 2003;

	•	Outstanding derivatives were settled for $1.9 million and recorded as an expense in the period ended June 13, 2003;

	•	Costs associated with the acquisition of new debt instruments totaling $5.1 million were capitalized;

	•	The Company entered into a sale-leaseback transaction involving ten properties which resulted in a decrease in fixed assets of $9.7 million;


	•	Rents payable under leases were revalued to their fair market value resulting in an additional obligation of $8.0 million;

	•	Midway redeemed all of its outstanding preferred stock for a total of $42.4 million;

	•	Franchise rights were recorded at their estimated fair value resulting in a decrease of $3.7 million of this asset; and

	•	Compensation costs of $6.2 million were recorded in the period ended June 13, 2003 as a result of the repurchase of common stock issued from the exercise of stock options, settlement of employment contracts and severance payments.

The financial statements for Midway as of October 27, 2002, for the period from October 28, 2002 through June 13, 2003, the year ended October 27, 2002 and the period from May 14, 2001 through October 28, 2001 represent the operations of the Company prior to the purchase by VI Acquisition and reflect the values established at the purchase on May 14, 2001 described below. They do not reflect the effects of the purchase accounting adjustments of the June 13, 2003 transaction. The financial statements and related notes as of October 26, 2003 and for the period from June 14, 2003 through October 26, 2003 reflect all purchase accounting adjustments resulting from the June 14, 2003 transaction.

On February 24, 2003, VICORP purchased all of the outstanding shares of Village Inn Pancake House of Albuquerque, Inc. This transaction was accounted for as a purchase in accordance with SFAS No. 141. The purchase price was allocated to the acquired assets (including specifically identifiable intangible assets) and assumed liabilities. Cash of $4.6 million was used to purchase net assets with the fair value of approximately $894,000, including $948,000 of property, plant and equipment resulting in goodwill of $3.7 million.

In connection with the May 14, 2001 acquisition of VICORP by Midway, the assets (including specifically identifiable intangible assets) and liabilities of the acquired company were recorded at the estimated fair value with the excess of the purchase price over these amounts being recorded as goodwill of $25.9 million. Capitalization of the acquired company was funded by senior and subordinated debt under the terms of various credit and investment agreements dated as of May 13, 2001. See Note 7 “Debt.” In connection with the closing of the purchase and subject to the terms of the stock purchase agreement, the following transactions occurred:


	•	Fixed assets were adjusted to their fair market value, resulting in an increase to the asset value of $1.6 million;

	•	A non-compete agreement with the former management of VICORP was recorded totaling $2.0 million;

	•	Costs associated with the acquisition of new debt instruments totaling $4.9 million were capitalized;

	•	The Company entered into a sale-leaseback transaction involving 48 properties which resulted in a decrease in fixed assets of $47.1 million;

	•	Rents payable under leases were recorded at their estimated fair market value resulting in an additional obligation of $3.1 million;

	•	Legal settlements totaling $8.3 million were recorded in the period ended May 13, 2001 in accordance with the terms of the purchase agreement; and


	•	Compensation costs of $1.7 million were recorded during the period ended May 13, 2001 as a result of the settlement of an employment contract and severance payments.

The income statement for the period from October 30, 2000 through May 13, 2001 is for VICORP and has been prepared on the historical cost basis. As a result, it does not reflect the effects of the purchase accounting adjustments for the May 14, 2001 purchase of VICORP by Midway. The financial statements and related notes as of October 27, 2002, for the period from May 14, 2001 through October 28, 2001, and for the year ended 2002, reflect all purchase accounting adjustments related to the acquisition of VICORP by Midway.

The accompanying consolidated financial statements of VI Acquisition Corp. as of October 26, 2003 and the period from June 14, 2003 through October 26, 2003 include the accounts of the Company, Midway, VICORP and its wholly-owned subsidiaries.

The accompanying predecessor financial statements as of October 27, 2002 and for the periods October 28, 2002 through June 13, 2003, the year ended October 27, 2002 and the period from May 14, 2001 through October 28, 2001 include the accounts of Midway, VICORP and its wholly-owned subsidiaries. The accompanying predecessor financial statements for the period October 30, 2000 through May 13, 2001 include the accounts of VICORP and its subsidiaries.

The Company reports on a 52/53 week fiscal year ending on the last Sunday in October.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Estimates are used in accounting for, among other things, allowances for uncollectible accounts, inventory allowances and insurance accruals. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary.

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”), established accounting standards for derivative instruments and hedging activities. Under SFAS No. 133, all derivatives are recognized as either assets or liabilities and measured at fair value. The accounting for changes in fair value of derivatives is dependent upon the intended use of the derivative. The Company does not use derivative instruments for trading purposes and the Company has procedures in place to monitor and control their use.

The Company uses interest rate swaps to manage its interest rate mix on the total debt portfolio and related overall cost of borrowing. To manage this mix in a cost-effective manner, the Company enters into interest rate swap agreements whereby it agrees to exchange the variable rate on a portion of its term

borrowings for a fixed rate. Under SFAS No. 133, the Company’s interest rate swap agreements are typically designated as cash flow hedges and are recorded at fair value, and changes in the value of such contracts, net of income taxes, are reported in comprehensive income. The net settlements made under the interest rate swap agreements are reflected in the consolidated statements of operations as an adjustment to interest expense over the term of the related swap. See Note 16 (“Hedging activities”) for further discussion.

Cash and cash equivalents consist of cash on hand and highly liquid instruments with original maturities of three months or less.

The Company maintains deposits in excess of FDIC limits at one bank. The maximum loss that would have resulted from this risk amounted to approximately $638,000 at October 26, 2003, which represents the excess of the deposit liabilities reported by the bank over the amounts that would have been covered by federal deposit insurance.

Inventories are stated at the lower of cost (first-in, first-out) or market and consist of food, paper products and supplies. Inventories consisted of the following:

Prepaid expenses consist primarily of prepaid rent, supplies, insurance and contracts.

At the date of the June 14, 2003 purchase of Midway, all property and equipment were adjusted to their estimated fair market values. This resulted in the Company recording an increase in its net property and equipment by $6.2 million and all subsequent acquisitions of property and equipment are stated at cost, less accumulated depreciation and amortization.

At the date of Midway’s purchase of VICORP, all property and equipment were adjusted to their estimated fair market values. This resulted in the Company increasing its net property and equipment by $1.6 million. Property and equipment of VICORP prior to the purchase by Midway and all subsequent acquisitions of property and equipment are stated at cost, less accumulated depreciation and amortization.

The provision for depreciation and amortization has been calculated using the straight-line method. The useful lives of assets range from 20 to 40 years for buildings and three to ten years for equipment and improvements. In general, assets acquired under capital leases and leasehold improvements are amortized over the lesser of the useful life or the lease term, including options. Property and equipment additions include acquisitions of building and equipment and costs incurred in the development and construction of new stores. Expenditures for maintenance and repairs are charged to expense as incurred.

The Company accounts for the cost of its information systems in accordance with Statement of Position (“SOP”) 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, which requires capitalization of external and internal costs incurred during the application development stage. Costs incurred during the preliminary project stage, post-implementation stage, and for training and application maintenance are expensed as incurred.

The Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”) in the period beginning October 28, 2002. Under SFAS No. 143, the fair value of a liability for an asset retirement obligation covered under the scope of this statement would be recognized in the period in which the liability is incurred, along with an offsetting increase in the carrying amount of the related long-lived asset. Upon settlement of the liability, an entity would either settle the obligation for its recorded amount or incur a gain or loss upon settlement.

The Company adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), in the period beginning October 28, 2002. SFAS No. 144 retains the fundamental provisions of existing generally accepted accounting principles with respect to the recognition and measurement of long-lived asset impairment contained in SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of (“SFAS No. 121”). However, SFAS No. 144 provides new guidance intended to address certain significant implementation issues associated with SFAS No. 121, including expanded guidance with respect to appropriate cash flows to be used to determine whether recognition of any long-lived asset impairment is required, and if required, how to measure the amount of the impairment. SFAS No. 144 also requires that any net assets to be disposed of by sale be reported at the lower of carrying value or fair value less cost to sell, and expands the reporting of discontinued operations to include any component of any entity with operations and cash flows that can be clearly distinguished from the rest of the entity.

Prior to October 28, 2002 and pursuant to SFAS No. 121, carrying values of long-lived assets were reviewed for impairment when events or changes in circumstances indicated that the assets’ carrying values may not be recoverable from the estimated future cash flows expected to result from the properties’ use and eventual disposition. When undiscounted expected future cash flows were less than carrying values, an impairment loss is recognized equal to the amount by which the carrying values exceed the net realizable values of the assets. The net realizable value would typically be calculated using discounted expected future cash flows. Net realizable values were generally determined by estimates provided by real estate professionals and/or the Company’s past experience in disposing of restaurant properties.

Goodwill represents the excess of cost over the fair value of individual net assets acquired in the business combination accounted for by the purchase method. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”), goodwill is not amortized on a periodic basis, but instead is subject to an impairment test to be performed at least on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. SFAS No. 142 requires a two-step

process for testing impairment. First, the fair value of each reporting unit is compared to its carrying value to determine whether an indication of impairment exists. If an impairment is indicated, the fair value of the reporting unit’s goodwill is determined by allocating the unit’s fair value to its assets and liabilities (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The amount of impairment, if any, for goodwill and other intangible assets, is measured as the excess of its carrying value over its fair value. The Company has determined that no impairments have existed in any of the periods presented. Intangible assets with lives restricted by contractual, legal, or other means continue to be amortized over their useful lives.

Prior to the June 14, 2003 purchase transaction, franchise rights with a value of $14.2 million were amortized using the straight-line method over the period expected to be benefited, or 20 years. Amortization expense of $500,000, $794,000 and $367,000 was recorded for the period ended June 13, 2003, the year ended October 27, 2002 and the period ended October 28, 2001, respectively.

At the date of the June 14, 2003 purchase transaction, the remaining franchise rights were adjusted to a current fair market value of $12.2 million. This value will be amortized over the remaining period expected to be benefited, or 18 years. Amortization expense of $250,000 was recorded for the period ended October 26, 2003. The Company expects to record annual amortization expense of $592,000 over the 18-year life of the franchise rights.

Upon completion of VICORP’s “going-private” transaction on May 14, 2001, the former chairman of VICORP’s Board of Directors entered into a noncompetition and escrow agreement pursuant to which he will be paid a total of $2 million not to compete with the Company for a period of five years after the purchase. The agreement requires the escrow agent to pay the former chairman, on January 2 of each year starting in 2002 through 2005, an amount equal to the lesser of (a) $500,000 plus all interest and other earnings in the escrow account, less any fees then due the escrow agent or (b) the entire amount then remaining in the escrow account. The noncompetition agreement is reflected in other assets and amortized using the straight-line method over a five-year period.

In connection with the June 14, 2003 purchase transaction and in accordance with SFAS No. 142, the Company had its trademarks and tradenames evaluated by an external third party. As a result of this evaluation it was determined that the Company possesses $42.6 million in trademarks and tradenames which have indefinite lives. The Company will not amortize trademarks and tradenames and will perform an evaluation for impairment at least annually.

As a component of the acquisition of Village Inn Pancake House of Albuquerque, Inc. on February 24, 2003, the Company entered into noncompetition agreements with the three former owners of the entity for an aggregate amount of $30,000 and a term of three years from issuance date.

Revenue from Company-operated stores is recognized in the period during which food and beverage products are sold.

Royalties are calculated as a percentage of the franchisee gross sales and recognized in the period the sales are generated. Initial franchise fees are recognized as income upon commencement of the franchise operation and completion of all material services and conditions by the Company. Rental income on properties subleased to franchisees is recognized on a straight-line basis over the life of the lease. Interest income on franchisee notes receivable and equipment sales is recognized when earned. Gift certificates sold but not yet redeemed are included in other accrued expenses (see “Other accrued expenses” in Note 6). Revenues are recognized upon redemption of the gift certificates.

Advertising costs for television, radio, newspapers, direct mail and point-of-purchase materials are expensed in the period incurred. Advertising expense for the periods ended October 26, 2003 and June 13, 2003, the year ended October 27, 2002, and the periods ending October 28, 2001 and May 13, 2001, was approximately $4.7 million, $8.6 million, $11.6 million, $4.3 million and $5.8 million, respectively.

New store pre-opening costs consist of salaries and other direct expenses incurred in connection with the setup and stocking of stores, employee training, and general store management costs incurred prior to the opening of new restaurants. New store pre-opening costs are expensed as incurred in accordance with SOP 98-5, Reporting on the Costs of Start-up Activities. New store preopening costs for the periods ended October 26, 2003 and June 13, 2003, the fiscal year ended October 27, 2002, and the periods ending October 28, 2001 and May 13, 2001 were approximately $249,000, $150,000, $60,000, $158,000 and $119,000, respectively.

The carrying value of cash, cash equivalents and notes receivable approximate fair value. The fair value of long-term debt approximates carrying value due to their variable, market-based interest rates.

Under SFAS No. 133, the Company’s interest rate swap agreements on its variable rate debt are recorded at fair value and changes in the value on such contracts, net of income taxes, are reported in comprehensive income. For the purposes of calculating income taxes related to comprehensive income, the Company uses the combined statutory rate for federal and state income taxes.

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees (“FIN 45”). FIN 45 requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in issuing the guarantee. FIN 45 also requires guarantors to disclose certain information for guarantees outstanding at June 15, 2003. FIN 45 did not have a significant impact on the Company’s consolidated statements of operations or financial position.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 requires an investor with a majority of the variable interests in a variable interest entity to consolidate the entity and also requires majority and significant variable interest investors to provide certain disclosures. A variable interest entity is an entity in which the equity investors do not have a controlling interest or the equity investment at risk is insufficient to finance the entity’s activities without receiving additional subordinated financial support from the other parties. FIN 46 provisions are effective for new variable interest entities created after January 31, 2003. The effective date of the application of FIN 46 for private companies with respect to interests in variable interest entities or potential variable interest entities created after December 31, 2003 is in the first period beginning after December 15, 2004. The Company is currently reviewing its investment portfolio to determine whether any of its investee companies are variable interest entities.

In March 2003, the Emerging Issues Task Force (“EITF”) reached consensus on EITF Issue No. 02-16, Accounting by a Customer for Certain Consideration Received from a Vendor. Issue No. 02-16 requires that certain cash consideration (rebates) received by a customer from a vendor be classified in the customer’s statements of operations as a reduction of cost of sales. The consensus is required to be applied to new arrangements entered into after December 31, 2002. The Company currently accounts for rebates in cost of sales.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“SFAS No. 149”). SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. The Company does not expect the implementation of SFAS No. 149 to have a material impact on its consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“SFAS No. 150”). SFAS No. 150 clarifies the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities (or assets in certain circumstances) in statements of financial position. SFAS No. 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities— all of whose shares are mandatorily redeemable. SFAS No. 150 is generally effective for all financial instruments entered into or modified after May 31, 2003. In November 2003, the FASB agreed to defer indefinitely the application of the guidance in SFAS No. 150 (recognition, measurement and disclosure requirements) to shares of non-public companies that are deemed mandatorily redeemable because of an event certain to occur, such as death or retirement of the holder, subject to certain exceptions. The adoption of SFAS No. 150 requires that certain financial instruments that the Company would have otherwise classified as equity, be reflected in the liability section of the consolidated balance sheets. See Note 10 (“Stockholders’ equity— VI Acquisition Corp.”) for further discussion.

On December 17, 2003, the Staff of the Securities and Exchange Commission (“SEC” or the “Staff”) issued Staff Accounting Bulletin No. 104 (“SAB 104”), Revenue Recognition, which supercedes

SAB 101, Revenue Recognition in Financial Statements. SAB 104’s primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superceded as a result of the issuance of EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. SAB 104 did not have a significant impact on the Company’s consolidated statements of income or financial position.

Certain reclassifications have been made to prior year information to conform to the current year presentation.

Receivables represent billings to third-party customers of our pie production facilities, franchisee billings for royalties, initial and renewal fees, equipment sales, and property rental for franchisees and other sublessees. The trade receivables are generally unsecured, while notes receivable are typically secured by the property that gave rise to them.

Depreciation expense was $4.9 million, $8.2 million, $14.1 million, $7.2 million and $9.5 million for the periods ended October 26, 2003 and June 13, 2003, the year ended October 27, 2002, and the periods ended October 28, 2001 and May 13, 2001, respectively.

Accrued miscellaneous expenses consisted primarily of accrued expenses for conferences, 401(k) employer contribution, royalty prepayments, disposal reserve, and legal and audit fees.


(1)	Midway’s previous indebtedness was repaid on June 14, 2003 and VI Acquisition Corp.’s senior secured credit facility agreements were executed following the June acquisition.

On June 14, 2003, the Company along with various lending institutions entered into a $90 million credit agreement (the “Existing Senior Secured Credit Facility”), and a $45 million investment agreement for subordinated debt (“Subordinated Debt”). The Existing Senior Secured Credit Facility consists of Term A and B loans.

Proceeds from the Existing Senior Secured Credit Facility were used to finance the purchase of Midway on June 14, 2003. The Existing Senior Secured Credit Facility also provided for a $25 million revolving credit facility, which may be borrowed and repaid from time to time through the maturity date of June 12, 2008. As of October 26, 2003, $9.8 million was outstanding under the revolving credit facility. With respect to the borrowings, $2.7 million has been repaid under the five-year Term A Loan, and $140,000 has been repaid under the six-year Term B Loan.

Interest on the Existing Senior Secured Credit Facility accrues at variable rates per annum equal to the base (higher of lender prime rate or Federal Funds Effective rate plus 0.50%) or Eurodollar rate plus the applicable margin with respect to Eurodollar rate (“LIBOR”) loans as in effect from time to time. Throughout the period between June 14, 2003 through October 26, 2003, interest was calculated at LIBOR plus the applicable margin. In addition, the Company is required to pay a commitment fee calculated by multiplying (a) the applicable commitment fee percentage (0.50% or 0.375%, depending on the leverage ratio) times (b) the average daily amount during each calendar quarter (or portion thereof). The commitment fee shall be payable quarterly in arrears on the first day of each calendar quarter for the

immediately preceding calendar quarter, with a final payment on the revolving credit facility maturity date or any earlier date on which the commitments shall terminate.

The interest rate on borrowings outstanding under the Existing Senior Secured Credit Facility was 4.657% for the Term A Loan and 5.157% for the Term B Loan at October 26, 2003. Borrowings are collateralized by substantially all of the Company’s property, rights and interests of the consolidated entities and the pledge by the Company, Midway and VICORP of all of the capital stock of their respective subsidiaries. This loan facility contains customary representations, warranties, and covenants, including financial covenants related to the maintenance of certain financial ratios and limitations on capital expenditures. The Company was in compliance with these covenants at October 26, 2003.

The Existing Senior Secured Credit Facility also provides for the issuance of letters of credit of up to $12.5 million under a subfacility. At October 26, 2003, the Company had letters of credit outstanding of $5.9 million. The Company is also required to pay fees on the issuance, extension, or renewal of any letters of credit equal to the applicable margin plus an amount equal to 0.125 of 1% per annum, as a fronting fee, plus other reasonable administrative fees in effect from time to time.

The Company issued Subordinated Debt with a principal amount of $45 million, which is subordinated to the senior indebtedness and was accompanied by warrants for an aggregate of 95,745 shares of common stock and 0.06 shares of preferred stock. See Note 10 (“Stockholders’ equity— VI Acquisition Corp.— Warrants”) for further discussion. The discount is being amortized to interest expense over the term of the Subordinated Debt. The proceeds from the issuance of the notes were used to finance, in part, the purchase, and to pay related transaction fees and expenses. The principal amount of the notes is due in full on December 13, 2009, and bears interest at a fixed annual rate of 16%. Subject to the terms of the Subordinated Debt, interest shall be paid in cash on a quarterly basis on each interest payment date (October 1, January 1, April 1 and July 1) at a fixed rate of 13% annually. On each interest payment date, the Company, at its option, shall (a) make an additional cash payment to the holders of the Subordinated Debt in an amount equal to 3% annually of the principal outstanding under the note, (b) the then outstanding principal of the note shall be increased by a payment-in-kind amount, or (c) pay a portion of the additional cash payment to the holders and accrue to the holders a portion of the payment-in-kind amount equal to 3% annually of the principal outstanding under the notes. This facility also contains covenants customary in lending transactions of this type.

In May 2001, Midway entered into a $95 million credit agreement (“Midway Senior Secured Credit Facility”) with various lending institutions, and an $18 million investment agreement for subordinated debt (“Midway Subordinated Debt”).

Proceeds from the Midway Senior Secured Credit Facility were issued to finance the purchase of VICORP in May 2001. The agreement also provided for a $20 million revolving credit facility, which could be borrowed, repaid, and reborrowed from time to time through the maturity date of May 13, 2006.

Interest on the Midway Senior Secured Credit Facility accrued at variable rates per annum equal to the base (higher of lender prime rate or Federal Reserve rate plus 0.5%) or LIBOR plus the applicable margin set forth in the agreement and dependent upon the leverage ratio. Throughout 2002, interest was calculated at LIBOR. In addition, Midway was required to pay a commitment fee of 0.5% per annum on the unused borrowings available under the revolving credit facility.

The interest rate on borrowings outstanding under the Midway Senior Secured Credit Facility was 5.56% at October 27, 2002. Borrowings were collateralized by substantially all of Midway’s assets and rights, including security interests in trademarks and copyrights. This loan facility contained customary representations, warranties and covenants, including certain financial covenants related to earnings before interest expense, income taxes, depreciation and amortization, maintenance of certain financial ratios, and

limitations on capital expenditures. Midway was in compliance with these covenants at October 27, 2002. In March 2002, the Midway Senior Secured Credit Facility was amended to allow liens in favor of specific intercreditor agreements and increase allowable indebtedness to $10 million.

The terms of the Midway Senior Secured Credit Facility also provided for the issuance of letters of credit of up to $10 million. At October 27, 2002, Midway had letters of credit outstanding of $2.4 million. Midway was also required to pay fees on the issuance, extension, or renewal of any letters of credit equal to the applicable margin plus an amount equal to 0.125% per annum, as a fronting fee, plus other customary charges in effect from time to time.

In connection with the purchase transaction on May 14, 2001, Midway issued the Midway Subordinated Debt with a principal amount of $18 million, which was issued at a discount and was subordinated to the senior indebtedness, accompanied by warrants for an aggregate of 1,063.7 shares of common stock and 2,005.7 shares of preferred stock. The discount was being amortized to interest expense over the term of the Midway Subordinated Debt. The proceeds from the issuance of the notes were used solely to finance, in part, the purchase, and to pay related transaction fees and expenses. The principal amount bore interest at a fixed annual rate of 13%. This facility also contained covenants customary in lending transactions of this type.

Midway’s indebtedness was repaid and new debt agreements were executed following the June 14, 2003 stock purchase transaction.

In March 2002, Midway acquired the real estate of six Bakers Square stores in the Midwest, which were previously leased properties. Pursuant to the acquisition, Midway assumed $3.4 million in mortgage loan obligations. The obligations required monthly principal and interest payments, mature on various dates from February 2003 through January 2005, and bore interest at rates ranging from 4.77% to 8.15% per year. The obligations were collateralized by the properties. These obligations were repaid in their entirety as a requirement of the June 14, 2003 purchase transaction.

Deferred financing costs of approximately $3.9 million, net of accumulated amortization of approximately $1.4 million at June 13, 2003, were written off in connection with the purchase of Midway on June 14, 2003.

The Company incurred $5.3 million, $5.5 million, $9.8 million, $4.5 million and $0.3 million of interest charges in the periods ended October 26, 2003 and June 13, 2003, the year ended October 27, 2002, and the periods ended October 28, 2001 and May 13, 2001, respectively. Of these amounts, $23,000, $92,000, $0, $23,000 and $11,000 was capitalized in the periods ended October 26, 2003 and June 13, 2003, the year ended October 27, 2002, and the periods ended October 28, 2001 and May 13, 2001, respectively.

Excluding capital lease obligations (see Note 8), the aggregate maturities of long-term debt obligations for the five years following October 26, 2003 are:

The Company is the prime lessee under various land, building, and equipment leases for Company-operated and franchised restaurants, pie production facilities and other locations. The leases have initial terms ranging from 15 to 35 years and, in most instances, provide for renewal options ranging from five to 20 years. Many leases contain purchase options at the end of the lease term and escalation clauses, either predetermined or based upon inflation. When predetermined escalation clauses are present, the Company recognizes rental expense on a straight-line basis. Leases may also include additional rental payments contingent upon restaurant sales volume. Under most leases, the Company is responsible for occupancy costs including taxes, insurance and maintenance. Subleases to franchisees and others generally provide for similar terms as the prime lease and an obligation for occupancy costs. Implicit interest rates range from 7.2% to 14.9% on capital leases.

The following summarizes future minimum lease payments under capital and operating leases having an initial or remaining noncancelable term of one year or more as of October 26, 2003:

During the period ended June 13, 2003, the Company completed two sale-leaseback transactions of real estate related to restaurant properties. The Company received $2.6 million in proceeds with a resulting loss on these properties of $37,000.

In connection with the purchase transaction on June 14, 2003, the Company completed a sale-leaseback transaction of real estate related to ten restaurant properties. The Company received $13.9 million in proceeds. No gain or loss was recorded in connection with the transaction.

In October 2003, the Company completed an additional sale-leaseback transaction of real estate related to a restaurant property. The Company received $1.3 million in proceeds with a resultant gain on this property of $17,000. The deferred gain on the sale-leaseback transaction will be amortized as a decrease to future rent expense over the term of the underlying lease agreement.

For all of the above identified sale-leaseback transactions, the risks and rewards of ownership have been transferred to the buyer-lessor and the Company has no continuing involvement with the properties other than that of an independent third-party lessee.

The deferred lease payments liability was established at the date of the Company’s purchase of Midway and represents the present value of the excess of the Company’s lease payments, on individual properties, compared to the market rates in effect as of that date.

The VI Acquisition Corp. Series A preferred stock has a par value of $0.0001 per share with a liquidation preference of $1,000 per share, plus accrued and unpaid dividends. Dividends on the Series A preferred stock accrue cumulatively on a daily basis at a fixed rate of 10% and are payable upon liquidation or redemption. Accrued dividends were approximately $2.6 million at October 26, 2003. Holders of the Series A preferred stock have no voting rights in relation to matters of the Company.

VI Acquisition Corp. common stock has a par value of $0.0001 per share and each holder of common stock is entitled to one vote for each share of common stock.

At June 13, 2003, the Company issued shares of both common stock and Series A preferred stock to a member of management. Indebtedness incurred by the shareholder totaling $590,000 to purchase these shares has been guaranteed by a letter of credit totaling $600,000 obtained by VICORP. As the Company has potential exposure under this arrangement, the potential obligation under this agreement has been reflected outside the equity section in the consolidated balance sheets. Common shares of 52,800, or $52,800, and preferred shares of 547.2, or $547,200, have been classified in this manner.

Certain members of management have purchased shares of the Company’s common and preferred stock which are subject to a put by the holder upon the death of the executive. Since the put feature is at the option of the holders’ estate but is not mandatory, these shares have been classified as mezzanine equities. These shares have resulted in common mezzanine equity of 35,248 shares, or $35,248, and preferred mezzanine equity of 1,027.85 shares, or $1,028,000.

Following the separation of a member of management during the period ended October 26, 2003, the Company repurchased 76,103 shares of common stock and 923.90 shares of preferred stock at a cost of $1.00 and $1,000 per share, respectively.

In connection with the issuance of senior debt on June 13, 2003, VI Acquisition Corp. issued common and preferred stock purchase warrants which entitled the holders to purchase at any time through June 13, 2013 an aggregate of 95,745 shares of common stock and an aggregate of 0.06 shares of Series A preferred stock at $0.01 per share. The preferred stock warrant holders are subject to an anti-dilution provision, which allows their ownership to remain at 6% of total preferred stock value, including liquidation value and accretion. As of October 26, 2003 the preferred warrant holders’ rights had increased to 166 shares.

The Midway Class A preferred stock has a par value of $0.01 per share with a liquidation preference of $1,000 per share, plus accrued and unpaid dividends. Dividends on the Class A preferred stock accrue cumulatively on a daily basis at a fixed annual rate of 8.94% through April 30, 2004, and 11.34% thereafter, and are payable upon liquidation or redemption. Accrued dividends were approximately $3.4 million at June 13, 2003. The Class A preferred stock is redeemable in cash, at Midway’s option, to all holders on a pro-rata basis. Holders of the Class A preferred stock have no voting rights in relation to matters of the Company.

In connection with the issuance of the Subordinated Debt on May 14, 2001, Midway issued 2,005.7 additional shares of Class A preferred stock, which are subject to certain put and call provisions (the “Redeemable Preferred Stock”). Under the terms of the Redeemable Preferred Stock, holders can require Midway to redeem their shares on the earliest of (i) May 14, 2006, (ii) a change in control, (iii) acceleration of the Subordinated Debt, (iv) noncompliance of covenants in the Subordinated Debt agreement, or (v) the undertaking of Midway in a fundamental asset transaction. Midway is also entitled to purchase all of the Redeemable Preferred Stock at any time between May 14, 2007 and the date of an initial public offering. The shares are to be redeemed at the accumulated liquidation value. The redemption value of the Redeemable Preferred Stock has been reflected as mezzanine debt in the consolidated balance sheets.

The Midway Class B preferred stock has a par value of $0.01 per share with a liquidation preference of $1,000 per share, plus accrued and unpaid dividends, and is convertible into an equal number of shares of Class A preferred stock. Dividends on the Class B Preferred Stock accrue cumulatively on a daily basis at a fixed annual rate of 8.94% through April 30, 2004, and 11.34% thereafter, and are payable exclusively by issuance of a payment-in-kind dividend of Class C preferred stock on the last day of each fiscal quarter. Accrued dividends were approximately 3,405 shares of Class C preferred stock at June 13, 2003. Fractional shares of Class C preferred stock may be issued in connection with any payment-in-kind dividend. The Class B preferred stock is redeemable in cash, at Midway’s option, to all holders of the preferred shares on a pro-rata basis. Holders of the Class B preferred stock have no voting rights in relation to matters of the Company.

The Class C preferred stock has a par value of $0.01 per share with a liquidation preference of $1,000 per share. The Class C preferred stock is redeemable in cash, at Midway’s option, to all holders of the preferred shares on a pro-rata basis. Holders of the Class C preferred stock have no voting rights in relation to matters of the Company.

On June 14, 2003, all previously outstanding shares of Class A preferred stock, Class B preferred stock, Class C preferred stock, Class A common stock, and Class B common stock were redeemed by the previous holders and sold to VI Acquisition Corp. At that time, all outstanding shares of common stock were sold to VI Acquisition Corp.

The Midway Class A common stock has a par value of $0.01 per share, and is convertible into the same number of shares of Class B common stock. Each holder of Class A common stock is entitled to one vote for each share of Class A common stock.

The Midway Class B common stock has a par value of $0.01 per share, and is automatically convertible into the same number of shares of Class A common stock upon the closing of a qualified public offering. Holders of the Class B common stock have no voting rights in relation to matters of the Company.

In connection with the issuance of the Midway Subordinated Debt, Midway issued common stock purchase warrants entitling the holders to purchase from Midway at any time prior to May 14, 2011, an aggregate of 1,063.7 shares of Class B common stock for an exercise price of $0.01 per share. See also Note 7 related to the accretion of this amount as a discount to the Subordinated Debt.

During the period of October 27, 2002 through June 13, 2003, the Company issued an additional 118.18 warrants with a value of $129,000. The warrants were issued in accordance with the antidilution provision in the warrant agreement following the grant of additional employee stock options on October 28, 2002. All warrants of Midway were exercised on June 13, 2003.

SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), defines a fair value method of accounting for employee stock compensation and encourages, but does not require, all entities to adopt that method of accounting. Entities electing not to adopt the fair value method of accounting must make pro forma disclosures of net income, as if the fair value method of accounting defined in SFAS No. 123 had been applied. Primarily as a result of the minimal number of options outstanding, the pro forma effects of the fair value of the options, amortized over their vesting period, has an immaterial effect on net income.

The Company has elected not to adopt the fair value method and instead has elected to follow Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations in accounting for its stock options. Under APB Opinion No. 25, compensation expense related to stock options is calculated as the difference between the exercise price of the option and the fair market value of the underlying stock at the date of grant. This expense is recognized over the vesting period of the option or at the time of grant if the options immediately vest.

On October 28, 2002, Midway’s Board of Directors authorized the issuance to certain key management personnel of options to purchase 550.5 shares of Class B common stock for an exercise price of $100 per share. It was determined that the market price of the Class B common stock at the date of grant was in excess of $100 per share and thus deferred compensation expense of $1.8 million was accrued based upon the difference in the market price, as determined by the Board of Directors, and the exercise price. This charge was amortized into expense over the vesting period of the options. During the period ended June 13, 2003, the Company recorded compensation expense of $523,000. At June 13, 2003, all outstanding options became fully vested as a result of the change in control and were exercised as a component of the acquisition of Midway by VI Acquisition Corp.

Information regarding activity for stock options exercisable for shares of Class B common stock outstanding under Midway’s stock option plan is as follows:

In connection with the acquisition of Midway by VI Acquisition Corp., those members of management who chose to roll over options to purchase shares of Midway stock were granted options to purchase shares of Series A preferred stock of VI Acquisition Corp. for $24.80 per share. These options were fully vested as of the grant date and no expense was recorded as a result of this transaction.

Information regarding activity for stock options exercisable for shares of Series A preferred stock outstanding under VI Acquisition Corp. Stock Option Plan is as follows:

The Company maintains the VICORP Restaurants, Inc. Employees’ 401(k) Plan under Section 401(k) of the Internal Revenue Code of 1986, which provides for annual contributions by the Company in the amount of 2% of the aggregate compensation of participants. Full-time and part-time employees meeting a 1,000 hour service requirement are eligible to participate. The Company accrued $406,000 and $231,000 for the periods ending June 13, 2003 and October 26, 2003, respectively.

At October 26, 2003, the Company had 14 properties which it was seeking to dispose of; five of these properties were idle and nine were subleased. The Company owns one of the properties and is the prime lessee on eight leases. The Company estimates potential proceeds of $375,000 on the disposal of the fee property. Three of the remaining idle properties will be disposed of through lease terminations within a year. At October 26, 2003, loss reserves previously established for the disposal of these properties has a remaining balance of $1.8 million to provide for carrying costs and sublease losses.

The provision for income taxes differs from the income tax provision that would result from applying federal statutory tax rates primarily due to the utilization of federal, state and general business tax credits slightly offset by the effects of state income taxes.

The Company entered into interest rate swaps to manage its cash flows associated with the interest payable under the variable component of the Existing Senior Secured Credit Facility. Under SFAS No. 133, the Company’s interest rate swap agreements have been designated as cash flow hedges and are recorded at fair value. Changes in the value of such contracts, net of income taxes, are reported in

comprehensive income. For the purpose of calculating income taxes related to comprehensive income, the Company uses its combined statutory rate for federal and state income taxes. The periodic net settlements made under the agreements are reflected in operations in the period in which the settlement occurs. The net settlements made under the variable-to-fixed interest rate swap agreements are reflected in operations as an adjustment to interest expense over the term of the related swap. The Company’s accounting treatment of these transactions is consistent with its tax treatment. The Company entered into four interest rate swap agreements effective in November 2001, with an original notional amount of $64.4 million and an amortized notional amount of $43.8 million at June 13, 2003. Interest rates under the swap agreements are based on three month LIBOR (1.82% at June 13, 2003). The estimated fair value of these agreements at June 13, 2003 was a loss of approximately $2.1 million, which is included in other liabilities and as a component of other comprehensive income, net of tax benefit of $859,000, on the Company’s consolidated balance sheets at June 13, 2003. As of June 12, 2003, all previously outstanding derivative obligations were settled through a lump-sum payment to the derivative holders, resulting in a loss on derivative instruments of $2.1 million for the period ended June 13, 2003. The Company had no derivative instruments as of October 26, 2003.

The Company has incurred various expenses directly related to the acquisitions of the predecessor companies discussed in Note 1. The components of the transaction expenses and debt extinguishment costs are as follows:

The Company retains a significant portion of certain insurable risks primarily in the medical, dental, workers’ compensation, general liability and property areas. Traditional insurance coverage is obtained for catastrophic losses. Provisions for losses expected under these programs are recorded based upon the Company’s estimates of liabilities for claims incurred, including those not yet reported. Such estimates utilize prior Company history and actuarial assumptions followed in the insurance industry.

The Company is involved in various lawsuits and claims arising from the conduct of its business. It has also guaranteed certain indebtedness and leases of its franchisees and others. Management believes the

ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

VICORP guaranteed certain leases for restaurant properties sold in 1986 and restaurant leases of certain franchisees. Minimum future rental payments remaining under these leases were approximately $2.9 million as of October 26, 2003.

Contractual obligations for restaurant construction amounted to approximately $3.4 million as of October 26, 2003. Included in the amount are contractual obligations related to franchise operations of approximately $17,000, which are reimbursed by the franchisee on a percentage basis with the final balance due in full 75 days after the equipment is installed.

On May 14, 2001, the Company entered into management fee agreements with Goldner Hawn, a Minnesota corporation, and First Capital Corporation of Boston (“First Capital”), a Massachusetts corporation, whereby certain management, financial and other consulting services would be provided to the Company. Under the terms of the agreement, the Company paid an annual fee of $500,000 to both Goldner Hawn and First Capital. Management fees totaled approximately $575,000, $1.0 million and $462,000 for the period from October 28, 2002 through June 13, 2003 and for the fiscal year ended October 27, 2002 and the period ended October 28, 2001, respectively. This agreement terminated June 13, 2003.

On June 14, 2003, the Company entered into management fee agreements with Wind Point Investors, IV, L.P. and Wind Point Investors V, L.P., whereby certain management, financial and other consulting services would be provided to the Company. Under terms of the agreement, the Company pays an annual fee of $850,000 to both partnerships. Management fees totaled approximately $315,000 for the period from June 14, 2003 through October 26, 2003.

The Company obtained a letter of credit, which is effective through May 31, 2006 and is required to secure the personal loan of a member of management. The proceeds under this arrangement were used by the individual to participate in the acquisition of the Company’s stock. As the Company has the potential to be required to reimburse the original lender for any default funds under the letter of credit, the associated shares of stock secured by the letter of credit have been included in other accrued expenses. The Company has assumed fees associated with this letter of credit in the amount of $8,000 through October 26, 2003.

In November 2003, the Company issued an additional 257.503 shares of preferred stock at $1,000 per share and 5,583 shares of common stock at $1.00 per share, under subscription agreements dated November 19, 2003 for proceeds of $263,000.

VI Acquisition Corp. (the “Company” or “VI Acquisition”), a Delaware corporation, was organized by Wind Point Partners and other co-investors. Founded in 1984, Wind Point Partners is a Chicago, Illinois and Southfield, Michigan-based private equity investment firm that invests in middle market companies with strong management teams and clear growth opportunities.

On June 14, 2003, the Company acquired Midway Investors Holdings Inc., and its wholly owned subsidiaries VICORP Restaurants, Inc. (“VICORP”) and Village Inn Pancake House of Albuquerque, Inc. (collectively “Midway” or “Predecessor”) in a stock purchase transaction accounted for under the purchase method of accounting pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations (“SFAS No. 141”). Midway Investors Holding Inc. was merged into the Company on April 14, 2004.

VICORP operates family style restaurants under the brand names “Bakers Square” and “Village Inn,” and franchises restaurants under the Village Inn brand name. At April 15, 2004, VICORP operated 269 Company-owned restaurants in 15 states. Of the Company-owned restaurants, 150 were Bakers Square restaurants and 119 were Village Inn restaurants, with an additional 104 franchised Village Inn restaurants in 19 states. The Company-owned and franchised restaurants are concentrated in Arizona, California, Florida, the Rocky Mountain region, and the upper Midwest. The Company operates three pie manufacturing facilities located in Santa Fe Springs, California; Oak Forest, Illinois; and Chaska, Minnesota.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation. Operating results for the twenty-four week period ended April 15, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending October 28, 2004.

The consolidated balance sheet at October 26, 2003 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the audited consolidated financial statements and footnotes thereto as of October 26, 2003.

The accompanying consolidated financial statements as of April 15, 2004 and October 26, 2003 and for the twenty-four week period ended April 15, 2004 include the accounts of the Company and Midway.

The accompanying consolidated statements of operations for the twenty-four week period ended April 13, 2003 include the accounts of Midway and are not necessarily comparable to the Company’s results for the twenty-four week period ended April 15, 2004.

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45 (“FIN 45”), Guarantor’s Accounting and Disclosure Requirements for Guarantees. FIN 45 requires guarantors to recognize, at the inception of a guarantee, a liability for the fair value of the obligation it has undertaken in issuing the guarantee. FIN 45 also requires guarantors to disclose certain information for guarantees. The disclosure provisions of FIN 45 were effective immediately upon issuance in 2002. The Company adopted the recognition and measurement provisions of FIN 45 on a prospective basis with respect to guarantees issued or modified after December 31, 2002. The adoption of the recognition and measurement provisions of FIN 45 had no effect on the Company’s consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 requires an investor with a majority of the variable interests in a variable interest entity to consolidate the entity and also requires majority and significant variable interest investors to provide certain disclosures. A variable interest entity is an entity in which the equity investors do not have a controlling interest or the equity investment at risk is insufficient to finance the entity’s activities without receiving additional subordinated financial support from the other parties. FIN 46 was effective January 1, 2004 for private companies with variable interest entities created on or after such date. FIN 46 is effective at the beginning of the first annual period beginning after December 15, 2004 for all other variable interest entities of private companies. The Company believes it created no variable interest entities during the twenty-four week period ended April 15, 2004, and it is currently reviewing its investment portfolio to determine whether any of the investee companies are variable interest entities.

In March 2003, the Emerging Issues Task Force (“EITF”) reached consensus on EITF Issue No. 02-16, Accounting by a Customer for Certain Consideration Received from a Vendor. ETTF Issue No. 02-16 requires that certain cash consideration (rebates) received by a customer from a vendor be classified in the customer’s statements of operations as a reduction of cost of sales. The consensus was required to be applied to new arrangements entered into after December 31, 2002. The Company already accounts for rebates in cost of sales.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“SFAS No. 150”). SFAS No. 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities (or assets in certain circumstances) in statements of financial position. SFAS No. 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities whose shares are mandatorily redeemable. SFAS No. 150 is generally effective for all financial instruments entered into or modified after May 31, 2003. In November 2003, the FASB agreed to defer indefinitely the application of the guidance in SFAS No. 150 (recognition, measurement and disclosure requirements) to shares of nonpublic companies that are deemed mandatorily redeemable because of an event certain to occur, such as death or retirement of the holder, subject to certain exceptions. The Company’s adoption of SFAS No. 150 required that certain financial instruments that the Company would have otherwise classified as stockholders’ equity be reflected outside of stockholders’ equity in its consolidated balance sheets.

SFAS No. 123, Accounting for Stock-Based Compensation, defines a fair value method of accounting for employee stock compensation and encourages, but does not require, all entities to adopt that method of accounting. The Company has elected not to adopt the fair value method and instead has elected to follow APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, in accounting for its stock options. Entities electing not to adopt the fair value method of accounting must make pro forma disclosures of net income, as if the fair value method of accounting defined in SFAS No. 123 had been applied. Primarily as a result of the minimal number of options outstanding, the pro forma effect of recognizing the grant date fair value of the Company’s outstanding stock options over their vesting periods had an immaterial effect on net income.

Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the presentation in 2004. These reclassifications had no effect on the Company’s consolidated net income.

Beginning in fiscal year 2004, the Company will report on a 52/53 week fiscal year ending on the Thursday nearest to October 31st of each year. As a result of closing the periods on Thursday instead of Sunday, as was done in prior periods, the twenty-four week period ended April 15, 2004 contained 172 days compared to the twenty-four week period ended April 13, 2003, which contained 168 days.

In connection with the June 14, 2003 purchase of Midway, the assets (including specifically identifiable intangible assets) and liabilities of the acquired company were recorded at the estimated fair value of $143.2 million with the excess of the purchase price over these amounts being recorded as goodwill of $82.8 million. Capitalization of the acquired company was funded by new senior and subordinated debt under the terms of newly executed credit and investment agreements dated as of June 13, 2003. In connection with the close of the purchase and subject to the terms of the stock purchase agreement, the following transactions occurred:


	•	Fixed assets were adjusted to their fair market value, resulting in an increase to the assets value of $6.2 million;

	•	Trademarks and trade names were recorded at an estimated fair value of $42.6 million;

	•	Repayment of all indebtedness, including the prior Senior Terms A and B loans, subordinated debt, mortgage loan obligations, and letters of credit. Prepayment penalties of $1.3 million were paid in association with the early repayment of this debt;

	•	Outstanding derivatives were settled for $1.9 million;

	•	Costs totaling $5.1 million associated with the acquisition of new debt instruments were capitalized;

	•	A sale-leaseback transaction of ten properties was consummated by the Company resulting in a decrease in fixed assets of $9.7 million;

	•	Rents payable under capital and operating leases were revalued to their fair market value resulting in an additional obligation of $8.0 million;

	•	Midway redeemed all of its outstanding preferred stock for a total of $42.4 million;


	•	Franchise rights were revalued resulting in a decrease of $3.7 million of this asset; and

	•	Compensation costs of $6.2 million were recorded as a result of the repurchase of common stock issued from the exercise of stock options, settlement of employment contracts and severance payments.

The consolidated financial statements for Midway for the twenty-four week period ended April 13, 2003 do not reflect the effects of the purchase accounting adjustments described above. The consolidated financial statements and related notes as of April 15, 2004 and October 26, 2003 and for the twenty-four week period ended April 15, 2004 reflect all purchase accounting adjustments for the June 14, 2003 transaction.

On April 14, 2004, VICORP completed a private placement of $126,530,000 aggregate principal amount of 10 1/2% senior unsecured notes maturing on April 15, 2011. The notes were issued at a discounted price of 98.791% of face value, resulting in proceeds of $125.0 million. The senior unsecured notes were issued by VICORP and are guaranteed by VI Acquisition and Village Inn Pancake House of Albuquerque, Inc. In connection with the issuance of the senior unsecured notes, VICORP agreed to file a registration statement with the Securities and Exchange Commission (“SEC”) so that the senior unsecured notes can be exchanged for registered notes having substantially the same terms and evidencing the same indebtedness, and exchange the related guarantees for registered guarantees having substantially the same terms as the original guarantees.

Concurrently with the issuance of the 10 1/2% senior unsecured notes, VICORP entered into an amended and restated senior secured credit facility consisting of a $15.0 million term loan and a $30.0 million revolving credit facility, with a $15.0 million sublimit for letters of credit. On April 15, 2004, VICORP issued letters of credit aggregating $10.5 million and had no borrowings outstanding under the senior secured revolving credit facility. The senior secured revolving credit facility permits borrowings equal to the lesser of (a) $30.0 million and (b) 1.2 times trailing twelve months Adjusted EBITDA (as defined in the senior secured credit agreement) minus the original amount of the new senior secured term loan. Under this formula, as of April 15, 2004, VICORP had the ability to borrow the full $30 million, less the amount of outstanding letters of credit, under the senior secured revolving credit facility. Borrowings under both the revolving credit facility and the term loan bear interest at floating rates tied to either the base rate of the agent bank under the credit agreement or LIBOR rates for a period of one, two or three months, in each case plus a margin that will adjust based on the ratio of our Adjusted EBITDA to total indebtedness, as defined in the new senior secured credit agreement. Both facilities are secured by a lien on all of the assets of VICORP, and guaranteed by VI Acquisition and Village Inn Pancake House of Albuquerque, Inc. The guarantees are also secured by the pledge of all of the outstanding capital stock of VICORP by VI Acquisition. The term loan does not require periodic principal payments, but requires mandatory repayments under certain events, including proceeds from sale of assets, issuance of equity, and issuance of new indebtedness. Both facilities mature on April 14, 2009.

The new senior secured credit facility and the indenture governing the senior unsecured notes contain a number of covenants that, among other things, restrict, subject to certain exceptions, VICORP’s ability to sell assets, incur additional indebtedness or issue preferred stock, repay other indebtedness, pay dividends and distributions or repurchase our capital stock, create liens on assets, make investments, loans or advances, make certain acquisitions, engage in mergers or consolidations, enter into sale-leaseback transactions, engage in certain transactions with affiliates, amend certain material agreements governing our indebtedness, change the business conducted by us and our subsidiaries and enter into hedging agreements. In addition, the new senior secured credit facility requires VICORP to maintain or comply with a

maximum total leverage ratio, a minimum interest coverage ratio and a maximum capital expenditures limitation. On April 15, 2004, VICORP was in compliance with these requirements.

The proceeds from these borrowings were used to repay the Company’s existing debt of $131.8 million and to pay transaction-related expenses of $8.2 million.

Inventories are stated at the lower of cost (determined using the first-in, first-out method) or market and consist of food, paper products and supplies. Inventories consisted of:

Effective October 27, 2003, the Company entered into an interest rate swap agreement to manage its cash flows associated with the interest payable under the variable component of the Company’s prior senior secured credit agreement. The swap agreement had an original notional amount of $35 million. The contract was scheduled to expire October 27, 2006 and the interest rate was fixed at 2.686%. In connection with the debt refinancing transaction on April 14, 2004 (Note 2), the outstanding derivative obligations were settled for $0.2 million. The Company held no derivative instruments as of April 15, 2004.

Under SFAS No. 133, the Company’s interest rate swap agreements have been designated as cash flow hedges and are recorded at fair value. Changes in the value of such contracts, net of income taxes, are reported in comprehensive income. For the purpose of calculating income taxes related to comprehensive

income, the Company uses its combined statutory rate for federal and state income taxes. The periodic net settlements made under the agreements are reflected in operations in the period in which the settlement occurs. The net settlements made under the variable to fixed interest rate swap agreements are reflected in operations as an adjustment to interest expense over the term of the related swap. The Company’s accounting treatment of these transactions is consistent with its tax treatment.

The Company is involved in various lawsuits and claims arising from the conduct of its business. The Company is currently a defendant in two purported class action claims in California. The first class action claim was brought in October 2003 by two former employees and one current employee of the Company, and the second class action claim was brought in May 2004 by two former employees of the Company. The complaints allege that the Company violated California law with regard to rest and meal periods, bonus payment calculations (in the October 2003 complaint), overtime payments (in the May 2004 complaint) and California law regarding unfair business practices. The classes and subclasses alleged in the actions have not been certified by the respective courts at the current stages of the litigation, but generally are claimed in the 2003 complaint to include persons who have been employed by the Company in California since October 17, 1999 in the positions of food server, restaurant general manager and assistant restaurant manager, and generally are claimed in the 2004 complaint to include persons who have been employed by the Company in California since May 21, 2000 in the positions of restaurant general manager and restaurant associate manager. No dollar amount in damages is requested in either complaint, and the complaints seek statutory damages, compensatory damages, interest and attorneys’ fees in unspecified amounts. Management believes that these matters, individually and in the aggregate, will not have a significant adverse effect on the Company’s financial condition.

On June 14, 2003, the Company entered into a professional services agreement with Wind Point Investors, IV, L.P. and Wind Point Investors V, L.P., whereby certain management, financial and other consulting services would be provided to the Company. Under the terms of the agreement, the Company pays an annual fee to both partnerships in the aggregate amount of $850,000. Management fees under this agreement totaled approximately $392,000 for the twenty-four week period ended April 15, 2004. In conjunction with the April 14, 2004 debt refinancing (Note 2), the Company also paid an additional $309,000 in fees to Wind Point Investors IV, L.P. and Wind Point Investors V, L.P., which represented a deferral of a portion of the transaction fee payable to Wind Point Investors IV, L.P. and Wind Point Investors V, L.P. in connection with the June 2003 acquisition (Note 1). Total fees paid to Wind Point Partners, IV, L.P. and Wind Point Investors V, L.P., totaled $701,000 for the twenty-four week period ended April 15, 2004.

On May 14, 2001, the Company entered into management fee agreements with Goldner Hawn and Second Capital Corporation of Boston (“Second Capital”) whereby certain management, financial, and other consulting services were provided to the Company. Under the terms of these agreements, the Company paid an annual fee of $500,000 to each of Goldner Hawn and Second Capital. Management fees totaled on approximately $462,000 for the twenty-four week period ended April 13, 2003. These agreements terminated on June 13, 2003.

In November 2003, the Company issued an additional 257.503 shares of preferred stock at $1,000 per share and an additional 5,583 shares of common stock at $1.00 per share to certain of its employees, directors or existing stockholders under subscription agreements dated November 19, 2003 for proceeds of $263,000.

In February and March 2004, the Company issued an additional 34,020 shares of common stock at $1.00 per share to certain of its employees, directors, or existing stockholders for proceeds of $34,020.

On May 6, 2004, the Company announced it was revising its financial statements for the twelve week period ended January 22, 2004 due to an error regarding advertising expenses. Certain advertising campaigns for which invoices had not been received as of January 22, 2004 were incorrectly excluded from expenses in the Company’s consolidated financial statements for the twelve weeks then ended. After adjustment, net income for the twelve week period ended January 22, 2004 was reduced from $3.1 million, as previously reported, to $2.6 million. The Company’s accompanying fiscal year-to-date consolidated financial statements as of April 15, 2004 reflect the restatement of the Company’s results. The Company’s consolidated financial statements for the fiscal year ended October 26, 2003 were unaffected.

We have not authorized any dealer, salesperson or other person to give you written information other than this prospectus or to make representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. Neither the delivery of this prospectus nor any sales made hereunder after the date of this prospectus shall create an implication that the information contained herein or the affairs of our company have not changed since the date hereof.

Until , 2004, all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The following summaries are subject to the complete text of the statutes and organizational documents of the registrant described below and are qualified in their entirety by reference thereto. VICORP Restaurants, Inc. (“VICORP”), the issuer of the notes, is a Colorado corporation.

The Colorado Business Corporation Act (“CBCA”) provides for indemnification of directors, officers, employees, fiduciaries and agents of Colorado corporations such as the registrant, subject to certain limitations, and authorizes such corporations to purchase and maintain insurance on behalf of such persons against any liability incurred in any such capacity or arising out of their status as such. The VICORP currently has such insurance in effect.

VICORP’s bylaws provide that, notwithstanding any provision of the CBCA, VICORP is not obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of VICORP. VICORP’s bylaws also provide that nothing in the bylaws shall preclude VICORP from providing indemnification and the advancement of funds for expenses to its directors and officers to the fullest extent permitted by the CBCA.

VICORP’s certificate of incorporation provides that its directors shall not be personally liable to VICORP or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability to VICORP and its shareholders for any breach, act, omission or transaction as to which the CBCA prohibits expressly the elimination of liability.

VICORP has also entered into separate indemnification agreements with its directors under which VICORP has agreed to indemnify, and to advance expenses to, each director to the fullest extent permitted by applicable law with respect to liabilities they may incur in their capacities as directors and officers.

VICORP has director and officer liability insurance coverage through a policy held by its parent, VI Acquisition Corp., to insure each person who was, is, or will be its director or officer against specified losses and wrongful acts of such director or officer in his or her capacity as such, including breaches of duty, error and misstatement. In accordance with the director and officer insurance policy, each insured party will be entitled to receive monies for specified defense costs as these costs are incurred.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The following summaries are subject to the complete text of the statutes and organizational documents of the co-registrant described below and are qualified in their entirety by reference thereto. VI Acquisition Corp. (“VI”), the parent of the registrant and a guarantor of the notes, is a Delaware corporation.

Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”) permits a corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a

director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, which relates to unlawful payment of dividends and unlawful stock purchases and redemptions, or (iv) for any transaction from which the director derived an improper personal benefit.

Section 145 of the DGCL provides that a corporation may indemnify any persons who were, are or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful.

Section 145 of the DGCL further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145 of the DGCL.

Article 5 of VI’s bylaws provides that notwithstanding any provision in the DGCL, VI shall not be obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of VI. Article 5 also provides that nothing in the bylaws shall preclude VI from providing indemnification and the advancement of funds for expenses to its directors and officers to the fullest extent permitted by the DGCL.

VI’s certificate of incorporation provides that its directors shall not be personally liable to VI or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability to VI and its shareholders for any breach of the director’s duty of loyalty, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, liability under Section 174, or for any transaction from which the director derived an improper personal benefit. VI’s certificate of incorporation also provides that VI has the right to indemnify its officers and directors to the fullest extent permitted under the DGCL including the reimbursement for fees and costs incurred to enforce any indemnification rights granted by VI.

VI has also entered into separate indemnification agreements with its directors under which VI has agreed to indemnify, and to advance expenses to, each director to the fullest extent permitted by applicable law with respect to liabilities they may incur in their capacities as directors and officers.

VI maintains director and officer liability insurance to insure each person who was, is, or will be its director or officer against specified losses and wrongful acts of such director or officer in his or her capacity as such, including breaches of duty, error and misstatement. In accordance with the director and officer insurance policy, each insured party will be entitled to receive monies for specified defense costs as these costs are incurred. VI’s director and officer liability insurance policy covers the registrant and the other co-registrant and their directors and officers as additional insured parties.

successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the co-registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The following summaries are subject to the complete text of the statutes and organizational documents of the co-registrant described below and are qualified in their entirety by reference thereto. Village Inn Pancake House of Albuquerque, Inc. (“Pancake House”), a subsidiary of the registrant and a guarantor of the notes, is a New Mexico corporation.

Section 53-11-4.1 of the New Mexico Business Corporation Act (the “NMBCA”) empowers a corporation to indemnify any officer or director against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the person in connection with any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to a criminal proceeding, had no reasonable cause to believe the person’s conduct was unlawful. This section empowers a corporation to maintain insurance or furnish similar protection, including, but not limited to, providing a trust fund, a letter of credit, or self-insurance, on behalf of any officer of director against any liability asserted against the person in such capacity whether or not the corporation would have the power to indemnify the person against such liability under the provisions of this section. The indemnification authorized by Section 53-11-4.1 of the NMBCA is not exclusive of any other rights to which an officer of director may be entitled under the articles of incorporation, the bylaws, an agreement, a resolution of shareholders or directors or otherwise.

Article VIII of Pancake House’s bylaws provides that notwithstanding any provision in the NMBCA, Pancake House shall not be obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of Pancake House. Article VIII also provides that nothing in the bylaws shall preclude Pancake House from providing indemnification and the advancement of funds for expenses to its directors and officers to the fullest extent permitted by the NMBCA.

Pancake House has also entered into separate indemnification agreements with its directors under which Pancake House has agreed to indemnify, and to advance expenses to, each director to the fullest extent permitted by applicable law with respect to liabilities they may incur in their capacities as directors and officers.

Pancake House has director and officer liability insurance coverage through a policy held by its ultimate parent, VI Acquisition Corp., to insure each person who was, is, or will be its director or officer against specified losses and wrongful acts of such director or officer in his or her capacity as such, including breaches of duty, error and misstatement. In accordance with the director and officer insurance policy, each insured party will be entitled to receive monies for specified defense costs as these costs are incurred.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the co-registrant pursuant to the foregoing provisions, or otherwise, the co-registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the co-registrant of expenses incurred or paid by a director, officer or controlling person of the co-registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the co-registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.


+	Certain portions of this exhibit have been omitted and separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment thereof.


	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:


	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;


	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;

	(4) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request; and

	(5) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on this 9th day of July, 2004.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Debra Koenig as such signatory’s true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to sign on his or her behalf, individually and in the capacities stated below, any and all amendments (including post-effective amendments) to this registration statement (and to any registration statement filed pursuant to Rule 462 under the Securities Act), and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully as to all intents and purposes as such signatory might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to requirements of the Securities Act, this registration statement has been signed on July 9, 2004 by the following persons in the capacities indicated.

Pursuant to the requirements of the Securities Act, the co-registrant set forth below has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on this 9th day of July, 2004.

Pursuant to requirements of the Securities Act, this registration statement has been signed on July 9, 2004 by the following persons in the capacities indicated.


+	Certain portions of this exhibit have been omitted and separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment thereof.

EX-2.1 2 c86044exv2w1.txt STOCK PURCHASE AGREEMENT Exhibit 2.1 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of the 15th day of April, 2003, by and among (i) VI ACQUISITION CORP., a Delaware corporation (the "Buyer"), (ii) MIDWAY INVESTORS HOLDINGS INC., a Delaware corporation (the "Company"), (iii) the shareholders, optionholders and warrantholders of the Company listed on Schedule 1 hereto (collectively, the "Sellers") and (iv) the holders of preferred stock of the Company listed on Schedule 2 hereto (collectively, the "Preferred Holders"). WHEREAS, the Sellers collectively own all of the issued and outstanding shares of common stock of the Company, all of the issued and outstanding warrants to purchase shares of common stock of the Company and all of the issued and outstanding options to purchase shares of common stock and preferred stock of the Company; WHEREAS, the Preferred Holders collectively own all of the issued and outstanding shares of preferred stock of the Company; WHEREAS, the Preferred Holders and Sellers desire that all of the issued and outstanding shares of preferred stock of the Company (including the shares of preferred stock of the Company to be issued upon exercise of the Non-Rollover Options (as defined in Section 9)) be redeemed upon the terms and subject to the conditions contained in this Agreement; and WHEREAS, the Sellers desire to sell all of the issued and outstanding shares of common stock of the Company, including the shares of common stock of the Company to be issued upon exercise of the Non-Rollover Options (collectively, the "Shares"), and the Warrants (as defined in Section 9) (the Shares and the Warrants are collectively referred to herein as the "Common Securities"), to the Buyer and the Buyer desires to purchase all of the Common Securities from the Sellers, upon the terms and subject to the conditions contained in this Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, the Buyer, the Company, the Sellers and the Preferred Holders agree as follows: 1. SALE AND PURCHASE OF COMMON SECURITIES. 1.1. Agreement to Sell. Subject to the terms and conditions set forth in this Agreement, each of the Sellers agrees to sell to the Buyer, and the Buyer agrees to purchase from such Seller, at the Closing, the Common Securities owned by such Seller, or, in the case of the Non-Rollover Options, to be owned by such Seller upon the exercise thereof, as set forth opposite such Seller's name on Schedule 1 hereto. 1.2. Purchase Price. (a) At the Closing, the Buyer shall pay to the Sellers, as the aggregate purchase price for all of the Common Securities (the "Closing Purchase Price"), subject to adjustment as set forth in Sections 1.2(c) and 1.5 below (as so adjusted, the "Purchase Price"), an amount equal to (i) the Enterprise Value (as defined in Section 1.2(b) below), plus (ii) the Net Cash Amount (as defined in Section 9) as of the Closing, less (iii) the aggregate amount of all Indebtedness (as defined in Section 9) of the Company and its Subsidiaries outstanding as of the Closing, less (iv) the Redemption Amount (as defined in Section 1.3(b) below), less (v) the Transaction Expenses (as defined in Section 9), less (vi) the Aggregate Option Spreads (as defined in Section 1.2(d) below). At the Closing, the Buyer shall (y) deposit $11,700,000 of the Closing Purchase Price (the "Initial Escrow Funds") into an escrow account (the "Escrow Account") maintained with a bank or trust company mutually approved by the Buyer and the Seller Representatives (the "Escrow Agent") pursuant to an escrow agreement substantially in the form of Exhibit A hereto, with such changes as may be reasonably required by the Escrow Agent (the "Escrow Agreement"), and (z) pay to each of the Sellers his, her or its applicable Pro Rata Share of the remainder of the Closing Purchase Price (the "Cash Purchase Price") by wire transfer of immediately available funds. (b) As used herein, the "Enterprise Value" shall mean an amount equal to Two Hundred Twenty-Five Million Five Hundred Thousand Dollars ($225,500,000), reduced by the amount, if any, by which negative Twenty-Three Million Dollars (-$23,000,000) (the "Agreed Amount") exceeds the Closing Date Net Working Capital (as defined in Section 9) of the Company and its Subsidiaries and increased by the amount, if any, by which the Closing Date Net Working Capital of the Company and its Subsidiaries exceeds the Agreed Amount. (c) At the Closing the Sellers shall make a good faith estimate of the Closing Date Net Working Capital ("Estimated Closing Date Net Working Capital"), and such estimated amount shall be used in the calculation of Enterprise Value for purposes of determining the Closing Purchase Price. After the Closing, the Closing Date Net Working Capital shall be computed in accordance with the provisions of Section 1.5 (the "Final Closing Date Net Working Capital"). In the event that the Final Closing Date Net Working Capital exceeds the Estimated Closing Date Net Working Capital, the Buyer shall pay to the Sellers their respective Pro Rata Shares 2 of the amount of such excess. In the event that the Final Closing Date Net Working Capital is less than the Estimated Closing Date Net Working Capital, the Sellers shall pay to the Buyer the amount of such deficiency. Any such amounts payable hereunder shall be paid in cash to the party entitled thereto within five (5) business days following the date on which the Net Working Capital Schedule (as defined in Section 1.5) has become final and binding as provided in Section 1.5(a), with interest from the Closing Date to the date of payment at a rate of 6% per annum; provided, that in the event that any such amount is payable by the Sellers, such amount, up to a maximum of $150,000, shall be paid solely from the Escrow Funds, and any such amount in excess of $150,000 shall be paid solely by offset against any Tax refund payments payable to the Seller Representatives on behalf of the Sellers pursuant to Section 10.3(b) hereof, at such time as such Tax refund payments are payable thereunder; provided, further that if any such amounts payable by the Sellers hereunder in excess of $150,000 exceeds the Tax refund payments payable to the Seller Representatives on behalf of the Sellers pursuant to Section 10.3(b), the Sellers shall pay to the Buyer the amount of such excess, payable at the time the final aggregate amount of such Tax refund payments is determined; provided, further, that the aggregate amount payable by any Seller pursuant to the foregoing proviso shall not exceed such excess amount multiplied by the Pro Rata Share of such Seller (determined in accordance with Section 13.4(f)). Notwithstanding anything to the contrary contained in this Agreement, the Minimum Claim Amount, the Deductible Amount and the Maximum Amount (as such terms are defined in Section 13.4) shall not apply with respect to any amounts payable under this Section 1.2(c). (d) As used herein, the "Aggregate Option Spreads" shall mean the sum of the Option Spreads for all of the Rollover Options. The "Option Spread" shall mean, (i) with respect to each Rollover Option exercisable for shares of Class B Common Stock (as defined in Section 3.3(a)), (A) the number of shares of Class B Common Stock issuable under such Rollover Option as of the Closing multiplied by (B) the difference between the Common Stock Price and the exercise price per share of Class B Common Stock pursuant to such Rollover Option, (ii) with respect to each Rollover Option exercisable for shares of Class A Preferred Stock (as defined in Section 3.3(a)), (A) the number of shares of Class A Preferred Stock issuable under such Rollover Option as of the Closing multiplied by (B) the difference between the Class A Preferred Stock Redemption Price and the exercise price per share of Class A Preferred Stock as of the Closing pursuant to such Rollover Option and (iii) with respect to each Rollover Option exercisable for shares of Class C Preferred Stock (as defined in Section 3.3(a)), (A) the number of shares of Class C Preferred Stock issuable under such Rollover Option as of the Closing multiplied by (B) the difference between $1,000 and the exercise price per share of Class C Preferred Stock as of the Closing pursuant to such Rollover Option. The "Common Stock Price" shall mean the quotient obtained by dividing (x) the sum of (A) the amounts set forth in clauses (i) through (v) of the Purchase Price formula set forth in Section 1.2(a) above (for this purpose, using the Estimated Closing Date Net Working Capital to 3 determine the Enterprise Value in calculating the amount set forth in clause (i) of such formula), plus (B) the aggregate exercise price of the Rollover Options by (y) the number of shares of Class A Common Stock (as defined in Section 3.3(a)) and Class B Common Stock outstanding as of the Closing after giving effect to the exercise of the Non-Rollover Options plus the number of shares of Class B Common Stock issuable upon exercise of the Rollover Options and the Warrants as of the Closing. The "Class A Preferred Stock Redemption Price" shall mean the aggregate redemption price payable per share of Class A Preferred Stock in the Redemption (as defined in Section 1.3(a)) pursuant to the terms of Section 1.3(b) below. 1.3. Redemption of Preferred Stock. (a) As a condition to the Closing and in accordance with Section 2.2, the Sellers shall cause the Company to validly and in compliance with all federal and state laws redeem all of the Company's issued and outstanding shares of Preferred Stock (as defined in Section 3.3) (including the shares of Preferred Stock to be issued upon the exercise of the Non-Rollover Options) (the "Redemption"). All of the foregoing issued and outstanding shares of Preferred Stock (including the shares of Preferred Stock to be issued upon the exercise of the Non-Rollover Options) are collectively referred to as the "Preferred Shares", and each a "Preferred Share". (b) Upon presentment to the Buyer at Closing of (i) certified copies of duly and validly taken corporate and shareholder action necessary or required for the Company to complete the Redemption, (ii) stock certificates or lost share affidavits with appropriate indemnities representing the redeemed shares of Preferred Stock and (iii) releases signed by each holder of Preferred Stock releasing the Company and the Buyer from any and all further obligations or liabilities with respect to the Preferred Stock, the Buyer shall pay to the Company, by making a capital contribution to the Company, an amount equal to the sum of (A) $1,000 per Preferred Share plus (B) in the case of each share of Class A Preferred Stock and Class B Preferred Stock (each as defined in Section 3.3), the aggregate amount of all accrued and unpaid dividends owed with respect to each such Preferred Share as of the Closing Date, in full payment for the Redemption (the aggregate amount payable by the Buyer pursuant to this Section 1.3(b) being referred to herein as the "Redemption Amount"). (c) Each of the Preferred Holders hereby waives any notice of the Redemption that may be required under the Company's Certificate of Incorporation, as amended, in connection with the Redemption. Each Preferred Holder hereby agrees to deliver to the Company or counsel to the Company the stock certificates (or lost share affidavits) and releases referred to in Sections 1.3(b)(ii) and (iii) at least three business days prior to the Closing. 4 1.4. Options. (a) Rollover Options. Each of the Sellers who holds Options may elect, by delivery to the Company of a notice in the form of Exhibit D hereto (the "Rollover Notice") received by the Company at least five business days prior to the Closing Date, to replace the Options specified in the Rollover Notice (the "Rollover Options") with options to purchase preferred stock of the Buyer (the "Replacement Options"). At the Closing, the Buyer shall issue to each such Seller who timely delivers a Rollover Notice Replacement Options having an aggregate value (based on the price per share paid by investors in the Buyer at the Closing for the Buyer's preferred stock less the exercise price per share for the Replacement Options) equal to the aggregate Options Spreads under such Seller's Rollover Options. The Replacement Options shall be issued pursuant to stock option agreements substantially in the form of Exhibit E attached hereto (the "New Stock Option Agreements") to be executed by the Buyer and the holders of Rollover Options at the Closing. Any Seller holding Options who fails to deliver a Rollover Notice to the Company at the address specified in the Rollover Notice at least five business days prior to the Closing Date shall not be entitled to replace any of his or her Options with Replacement Options and shall be required to exercise all of his or her Options at the Closing in accordance with Section 1.4(b). Notwithstanding the foregoing, (i) Joseph F. Trungale hereby agrees to elect to replace Options having aggregate Option Spreads of at least $1,000,000 for Replacement Options by delivering a corresponding Rollover Notice to the Company at least five business days prior to the Closing Date, and if he fails to timely deliver a Rollover Notice providing for such election, he shall be deemed to have elected to replace Options having aggregate Options Spreads of $1,000,000 with Replacement Options, and (ii) Robert E. Kaltenbach hereby agrees to elect to replace Options having aggregate Option Spreads of at least $500,000 for Replacement Options by delivering a corresponding Rollover Notice to the Company at least five business days prior to the Closing Date, and if he fails to timely deliver a Rollover Notice providing for such election, he shall be deemed to have elected to replace Options having aggregate Options Spreads of $500,000 with Replacement Options. Each holder of Options who timely delivers a Rollover Notice to the Company agrees not to exercise any Rollover Options at or prior to the Closing. (b) Non-Rollover Options. At the Closing, each holder of Options which are not Rollover Options (the "Non-Rollover Options") agrees to exercise his or her Non-Rollover Options in the manner provided in Section 2.2(a). 1.5 Net Working Capital Adjustment. (a) Within sixty (60) days after the Closing Date, the Buyer shall cause the Company to prepare and deliver to the Seller Representatives a schedule of the Closing Date Net Working Capital (the "Net Working Capital Schedule"). The Net Working Capital Schedule shall be deemed final upon the earliest of (i) the date on which the Buyer and the Seller Representatives 5 agree that the Net Working Capital Schedule is final, (ii) if the Seller Representatives have not earlier notified the Buyer, in writing, of any dispute over the amounts shown on the Net Working Capital Schedule, the twentieth (20th) day following the date of delivery of the Net Working Capital Schedule to the Seller Representatives, and (iii) the date on which any disputes relating to the Net Working Capital Schedule are resolved, as described in Section 1.5(b) below. The final Net Working Capital Schedule, as adjusted by any agreement of the Buyer and the Seller Representatives or by any resolution of disputes as described in Section 1.5(b) below, is hereinafter referred to as the "Final Net Working Capital Schedule". (b) Notwithstanding anything to the contrary in this Agreement, any disputes regarding amounts shown in the Net Working Capital Schedule shall be resolved as set forth in this Section 1.5(b). The Seller Representatives may dispute any amount shown on the Net Working Capital Schedule initially delivered in accordance with Section 1.5(a) hereof by delivering written notice of each disputed item (each, a "Disputed Item") to the Buyer (the "Dispute Notice," and, the date of its delivery, the "Dispute Notice Date") within the 20 day period referred to in Section 1.5(a) specifying the amount thereof in dispute and setting forth, in reasonable detail, the basis for such dispute. Within twenty (20) business days following the Dispute Notice Date, the Disputed Items shall be submitted to Deloitte & Touche LLP (the "Independent Accountant"). The Seller Representatives and the Buyer shall each then submit evidence in support of its position on each Disputed Item. (c) Without limiting the generality of the foregoing, the parties acknowledge that the Purchase Price adjustment contemplated by this Section 1.5 is intended to reflect the difference between the Closing Date Net Working Capital as shown on the Net Working Capital Schedule and the Agreed Amount, and the parties further acknowledge that such difference can only be measured if the calculation of Closing Date Net Working Capital is performed in accordance with GAAP applied on a basis consistent with the preparation of the Most Recent Audited Balance Sheet (as defined in Section 3.6). The scope of the Disputed Items to be resolved by the Independent Accountant is limited, therefore, to whether the Net Working Capital Schedule was prepared in accordance with the terms of this Agreement. Upon final resolution of all Disputed Items, the Independent Accountant shall issue a report showing a calculation of the Closing Date Net Working Capital. (d) The Independent Accountant shall make its determination of the Disputed Items, and such determination shall be binding and conclusive on the parties. The parties shall cooperate fully in assisting the Independent Accountant in calculating the Disputed Items and shall take such actions as are necessary to expedite and to cause the Independent Accountant to expedite such calculation. 6 (e) The Buyer shall bear a percentage of the fees and expenses of the Independent Accountant that equals (i) the difference, if any, between the Company's calculation of Closing Date Net Working Capital delivered pursuant to Section 1.5(a) and the Independent Accountant's calculation of Closing Date Net Working Capital divided by (ii) the total difference between the Company's calculation of Closing Date Net Working Capital delivered pursuant to Section 1.5(a) and the Seller Representatives' calculation of Closing Date Net Working Capital delivered pursuant to Section 1.5(b). (f) The Sellers shall bear a percentage of the fees and expenses of the Independent Accountant that equals (i) the difference, if any, between the Seller Representatives' calculation of Closing Date Net Working Capital delivered pursuant to Section 1.5(b) and the Independent Accountant's calculation of Closing Date Net Working Capital divided by (ii) the total difference between the Seller Representatives' calculation of Closing Date Net Working Capital delivered pursuant to Section 1.5(b) and the Company's calculation of Closing Date Net Working Capital delivered pursuant to Section 1.5(a). 2. CLOSING. 2.1. Time and Place. The closing of the sale and purchase of the Common Securities (the "Closing") shall be held at the offices of Sachnoff & Weaver, Ltd., 30 South Wacker Drive, Suite 2900, Chicago, Illinois 60606, at 10:00 a.m. on the later of (a) May 27, 2003 and (b) the third business day following expiration or termination of the waiting period under the HSR Act (as defined in Section 9) and the satisfaction or waiver of all other conditions set forth in Sections 7 and 8 (other than the delivery of customary closing documents), or at such other time, or at such other place as the Buyer and the Seller Representatives may mutually agree. The date on which the Closing is actually held hereunder is sometimes referred to herein as the "Closing Date". 2.2. Transactions at Closing. At the Closing: (a) The Sellers who hold Non-Rollover Options shall exercise such Non-Rollover Options by delivering to the Company an executed notice of exercise and delivering a written direction to the Buyer to deduct from the portion of the Cash Purchase Price otherwise payable to such Seller hereunder an amount equal to the applicable exercise price (plus the amount of any required federal, state or local withholding Taxes payable by the Company with respect to such exercise) and to pay such amount to the Company. (b) The Buyer and the Sellers shall cause the Company or its Subsidiaries to pay the Contract Termination Payments to the recipients 7 thereof, subject to delivery by such recipients of the releases referred to in the Contract Termination Agreements. (c) The Buyer and the Sellers shall cause the Company or its Subsidiaries to pay to First Capital Corporation of Boston and Goldner Hawn Johnson & Morrison Incorporated all accrued and unpaid management fees and other amounts due (including the accrued pro rata portion of management fees for the month in which the Closing occurs) under their respective Management Fee Agreements dated as of May 14, 2001 with the Company and VICORP (collectively, the "Management Fee Agreements"). (d) The Buyer, upon receipt of the appropriate documentation referred to in Section 1.2, shall pay to the Company the Redemption Amount, and the Redemption shall be completed by the Company and the Sellers. (e) The Sellers shall deliver to the Buyer, free and clear of any lien, claim or encumbrance, (i) certificates representing the Shares and (ii) the Warrants, each duly endorsed in blank or with duly executed stock powers or other transfer documents attached. (f) The Sellers shall cause the Company (i) to prepare and deliver to the Buyer the Certificate of Indebtedness and Net Cash pursuant to (and as defined in) Section 7.5, estimates of which shall be delivered to Buyer at least three (3) business days prior to the Closing, and (ii) to deliver to the Buyer pay-off letters, releases and lien discharges (or agreements therefor) reasonably satisfactory to the Buyer from each creditor listed on the Certificate of Indebtedness and Net Cash (other than with respect to Continuing Indebtedness). (g) The Buyer shall pay and discharge all outstanding Indebtedness evidenced on the Certificate of Indebtedness and Net Cash (other than Continuing Indebtedness) and all Transaction Expenses by wire transfer of immediately available funds. (h) The Buyer shall deliver the Initial Escrow Funds to the Escrow Agent by wire transfer of immediately available funds. (i) The Buyer shall deliver to each of the Sellers his, her or its Pro Rata Share of the Cash Purchase Price by wire transfer of immediately available funds. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Buyer as follows: 8 3.1. Organization; Authority; Binding Effect. The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing in the state or province, as the case may be, of its incorporation. The Company has delivered to the Buyer complete and correct copies of the Company's and each of its Subsidiaries' charter and by-laws and all amendments thereto. The Company and each of its Subsidiaries is qualified to do business as a foreign corporation and is in good standing in the respective jurisdictions listed on Schedule 3.1 hereto, and such jurisdictions constitute all of the jurisdictions in which the Company and/or its Subsidiaries are required to be qualified, other than those jurisdictions where the failure of the Company and/or any of its Subsidiaries to be so qualified, either individually or in the aggregate, would not have a Material Adverse Effect. The Company has all requisite power and full legal right to enter into this Agreement and to perform all of its agreements and obligations under this Agreement in accordance with its terms. The Company has obtained all corporate approvals necessary for the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other law affecting or relating to creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.2. Subsidiaries. Except as set forth on Schedule 3.2 hereto, the Company does not have any Subsidiaries and does not own or hold, of record and/or beneficially, any shares of any class of the capital stock of any corporation or any legal and/or beneficial interests in any partnerships, limited liability companies, business trusts or joint ventures or in any unincorporated trade or business enterprises. 3.3. Capitalization. (a) The authorized capital of the Company consists of (i) 70,000 shares of Class A Preferred Stock, par value $.01 per share (the "Class A Preferred Stock"), 20,304.8 shares of which are issued and outstanding on the date hereof prior to the Redemption, and none of which shall be outstanding subsequent to the Redemption; (ii) 70,000 shares of Class B Preferred Stock, par value $.01 per share (the "Class B Preferred Stock"), 18,266.1 shares of which are issued and outstanding on the date hereof prior to the Redemption, and none of which shall be outstanding subsequent to the Redemption; (iii) 50,000 shares of Class C Preferred Stock, par value $.01 per share (the "Class C Preferred Stock") and collectively with the Class A Preferred Stock and the Class B Preferred Stock, the "Preferred Stock"), 3,127.28 shares of which are issued and outstanding on the date hereof prior to the Redemption, and none of which shall be outstanding subsequent to the Redemption; (iv) 70,000 shares of Class A Voting Common Stock, $.01 par value per share (the "Class A Common Stock"), 19,397.4 shares of which are issued and outstanding on 9 the date hereof; and (v) 70,000 shares of Class B Non-Voting Common Stock, $.01 par value per share (the "Class B Common Stock"), 627.2 shares of which are issued and outstanding on the date hereof. An aggregate of 1,543.40 shares of Class A Preferred Stock (plus an additional number of shares of Class C Preferred Stock determined in accordance with the applicable stock option agreement) and 2,430.70 shares of Class B Common Stock are issuable upon exercise of the Options. An aggregate of 1,181.88 shares of Class B Common Stock are issuable upon exercise of the Warrants. All of the Shares are (or will be on the Closing Date, upon the exercise of the Non-Rollover Options) validly issued and outstanding, fully paid and nonassessable. Other than the Options and the Warrants, there are no outstanding options, warrants or other rights to subscribe for or purchase any securities of the Company. (b) All of the outstanding capital stock of each of the Company's Subsidiaries (i) is listed on Schedule 3.3(b) hereto, (ii) is owned of record and beneficially by the Company or a Subsidiary of the Company, (iii) is, except as set forth on Schedule 3.3(b) hereto, owned free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto, and (iv) is validly issued and outstanding, fully paid and nonassessable. There are no outstanding options, warrants or other rights to subscribe for or purchase any securities of any of the Company's Subsidiaries. 3.4. Non-Contravention. Except as set forth on Schedule 3.4 hereto, neither the execution and delivery of this Agreement by the Company and the Sellers nor the consummation by the Company and the Sellers of the transactions contemplated hereby will constitute a violation of, or be in conflict with, or constitute or create a material default under or result in the creation or imposition of any material lien, claim or encumbrance upon any property of the Company or any of its Subsidiaries pursuant to, (a) the charter or by-laws of the Company or any of its Subsidiaries, each as amended to date; or (b) subject to the expiration of the waiting period under the HSR Act, any statute or any judgment, decree, order, regulation or rule of any court or governmental authority. 3.5. Consents. Except as set forth on Schedule 3.5 hereto, and subject to the expiration of the waiting period under the HSR Act, no notice to, consent, approval, order or authorization of, or declaration or filing with, any governmental authority is required to be obtained or made by the Company or any of its Subsidiaries in connection with the consummation of the transactions contemplated by this Agreement. 3.6. Financial Statements. The Company has delivered the following financial statements (the "Financial Statements") to the Buyer, which are attached hereto as Schedule 3.6: (a) the audited consolidated balance sheets of the Company and its Subsidiaries as of October 28, 2001 and October 27, 2002 (the "Most Recent 10 Audited Balance Sheet"), the related audited consolidated statements of operations, cash flows and stockholders' equity of (i) the Company and its Subsidiaries for the fiscal year ended October 27, 2002 and the period from May 14, 2001 through October 28, 2001 and (ii) VICORP for the period from October 30, 2000 through May 13, 2001, and (b) the unaudited consolidated balance sheet of the Company and its Subsidiaries as of March 16, 2003 and the related unaudited consolidated statements of income, cash flows and retained earnings of the Company and its Subsidiaries for the twenty (20) week period then ended (the "Interim Financials"). Subject to year-end audit adjustments and the absence of footnotes in the case of the Interim Financials, each of the Financial Statements has been prepared in accordance with GAAP applied on a basis consistent with prior periods except as otherwise stated therein; each of such balance sheets fairly presents in all material respects the consolidated financial condition of the Company and its Subsidiaries as of its respective date; and each of such statements of operations and stockholders' equity fairly presents in all material respects the consolidated results of operations of the Company and its Subsidiaries for the period covered thereby. 3.7. Taxes. Except as disclosed on Schedule 3.7 hereto: (a) each of the Company and its Subsidiaries has duly and timely filed with the appropriate government agencies all of the Tax Returns required to be filed by it; (b) no waiver of any statute of limitations relating to Taxes has been executed or given by the Company or any of its Subsidiaries; (c) all Taxes, assessments, fees and other governmental charges upon the Company or any of its Subsidiaries or upon any of their respective properties, assets, revenues, income and franchises which are currently owed by the Company or any such Subsidiary with respect to any period ending on or before the Closing Date have been paid, other than those currently payable without penalty or interest; (d) each of the Company and its Subsidiaries has withheld and paid all Taxes required to be withheld or paid in connection with amounts paid or owing to any employee, creditor, shareholder, independent contractor or third party; (e) no federal Tax Return of the Company or any of its Subsidiaries is currently under audit by the IRS (as defined in Section 9), and no other Tax Return of the Company or any of its Subsidiaries is currently under audit by any other taxing authority; (f) neither the IRS nor any other taxing authority is now asserting or, to the Company's knowledge, threatening to assert against the Company or any of its Subsidiaries any deficiency or claim for additional Taxes or interest thereon or penalties in connection therewith; 11 (g) neither the Company nor any of its Subsidiaries (i) is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement, or (ii) has ever been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code") (other than a group the common parent of which is the Company); (h) each Seller is a United States person within the meaning of the Code and the transactions contemplated hereby are not subject to the withholding provisions of Section 3406 or subchapter A of Chapter 3 of the Code; (i) neither the Company nor any of its Subsidiaries (i) has been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, or (ii) has had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country; (j) there are no outstanding rulings, or requests for rulings, with any Tax authority addressed to the Company or any of its Subsidiaries that are, or if issued would be, binding upon the Company or any of its Subsidiaries for any Tax period ending after the Closing Date; (k) neither the Company nor any of its Subsidiaries has (i) executed, become subject to or entered into any closing agreement pursuant to Section 7121 of the Code that would be binding on the Company or any of its Subsidiaries, (ii) filed for or agreed to any extension of time with respect to the filing of any Tax Return relating to the Company or any of its Subsidiaries or (iii) received approval from, or agreed with, any Tax authority to make a change in accounting method or has any application pending with any Tax authority requesting permission for any such change; (l) no extension of time within which to file any Tax Return that has not been filed has been requested or filed by the Company or any of its Subsidiaries; and (m) neither the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan (other than agreements, contracts, arrangements or plans disclosed on Schedule 3.16) that may result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. 3.8. Absence of Certain Changes. Except as set forth on Schedule 3.8 hereto or as contemplated by this Agreement, since October 29, 2002 there has not been: (a) any material change in the assets, liabilities, sales, income or business of the Company or any of its Subsidiaries or in any of the Company's or any of its 12 Subsidiaries' relationships with suppliers, customers or lessors, other than changes which arose in the ordinary course of business; (b) any acquisition or disposition by the Company or any of its Subsidiaries of any material asset or material property other than in the ordinary course of business; (c) any material damage, destruction or loss, whether or not covered by insurance; (d) any declaration, setting aside or payment of any dividend or any other distributions in respect of the Company's capital stock, other than dividends paid in kind on shares of Preferred Stock; (e) except for the issuance of shares pursuant to the exercise of the Non-Rollover Options, or in payment of a dividend on the Preferred Stock paid in kind in accordance with clause (d) above, any issuance of any shares of the capital stock of the Company or any of its Subsidiaries or any direct or indirect redemption, purchase or other acquisition of any of the Company's or any of its Subsidiaries' capital stock; (f) any increase in the compensation, pension or other benefits payable or to become payable by the Company or any of its Subsidiaries to any of their respective officers or employees, or any bonus payments or arrangements made to or with any of them (other than pursuant to the terms of any existing written agreement or plan or annual or periodic increases made in the ordinary course of business consistent with the Company's or such Subsidiary's past practice and other than the payment of the Contract Termination Payments); (g) any entry by the Company or any of its Subsidiaries into any material transaction other than in the ordinary course of business or as contemplated herein; (h) any incurrence by the Company or any of its Subsidiaries of any material obligations or material liabilities, whether absolute, accrued, contingent or otherwise (including, without limitation, liabilities as guarantor or otherwise with respect to obligations of others), other than obligations and liabilities incurred in the ordinary course of business or as contemplated herein; (i) any discharge or satisfaction by the Company or any of its Subsidiaries of any material lien or encumbrance or payment by the Company or any of its Subsidiaries of any material obligation or material liability (fixed or contingent) other than in the ordinary course of business or as contemplated herein; (j) any forgiveness or cancellation of any material debt or claim by the Company or any of its Subsidiaries or any waiver of any right of material value, in each case other than in the ordinary course of business; (k) any grant or creation of any material mortgage, pledge, lien, lease, security interest or other charge or encumbrance on any of the assets of the Company or any of its Subsidiaries other than Permitted Encumbrances and other than in the ordinary course of business or pursuant to a third party's pre-existing contractual right to obtain such mortgage, pledge, lien, lease, security interest or other charge or encumbrance; (l) any capital expenditures by the Company or any of its Subsidiaries which have exceeded $500,000 per expenditure or $500,000 in the aggregate; (m) any entry into or amendment by the Company or any of its Subsidiaries of (i) any written employment agreement that provides for a base salary in excess of $100,000 per annum and a term in excess of one (1) year or (ii) any collective bargaining agreement; (n) any material change in the accounting practices of the Company or any of its Subsidiaries; (o) any entry by the Company or any of its 13 Subsidiaries into any transaction with any Affiliate; or (p) any commitment to do any of the foregoing. 3.9. Litigation, etc. Except as set forth on Schedule 3.9(a) hereto, (i) neither the Company nor any Subsidiary of the Company is subject to any unsatisfied injunction or judgment and (ii) no material action, suit, proceeding or administrative enforcement action is pending or, to the Company's knowledge, threatened or filed, against the Company or any of its Subsidiaries, nor to the Company's knowledge, is any administrative or governmental investigation pending against the Company or any of its Subsidiaries. Except as set forth on Schedule 3.9(b) hereto, since May 13, 2001, no material action, suit, proceeding or administrative enforcement action has been pending or, to the Company's knowledge, filed, against the Company or any of its Subsidiaries which has subsequently been dismissed, withdrawn, settled, adjudicated or otherwise terminated. 3.10. Conformity to Law. The Company and each of its Subsidiaries have complied with, and are in compliance with, in all material respects, all laws, statutes and governmental regulations and all judicial or administrative tribunal orders, judgments, writs, injunctions or decrees applicable to its business, including the notice, disclosure, and registration requirements to sell and maintain franchises in the states and jurisdictions where the Company sells and maintains franchises. Except as set forth on Schedule 3.10 hereto, neither the Company nor any of its Subsidiaries or Franchisees has been charged with any material violation of any provision of any federal, state or local law or administrative regulation in respect of its business. The Company and its Subsidiaries have all material governmental and regulatory licenses and permits necessary for the conduct of their business as presently conducted. Neither the Company nor any of its Subsidiaries has sold any products prior to receiving any required approvals or consents from the U.S. Food and Drug Administration under the Food, Drug & Cosmetics Act of 1976, as amended, and the regulations promulgated thereunder. Neither the Company or any of its Subsidiaries, nor, to the knowledge of the Company, any officer, director or employee of the Company or any of its Subsidiaries acting on behalf of the Company or any of its Subsidiaries, has made or received any material unlawful payment. 3.11. Real Property and Environmental Matters. (a) The Company does not own or lease any real property. Schedule 3.11(a) hereto sets forth a complete and accurate list of all of the real property owned by any of the Company's Subsidiaries (the "Owned Real Property") and all of the real property leased by any of the Company's Subsidiaries (the "Leased Real Property", and together with the Owned Real Property, the "Real Property"). Except as set forth on Schedule 3.11(a) hereto, (i) each of the Company's Subsidiaries has valid fee simple title to its Owned Real Property, free and clear of any mortgage, pledge, lien, encumbrance, charge, or other security interest, easement, covenant, or other 14 restriction or other claim adversely affecting its title to or possession of its Owned Real Property, except for installments of special assessments not yet delinquent, recorded easements, covenants, and other restrictions, and utility easements, building restrictions, zoning restrictions, and Permitted Encumbrances, none of which materially impairs the use of such Real Property as it is presently being used in the operation of the business of the Company and its Subsidiaries, (ii) none of the Company's Subsidiaries has leased, licensed or otherwise granted any Person the right to use or occupy any of its Owned Real Property or any portion thereof and (iii) to the Company's knowledge, neither the Owned Real Property nor any of the buildings, plants, improvements, structures or fixtures located thereon are in violation of any laws, rules or regulations regarding zoning, health, safety, building or land use. Except as set forth on Schedule 3.11(a) hereto, the Leased Real Property is held by the Company's Subsidiaries under outstanding leases which are in full force and effect and none of the Company's Subsidiaries (i) is in material breach or default under any of the real property leases to which it is a party or has received a notice of cancellation or termination with respect to any such real property lease, or (ii) has subleased, licensed or otherwise granted any Person the right to use or occupy any of its Leased Real Property or any portion thereof. To the Company's knowledge, all of real property leases to which any of the Company's Subsidiaries is a party are valid leases. The Company and its Subsidiaries have all material easements and licenses and other rights relating to real estate necessary to conduct their respective businesses in the manner heretofore conducted or carried on by them. Except as set forth on Schedule 3.11(a) hereto, neither the Company nor any of its Subsidiaries has received any notice that or has any knowledge that either the whole or any portion of any of the Real Property is to be, or is threatened to be, condemned, requisitioned or otherwise taken by any public or quasi-public authority. Except as set forth on Schedule 3.11(a) hereto, neither the Company nor any of its Subsidiaries has received notice of or has any knowledge of any public improvements that will be made that may result in special assessments against or otherwise affect any of the Real Property in any material respect. Except as set forth on Schedule 3.11(a) hereto, none of the Company's Subsidiaries is a lessor of real property and The Company has made available to the Buyer a true, correct and complete copy of each title insurance policy, title opinion, survey and appraisal relating to the Owned Real Property which is in its possession or is reasonably available. (b) Except as set forth on Schedule 3.11(b) hereto: (i) neither the Company nor any of its Subsidiaries is in violation, in any material respect, of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation those arising under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water Act, the Federal Clean 15 Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment, each as amended from time to time (hereinafter "Environmental Laws"); (ii) neither the Company nor any of its Subsidiaries has received written notice, order, demand or decree from any third party including, without limitation, any federal, state or local governmental authority: (A) that the Company or any of its Subsidiaries has been identified by the United States Environmental Protection Agency as a potentially responsible party under CERCLA with respect to any site including any site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (B) that any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any hazardous substance as defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) and any toxic substance, oil or hazardous material or other chemical or substance (including, without limitation, petroleum, asbestos in any form, urea formaldehyde or polychlorinated biphenyls) designated, controlled or regulated by any Environmental Laws ("Hazardous Materials") which the Company or any of its Subsidiaries has or allegedly has generated, transported or disposed of has been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that the Company or any of its Subsidiaries conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; (C) that the Company or any of its Subsidiaries is or shall be a named party to any claim, action, cause of action, complaint, (contingent or otherwise) legal or administrative proceeding arising out of any third party's incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the release of Hazardous Materials; or (D) that any material payment or contribution is being demanded from the Company or any of its Subsidiaries with respect to any damage to the environment or any violation of any Environmental Law; (iii) (A) in the course of any activities conducted by the Company or any of its Subsidiaries, no Hazardous Materials have been generated or are being used on any Real Property except in accordance, in all material respects, with applicable Environmental Laws; and (B) no Hazardous Materials have been released at or are present in the soil or ground water of, or contained in any storage tank located on or under, any Real Property, except in each case to the extent that the presence of Hazardous Materials on or under such Real Property does not violate, in any material respect, any applicable Environmental Laws or require remediation by the Company or any of its Subsidiaries under any applicable Environmental Laws or give rise to any material liability of the Company or its Subsidiaries under any applicable Environmental Laws; 16 (iv) no action, proceeding, revocation proceeding, amendment procedure, writ, injunction or claim is pending, or to the knowledge of the Company, threatened with respect to the Company or any of the Subsidiaries or any Real Property in connection with Environmental Laws or Hazardous Materials; (v) to the knowledge of the Company, no underground storage tanks for petroleum products or any other Hazardous Materials are located on any of the Real Property; (vi) no asbestos-containing materials are located in any of the Real Property, except in each case to the extent that the presence of asbestos-containing materials in such Real Property does not violate, in any material respect, any applicable Environmental Laws or require remediation by the Company or any of its Subsidiaries under any applicable Environmental Laws or give rise to any material liability of the Company or its Subsidiaries under any applicable Environmental Laws; (vii) no polychlorinated biphenyls are located on or in any of the Real Property, except in each case to the extent that the presence of polychlorinated biphenyls on or in such Real Property does not violate, in any material respect, any applicable Environmental Laws or require remediation by the Company or any of its Subsidiaries under any applicable Environmental Laws or give rise to any material liability of the Company or its Subsidiaries under any applicable Environmental Laws; (viii) the Company and the Subsidiaries hold all Permits required under Environmental Laws (the "Environmental Permits") necessary for the conduct of the Company and the Subsidiaries' businesses as such are currently being conducted; and (ix) the Company and the Subsidiaries are in compliance in all material respects with all terms and conditions of the Environmental Permits. (c) Schedule 3.11(c) includes a listing and description of all Environmental Permits currently held by the Company and the Subsidiaries with respect to their pie production operations. (d) The properties listed on Schedule 3.11(d) constitute all real properties used or occupied by the Company and its Subsidiaries in connection with their pie production operations. 3.12. Restaurants. Schedule 3.12 hereto lists all of the restaurants operated by the Company or any of its Subsidiaries and all of the restaurants operated by any franchisee of the Company or any of its Subsidiaries. Schedule 3.12 hereto also lists 17 the restaurants that the Company and its Subsidiaries currently intend to close and the new restaurants that the Company and its Subsidiaries are in the process of developing. 3.13. Franchise Agreements and Registrations. Schedule 3.13 lists each of the franchise agreements to which the Company or any of its Subsidiaries is a party (the "Franchise Agreements"). Neither the Company nor any of its Subsidiaries is in material default of its obligations under any such Franchise Agreement and each Franchise Agreement is in full force and effect and the terms thereof comply in all material respects with all applicable laws and regulations. Neither the Company nor any of its Subsidiaries has received from any other party to a Franchise Agreement with the Company any written notice of default or intent to terminate. Schedule 3.13 also lists each of the states in which the Company and/or its Subsidiaries are currently registered to sell franchises. All such registrations, disclosure requirements and related filings are current and comply in all material respects with all applicable laws and regulations in effect and in force as of the date of this Agreement in all jurisdictions where the Company is engaging in franchise-related activities. Neither the Company nor any of its Subsidiaries has offered to sell franchises in any state in which the Company or any of its Subsidiaries was required to be registered to sell franchises but was not so registered. 3.14. Insurance. Schedule 3.14 hereto lists all policies of fire, liability, workmen's compensation, life, property and casualty and other insurance owned or held by the Company or any of its Subsidiaries. Such policies of insurance are sufficient for compliance by the Company and its Subsidiaries with all requirements of law and all agreements to which the Company or its Subsidiaries is a party. All such policies are in full force and effect and will not terminate or lapse by reason of the transactions contemplated by this Agreement. Neither Company nor any of its Subsidiaries is in default with respect to its obligations under any of such insurance policies and neither the Company nor any of its Subsidiaries has received any notification of cancellation of any such insurance policies. 3.15. Contracts. Schedule 3.15 sets forth a list of all contracts to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which the Company or any of its Subsidiaries is subject, except (a) any contract that does not require payment by any party thereto of more than $250,000, (b) any contract that is terminable by the Company or any of its Subsidiaries upon ninety (90) days' notice or less without the payment of any material penalty or material termination fee, (c) any contract entered into, after the date hereof and prior to Closing, with the Buyer, (d) any contract entered into in the ordinary course of business after the date hereof and prior to the Closing, and (e) any contract listed in any other Schedule to this Agreement. As used in this Section 3.15, the word "contract" means and includes every written agreement of any kind which is legally enforceable by or against the Company or any of its Subsidiaries. Each of the 18 contracts listed on Schedule 3.15 hereto or any of the other Schedules hereto is in full force and effect and neither the Company nor any of its Subsidiaries has committed any material breach or default thereunder. Except as set forth on Schedule 3.4 or Schedule 3.15, neither the execution and delivery of this Agreement by the Company and the Sellers nor the consummation by the Company and the Sellers of the transactions contemplated hereby will constitute a violation of, or constitute or create a material default under, permit the termination of, cause the acceleration or maturity of, or result in the creation or imposition of any material lien, claim or encumbrance upon any property of the Company or any of its Subsidiaries pursuant to, any contract listed on Schedule 3.15 or any of the other Schedules hereto. Except as set forth on Schedule 3.5 or Schedule 3.15 hereto, no notice to or consent or approval of any Person is required to be obtained or made by the Company or any of its Subsidiaries in connection with the consummation of the transactions contemplated by this Agreement under any contract listed or required to be listed on Schedule 3.15 or any of the other Schedules hereto (other than notices, consents or approvals required under agreements or commitments evidencing, or entered into by the Company or any of its Subsidiaries in connection with, Indebtedness of the Company and/or any of its Subsidiaries to be paid and discharged at Closing pursuant to Section 8.4). 3.16. Employee Benefit Plans. Except as set forth on Schedule 3.16 hereto, neither the Company nor any of its Subsidiaries maintains or has any obligation to make contributions to, any employee benefit plan (an "ERISA Plan") within the meaning of Section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any other retirement, profit sharing, stock option, stock bonus or employee benefit plan (a "Non-ERISA Plan"). All such ERISA Plans and Non-ERISA Plans have been maintained and operated in all material respects in accordance with all federal, state and local laws applicable to such plans and the terms and conditions of the respective plan documents. The Internal Revenue Service has issued a favorable determination letter with respect to each ERISA Plan that is intended to be a "qualified plan" within the meaning of Section 401(a) of the Code. No ERISA Plan is subject to Title IV or Section 302 of ERISA or Section 412 of the Code. No ERISA Plan is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor has the Company or any of its Subsidiaries nor any entity aggregated with the Company under Section 414 of the Code contributed to, or been obligated to contribute to, any Multiemployer Plan or any Multiple Employer Plan or any other plan that is subject to Title IV of ERISA or Section 412 of the Code. Except for continuation coverage as required by Section 4980(B) of the Code or by applicable state insurance laws, no ERISA Plan or Non-ERISA Plan provides life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof. Except as set forth on Schedule 3.16 and except for the Contract Termination Agreements, neither the Company nor any of its Subsidiaries are parties 19 to (i) any written employment agreements, other than written employment agreements that provide for base salary of less than $50,000 per annum or are terminable at will or (ii) any written agreement providing for any severance payment, bonus payment, acceleration of payments, increase in compensation or benefits or similar payment in connection with any change in control of the Company or any of its Subsidiaries, and the Contract Termination Payments, together with any payments in connection with the sale of any Common Securities or the redemption of any Preferred Shares hereunder, are the only payments owed to any employee of the Company or any of its Subsidiaries as a result of the change of control contemplated by this Agreement. 3.17. Trademarks, Patents, Etc. Schedule 3.17 hereto sets forth a list of (a) all patents, trademarks, trade names and copyrights registered in the name of the Company or any of its Subsidiaries and all applications therefor, and (b) all material written agreements relating to technology, know-how and processes which the Company or any of its Subsidiaries is licensed or authorized to use by others or which the Company or any of its Subsidiaries has licensed or authorized for use by others. Except to the extent set forth on Schedule 3.17, the Company and each of its Subsidiaries owns or has permission to use all Intellectual Property material to, and used in the ordinary course of, the operation of its business as presently conducted. Except as set forth on Schedule 3.17 hereto, (a) no material claims are pending or, to the knowledge of the Company, threatened, against the Company or any of its Subsidiaries by any Person regarding the use of any such Intellectual Property, or challenging or questioning the validity or effectiveness of any license or agreement included in any licensed Intellectual Property, and (b) none of the Company's or any of its Subsidiaries' employees has any right in or to any of the Intellectual Property that is material to the operation of the business of the Company and its Subsidiaries. To the knowledge of the Company, no third party has infringed or misappropriated any of the Intellectual Property used in the operation of the business of the Company and its Subsidiaries in any material respect. 3.18. Indebtedness. Except as set forth on Schedule 3.18 hereto, except for the Unfunded POS Price and the Unfunded Capital Expenditures and except for Indebtedness reflected or reserved against in the Most Recent Audited Balance Sheet or Indebtedness incurred in the ordinary course of business after the date of the Most Recent Audited Balance Sheet, neither the Company nor any of its Subsidiaries has any Indebtedness outstanding at the date hereof. As of the Closing, neither the Company nor any of its Subsidiaries will have any Indebtedness outstanding other than as described on the Certificate of Indebtedness and Net Cash. 3.19. Labor Relations. The Company and each of its Subsidiaries have been in compliance in all material respects with all federal and state laws respecting employment and employment practices, terms and conditions of employment, wages and hours and nondiscrimination in employment, and neither the Company nor any of its Subsidiaries has engaged in any unfair labor practice. Except as set forth on 20 Schedule 3.19 hereto, there is no material charge pending against the Company or any of its Subsidiaries alleging unlawful discrimination in employment practices before any court or agency, and there is no material charge of or proceeding with regard to any unfair labor practice against the Company or any of its Subsidiaries pending before the National Labor Relations Board. There is no labor strike, dispute, slow-down or work stoppage actually pending against or involving the Company or any of its Subsidiaries other than disputes with individual employees. None of the employees of the Company or any of its Subsidiaries is covered by any collective bargaining agreement, and no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries. Except for the union organizing petition currently pending with respect to the employees of the Oak Forest, Illinois pie production facility, to the knowledge of the Company, there are no other organizational efforts presently being made or threatened by or on behalf of any labor union with respect to employees of the Company or any of its Subsidiaries. 3.20. Title to Personal Property. Except as set forth on Schedule 3.20 hereto, the Company and each of its Subsidiaries has good title to all of its personal property (the "Personal Property"), including, without limitation, all such personal property reflected in the Most Recent Audited Balance Sheet (except for personal property sold or otherwise disposed of in the ordinary course of business since the date of the Most Recent Audited Balance Sheet), free and clear of all liens, pledges, charges, security interests, encumbrances or title retention agreements, other than those which arose in the ordinary course of business and other than Permitted Encumbrances. 3.21. Accounts Receivable. All accounts receivable reflected on the Most Recent Audited Balance Sheet, and all accounts receivable arising subsequent to the date of the Most Recent Audited Balance Sheet, represent valid obligations owing to the Company and its Subsidiaries. 3.22. Inventories. The inventory of the Company and its Subsidiaries is adequate and sufficient to conduct the business of the Company and its Subsidiaries as presently conducted. 3.23. Suppliers. Neither the Company nor any of its Subsidiaries has received any notice that any of its fifteen (15) largest suppliers (based on the dollar amount of purchases from such suppliers during the fiscal year ended October 27, 2002) intends to cancel or terminate its relationship with the Company or such Subsidiary or to materially decrease or limit its services, supplies or materials to the Company or such Subsidiary. 3.24. Potential Conflicts of Interest. Except as set forth on Schedule 3.24 hereto, to the knowledge of the Company, no officer, director or shareholder of the Company or any of its Subsidiaries (other than BBV, Marathon or LLC) owns, directly or indirectly, any interest in (excepting not more than 1% stock holdings for 21 investment purposes in securities of publicly held and traded companies) or is an officer, director, employee or consultant of any Person which is a competitor, lessor, lessee or supplier of the Company or any of its Subsidiaries. Except as set forth on Schedule 3.24 hereto, to the knowledge of the Company, no officer, director or shareholder of the Company or any of its Subsidiaries (a) owns, directly or indirectly, in whole or in part, any material tangible or intangible property which the Company or any of its Subsidiaries is using or the use of which is necessary for the business of the Company or any of its Subsidiaries or (b) has any material cause of action or other claim whatsoever against, or owes any material amount to, the Company or any of its Subsidiaries, except for claims which arose in the ordinary course of business, including but not limited to accrued vacation pay, accrued benefits under Employee Benefit Plans and similar matters and agreements. 3.25. Bank Accounts; Powers of Attorney. Except as set forth on Schedule 3.25 hereto, neither the Company nor any of its Subsidiaries has any account in any bank or other financial institution and no Person has any power to act under any power of attorney granted by the Company or any of its Subsidiaries at any time for any purpose. 3.26. Minute Books. The minute books and the Company and each of its Subsidiaries made available to the Buyer for inspection accurately record therein all actions taken by the boards of directors and shareholders of the Company and its Subsidiaries. 3.27. Brokers. Except for U.S. Bancorp Piper Jaffray, Inc. and Acheson Capital LLC, which have been retained by the Company, neither the Sellers nor the Company or any of its Subsidiaries has retained, utilized or been represented by any broker or finder in connection with the transactions contemplated by this Agreement. 3.28. Condition and Sufficiency of Certain Assets. The Company's machinery, vehicles, equipment and other tangible personal or movable property and assets which are used in its pie production operations conducted at the locations listed on Schedule 3.11(d) are in adequate condition for their present use, ordinary wear and tear excepted. 3.29. Disclosure. No representation or warranty by the Company in this Agreement or in any schedule attached hereto contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading. 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PREFERRED HOLDERS. Each of the Sellers and the Preferred Holders (collectively, the "Seller Indemnifying Parties"), severally and not jointly, represents and warrants to the Buyer as follows: 22 4.1. Right to Sell Securities; Binding Effect. Such Seller Indemnifying Party has all requisite power and full legal right to enter into this Agreement and (if applicable) the Escrow Agreement, to perform all of its, his or her agreements and obligations under this Agreement and (if applicable) the Escrow Agreement in accordance with its terms, and each Seller has all requisite power and full legal authority to sell to the Buyer all of the Common Securities owned by such Seller. Such Seller Indemnifying Party has obtained all necessary corporate or other applicable entity approvals, if applicable, necessary for the execution and delivery of this Agreement and (if applicable) the Escrow Agreement by such Seller Indemnifying Party and the consummation by such Seller Indemnifying Party of the transactions contemplated hereby and (if applicable) thereby. Each of this Agreement and (if applicable) the Escrow Agreement has been duly executed and delivered by such Seller Indemnifying Party and constitutes the legal, valid and binding obligation of such Seller Indemnifying Party, enforceable against such Seller Indemnifying Party in accordance with its terms, except to the extent such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other law affecting or relating to creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4.2. Title to Securities, Liens, etc. Such Seller has, and as of the consummation of the Closing (after giving effect to the issuance of shares upon exercise of the Non-Rollover Options) the Buyer will have, record and beneficial ownership of such Seller's Common Securities as set forth on Schedule 1 hereto, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, right of first refusal or first offer option, equity or other adverse claim thereto (any of the foregoing, a "Lien"), other than any such Lien incurred by the Buyer. Such Seller holds Options for the number and class of shares of capital stock of the Company set forth opposite his or her name on Schedule 3 hereto. Such Preferred Holder has record and beneficial ownership of the number of shares of Preferred Stock set forth opposite his or its name on Schedule 2 hereto, free and clear of any Lien, other than any such Lien incurred by the Buyer. 4.3. Governmental Consents. Subject to the expiration of the waiting period under the HSR Act, no consent, approval or authorization of, or registration, qualification or filing with, any governmental agency or authority is required for the execution and delivery of this Agreement by such Seller Indemnifying Party or for the consummation by such Seller Indemnifying Party of the transactions contemplated hereby, except where the failure to obtain any such consent, approval or authorization or to so register, qualify or file would not reasonably be expected to materially and adversely effect such Seller Indemnifying Party's ability to consummate the transactions contemplated hereby. 23 4.4. Non-Contravention. Neither the execution and delivery of this Agreement or (if applicable) the Escrow Agreement by such Seller Indemnifying Party nor the consummation by such Seller Indemnifying Party of the transactions contemplated hereby or thereby will constitute a violation of, or be in conflict with, or constitute or create a default under or result in the creation or imposition of any liens upon any property of the such Seller Indemnifying Party pursuant to, (a) if the Seller Indemnifying Party is an entity, the charter documents, by-laws or other similar governing documents of such Seller Indemnifying Party, each as amended to date; (b) any material agreement or commitment to which such Seller Indemnifying Party is a party or by which such Seller Indemnifying Party or any of his, her or its properties is bound or to which such Seller Indemnifying Party or any of his, her or its properties is subject; or (c) subject to the expiration of the waiting period under the HSR Act, any statute or any judgment, decree, order, regulation or rule of any court or governmental authority relating to such Seller Indemnifying Party. 4.5. Litigation, etc. No action, suit, proceeding or investigation is pending or, to such Seller Indemnifying Party's knowledge, threatened, against such Seller Indemnifying Party with respect to his, her or its execution and delivery of this Agreement or the consummation by such Seller Indemnifying Party of the transactions contemplated hereby. 5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to each of the Sellers as follows: 5.1. Organization and Standing of Buyer. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Buyer has full power and authority under its Certificate of Incorporation and by-laws and applicable laws to execute and deliver this Agreement and the Escrow Agreement and to consummate the transactions contemplated hereby and thereby. 5.2. Corporate Approval; Binding Effect. The Buyer has obtained all necessary authorizations and approvals required for the execution and delivery of this Agreement and the Escrow Agreement and the consummation of the transactions contemplated hereby and thereby. Each of this Agreement and the Escrow Agreement has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except to the extent such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other law affecting or relating to creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 24 5.3. Non-Contravention. Neither the execution and delivery of this Agreement or the Escrow Agreement by the Buyer nor the consummation by the Buyer of the transactions contemplated hereby or thereby will constitute a violation of, or be in conflict with, constitute or create a default under, or result in the creation or imposition of any liens upon any property of the Buyer pursuant to, (a) the charter documents or by-laws of the Buyer, each as amended to date; (b) any agreement or commitment to which the Buyer is a party or by which the Buyer or any of its properties is bound or to which the Buyer or any of its properties is subject; or (c) subject to the expiration of the waiting period under the HSR Act, any statute or any judgment, decree, order, regulation or rule of any court or governmental authority relating to the Buyer. 5.4. Governmental Consents. Subject to the expiration of the waiting period under the HSR Act, no consent, approval or authorization of, or registration, designation, declaration or filing with, any governmental agency or authority is required in connection with the purchase of the Common Securities pursuant to this Agreement or for the consummation by the Buyer of any other transaction contemplated hereby, except where the failure to obtain any such consent, approval or authorization or to so register, qualify or file would not reasonably be expected to materially and adversely effect the Buyer's ability to consummate the transactions contemplated hereby. 5.5. Solvency. At the Closing, the Buyer will be solvent and capable of meeting its obligations as they become due, and has assets exceeding its liabilities and a reasonable amount of capital for the conduct of its business. 5.6. Buyer Financial Resources. Attached as Schedule 5.6 hereto are commitments to provide the debt financing to the Buyer and statements of availability to provide the equity financing to the Buyer necessary to pay the Purchase Price. Such commitments are in full force and effect in the form attached hereto. 5.7. Brokers. The Buyer has not retained, utilized or been represented by any broker or finder in connection with the transactions contemplated by this Agreement. 6. CONDUCT OF BUSINESS BY THE COMPANY AND ITS SUBSIDIARIES PENDING CLOSING. The Company covenants and agrees that, from and after the date of this Agreement and until the Closing, except as otherwise specifically consented to or approved by the Buyer in writing: 6.1. Access. The Company shall, and shall cause each of its Subsidiaries to, afford to the Buyer and its authorized representatives access during normal business hours to all properties, books, records, contracts and documents of the Company or such Subsidiary and an opportunity to make such investigations as they 25 shall reasonably desire to make of the Company or such Subsidiary (provided that such investigations shall be conducted so as to minimize any disruption of the operations of the Company or such Subsidiary), and the Company shall, and shall cause each of its Subsidiaries to, furnish or cause to be furnished to the Buyer and its authorized representatives all such information with respect to the affairs and business of the Company or such Subsidiary as the Buyer may reasonably request. Upon the reasonable prior request of the Buyer, the Company shall, and shall cause each of its Subsidiaries to, arrange meetings or conference calls for the Buyer and its authorized representatives with the Company's or such Subsidiary's executive officers, franchisees and suppliers (provided that such meetings or conference calls shall only be held during normal business hours and shall be conducted so as to minimize any disruption in the business activities of such executive officer, franchisee or supplier). 6.2. Carry on in Regular Course. The Company shall, and shall cause each of its Subsidiaries to, maintain its owned and leased properties in accordance with its historical maintenance practices, maintain its material licenses and permits, continue to make customary capital expenditures in the ordinary course of business consistent with past practice and otherwise carry on its business in the ordinary course consistent with past practice. The Company shall not, and shall not permit any of its Subsidiaries to, incur any Indebtedness outside the ordinary course of business. 6.3. No General Increases. Except as set forth on Schedule 6.3 hereto, the Company shall not, and shall not permit any of its Subsidiaries to, grant any general or uniform increase in the rates of pay of its employees or in their benefits under any bonus or pension plan or other contract or commitment, or increase the compensation payable or to become payable to its officers, key salaried employees or agents, or any bonus, insurance, pension or other benefit plan, payment or arrangement made to, for or with any such officers, key salaried employees or agents, unless such grant or increase is made in the ordinary course of business consistent with past practices or is required by the terms of any existing agreement. 6.4. Contracts and Commitments. Except as set forth on Schedule 6.4 hereto, the Company shall not, and shall not permit any of its Subsidiaries to, enter into any material lease, contract or commitment or engage in any material transaction not contemplated by this Agreement or not in the usual and ordinary course of business and consistent with its normal business practices. 6.5. Sale of Capital Assets. The Company shall not, and shall not permit any of its Subsidiaries to, sell or otherwise dispose of any capital asset other than (a) any capital asset with a fair market value not in excess of $500,000, or (b) capital assets with a fair market value aggregating not in excess of $500,000, without the prior written consent of the Buyer. 26 6.6. Preservation of Organization. The Company shall, and shall cause each of its Subsidiaries to, use reasonable efforts to preserve its business organization intact, to keep available to the Buyer its present key officers and employees, and to preserve for the Buyer its present relationships with its franchisees, suppliers and customers and others with whom it has business relations. 6.7. Capital Expenditures. Except as set forth on Schedule 6.7 hereto, the Company shall not, and shall not permit any of its Subsidiaries to, make any capital expenditures which exceed $500,000 per expenditure and $500,000 in the aggregate. 6.8. Capital Stock. Except for the Redemption, the issuance of shares upon the exercise of the Non-Rollover Options or as payment in kind of a dividend on the Preferred Stock, the Company shall not, and shall not permit any of its Subsidiaries to, (a) effect any issuance of any shares of its capital stock, (b) redeem, purchase or otherwise acquire any shares of its capital stock or (c) declare, set aside or pay any dividends or other distributions in respect of its capital stock. 6.9. Tax Matters. Without the prior written consent of Buyer, neither the Company nor any of its Subsidiaries shall file any amended Tax Return, change any election or change any accounting method if such amendment or change would have the effect of increasing the Tax liability of the Company or any of its Subsidiaries for any period ending after the Closing Date. 6.10. Financial Statements. Within 15 days following the end of each monthly period (or four week equivalent) ending prior to the Closing Date beginning with the four week period ending April 13, 2003, the Company shall deliver to the Buyer the unaudited consolidated balance sheets, income statements and statements of cash flows of the Company and its Subsidiaries (including VICORP and Village Inn Pancake House of Albuquerque, Inc.) for such period, which, subject to year-end audit adjustments and the absence of footnotes, shall be prepared in accordance with GAAP. 6.11. Notice of Breach. The Company shall promptly notify the Buyer of any material breach of any representations and warranties of the Company set forth in Section 3 hereof or any of the covenants of the Company contained herein. 6.12. Schedules. The Company shall promptly supplement or amend the Schedules hereto with respect to any matter arising after the date hereof which, if existing or occurring on the date hereof, would have been required to be set forth or described in the Schedules hereto, by delivering written notice thereof to the Buyer accompanied by a copy of the applicable supplement or amendment. Any such supplement or amendment shall be solely for the purpose of disclosure to the Buyer hereunder, and for purposes of the conditions to closing set forth in Section 7.1 and the indemnification provisions in Section 13 hereof shall not be deemed to cure any 27 breach of any representation or warranty hereunder that would have occurred in the absence of such supplement or amendment unless the Buyer specifically waives such condition or breach in writing. 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the Buyer to consummate the Closing shall be subject to the satisfaction at or prior to the Closing of each of the following conditions (to the extent noncompliance is not waived in writing by the Buyer): 7.1. Representations and Warranties True at Closing. The representations and warranties made by the Company and the Seller Indemnifying Parties in Sections 3 and 4 hereof, if qualified by a reference to materiality or similar qualifiers, shall be true and correct, and if not so qualified, shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date, provided that this condition shall be deemed satisfied unless the aggregate amount of Damages (as defined in Section 13.1) indemnifiable pursuant to Section 13 with respect to any such breaches of representations and warranties at Closing would be reasonably likely to exceed $5,000,000. 7.2. Compliance With Agreement. The Company and the Seller Indemnifying Parties shall have performed and complied in all material respects with all of their obligations under this Agreement to be performed or complied with by them on or prior to the Closing Date. 7.3. Officer's Certificate. The Company shall have delivered to the Buyer in writing, at and as of the Closing, a certificate, in form and substance reasonably satisfactory to the Buyer, certifying that the conditions in each of Sections 7.1 and 7.2 have been satisfied. 7.4. No Material Adverse Change. There shall have been no change as of the Closing Date, since the date hereof, in the business or the assets of the Company or any of its Subsidiaries which either individually or in the aggregate is or is reasonably likely to result in a Material Adverse Effect. 7.5. Certificate of Indebtedness and Net Cash. The Sellers shall have caused the Company to prepare and deliver to the Buyer a certificate (the "Certificate of Indebtedness and Net Cash") certifying (a) the amount of Indebtedness of the Company and its Subsidiaries outstanding on the Closing Date and specifying the amount owed to each creditor listed thereon, (b) the Net Cash Amount as of the Closing Date and (c) the amount of outstanding checks as of the Closing Date. 7.6. No Action or Restraining Order. No action, suit or proceeding shall have been filed or shall be threatened and no restraining order or injunction shall be 28 in effect which would prohibit the transactions contemplated hereby or seek to impose any material liability on any party hereto as a result of the consummation of the transactions contemplated hereby. 7.7. Resignations of Directors and Officers. The directors and officers of the Company and each of its Subsidiaries set forth on Schedule 7.7 hereto shall have resigned their positions with the Company and/or its Subsidiaries on or prior to the Closing Date. 7.8. Opinion of Counsel. Each of Bingham McCutchen LLP, counsel to the Company and the LLC, and Stanley Ereckson, Jr., counsel to VICORP, shall have delivered to the Buyer a written opinion, addressed to the Buyer and dated the Closing Date, substantially in the form of Exhibits B-1 and B-2, respectively, hereto. 7.9. HSR Act. Any applicable waiting period under the HSR Act, including any extension, shall have expired, or shall have been earlier terminated. 7.10. Escrow Agreement. The Seller Representatives, the Buyer and the Escrow Agent shall have executed and delivered the Escrow Agreement, and the Escrow Agreement shall be in full force and effect. 7.11. Termination of Agreements. Each of the agreements listed on Schedule 7.11 hereto shall have been terminated and (a) the Sellers party thereto, and with respect to the Management Fee Agreements, First Capital Corporation of Boston and Goldner Hawn Johnson & Morrison Incorporated shall have released all of their rights and claims against the Company and its Subsidiaries under such agreements and (b) the Sellers party thereto who are not employees of the Company or any of its Subsidiaries and First Capital Corporation of Boston and Goldner Hawn Johnson & Morrison Incorporated shall also have released any and all other rights and claims against the Company and its Subsidiaries, other than the rights and claims arising under this Agreement, the Escrow Agreement and any other agreements to be entered into at the Closing in connection with this Agreement. 7.12. Financing. The lenders furnishing the commitments attached as Schedule 5.6 shall have funded such commitments in accordance with the terms thereof; provided, however, that the Buyer shall not be entitled to assert this condition precedent if the failure of such lenders to fund such commitments shall have resulted from the willful failure of the Buyer to have satisfied all material conditions within its reasonable control to funding thereunder for the purpose of avoiding the Buyer's obligations hereunder. 7.13. Releases. Each Seller (other than those Sellers who are party to a Contract Termination Agreement) who holds Options as of the Closing Date shall have executed and delivered to the Company a release in the form of Exhibit F 29 attached hereto. Each Seller who is a party to a Contract Termination Agreement shall have executed and delivered to the Company a release in the form described in such Contract Termination Agreement. 7.14. Certificate as to LLC Pro Rata Shares. The Seller Representatives shall have delivered a certificate certifying the LLC Pro Rata Share of each of the LLC Members (and the LLC Pro Rata Shares of all of the LLC Members as set forth on such certificate shall collectively total 100%). 7.15. Bronstein Leases. The issue of whether all or any portion of the Bronstein Leases constitute operating leases or capital leases shall have been resolved to the satisfaction of the Buyer; provided, that if the Sellers are willing to treat the Bronstein Leases as capital leases, then this condition shall be deemed to be satisfied. 7.16. Proceedings and Documents Satisfactory. All proceedings in connection with the transactions contemplated by this Agreement and all certificates and documents delivered to the Buyer in connection with the transactions contemplated by this Agreement shall be satisfactory in all reasonable respects to the Buyer and the Buyer's counsel, and the Buyer shall have received the originals or certified or other copies of all such records and documents as the Buyer may reasonably request. 8. CONDITIONS PRECEDENT TO SELLER INDEMNIFYING PARTIES' OBLIGATIONS. The obligation of the Seller Indemnifying Parties to consummate the Closing shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions (to the extent noncompliance is not waived in writing by the Seller Representatives): 8.1. Representations and Warranties True at Closing. The representations and warranties made by the Buyer in Section 5 hereof, if qualified by a reference to materiality or similar qualifiers, shall be true and correct, and if not so qualified, shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though such representations and warranties had been made or given at and as of the Closing Date, provided that this condition shall be deemed satisfied unless the aggregate amount of Damages indemnifiable pursuant to Section 13 with respect to any such breaches of representations and warranties at Closing would be reasonably likely to exceed $5,000,000. 8.2. Compliance with Agreement. The Buyer shall have performed and complied in all material respects with all of its obligations under this Agreement that are to be performed or complied with by it at or prior to the Closing. 8.3. Officer's Certificate. The Buyer shall have delivered to the Sellers in writing, at and as of the Closing, a certificate, in form and substance reasonably 30 satisfactory to the Seller Representatives, to the effect that the conditions in each of Sections 8.1 and 8.2 have been satisfied. 8.4. Discharge of Indebtedness. The Buyer shall have paid in full and terminated all liabilities of the Company and each of its Subsidiaries for all of the Indebtedness evidenced on the Certificate of Indebtedness and Net Cash. 8.5. Transaction Expenses. The Buyer shall have paid in full and terminated all liabilities of the Sellers for the Transaction Expenses. 8.6. No Action or Restraining Order. No action, suit or proceeding shall have been filed and no restraining order or injunction shall be in effect which would prohibit the transactions contemplated hereby or seek to impose liability on any party hereto as a result of the consummation of the transactions contemplated hereby. 8.7. Opinion of Counsel. Sachnoff & Weaver, Ltd., counsel to the Buyer, shall have delivered to the Sellers a written opinion, addressed to the Sellers and dated the Closing Date, substantially in the form of Exhibit C hereto. 8.8. HSR Act. Any applicable waiting period under the HSR Act, including any extension, shall have expired, or shall have been earlier terminated. 8.9. Redemption. The Buyer shall have provided the Company with the Redemption Amount specified in Section 1.2 above, and the Redemption shall have been completed. 8.10. Escrow Agreement. The Seller Representatives, the Buyer and the Escrow Agent shall have executed and delivered the Escrow Agreement, and the Escrow Agreement shall be in full force and effect. 8.11. New Stock Option Agreements. The Buyer shall have executed and delivered the New Stock Option Agreements for each holder of Rollover Options. 8.12. Bronstein Leases. The issue of whether all or any portion of the Bronstein Leases constitute operating leases or capital leases shall have been resolved to the satisfaction of the Seller Representatives; provided, that if the Buyer is willing to treat the Bronstein Leases as operating leases, then this condition shall be deemed to be satisfied. 8.13. Proceedings and Documents Satisfactory. All proceedings in connection with the transactions contemplated by this Agreement and all certificates and documents delivered to the Sellers in connection with the transactions contemplated by this Agreement shall be satisfactory in all reasonable respects to the Sellers and their counsel, and each Seller shall have received the originals or certified 31 or other copies of all such records and documents as such Seller may reasonably request. 9. CERTAIN DEFINITIONS. As used herein the following terms not otherwise defined have the following respective meanings: "Affiliate": As applied to any specified Person, any other Person controlling, controlled by or under common control with such specified Person. "BBV": BancBoston Ventures Inc., a Massachusetts corporation. "Bronstein Leases": The leases of the Company and its Subsidiaries acquired in connection with the acquisition by VICORP of all of the outstanding capital stock of Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation, in February, 2003. "Closing Date Net Working Capital": The Net Working Capital as of the Closing Date, immediately prior to giving effect to the transactions contemplated by this Agreement; provided, that for purposes of determining the Closing Date Net Working Capital, the amount of short-term liability for workers compensation claims of the Company and its Subsidiaries as of the Closing Date shall be deemed to be zero. "Continuing Indebtedness": Any Indebtedness (i) consisting of letters of credit issued to support workers' compensation obligations or lease obligations, (ii) consisting of capitalized leases, (iii) consisting of the Unfunded POS Price, (iv) consisting of the Unfunded Capital Expenditure Amount or (v) secured by mortgages held by General Electric Capital Business Asset Funding Corporation or any of its Affiliates on Owned Real Property located at 210 North Blake Road, Hopkins, Minnesota 55343 and 7320 Goodhope Road, Milwaukee, Wisconsin 53223. "Contract Termination Agreements": Collectively, (a) the letter agreement dated as of April 14, 2003 among the Company, VICORP and Joseph F. Trungale regarding the termination of the Employment Agreement dated as of May 14, 2001 between VICORP and Joseph F. Trungale and (b) the letter agreement dated as of April 14, 2003 among the Company, VICORP and Robert E. Kaltenbach regarding the termination of the Severance Agreement dated as of July 17, 1998 (as amended) among VICORP and Robert E. Kaltenbach. "Contract Termination Payments": The amounts payable to Joseph F. Trungale and Robert E. Kaltenbach under their respective Contract Termination Agreements. 32 "Escrow Funds": The amount of funds remaining in the Escrow Account from time to time. "GAAP": U.S. generally accepted accounting principles, consistently applied. "HSR Act": The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indebtedness": As applied to any Person, all indebtedness of such Person for borrowed money, whether current or funded, or secured or unsecured, including without limitation, (a) all indebtedness of such Person for the deferred purchase price of property or services represented by a note, earnout or contingent purchase payment, (b) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (c) all indebtedness of such Person secured by a purchase money mortgage or other lien to secure all or part of the purchase price of the property subject to such mortgage or lien, (d) all obligations under leases which shall have been or must be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee, (e) any liability of such Person in respect of banker's acceptances or letters of credit (provided, that any increase in the outstanding amount of letters of credit issued to support workers' compensation obligations above the amount of $3,862,500 outstanding as of the date hereof shall not be deemed to be Indebtedness of the Company and its Subsidiaries as of the Closing Date for purposes of Section 1.2(a) hereof), (f) the Unfunded POS Price, (g) the Unfunded Capital Expenditure Amount, (h) any obligations (including, but not limited to, interest, fees, penalties and other expenses) under any interest rate swap agreements or instruments of the Company or its Subsidiaries, (i) all interest, fees and other expenses owed with respect to the indebtedness referred to above, and (j) all indebtedness referred to above which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss. "Intellectual Property": All of the following (including all copies and embodiments thereof, in whatever media): (a) registered and unregistered trademarks, trade dress, service marks, logos, trade names, corporate names and applications to register the same ("Trademarks"); (b) issued U.S. and foreign patents and pending patent applications, patent disclosures and improvements thereto ("Patents"); (c) registered and unregistered copyrights, mask work rights and all applications to register the same ("Copyrights"); (d) computer software and databases ("Software"); (e) licenses and agreements to use or exercise rights in any Trademarks, Patents, Copyrights or Software; (f) Internet domain names; and (g) all categories of trade secrets, know-how, recipes, formulas, inventions (whether or not patentable and 33 whether or not reduced to practice), processes, procedures, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial, marketing, and business data, pricing and cost information, business and marketing plans, customer and supplier lists and information and other confidential and proprietary information. "IRS": The United States Internal Revenue Service. "LLC": Midway Investors, LLC, a Delaware limited liability company. "LLC Members": Those Preferred Holders identified on Schedule 2 hereto as LLC Members. "LLC Pro-Rata Share": With respect to any LLC Member, the percentage set forth for such LLC Member on the Certificate of LLC Pro-Rata Shares delivered pursuant to Section 7.14. "Material Adverse Effect": A material adverse effect on the business, operations or financial condition of the Company and its Subsidiaries, taken as a whole. "Net Cash Amount": As of any date, the aggregate amount of the Company's and each of its Subsidiaries' cash and cash equivalents on hand or in bank accounts as of such date after giving effect to the Contract Termination Payments payable on such date and the management fees and other amounts payable on such date under the Management Fee Agreements, minus the aggregate amount of outstanding and unpaid checks issued by the Company and each of its Subsidiaries as of such date, plus (without duplication) the aggregate exercise price paid or deemed paid pursuant to Section 2.2(b) upon exercise of the Non-Rollover Options. "Net Working Capital": As of any date, the total (excluding intercompany accounts) of accounts receivable, inventory and prepaid expenses (excluding any deferred tax assets, prepaid income taxes or accrued tax refunds) of the Company and its Subsidiaries, less the total (excluding intercompany accounts) of accounts payable, accrued compensation (including bonuses accrued in the ordinary course), accrued taxes (other than any liability for federal or state income taxes or any reserves for income taxes or any deferred tax liability), accrued insurance and accrued expenses (excluding accrued interest and accrued management fees) of the Company and its Subsidiaries, all determined in accordance with GAAP on a consolidated basis in accordance with the Most Recent Audited Balance Sheet, it being understood and agreed that no long-term assets or liabilities shall be included in any determination of Net Working Capital. 34 "Options": As of the date hereof, the aggregate amount of unexercised stock options to purchase shares of Class A Preferred Stock, Class C Preferred Stock or Class B Common Stock, as the case may be, as more fully set forth on Schedule 3 hereto. "Permitted Encumbrances": Any (a) liens for Taxes or assessments or other governmental charges not yet due and payable; (b) pledges or deposits of money securing statutory obligations under workmen's compensation, unemployment insurance, social security or public liability laws or similar legislation; (c) pledges or deposits of money securing bids, tenders, contracts or leases to which the Company or any of its Subsidiaries is a party as lessee made in the ordinary course of business; (d) inchoate and unperfected workers', mechanics' or similar liens arising in the ordinary course of business, so long as such liens attach only to equipment, fixtures or real property of the Company or any of its Subsidiaries; (e) carriers', warehousemen's, suppliers' or other similar possessory liens arising in the ordinary course of business; (f) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which the Company or any of its Subsidiaries is a party; (g) zoning restrictions or recorded easements affecting the use of any Real Property or other minor irregularities in title (including leasehold title) affecting any Real Property, so long as the same do not materially impair the use of such Real Property as it is presently being used in the operation of the business of the Company and its Subsidiaries; (h) liens presently existing or hereafter created pursuant to any agreements or commitments evidencing, or entered into by the Company or any of its Subsidiaries in connection with, Indebtedness of the Company and/or any of its Subsidiaries to be paid and discharged at Closing pursuant to Section 8.4; and (i) any leases or subleases entered into in the ordinary course of business by the Company or any of its Subsidiaries as lessor with respect to excess or unused Real Property. "Person": A corporation, a limited liability company, an association, a partnership, an organization, a trust, a business or an individual. "Projected Capital Expenditure Amount" means (a) if the Closing Date is prior to May 11, 2003, an amount equal to $3,478,000 plus (i) a fraction, the numerator of which is the number of days between April 13, 2003 and the Closing Date and the denominator of which is 28 multiplied by (ii) $931,000, (b) if the Closing Date is on or after May 11, 2003 but prior to June 8, 2003, an amount equal to $4,409,000 plus (i) a fraction, the numerator of which is the number of days between May 11, 2003 and the Closing Date and the denominator of which is 28 multiplied by (ii) $2,002,000 and (c) if the Closing Date is on or after June 8, 2003, $6,411,000. "Pro-Rata Share": With respect to each Seller, a fraction (expressed as a percentage), the numerator of which is the number of Shares sold by such Seller to the Buyer at the Closing (including any shares of Class B Common Stock of the 35 Company issued to such Seller upon exercise of any Non-Rollover Options) plus the number of shares of Class B Common Stock issuable upon exercise of any Warrants sold by such Seller to the Buyer at the Closing and the denominator of which is the total number of Shares sold by all of the Sellers to the Buyer at the Closing (including the total number of shares of Class B Common Stock of the Company issued to the Sellers upon exercise of any Non-Rollover Options) plus the total number of shares of Class B Common Stock issuable upon exercise of the Warrants sold by the Sellers to the Buyer at the Closing. "Subsidiary": As applied to any specified Person, any other Person of which such specified Person shall at the time own, directly or indirectly, through a Subsidiary or otherwise, at least a majority of the outstanding capital stock (or other beneficial interests) entitled to vote generally. "Tax": Any federal, state, local, foreign and other income, profits, franchise, capital, withholding, unemployment insurance, social security, occupational, production, severance, gross receipts, value added, sales, use, excise, real and personal property, ad valorem, occupancy, transfer, employment, disability, worker's compensation or other similar tax, duty or other governmental charge (including all interest and penalties thereon and additions thereto). "Tax Return": Any return, declaration, report, claim for refund, information return, statement or other document (including any related or supporting estimates, elections, schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax or the administration of any law, regulation or administrative requirements relating to any Tax. "Transaction Expenses": All expenses of the Sellers and the Company incurred in connection with the preparation, execution and consummation of this Agreement and the Closing, including fees and disbursements of attorneys, accountants and other advisors and service providers, payable by the Sellers pursuant to Section 15.1 hereof that have not been paid as of the Closing. "Unfunded Capital Expenditure Amount": The amount, if any, by which the Projected Capital Expenditure Amount exceeds the sum of (a) the aggregate amount of remodeling and maintenance capital expenditures of the Company and its Subsidiaries for corporate, manufacturing (VICOM) and restaurants during the period beginning on October 28, 2002 and ending on the Closing Date plus (b) $50,000. "Unfunded POS Price": The amount, if any, by which $7,489,000 exceeds the aggregate amount of cash paid by the Company and its Subsidiaries in connection with the POS system upgrade prior to the Closing Date. 36 "VICORP": VICORP Restaurants, Inc., a Colorado corporation. "Warrants": The warrants to purchase shares of Class B Common Stock issued by the Company to certain of the Sellers, as more fully set forth on Schedule 1 hereto. 10. CERTAIN COVENANTS. 10.1. Confidential Information. Any and all information disclosed by the Company, any of its Subsidiaries or any Seller to the Buyer as a result of the negotiations leading to the execution of this Agreement, or in furtherance thereof, which information was not already known to the Buyer shall remain confidential to the Buyer and its respective employees, agents and investors until the Closing Date. If the transactions contemplated by this Agreement are not consummated, the Buyer agrees not to divulge or disclose or use for its benefit or purposes any such information at any time in the future unless it has otherwise become public (without violation of this Agreement). The information intended to be protected hereby shall include, but not be limited to, financial information, franchisee information, lease terms, recipes, and anything else having an economic or pecuniary benefit to the Company, any of its Subsidiaries or any Seller. 10.2. Releases. Each Seller (other than those Sellers party to a Contract Termination Agreement) who holds Options as of the Closing Date shall execute and deliver to the Company at or prior to the Closing a release in the form of Exhibit F attached hereto. Each Seller party to a Contract Termination Agreement shall execute and deliver to the Company at or prior to the Closing a release in the form described in such Contract Termination Agreement. Each Seller party to any of the agreements listed on Schedule 7.11 hereto and First Capital Corporation of Boston and Goldner Hawn Johnson & Morrison Incorporated shall execute and deliver to the Company at or prior to the Closing a termination agreement in the form of Exhibit G attached hereto. 10.3. Tax Matters. (a) Tax Returns. (i) The Buyer will be responsible for and shall cause the Company and its Subsidiaries to timely file any income Tax Returns with a filing due date that is after the Closing Date for tax periods of the Company and its Subsidiaries that end on or before the Closing Date. If the fiscal year 2002 federal income Tax Returns of the Company and its Subsidiaries (the "2002 Federal Tax Returns") have not been filed as of the Closing Date, the Buyer shall cause the 2002 Federal Tax Returns to be filed within 60 days after the Closing Date. Within 30 days after the Closing Date, the Buyer shall cause the Company and/or its Subsidiaries to file for a refund of the 37 full amount of the estimated federal income Tax payment of $1,300,000 made by the Company and/or its Subsidiaries on or about February 15, 2003 (the "Estimated Tax Payment Refund Filing"). Within 150 days after the Closing Date, the Buyer shall cause the federal income Tax Returns of the Company and its Subsidiaries for the partial tax year ending on the Closing Date (the "Stub Period Federal Tax Returns") to be filed. Within 60 days following the filing of the Stub Period Federal Tax Returns, the Buyer shall cause to be filed either (A) amendments to the fiscal year 2001 and 2002 federal income Tax Returns of the Company and its Subsidiaries or (B) an IRS Form 1139 to apply any net operating loss of the Company or its Subsidiaries for any partial tax year ending on the Closing Date to the preceding tax years (either (A) or (B), the "2001/2002 Federal Tax Return Amendments"). The Buyer shall cause the Company and its Subsidiaries, or the accountants for the Company and its Subsidiaries, to prepare and file each of the Tax Returns and other filings required to be filed pursuant to this Section 10.3(a)(i) in accordance with the provisions of Section 10.3(b)(i). (ii) The Buyer shall provide the Seller Representatives with copies of the 2002 Federal Tax Returns, the Stub Period Federal Tax Returns and the 2001/2002 Federal Tax Return Amendments for their review and comment at least 30 days prior to the applicable filing deadline set forth in Section 10.3(a)(i) above (the "Tax Refund Materials"). The Seller Representatives shall have a period of 15 days to provide the Buyer with a statement of any disputed items with respect to the Tax Refund Materials. In the event the Seller Representatives and the Buyer are unable to reach agreement with respect to any disputed items within a period of 5 days, all such disputed items shall be submitted to the Independent Accountant for final resolution prior to the applicable filing deadline. In addition, the Buyer shall provide the Seller Representatives with a copy of the Estimated Tax Payment Refund Filing at least 15 days prior to the applicable filing deadline set forth in Section 10.3(a)(i) above, and the Seller Representatives shall have a period of 5 days to provide the Buyer with a statement of any disputed items with respect to the Estimated Tax Payment Refund Filing. In the event the Seller Representatives and the Buyer are unable to reach agreement with respect to any disputed items within a period of 5 days, all such disputed items shall be submitted to the Independent Accountant for final resolution prior to the applicable filing deadline. In the event the Independent Accountant fails to resolve any disputed items prior to the applicable filing deadline and, as a result, the Buyer does not make the required filings by the applicable filing deadline, the Buyer shall not be deemed to have breached this Section 10.3 so long as the Buyer makes the required filings promptly following resolution of such disputed items, which shall be no later than 30 days after the applicable filing deadline. (iii) The Buyer shall provide the Seller Representatives with copies of all state and local income Tax Returns of the Company and its Subsidiaries that include a taxable period prior to the Closing Date for their review and comment at least 30 days prior to the applicable filing deadline (subject to any extensions of such 38 filing deadline) for such Tax Returns together with the Buyer's calculation of the Tax refund to be received, or the Taxes payable, with respect to the Pre-Closing Tax Period (the "Tax Materials"). The Seller Representatives shall have a period of 15 days to provide the Buyer with a statement of any disputed items with respect to the Tax Materials. In the event the Seller Representatives and the Buyer are unable to reach agreement with respect to any disputed items within a period of 5 days, all such disputed items shall be submitted to the Independent Accountant for final resolution prior to the applicable filing deadline. As used herein, "Pre-Closing Tax Period" means (i) any taxable period of the Company or its Subsidiaries that begins on or before the Closing Date and ends on or before the Closing Date and (ii) with respect to any other taxable period of the Company or its Subsidiaries that includes the Closing Date, the portion of such taxable period prior to and including the Closing Date. (iv) The Buyer and the Sellers agree that if the Company or any of its Subsidiaries is permitted under any applicable state or local income tax law to treat the Closing Date as the last day of the taxable period during which the Closing occurs, the Buyer and the Sellers shall treat (and shall cause their respective Affiliates to treat) such date as the last day of such taxable period. (b) Tax Refunds With Respect to Pre-Closing Tax Periods. (i) The Buyer shall cause each federal or state income Tax Return of the Company and its Subsidiaries filed after the Closing Date that includes a Pre-Closing Tax Period (including, without limitation, the 2002 Federal Tax Returns, the Estimated Tax Payment Refund Filing, the Stub Period Federal Tax Returns and the 2001/2002 Federal Tax Return Amendments) to claim the maximum amount of income tax refunds to which the Company and its Subsidiaries may be entitled; provided, however, that each such Tax Return shall be prepared in accordance with the most recent past practices of the Company and its Subsidiaries. In connection with such filings, the Buyer shall cause the Company and its Subsidiaries to apply any net operating loss of the Company or its Subsidiaries for the tax year ending on the Closing Date (the "Pre-Closing NOL") to any successive preceding tax years until all of the Pre-Closing NOL has been applied. Notwithstanding the foregoing provisions of this Section 10.3(b)(i), the Buyer and the Sellers hereby acknowledge and agree that the Company and its Subsidiaries are expected to incur certain deductible expenses on the Closing Date immediately prior to giving effect to the Closing, including without limitation, expenses related to the exercise of Non-Rollover Options as contemplated by Section 2.2(a), the payment of the Contract Termination Payments as contemplated by Section 2.2(b) and the termination or prepayment of certain Indebtedness in connection with the Closing as contemplated by Section 2.2(g), and such deductible expenses shall be reported in the determination of the income or loss of the Company or its Subsidiaries pursuant to 39 any federal or state income Tax Return of the Company or its Subsidiaries filed after the Closing Date that includes a Pre-Closing Tax Period. (ii) The Buyer and the Sellers agree that any federal or state income tax refunds payable to the Company or its Subsidiaries with respect to the carryback or application of the Pre-Closing NOL to any Pre-Closing Tax Period shall be for the account of the Sellers. Within five (5) days after receipt of each such refund by the Company or its Subsidiaries after the Closing Date, the Buyer shall pay to the Sellers an amount equal to such refund as follows: (A) the initial $1,300,000 in such refunds shall be deposited into the Escrow Account, as an addition to the Escrow Funds, by wire transfer of immediately available funds to the Escrow Agent; provided, that in the event that any such refunds are received by the Company or its Subsidiaries after the tenth day prior to the date that is 18 months from the Closing Date, the Buyer shall pay the applicable amount of such refunds by wire transfer of immediately available funds directly to the Seller Representatives for distribution to the Sellers in accordance with their respective Pro Rata Shares; and (B) the amount of such refunds in excess of the initial $1,300,000 of such refunds (less any amounts paid by offset pursuant to Section 1.2(c)) shall be paid by wire transfer of immediately available funds to the Seller Representatives for distribution to the Sellers in accordance with their respective Pro Rata Shares. (iii) The Buyer shall permit the Seller Representatives to control the prosecution of any refund claim payable for the account of the Sellers and, where deemed appropriate by the Seller Representatives, shall cause the Buyer to authorize by appropriate powers of attorney such Persons as the Seller Representatives shall designate to represent the Company and its Subsidiaries with respect to such refund claim; provided, however, that the Sellers shall take no action that would increase the tax liability of the Company and its Subsidiaries for any tax period beginning on or after the Closing Date and ending after the Closing Date (other than as a consequence of any reduction of any net operating loss of the Company or its Subsidiaries for the partial tax year ending on the Closing Date by the carryback of all or any portion of such net operating loss to any prior tax period) unless such action is agreed to by the Buyer; provided, further, that the Sellers shall be responsible for paying any costs and expenses incurred by the Seller Representatives in connection with any such prosecution. (iv) Buyer shall not amend, and shall not permit the Company or any of its Subsidiaries to amend, any income Tax Return or election made in connection with such income Tax Return for any Pre-Closing Tax Period without the prior written consent of the Seller Representatives if such amendment would have the effect of reducing the amount of any refunds to which the Sellers would otherwise be entitled pursuant to this Section 10.3(b). 40 (v) The parties acknowledge and agree that the estimated federal income tax payment of the Company and its Subsidiaries due on April 15, 2003 shall be reduced to take into account the Company's good faith estimate of the deductions resulting from the exercise of employee stock options, the payment of the Contract Termination Payments and certain other deductible expenses to be incurred by the Company and its Subsidiaries as of the Closing Date immediately prior to giving effect to the Closing, as a result of the transactions contemplated hereby. (vi) The Buyer and the Sellers agree that any federal, state or local income tax refunds payable to the Company or its Subsidiaries with respect to the carryback of any net operating loss of the Company or its Subsidiaries for any taxable period that begins on or after the Closing Date and ends after the Closing Date (a "Post-Closing NOL") to any Pre-Closing Tax Period shall be for the account of the Buyer; provided, that the Buyer shall not, and shall not permit the Company or any of its Subsidiaries to, file any Tax Return (including, without limitation, any amendment to any Tax Return or any IRS Form 1139) of the Company or its Subsidiaries in which a Post-Closing NOL is carried back to any Pre-Closing Tax Period (a "Post-Closing NOL Return") until such time as the Sellers have received the maximum amount of refunds available to them with respect to the application or carryback of the Pre-Closing NOL to the Pre-Closing Tax Period in accordance with Section 10.3(b)(i). The Buyer shall provide the Seller Representatives with written notice that the Buyer intends to file a Post-Closing NOL Return at least 30 days prior to the date of filing thereof. The Seller Representatives shall have a period of 15 days to provide the Buyer with a written statement of objection to such filing, provided that the basis for any such objection shall be limited to the Sellers' failure to receive the maximum amount of refunds available to them with respect to the application or carryback of the Pre-Closing NOL to the Pre-Closing Tax Period in accordance with Section 10.3(b)(i). In the event that the Seller Representatives and the Buyer are unable to reach agreement with respect to any such objection by the Sellers within a period of 5 days, any such dispute shall be submitted to the Independent Accountant for final resolution prior to the filing of such Post-Closing NOL Return. (c) Tax Cooperation. The Buyer and the Sellers shall reasonably cooperate with each other in connection with the preparation of Tax Returns related to the Company and its Subsidiaries and shall preserve all information, returns, books, records and documents relating to any liabilities for Taxes with respect to a taxable period until the later of the expiration of all applicable statutes of limitation and extensions thereof, or a final determination with respect to Taxes for such period and shall not destroy or otherwise dispose of any record without first providing the other party a reasonable opportunity to review and copy the same. 41 (d) Post-Closing Audits. (i) The Buyer shall notify the Seller Representatives in writing within 10 days after receipt by the Buyer, the Company or any Subsidiary of the Company of any official inquiry, examination, audit or proceeding ("Audit") regarding any Tax Return or period with respect to which the Sellers may have a right to a refund under Section 10.3(b) or an indemnification obligation under Section 10.3(e). The Seller Representatives shall have the right to exercise, on behalf of the Sellers and at the expense of the Sellers, control at any time over the handling, disposition and/or settlement of any issue raised in any Audit regarding any taxable period that ends on or before the Closing Date. The Buyer shall cooperate with the Seller Representatives, as reasonably requested by the Seller Representatives, in any such Audit. (ii) The Buyer shall have the right, at its own expense, to exercise control at any time over the handling, disposition and/or settlement of any issue raised in any official inquiry, examination or proceeding regarding any Tax Return other than as described in Section 10.3(d)(i) above (including the right to settle or otherwise terminate any contest with respect thereto); provided that in the case of any Tax Return for a period beginning before the Closing Date, the Buyer shall settle any issue (if such settlement would result in a required indemnification payment by the Sellers under Section 10.3(e)) only with the prior consent of the Seller Representatives, which consent shall not be unreasonably withheld. (e) Indemnification. (i) After the Closing Date, and regardless of whether the Buyer would be entitled to indemnification for such amount under Section 13.1, the Sellers shall indemnify and hold harmless the Buyer and the Company and each of their respective Affiliates, successors and assigns from and against any unpaid Tax liability (calculated after taking into account any unrefunded estimated tax payments or other tax payments made by the Company prior to the Closing Date and net of any reserve or accrual for Tax liabilities as set forth on the Final Net Working Capital Schedule) with respect to a taxable period ending on or before the Closing Date or a Pre-Closing Tax Period, determined on the basis set forth in Section 10.3(e)(ii) below. The Sellers shall pay such amounts as they are obligated to pay to the Buyer or the Company within 15 calendar days after payment of any applicable Tax liability by the Buyer or the Company. The Sellers shall also indemnify and hold harmless the Buyer and the Company, regardless of whether the Buyer would be entitled to indemnification for such amount under Section 13.1, from and against any Tax liability for periods prior to and including the Closing Date resulting from the Company or any of its Subsidiaries being severally liable for any Taxes of any consolidated group of which the Company or any of its Subsidiaries (prior to the Closing Date) was or is a member pursuant to Treasury Regulations Sec. 1.1502-6 or 42 any analogous state or local tax provisions, determined on the basis set forth in Section 10.3(e)(ii) below. The payment of any Tax liability by the Sellers as provided under this Section 10.3(e) shall be subject to the limitations contained in Sections 13.4(c), (d), (e), (f), (j) and (k). Claims made pursuant to this Section 10.3 may only be asserted prior to the expiration of the applicable statute of limitations. (ii) Any Taxes for a period of time including both a pre-Closing period and a post-Closing period shall be apportioned between such pre-Closing period and the post-Closing period based, in the case of real and personal property Taxes, in a per diem basis and in the case of other Taxes, on the actual activities, taxable income or taxable loss of the Company during such pre-Closing period and post-Closing period determined as if the books of the Company and each of its Subsidiaries were closed on the Closing Date. (iii) Notwithstanding anything to the contrary contained herein, the Sellers shall have no liability or obligation under this Section 10.3(e) or otherwise with respect to any unpaid Tax liability of the Company or its Subsidiaries to the extent arising from any disallowance, return, reduction or any other adjustments of any refund of income Taxes attributable to the carryback of any Post-Closing NOL to any Pre-Closing Tax Period. 10.4. Non-Solicitation. From and after the Closing Date until the second anniversary of the Closing Date, neither any Seller nor BBV nor Marathon nor any of their respective Affiliates shall, without the prior written consent of the Buyer, solicit or encourage Joseph F. Trungale, Robert E. Kaltenbach, William S. Hoppe, Stanley Ereckson, Jr. or Timothy Kanaly to leave the Company's or such Subsidiary's employ for employment by or with such Seller, BBV, Marathon or any of their respective Affiliates or any competitor of the Company or any of the Company's Subsidiaries; provided, that (i) the foregoing provisions of this Section 10.4 shall not restrict any Seller, BBV, Marathon or any of their respective Affiliates from hiring any of the foregoing employees following any termination of such employee by the Company or any of its Subsidiaries and (ii) general solicitations of employment not specifically directed towards such employees shall not be deemed to constitute a breach of the provisions of this Section 10.4. 10.5. Certain Environmental Matters. Except with respect to those matters listed on Schedule 3.11(b) and/or Schedule 13.1, the Buyer shall not undertake environmental testing, sampling, monitoring or remediation activities (any such activity or activities, an "Environmental Investigation") which are not (a) required by applicable Environmental Laws or any federal, state or local governmental authority, (b) in response to a third-party notice or claim asserting liability or potential liability arising out of an environmental condition in connection with acts, events or circumstances existing or occurring prior to the Closing, (c) in response to due diligence or other requirements of any Person (i) providing the Buyer with financing 43 for the consummation of the transactions contemplated hereby or any refinancing thereof, (ii) taking a security interest in any applicable site or (iii) purchasing any applicable site from Buyer, (d) required in connection with any lease arrangement affecting any applicable site, (e) precipitated by Buyer's reasonable determination that an environmental condition exists or could exist which would present a risk of material harm to human health or the environment, violate applicable Environmental Laws, require remediation under any applicable Environmental Laws or give rise to any material liability of the Buyer under any applicable Environmental Laws or (f) in response to or in connection with any environmental condition first arising or occurring after the Closing. This covenant shall survive the Closing for a period of eighteen (18) months following the Closing and shall thereafter terminate and be of no further force or effect. The parties agree that Sellers' sole remedy for a breach of this covenant by Buyer shall be that Buyer shall not be entitled to seek indemnification from Sellers for Damages sustained by Buyer in connection with or arising out of an Environmental Investigation undertaken by Buyer in breach of this provision. 10.6. Payment of Accrued Bonuses. After the Closing, the Buyer shall cause the Company and its Subsidiaries to pay to the applicable employees of the Company and its Subsidiaries the amount of their respective bonuses accrued in the ordinary course as of the Closing Date in the aggregate amount set forth on the Final Net Working Capital Schedule at such time as bonus payments for the current fiscal year of the Company and its Subsidiaries are payable under the terms of the applicable bonus or incentive program documents, agreements or plans as in effect on the Closing Date; provided, however, that Buyer shall only be required to cause the Company and its Subsidiaries to make such bonus payments to the extent such bonus payments are actually earned in accordance with the terms of the applicable bonus or incentive program documents, agreements or plans as in effect on the Closing Date. 10.7. Non-Competition. (a) Each of Joseph F. Trungale, Robert E. Kaltenbach and William S. Hoppe (each an "Executive") acknowledges that: (i) he is currently an executive officer of VICORP and a shareholder or optionholder of the Company; (ii) from and after the Closing Date, VICORP will continue to be engaged in the business of (A) operating and managing family dining restaurants and enterprises or (B) conducting such other activities as are undertaken from time to time by VICORP or any of its subsidiaries or parent companies as a result of future acquisitions, or otherwise (collectively, the "Business"); (iii) VICORP and the Company are and will be actively engaged in the Business throughout North America; (iv) Executive, as a selling shareholder or optionholder of the Company, will benefit, financially and otherwise, from the consummation of the transactions contemplated by this Agreement; (v) Executive is one of the persons who will be developing the Business; (vi) Executive will continue to occupy a position of trust and confidence with 44 VICORP after the Closing Date and, therefore, Executive will continue to become familiar with VICORP's and the Company's and each of their subsidiaries' (collectively, the "Group") trade secrets and with other proprietary and confidential information concerning the Group and the Business (and the other businesses of the Group); and (vii) the agreements and covenants contained in this Section 10.7 are essential to protect the Group and the goodwill of the Business. (b) Each Executive hereby agrees that he will not, at any time during the Restricted Period (as defined below), anywhere in North America (the "Restricted Territory") (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) own, operate, manage, control, invest in, perform services for, or engage or render services to (alone or through any other person or entity) the following Entities (as defined below), or any subsidiaries or affiliates in which the Entities have a controlling interest: Bob Evans'; IHOP; Denny's; Perkin's; Marie Calendar; Mimi's; and Cracker Barrel (the "Entities"); provided, however, that the Executive can be associated with a national or state not-for-profit restaurant association whose membership includes these corporations and as such, from time to time, shall receive consultation and services from Executive provided as a restaurant association officer or director, and, provided, further, that the Executive can be employed by, engaged by or associated with, a person or entity that provides services to the Entities so long as the Executive does not himself provide such services or work on matters related to the Entities. The term "Restricted Period" means (i) with respect to Joseph F. Trungale, (A) the period of time from the Closing Date until six (6) months after the termination for any reason of his employment relationship with the Group or any successor thereto (whether pursuant to a written agreement or otherwise) if such employment is terminated prior to the first (1st) anniversary of Closing Date or (B) the period of time from the Closing Date until one (1) year after the termination for any reason of his employment relationship with the Group or any successor thereto (whether pursuant to a written agreement or otherwise) if such employment is terminated on or after the first (1st) anniversary of Closing Date or (C) such longer period of time as may be determined pursuant to agreement between the Buyer and Joseph F. Trungale if his employment relationship with the Group or any successor thereto is terminated (whether pursuant to a written agreement or otherwise) at any time; (ii) with respect to Robert E. Kaltenbach, the longer of (A) the period of time from the Closing Date until one (1) year after the termination for any reason of his employment relationship with the Group or any successor thereto (whether pursuant to a written agreement or otherwise) or (B) such period of time as may be determined pursuant to agreement between Buyer and Robert E. Kaltenbach; and (iii) with respect to William S. Hoppe, the period of time from the Closing Date until one (1) year after the termination for any reason of his employment relationship with the Group or any successor thereto (whether pursuant to a written agreement or otherwise). The Restricted Period shall be extended for a period equal to any time period that a court determines Executive is in violation of this Section 10.7(b). Nothing contained in this Section 10.7(b) shall 45 be construed to prevent Executive from investing in the stock of any competing corporation listed on a national securities exchange or traded in the over-the-counter market, but only if Executive is not involved in the business of said corporation and if Executive and Executive's associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof), collectively, do not own more than an aggregate of one percent (1%) of the stock of such corporation. (c) The parties acknowledge that the business of VICORP and the Company is and will be national in scope and thus the covenants in this Section 10.7 would be ineffective if the covenants were to be limited to a particular geographic area. If any court of competent jurisdiction at any time deems the Restricted Period unreasonably lengthy, or the Restricted Territory unreasonably extensive, or any of the covenants set forth in this Section 10.7 not fully enforceable, the other provisions of this Section 10.7, and this Agreement in general, will nevertheless stand and, to the full extent consistent with law, continue in full force and effect, and it is the intention and desire of the parties that the court treat any provisions of this Section 10.7 which are not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent (for example, that the Restricted Period be deemed to be the longest period permissible by law, but not in excess of the length provided for in Section 10.7(b), and the Restricted Territory be deemed to comprise the largest territory permissible by law under the circumstances but not in excess of the territory provided for in Section 10.7(b)). 11. HSR ACT. The Buyer, the Sellers and the Company shall, within five (5) business days after the date hereof, if required by law, file with the United States Department of Justice and the United States Federal Trade Commission the Notification and Report Form required to be filed by them under the HSR Act concerning the transactions contemplated hereby, and shall request early termination of the waiting period under the HSR Act. The Buyer, the Sellers and the Company hereby agree that they will promptly comply with any request by the Department of Justice or the Federal Trade Commission for additional documents or information so that such waiting period shall expire as soon as practicable after the execution and delivery of this Agreement. 12. EXCLUSIVE DEALING. The Sellers hereby agree that during the Exclusivity Period (as defined below), neither the Sellers, the Company or any of its Subsidiaries nor any of their respective Affiliates shall engage in negotiations with any Person, other than the Buyer, concerning the purchase of all or any substantial portion of the capital stock or assets of the Company or any of its Subsidiaries. The "Exclusivity Period" shall be the period commencing on the date hereof and ending on the earlier of the Closing Date or the date on which this Agreement is terminated in accordance with the provisions hereof. 46 13. INDEMNIFICATION. 13.1. Indemnity by the Seller Indemnifying Parties. Subject to the limitations set forth in Section 10.5 and the overall limitations, the minimum amounts, the time limitations and other provisions set forth in Section 13.4, as applicable, (a) each of the Sellers agrees severally, and not jointly, to indemnify and hold the Buyer harmless from and with respect to any and all claims, liabilities, losses, damages, costs and expenses, including without limitation the fees and disbursements of counsel (collectively, "Damages"), related to or arising directly or indirectly out of: (i) any breach of any representation or warranty made by the Company in Section 3 or by such Seller in Section 4 (other than any representation or warranty relating to any workers compensation claims); (ii) any breach of any covenant made by the Company or by such Seller in this Agreement; (iii) any of the environmental conditions listed on Schedule 13.1 to the extent that such environmental conditions existed on or prior to the Closing Date, including, without limitation, the passive migration or expansion of any such pre-existing environmental condition, and either (x) such Damages arise out of the exercise of any governmental authority or third party rights under applicable Environmental Law or common law or (y) a cleanup, removal, remediation, investigation and/or regulatory closure of such pre-existing environmental condition is imposed on the Buyer by applicable Environmental Law or constitutes good and customary practice (collectively, "Special Environmental Claims"); provided, that (A) for purposes of this Section 13.1, "good and customary practice" shall mean those investigations, risk assessments and other steps necessary to obtain a "no further action" letter, or letter of similar import, from applicable regulatory authorities (a "Governmental Determination") with respect to such pre-existing environmental condition assuming, for all purposes, a commercial use of the relevant property; and (B) the Buyer shall notify the Seller Representatives in writing (describing in reasonable detail the proposed costs or expenses to be incurred) at least 15 days prior to incurring any costs or expenses with respect to any investigation, risk assessment or other steps necessary to obtain a Governmental Determination for which the Buyer will be seeking indemnification by the Sellers hereunder; 47 (iv) any claim, liability or obligation of the Company or any of its Subsidiaries arising under any class action lawsuit or governmental proceeding alleging any violation by the Company or any of its Subsidiaries on or prior to the Closing Date of the Fair Labor Standards Act or any analogous state law, rule or regulation regarding the payment of wages or other forms of compensation ("Special Labor Claims"); or (v) any claim, liability or obligation of the Company or any of its Subsidiaries with respect to any of the items disclosed on Parts I, II or III of Schedule 3.9(a) (other than any workers' compensation matters) to the extent that the liability with respect thereto exceeds the reserve for legal settlements on the Final Net Working Capital Schedule; and (b) each of the Preferred Holders agrees severally, and not jointly, to indemnify and hold the Buyer harmless from and with respect to any Damages related to or arising directly or indirectly out of any breach of the representations or warranties made by such Preferred Holder in Section 4.2 regarding title to the Preferred Stock. 13.2. Indemnity by the Buyer. Subject to the overall limitations, the minimum amounts and the time limitations set forth in Section 13.4, the Buyer agrees to indemnify and hold each of the Seller Indemnifying Parties harmless from and with respect to any and all Damages, related to or arising directly or indirectly out of any breach by the Buyer of any representation or warranty or covenant made by the Buyer in this Agreement. 13.3. Third Party Claims. In the event that a party claiming a right of indemnification hereunder (each an "Indemnitee") desires to make a claim against any other party or parties (the "Indemnitor") in connection with any action, suit, proceeding or demand at any time instituted against or made upon the Indemnitee by any third party for which the Indemnitee may seek indemnification hereunder (a "Third Party Claim"), the Indemnitee shall promptly notify Indemnitor (or, if the Indemnitor is one or more of the Seller Indemnifying Parties, the Seller Representatives) of such Third Party Claim and of the Indemnitee's claim of indemnification with respect thereto. The Indemnitor shall have forty-five (45) days after receipt of such notice (or by such earlier date as may be necessary under applicable procedural rules in order to file a timely appearance and response) to notify the Indemnitee if the Indemnitor has elected to assume the defense of such Third Party Claim; provided that Indemnitor shall not be entitled to assume the defense of any Third Party Claim (but, the Indemnitor may participate in the defense of such Third Party Claim with its own counsel at its own expense) for which the Indemnitee is conducting such defense actively and diligently unless and until the aggregate amount of all Damages for claims subject to the Deductible Amount exceeds the Deductible Amount; and provided further that for so long as Indemnitor 48 is not entitled to assume the defense of a Third Party Claim arising under Section 13.1(a)(iii) or 13.1(a)(v) and Indemnitee maintains control over the defense of such claims, Indemnitee shall not (a) settle any Third Party Claim arising under Section 13.1(a)(iii) or consent to the entry of judgment or take any remedial action with respect thereto unless such settlement, consent or action is made or taken on commercially reasonable terms or (b) settle any Third Party Claim arising under Section 13.1(a)(v) or consent to the entry of judgment with respect thereto in an amount in excess of $50,000 without the Indemnitor's prior written consent (which consent shall not be unreasonably withheld or delayed). If the Indemnitor elects to assume the defense of such Third Party Claim pursuant to the terms hereof, the Indemnitor shall be entitled at its own expense to conduct and control the defense and settlement of such Third Party Claim through counsel of its own choosing; provided that (a) the Indemnitor shall conduct such defense actively and diligently, (b) the Indemnitee may participate in the defense of such Third Party Claim with its own counsel at its own expense and (c) the Indemnitor may not settle any Third Party Claim or consent to the entry of judgment with respect thereto without the Indemnitee's prior written consent (which consent shall not be unreasonably withheld or delayed); provided further, that in the event that the Indemnitee withholds its consent to any settlement of, or entry of judgment with respect to, a Third Party Claim (other than a Third Party Claim involving a claim for equitable relief against the Company or any of its Subsidiaries), (i) the Indemnitor's maximum liability under this Section 13 with respect to such Third Party Claim shall be limited to the amount that would be payable by the Indemnitor under this Section 13 if such settlement had been entered into or such judgment had been entered and (ii) the Indemnitee shall thereafter assume the defense of such Third Party Claim at its own expense and shall conduct such defense actively and diligently (and the Indemnitor may participate in such defense with its own counsel at its own expense). If the Indemnitor fails to notify the Indemnitee as required above after receipt of the Indemnitee's notice of a Third Party Claim or fails to conduct the defense as required above, the Indemnitee shall be entitled to assume the defense of such Third Party Claim at the expense of the Indemnitor, provided that the Indemnitee may not settle any Third Party Claim without the consent (which consent shall not be unreasonably withheld or delayed) of the Indemnitor. 49 13.4. Limitations of Liability. (a) Subject to paragraphs (c)-(j) below, the Seller Indemnifying Parties shall not be required to indemnify the Buyer hereunder with respect to claims for Damages pursuant to Section 13.1(a) (other than claims for Damages relating to a breach of Section 1.2(a), 1.2(c), 1.5 or 10.4 by the Company or any Seller) except to the extent that the aggregate amount of Damages with respect to any claim or series of related claims for which the Buyer is otherwise entitled to indemnification pursuant to Section 13.1(a) exceeds $10,000 (the "Minimum Claim Amount") (it being understood and agreed that the Seller Indemnifying Parties shall not be liable for any Damages with respect to any claim or series of related claims in the event that such Damages are less than the Minimum Claim Amount) and the aggregate amount of Damages for which the Buyer is otherwise entitled to indemnification pursuant to Section 13.1(a) exceeds $1,000,000 (the "Deductible Amount") (it being understood and agreed that (A) any claim or series of related claims for Damages of less than the Minimum Claim Amount shall be disregarded for purposes of calculating the Deductible Amount and (B) the Deductible Amount is intended as a deductible, and the Seller Indemnifying Parties shall not be liable for any Damages less than the Deductible Amount for which the Buyer is otherwise entitled to indemnification); provided that the Deductible Amount shall not apply to breaches of representations and warranties contained in Sections 3.1, 3.3, 3.7, 3.18, 4.1 and 4.2 or to claims for Damages relating to a breach of Section 1.2(a), 1.2(c), 1.5 or 10.4 by the Company or any Seller. (b) Subject to paragraphs (c)-(j) below, except with respect to claims for Damages relating to a breach of the representations and warranties of the Company contained in Section 3.1, 3.3, 3.7 and 3.18 and claims for Damages relating to a breach of the representations and warranties of each Seller Indemnifying Party contained in Section 4 claims for Damages relating to a breach of Section 1.2(a), 1.2(c), 1.5 or 10.4 by the Company or any Seller, which will be limited as set forth in paragraphs (c) and (d) below, the aggregate Damages payable by the Seller Indemnifying Parties pursuant to Section 13.1(a) with respect to all claims for indemnification (including, without limitation, any Special Environmental Claims) shall not exceed an amount equal to $13,000,000 (the "Maximum Amount") and the aggregate Damages payable by each Seller pursuant to Section 13.1(a) with respect to all claims for indemnification shall not exceed an amount equal to the Maximum Amount multiplied by the Pro Rata Share of such Seller. For purposes of calculating a Seller's Pro Rata Share under this Section 13 only, all shares of Common Stock of the Company that would have been issued to such Seller upon exercise of such Seller's Rollover Options shall be deemed to have been issued and sold to the Buyer at the Closing. Notwithstanding the foregoing, the aggregate Damages payable by the Seller Indemnifying Parties pursuant to Section 13.1(a)(iii) with respect to all Special Environmental Claims shall not exceed an amount equal to $2,500,000 (the "Special Environmental Claim Maximum Amount") and the aggregate Damages payable by 50 each Seller pursuant to Section 13.1(a)(iii) with respect to all Special Environmental Claims shall not exceed an amount equal to the Special Environmental Claim Maximum Amount multiplied by the Pro Rata Share of such Seller. (c) The maximum liability of any Seller with respect to any claims for Damages relating to a breach of the representations and warranties of the Company contained in Section 3.1, 3.3, 3.7 and 3.18 or a breach of Sections 1.2(c) or 1.5 by the Sellers or a breach of Section 10.4 by such Seller , together with all other Damages payable by such Seller under Section 10.3(e) or this Section 13, shall not exceed the full amount of the Purchase Price received by such Seller, less in each case any amount previously paid or to be paid by such Seller pursuant to Section 10.3(e) or this Section 13. (d) The maximum liability of any Seller with respect to any Third Party Claim or other claim for Damages shall be the amount thereof multiplied by such Seller's Pro Rata Share; provided, however, that the representations and warranties contained in Section 4 and (if applicable) the covenants in Sections 10.4 and 10.7 are made severally by each Seller as to himself, herself or itself only and any Seller who has breached such representation or warranty or covenant as to himself, herself or itself (but only such Seller) shall be liable with respect to all Damages arising from the breach thereof, up to an amount equal to the Maximum Amount multiplied by such Seller's Pro Rata Share and, in the case of Damages arising from any breach of such Seller's representations and warranties in Section 4.2 hereof, up to the full amount of the Purchase Price and the Redemption Amount received by such Seller, less in each case any amount previously paid or to be paid by such Seller pursuant to Section 10.3(e) or this Section 13, and no other Seller shall be liable for any such Damages. (e) Notwithstanding any provision herein to the contrary, the Buyer shall seek payment for any amounts due with respect to all claims for indemnification under Section 10.3(e) or Section 13.1 hereof solely as follows: (i) with respect to all such claims (other than claims related to a breach of any representations and warranties contained in Sections 3.1, 3.3, 3.7, 3.18, 4.1 or 4.2, claims for Damages relating to a breach of Section 1.2(a), 1.2(c), 1.5 or 10.4 by the Company or any Seller or claims for indemnification under Section 10.3(e)), the Buyer shall seek payment solely from the Escrow Funds in accordance with the provisions of the Escrow Agreement and none of the Sellers shall have any liability for any such claims for any amount other than the amount of the Escrow Funds; (ii) with respect to any such claims related to a breach of any representations and warranties contained in Sections 3.1, 3.3, 3.7 or 3.18, claims for Damages relating to a breach of Section 1.2(a), or 1.5 by the Company or the Sellers or indemnification under Section 10.3(e), the Buyer shall seek payment only as follows: (A) first, out of the Escrow Funds in accordance with the provisions of the Escrow Agreement and (B) second, to the extent that amounts owing by the Sellers exceed the amount of the Escrow Funds 51 released in payment thereof, the Buyer shall be entitled to seek payment from each Seller directly for such Seller's Pro Rata Share of the amount of such excess; (iii) with respect to any such claims related to a breach of Section 1.2(c), the Buyer shall seek payments in accordance with Section 1.2(c); (iv) with respect to any such claims related to a breach of any representations and warranties contained in Section 4 (other than Section 4.1 or 4.2), the Buyer shall seek payment only from the amount of the Escrow Funds otherwise distributable under the Escrow Agreement to the Seller who is severally liable for such claim; (v) the Buyer may seek payment for any amounts due with respect to any claims related to a breach of the representations and warranties contained in Section 4.1 or 4.2 or related to a breach of Section 10.4 or 10.7 either from the Seller Indemnifying Party who is severally liable for such claim or from the amount of the Escrow Funds otherwise distributable to such Seller Indemnifying Party under the Escrow Agreement; and (vi) with respect to any Special Labor Claims brought or asserted more than eighteen (18) months after the Closing Date, the Buyer shall seek payment solely from the Escrow Funds in accordance with the provisions of the Escrow Agreement, up to a maximum amount equal to the lesser of (x) the amount of the remaining Escrow Funds then available for distribution and (y) $3,000,000, and none of the Sellers shall have any liability for any such Special Labor Claims in excess of such amount. (f) The Sellers and the Buyer acknowledge that at or after the Closing, the LLC intends to distribute the amount of the Purchase Price received by it to the LLC Members, and the Buyer desires that the LLC Members be individually liable for their pro rata share of the obligations of the LLC for any indemnification payments under Section 10.3(e) and Section 13. Accordingly, notwithstanding anything to the contrary contained herein, (i) the LLC shall have no liability for any indemnification payments under Section 10.3(e) or Section 13 and (ii) for purposes of Section 10.3(e) and Section 13, each LLC Member shall be treated as a Seller and shall be liable to the Buyer for indemnification payments hereunder and thereunder (A) to the extent of such LLC Member's LLC Pro Rata Share of any amounts that would otherwise (but for the terms of the foregoing clause (i)) be payable by the LLC hereunder and thereunder and (B) to the extent of any liability for indemnification for breach of the representations and warranties contained in Section 4.2 regarding title to shares of Preferred Stock owned by such LLC Member. (g) Subject to paragraph (h) below, no action or claim for Damages pursuant to this Section 13 shall be brought or asserted after the date eighteen (18) months from the Closing. (h) The limitations set forth in paragraph (g) above shall not apply to any Damages arising from a breach of the representations and warranties contained in Sections 3.1, 3.3, 3.7, 3.18, 4.1 and 4.2, a breach of Section 10.4 by any Seller or any Special Labor Claims, provided however that (i) no Seller Indemnifying Party shall be liable for any Damages arising from a breach of the representations and warranties 52 contained in Sections 3.1, 3.3, 3.7, 3.18, 4.1 or 4.2 unless the Buyer has asserted a claim for such Damages prior to the sixtieth (60th) day following the expiration of the applicable statute of limitations, (ii) no Seller Indemnifying Party shall be liable for damages arising from any breach of Section 10.4 unless the Buyer has asserted a claim for such Damages prior to the sixtieth (60th) day following the second anniversary of the Closing Date and (iii) no Seller Indemnifying Party shall be liable for Damages arising from any Special Labor Claims unless the Buyer has asserted a claim for such Damages prior to the sixtieth (60th) day following the fourth anniversary of the Closing Date. The Buyer is hereby deemed to have asserted a claim as of the Closing Date for Damages arising under Section 13.1(a)(iii) and Section 13.1(a)(v). (i) For purposes of Section 13.1, in determining whether there has been any breach of any representation or warranty made by the Company or any Seller Indemnifying Party, such representations and warranties shall be read without regard to any materiality or "Material Adverse Effect" qualifier contained therein, and any breach thereof as so read shall be indemnifiable hereunder, subject to the limitations set forth in this Section 13. (j) The amount of any Damages for which indemnification is provided for under Section 10.3(e) or this Section 13 shall be net of (i) any amounts recovered by the Buyer or its Affiliates as a result of any indemnification by any third party, (ii) any insurance proceeds or other amounts received by the Buyer or its Affiliates from third parties with respect to such Damages and (iii) any net Tax benefit actually realized by the Buyer or its Affiliates from the incurrence or payment of any such Damage. In computing the amount of any such Tax benefits, the Buyer and its Affiliates shall be deemed to recognize all other items of income, gain, loss, deduction or credit before recognizing any items arising from the receipt or accrual of any indemnity payment hereunder or the incurrence or payment of any indemnified Damage for which indemnification is provided under Section 10.3(e) or this Section 13. For purposes of this Agreement, the Buyer and any of its Affiliates shall be deemed to have "actually realized" a net Tax benefit to the extent that, and at such time as, the amount of Taxes payable by the Buyer or such Affiliate is reduced below the amount of Taxes that the Buyer or such Affiliate would have been required to pay but for the receipt or accrual of the indemnity payment or the incurrence or payment of such Damages for which indemnification is provided under Section 10.3(e) or this Section 13. The Buyer agrees to use commercially reasonable efforts to make any claims for insurance, tax benefits and/or indemnification available from a third party(ies) with respect to Damages for which it will seek indemnification hereunder and to diligently pursue such claims in good faith. If any such insurance proceeds and/or other amounts are received by the Buyer after payment by any Seller Indemnifying Party of any amount otherwise required to be paid to the Buyer pursuant to Section 10.3(e) or this Section 13, the Buyer shall repay to such Seller Indemnifying Party(ies), promptly after receipt of such insurance proceeds and/or 53 other amounts, the amount that such Seller Indemnifying Party(ies) would not have had to pay pursuant to this Section 13 had such insurance proceeds and/or other amounts been received by the Buyer prior to such Seller Indemnifying Party's payment under Section 10.3(e) or this Section 13. The Buyer further agrees to assign (and cause the Company and its Subsidiaries to assign) to the Sellers or another designee of the Seller Representatives all rights of the Buyer, the Company and/or its Subsidiaries to contribution, cost recovery, damages, equitable relief or other remedies for Damages claimed by the Buyer under Section 13.1(a)(iii) or (with respect to claims for breach of any representation and warranty in Section 3.11(b) or any other representation and warranty to the extent relating to environmental matters) Section 13.1(a)(i), but only to the extent of any payments by the Sellers to the Buyer (including any payments from the Escrow Funds) in connection with such Damages. (k) Any indemnification payments made by any of the Seller Indemnifying Parties pursuant to Section 10.3(e) or this Section 13 shall be treated by all parties as an adjustment to the Purchase Price hereunder to the extent permitted by applicable law. 13.5. Expiration of Representations and Warranties; Scope of Seller Indemnifying Parties' Liability. Each of the representations and warranties of the Seller Indemnifying Parties contained in this Agreement shall irrevocably expire on the last day on which any action or claim for breach of such representation or warranty may be brought or asserted pursuant to Sections 13.4(g) or (h) (the "Expiration Date"). The Buyer acknowledges and agrees that its sole remedy against the Seller Indemnifying Parties for any matter arising out of the transactions contemplated by this Agreement is set forth in Section 10.3(e) or Section 13.1 and that, except to the extent the Buyer has asserted a claim for indemnification prior to the applicable Expiration Date, the Buyer shall have no remedy against any of the Seller Indemnifying Parties for any breach of a representation or warranty made by any of them in this Agreement except to the extent that such breach arises out of or results from fraud by the Company or the Seller Indemnifying Parties. The Seller Indemnifying Parties and the Buyer agree that the purpose of this Section 13.5 is to make it clear that the Seller Indemnifying Parties are to have no liability whatsoever to the Buyer, except as set forth in Section 13.1, and accordingly agree that this Section 13.5 is to be construed broadly. The Buyer acknowledges that this Section 13.5 has been negotiated fully by the Buyer and the Seller Indemnifying Parties and that the Seller Indemnifying Parties would not have entered into this Agreement but for the inclusion of this Section 13.5. 14. RIGHT TO TERMINATE. This Agreement may be terminated at any time prior to the Closing as follows: (a) By mutual written consent of the Buyer and the Seller Representatives; 54 (b) In the event that the Closing does not occur on or before June 9, 2003, the Buyer may terminate this Agreement at any time after the close of business on such date by delivering written notice to the Seller Representatives so long as such failure to close is not a result of a breach by the Buyer of any of its obligations hereunder; (c) In the event that the Closing does not occur on or before June 9, 2003, the Seller Representatives may terminate this Agreement at any time after the close of business on such date by delivering written notice to the Buyer so long as such failure to close is not a result of a breach by the Sellers of any of their obligations hereunder; (d) In the event that Buyer fails to file with the United States Department of Justice and the United States Federal Trade Commission the Notification and Report Form required to be filed by it under the HSR Act in accordance with Section 11 hereof within five (5) business days after the date hereof, the Seller Representatives may terminate this Agreement at any time after the close of business on such date by delivering written notice to the Buyer; or (e) In the event that LLC (as the ultimate parent entity of the Company) fails to file with the United States Department of Justice and the United States Federal Trade Commission the Notification and Report Form required to be filed by it under the HSR Act in accordance with Section 11 hereof within five (5) business days after the date hereof, the Buyer may terminate this Agreement at any time after the close of business on such date by delivering written notice to the Seller Representatives. 15. GENERAL. 15.1. Expenses. All expenses of the preparation, execution and consummation of this Agreement and of the transactions contemplated hereby, including, without limitation, attorneys', accountants' and outside advisers' fees and disbursements, shall be borne by (a) the Buyer if incurred for the Buyer's account or (b) the Company if incurred for the account of the Sellers or the Company. Notwithstanding the foregoing, (i) all brokerage commissions of U.S. Bancorp Piper Jaffray, Inc. and Acheson Capital LLC shall be paid by the Sellers by deduction from the Purchase Price as Transaction Expenses, and (ii) all fees payable by the Buyer, the Company and the Sellers in connection with the required filing under the HSR Act of the Notification and Report Form with the United States Department of Justice and the United States Federal Trade Commission shall be paid the Buyer. 15.2. Notices. All notices, demands and other communications hereunder shall be in writing or by facsimile, and shall be deemed to have been duly given if delivered personally or by overnight courier or if mailed by certified mail, return receipt requested, postage prepaid, or sent by facsimile, as follows: 55 If to the Company, to: Midway Investors Holdings Inc. c/o Goldner Hawn Johnson & Morrison Incorporated 5250 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attention: Michael Sweeney, Managing Partner Fax: (612) 338-2860 with copies sent contemporaneously to: BancBoston Ventures Inc. 175 Federal Street, 10th Floor Boston, Massachusetts 02110 Attention: Theresa A. Nibi, Managing Director Fax: (617) 434-1153 and Robert M. Wolf, Esq. Bingham McCutchen LLP 150 Federal Street Boston, Massachusetts 02110 Fax: (617) 951-8736 If to the Sellers, the Preferred Holders or the Seller Representatives, to: Marathon Fund Limited Partnership IV c/o Goldner Hawn Johnson & Morrison Incorporated 5250 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attention: Michael Sweeney, Managing Partner Fax: (612) 338-2860 and 56 BancBoston Ventures Inc. 175 Federal Street, 10th Floor Boston, Massachusetts 02110 Attention: Theresa A. Nibi, Managing Director Fax: (617) 434-1153 with a copy sent contemporaneously to: Robert M. Wolf, Esq. Bingham McCutchen LLP 150 Federal Street Boston, Massachusetts 02110 Fax: (617) 951-8736 If to the Buyer, to: VI Acquisition Corp. c/o Wind Point Partners 676 N. Michigan Ave., Suite 3700 Chicago, Illinois 60611 Attention: Michael Solot Fax: (312) 255-4820 with a copy sent contemporaneously to: Seth M. Hemming, Esq. Sachnoff & Weaver, Ltd. 30 South Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-6400 Any such notice shall be effective (a) if delivered personally, when received, (b) if sent by overnight courier, when receipted for, (c) if mailed, five (5) days after being mailed as described above, and (d) if sent by facsimile, when dispatched. 15.3. Entire Agreement. This Agreement contains the entire understanding of the parties, supersedes all prior agreements and understandings relating to the subject matter hereof and (except as set forth in Section 6.12) shall not be amended except by a written instrument hereafter signed by the Buyer, the Company, and each of the Seller Representatives. 57 15.4. Governing Law. The validity and construction of this Agreement shall be governed by the internal laws (and not the choice-of-law rules) of the State of Delaware. 15.5. Sections and Section Headings. All enumerated subdivisions of this Agreement are herein referred to as "Section" or "paragraph." The headings of Sections and paragraphs are for reference only and shall not limit or control the meaning thereof. 15.6. Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor the obligations of any party hereunder shall be assignable or transferable by such party without the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld, except that the Buyer may assign (a) its rights and obligations hereunder to any of its Affiliates and (b) as collateral security its rights hereunder to any Person providing the Buyer with financing for the consummation of the transactions contemplated hereby; provided, however, that in each such case the Buyer shall remain liable to the Sellers for all its obligations hereunder. 15.7. Further Assurances. The Sellers, the Preferred Holders, the Company and the Buyer shall execute and deliver to all appropriate other parties such other instruments as may be reasonably required in connection with the performance of this Agreement and each shall take all such further actions as may be reasonably required to carry out the transactions contemplated by this Agreement. 15.8. No Implied Rights or Remedies. Except as set forth in Section 10.2 and as otherwise expressly provided herein, nothing herein expressed or implied is intended or shall be construed to confer upon or to give any person, firm or corporation, other than the Sellers, the Preferred Holders, the Company and the Buyer and their respective shareholders, any rights or remedies under or by reason of this Agreement. 15.9. Knowledge. Whenever the phrase "to the knowledge of the Company" or another similar qualification is used herein, the relevant knowledge is limited solely to the actual knowledge of Joseph Trungale, Robert Kaltenbach, William Hoppe, Stanley Ereckson and Timothy Kanaly. 15.10. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 58 15.11. Satisfaction of Conditions Precedent. The Sellers, the Preferred Holders and the Buyer will each use commercially reasonable efforts to cause the satisfaction of the conditions precedent contained in this Agreement; provided, however, that nothing contained in this Section 15.11 shall obligate any party hereto to waive any right or condition under this Agreement. 15.12. Public Statements or Releases. Except as otherwise required by applicable law, each of the parties hereto agrees that prior to the Closing no party to this Agreement will make, issue or release any public announcement, statement or acknowledgment of the existence of, or reveal the status of, this Agreement, the transactions contemplated hereby or any negotiations or discussions related hereto, without first obtaining the prior consent of the other parties hereto. Each of the parties hereto further agrees to provide written notice to the other parties to this Agreement, immediately upon the knowledge thereof, of any obligation under applicable law to make, issue or release any such public announcement, statement or acknowledgment. 15.13. Business Records. The Buyer acknowledges that the business records of the Company and each of its Subsidiaries relating to their respective operations prior to Closing will be acquired by the Buyer in connection with the consummation of the transactions contemplated hereby, and that the Sellers may from time to time require access to or copies of such records. The Buyer agrees that upon reasonable prior notice from any Seller, it will, during normal business hours, provide such Seller with access to or copies of such records. Each Seller hereby agrees to hold any confidential information so provided in confidence and to use such information only for the purposes described above. The Buyer agrees that it will not within six (6) years after the Closing Date destroy any business records of the Company or any of its Subsidiaries prepared prior to the Closing without first notifying BBV and Marathon, and affording BBV and Marathon the opportunity to remove or copy such records. For purposes of the preceding sentence, any notice from the Buyer delivered in accordance with Section 13.4 shall be deemed to be adequate notice if not responded to in writing by BBV and Marathon within ninety (90) days. 15.14. Seller Representatives. By the execution and delivery of this Agreement, each of the Sellers and Preferred Holders hereby irrevocably constitutes and appoints BBV and Marathon as the true and lawful agents and attorneys-in-fact (the "Seller Representatives", and each a "Seller Representative") of the Sellers and Preferred Holders with full power of substitution to act jointly in the name, place and stead of the Sellers and the Preferred Holders with respect to the transfer of the Common Securities owned by the Sellers to the Buyer and the Redemption of the shares of Preferred Stock owned by the Preferred Holders, each in accordance with the terms and provisions of this Agreement, and to act jointly on behalf of the Sellers and the Preferred Holders in any litigation or arbitration involving this Agreement, to jointly do or refrain from doing all such further acts and things, and to jointly execute 59 all such documents as the Seller Representatives shall unanimously deem necessary or appropriate in connection with the transactions contemplated by this Agreement, including, without limitation, the power: (a) to execute the Escrow Agreement and any amendments thereto as the representative of the Sellers and the Preferred Holders, to execute any instructions or directions to the Escrow Agent with respect to disbursements or other matters thereunder, to pay any expenses of the Sellers or the Seller Representatives from the escrow and to take such further actions under the Escrow Agreement as the Seller Representatives deem to be necessary or appropriate; (b) to act jointly for the Sellers and the Preferred Holders with regard to matters pertaining to indemnification referred to in this Agreement, including the power to compromise any indemnity claim on behalf of the Sellers and the Preferred Holders and to transact matters of litigation; (c) to jointly execute and deliver all amendments, waivers, ancillary agreements, stock powers, certificates and documents that the Seller Representatives unanimously deem necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, agreements terminating the agreements listed on Schedule 7.11 hereto; (d) to jointly receive funds, make payments of funds, and give receipts for funds; (e) to jointly receive funds for the payment of expenses of the Sellers and the Preferred Holders and apply such funds in payment for such expenses; (f) to jointly do or refrain from doing any further act or deed on behalf of the Sellers and the Preferred Holders that the Seller Representatives unanimously deem necessary or appropriate in their sole discretion relating to the subject matter of this Agreement as fully and completely as the Sellers and the Preferred Holders could do if personally present; and (g) to jointly receive service of process in connection with any claims under this Agreement. In order to be effective for purposes of this Agreement and binding on each of the Sellers and the Preferred Holders, any action of the Seller Representatives, including but not limited to any decision to refrain from taking any action, must be made by the Seller Representatives acting unanimously. 60 The appointment of the Seller Representatives shall be deemed coupled with an interest and shall be irrevocable, and the Buyer and any other Person may conclusively and absolutely rely, without inquiry, upon any unanimous action of the Seller Representatives in all matters referred to herein. All notices required to be made or delivered by the Buyer to the Sellers or the Preferred Holders described above in this Section 15.14 shall be made to each of the Seller Representatives for the benefit of the Sellers and the Preferred Holders and shall discharge in full all notice requirements of the Buyer to the Sellers or the Preferred Holders with respect thereto. The Sellers and the Preferred Holders hereby confirm all that the Seller Representatives shall jointly do or cause to be done by virtue of their appointment as the Seller Representatives of the Sellers and the Preferred Holders. The Seller Representatives shall act for the Sellers and the Preferred Holders on all of the matters set forth in this Agreement in the manner the Seller Representatives unanimously believe to be in the best interest of the Sellers and the Preferred Holders and consistent with the obligations under this Agreement, but the Seller Representatives shall not be responsible to the Sellers or the Preferred Holders for any loss or damages the Sellers or the Preferred Holders may suffer by the performance of their duties under this Agreement, other than loss or damage arising from willful violation of the law or gross negligence in the performance of their duties under this Agreement. [Remainder of Page Left Intentionally Blank] 61 IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Stock Purchase Agreement to be duly executed and delivered as of the date and year first above written. THE COMPANY: MIDWAY INVESTORS HOLDINGS INC. By: /s/ Michael T. Sweeney ------------------------------------- Name: Michael T. Sweeney Title: President SELLERS: MIDWAY INVESTORS, LLC By: /s/ Theresa A. Nibi, Manager ------------------------------------- Theresa A. Nibi, Manager and By: /s/ Michael T. Sweeney ------------------------------------- Name: Michael T. Sweeney Title: Manager WACHOVIA INVESTORS, INC. (f/k/a First Union Investors, Inc.) By: /s/ David Carson ------------------------------------- Name: David Carson Title: Managing Director 62 SUNTRUST EQUITY FUNDING, LLC By: /s/ Martin Ted Mayden ------------------------------------- Name: Martin Ted Mayden Title: Manager /s/ Joseph F. Trungale ----------------------------------------- Joseph F. Trungale /s/ Robert E. Kaltenbach ----------------------------------------- Robert E. Kaltenbach /s/ William S. Hoppe ----------------------------------------- William S. Hoppe /s/ Stanley Ereckson, Jr. ----------------------------------------- Stanley Ereckson, Jr. /s/ Timothy Kanaly ----------------------------------------- Timothy Kanaly /s/ John Stocchero ----------------------------------------- John Stocchero /s/ Pete Pascuzzi ----------------------------------------- Pete Pascuzzi /s/ Jeffey Guido ----------------------------------------- Jeffrey L. Guido /s/ Thomas Rink ----------------------------------------- Thomas Rink 63 /s/ Cheryl Ahlbrandt ----------------------------------------- Cheryl Ahlbrandt /s/ Jill Bagley ----------------------------------------- Jill Bagley /s/ Donald Prismon ----------------------------------------- Donald Prismon /s/ Karen Van Valkenburgh ----------------------------------------- Karen Van Valkenburgh /s/ Michael Kinnen ----------------------------------------- Michael Kinnen /s/ Danny Gresham ----------------------------------------- Danny Gresham /s/ Mark Hampton ----------------------------------------- Mark Hampton /s/ Frank Scherer ----------------------------------------- Frank Scherer BANCBOSTON VENTURES INC. By: /s/ Theresa A. Nibi ------------------------------------- Theresa A. Nibi Managing Director 64 MARATHON FUND LIMITED PARTNERSHIP IV By: Miltiades, LLC, its sole General Partner By: /s/ Michael T. Sweeney ------------------------------------- Name: Michael T. Sweeney Title: Authorized Member /s/ Michael W. Gibbons ----------------------------------------- Michael W. Gibbons /s/ Timothy R. Greenleaf ----------------------------------------- Timothy R. Greenleaf /s/ Mark J. Gill ----------------------------------------- Mark J. Gill /s/ Paul Grangaard ----------------------------------------- Paul Grangaard /s/ Alan McDowell ----------------------------------------- Alan McDowell BUYER: VI ACQUISITION CORP. By: /s/ Michael J. Solot ------------------------------------- Name: Michael J. Solot Title: President 65 Schedules 1 Sellers 2 Preferred Holders 3 Stock Options 3.1 Foreign Qualifications 3.2 Subsidiaries 3.3(b) Capitalization of Subsidiaries 3.4 Non-Contravention 3.5 Consents 3.6 Financial Statements 3.7 Taxes 3.8 Absence of Certain Changes 3.9(a) Litigation, etc. (Pending) 3.9(b) Litigation, etc. (Historical) 3.10 Conformity to Law 3.11(a) Real Property 3.11(b) Environmental Matters 3.11(c) Environmental Permits 3.11(d) Pie Production Facilities 3.12 Restaurants 3.13 Franchise Agreements and Registrations 3.14 Insurance 3.15 Contracts 3.16 Employee Benefit Plans 3.17 Trademarks, Patents, Etc. 3.18 Indebtedness 3.19 Labor Relations 3.20 Title to Personal Property 3.24 Potential Conflicts of Interest 3.25 Bank Accounts; Powers of Attorney 5.6 Financing Commitments 6.3 No General Increases 6.4 Contracts and Commitments 6.7 Capital Expenditures 7.7 Resigning Directors and Officers 7.11 Termination of Agreements 13.1 Certain Environmental Matters Exhibits A Form of Escrow Agreement B-1 Form of Opinion of Bingham McCutchen LLP B-2 Form of Opinion of Stanley Ereckson, Jr. C Form of Opinion of Sachnoff & Weaver, Ltd. D Form of Rollover Option Election E Form of New Stock Option Agreement F Form of Release (Special Compensation Payments) G Form of Termination Agreement (Schedule 7.11 Agreements) EX-2.2 3 c86044exv2w2.txt AMENDMENT NO.1 TO STOCK PURCHASE AGREEMENT Exhibit 2.2 June 9, 2003 Midway Investors Holdings Inc. c/o Goldner Hawn Johnson & Morrison Incorporated 5250 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attention: Michael T. Sweeney, Managing Partner Marathon Fund Limited Partnership IV c/o Goldner Hawn Johnson & Morrison Incorporated 5250 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Attention: Michael T. Sweeney, Managing Partner Banc Boston Ventures, Inc. 175 Federal Street, 10th Floor Boston, Massachusetts 02110 Attention: Richard A. Meringolo, Managing Director Re: Amendments to the VI Acquisition Corp./Midway Investors Holdings, Inc. Stock Purchase Agreement. Ladies and Gentlemen: Reference is hereby made to that certain Stock Purchase Agreement by and among VI Acquisition Corp., Midway Investors Holdings, Inc. the Sellers and the Preferred Holders dated April 15, 2003 (the "Stock Purchase Agreement"). Capitalized terms not otherwise defined herein shall have the same meaning as the meaning set forth in the Stock Purchase Agreement. This letter (this "Letter Agreement") is written in connection with the Stock Purchase Agreement and confirms our understanding regarding certain amendments to the Stock Purchase Agreement. Specifically, it is our understanding that notwithstanding anything to the contrary in the Stock Purchase Agreement: 1. Section 14(b) of the Stock Purchase Agreement is hereby deleted in its entirety and replaced with the following: "(b) In the event that the Closing does not occur on or before June 13, 2003, the Buyer may terminate this Agreement at any time after the close of business on such date by delivering written notice to the Seller Representatives so long as such failure to close is not a result of a breach by the Buyer of any of its obligations hereunder;" 2. Section 14(c) of the Stock Purchase Agreement is hereby deleted in its entirety and replaced with the following: "(c) In the event that the Closing does not occur on or before June 13, 2003, the Seller Representatives may terminate this Agreement at any time after the close of business on such date by delivering written notice to the Buyer so long as such failure to close is not a result of a breach by the Sellers of any of their obligations hereunder:" This Letter Agreement may be executed by facsimile in any number of counterparts, each of which shall be an original, but all of which together shall be deemed to constitute one instrument. If the foregoing reflects your understanding of our agreements, please signify your acceptance of the agreements contained herein by executing this Letter Agreement in the space provided below and returning an executed copy to the undersigned. Very truly yours, VI ACQUISITION CORP. By: /s/ Michael J. Solot ------------------------------ Name: Michael J. Solot Its: President 2 ACCEPTED AND AGREED: MIDWAY INVESTORS HOLDINGS, INC. By: /s/ Michael T. Sweeney ----------------------------- Michael T. Sweeney Its: President Date: ---------------------------- SELLERS REPRESENTATIVES MARATHON FUND LIMITED PARTNERSHIP IV By: Miltiades, LLC, its sole General Partner By: /s/ Michael T. Sweeney ----------------------------- Michael T. Sweeney Its: Authorized Member Date: ----------------------------- BANCBOSTON VENTURES INC. By: /s/ Richard A. Meringolo ----------------------------- Richard A. Meringolo Its: Managing Director Date: ----------------------------- 3 EX-2.3 4 c86044exv2w3.txt AMENDMENT NO.2 TO STOCK PURCHASE AGREEMENT Exhibit 2.3 Marathon Fund Limited Partnership IV c/o Goldner Hawn Johnson & Morrison 5250 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 and BancBoston Ventures Inc. 175 Federal Street, 10th Floor Boston, MA 02110 June 12, 2003 VI Acquisition Corp. c/o Wind Point Partners 676 North Michigan Avenue Chicago, Illinois 60611 Re: Interest Rate Swap Amount; Cash and Outstanding Checks Gentlemen: Reference is hereby made to the Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of April 15, 2003, among Midway Investors Holdings Inc., a Delaware corporation (the "Company"), VI Acquisition Corp., a Delaware corporation (the "Buyer"), and the shareholders, optionholders and warrantholders of the Company. Capitalized terms used herein without definition shall have the meanings specified for such terms in the Stock Purchase Agreement. Pursuant to Section 1.2(a) of the Stock Purchase Agreement, the calculation of the Closing Purchase Price includes a deduction of the aggregate amount of all Indebtedness of the Company and its Subsidiaries outstanding as of the Closing and an increase equal to the Net Cash Amount as of the Closing. Pursuant to Section 7.5 of the Stock Purchase Agreement, the Certificate of Indebtedness and Net Cash to be delivered by the Company at the Closing will include a certification of the amount of outstanding Indebtedness and Net Cash Amount of the Company and its Subsidiaries as of the Closing Date. The Company, the Buyer and the Seller Representatives hereby agree that notwithstanding anything to the contrary contained in the Stock Purchase Agreement, the Seller Representatives and the Company shall be permitted to use an estimated amount of (a) the obligations of the Company and its Subsidiaries under their interest rate swap agreements (based on the payoff amount for such obligations as of the last business day preceding the Closing Date) for purposes of calculating Indebtedness of the Company and its Subsidiaries as of the Closing Date and calculating the Closing Purchase Price and (b) the aggregate amount of the Company's and each of its Subsidiaries' cash and cash equivalents on hand or in bank accounts as of such date and the aggregate amount of outstanding and unpaid checks issued by the Company and each of its Subsidiaries as of such date for purposes of calculating the Net Cash Amount and calculating the Closing Purchase Price. In the event that the actual amount of (a) such obligations under the interest rate swap agreements is greater or less than such estimated amount or (b) such cash and cash equivalents and outstanding and unpaid checks is greater or less than such estimated amount, then in connection with the determination of the Final Closing Date Net Working Capital, the Seller Representatives and the Buyer will make an appropriate adjustment and payment to reflect the Closing Purchase Price that would have resulted from using such actual amount in lieu of such estimated amount. Such adjustments will be made at the same time, in the same manner, with the same procedures and the same payment mechanisms as those used in connection with the determination of the Final Closing Date Net Working Capital, including, without limitation, those set forth in Sections 1.2(c) and 1.5 of the Stock Purchase Agreement. [Balance of Page Intentionally Left Blank] Please indicate your agreement to the foregoing by signing and returning to the undersigned an original counterpart of this letter. Very truly yours, MIDWAY INVESTORS HOLDINGS INC. By: /s/ Michael T. Sweeney ------------------------------------- Michael T. Sweeney President MARATHON FUND LIMITED PARTNERSHIP IV, as Seller Representative By: Miltiades LLC, its Sole General Partner By: /s/ Michael T. Sweeney ------------------------------------- Michael T. Sweeney Authorized Member BANCBOSTON VENTURES INC., as Seller Representative By: /s/ Richard Meringolo ------------------------------------- Richard Meringolo Managing Director The undersigned hereby acknowledges and agrees to the foregoing as of the date first above written. VI ACQUISITION CORP. By: /s/ Michael J. Solot ------------------------------------- Name: Michael J. Solot Title: President EX-2.4 5 c86044exv2w4.txt STOCK PURCHASE AGREEMENT Exhibit 2.4 EXECUTION COPY STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (this "Agreement"), is made as of June 13, 2003 by and among (i) VI ACQUISITION CORP., a Delaware corporation (the "Company"), (ii) WIND POINT PARTNERS IV, L.P., WIND POINT PARTNERS V, L.P. and WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P., each of which is a Delaware limited partnership, and WIND POINT ASSOCIATES IV, LLC, a Delaware limited liability company (collectively, "WPP"), (iii) MID OAKS INVESTMENTS LLC, a Delaware limited liability company ("Mid Oaks"), (iv) A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. and A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P., each of which is a Delaware limited partnership (collectively, "AGE"), (v) DEBRA KOENIG ("Koenig"), (vi) WALTER VAN BENTHUYSEN ("van Benthuysen," and together with WPP, Mid Oaks, AGE, Koenig, and any additional purchaser deemed an Investor pursuant to Section 6.05 hereof, the "Investors") and (vii) ROBERT KALTENBACH ("Kaltenbach") and JOSEPH TRUNGALE ("Trungale") and the other Executives identified on the signature pages to this Agreement (each individually, an "Executive" and collectively the "Executives"). The Investors and the Executives are herein called the "Purchasers". Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in Section 5 of this Agreement. RECITALS: WHEREAS, the Company has been organized for the purpose of operating and managing family dining restaurants and enterprises (the "Core Business"), which Core Business will be operated by the Company through its direct subsidiary, VICORP Restaurants Inc., a Colorado corporation ("VICORP"), and through the direct subsidiaries of VICORP. WHEREAS, on the date hereof, the Company will acquire VICORP pursuant to that certain Stock Purchase Agreement dated as of April 15, 2003, attached as EXHIBIT A hereto (the "Acquisition Agreement"). WHEREAS, in order to partially fund the transactions contemplated by the Acquisition Agreement, the Company proposes to issue and sell to the Purchasers up to $72,237,500 worth of its capital stock, comprising up to 1,237,500 shares of its Common Stock, par value $.0001 per share (the "Common Stock"), and up to 71,000 shares of its Series A Preferred Stock, par value $.0001 per share (the "Series A Preferred Stock"), each having the rights and preferences set forth in the Company's Amended and Restated Certificate of Incorporation attached as EXHIBIT B hereto (the "Certificate of Incorporation"). The parties hereto agree as follows: SECTION 1. AUTHORIZATION AND CLOSING. 1.01 Authorization of the Stock. The Company has authorized the issuance and sale to the Purchasers of up to 1,237,500 shares of its Common Stock and up to 71,000 shares of Series A Preferred Stock, each having the rights and preferences set forth in the Certificate of Incorporation. The Common Stock and the Series A Preferred Stock are collectively referred to herein as the "Stock". 1.02 Purchase and Sale of the Stock. At the Closing (as defined in Section 1.03 below), the Company shall issue to the Purchasers and, subject to the terms and conditions set forth herein, such Purchasers shall acquire from the Company, shares of Common Stock at a price of $1.00 per share and shares of Series A Preferred Stock at a price of $1000.00 per share and/or the Preferred Stock Options (which shares and options shall total 1,237,500 shares of Common Stock and 71,000 shares of Series A Preferred Stock). The number of shares to be acquired by the Purchasers at the Closing or pursuant to the Preferred Stock Options is set forth on EXHIBIT C hereto. The number of shares and Preferred Stock Options to be acquired by each Executive is set forth on his or her signature page. 1.03 Closing. The closing of the purchase and sale of the Stock to be purchased by the Purchasers and of the transactions contemplated by the Acquisition Agreement (the "Acquisition") shall take place at the offices of Sachnoff & Weaver, 30 S. Wacker Drive, 29th Floor, Chicago, Illinois 60606 at 9:00 a.m. on June 13, 2003, or at such other place or on such other date as may be mutually agreeable to the Company and WPP (the "Closing"). At the Closing, the Company shall deliver to each Purchaser stock certificates evidencing the Stock to be purchased by such Purchaser, registered in such Purchaser's name, upon payment of the purchase price therefor. SECTION 2. CONDITIONS TO THE PURCHASER'S OBLIGATION AT THE CLOSINGS. The obligation of the Purchasers (other than WPP) to purchase and pay for the Stock to be purchased by them at the Closing is conditioned upon the contemporaneous purchase by WPP of the Stock being purchased by it at the Closing and satisfaction of each of the conditions set forth below: 2.01 Representations and Warranties. The representations and warranties contained in Section 4 hereof shall be true and correct at and as of the Closing as though then made, except to the extent of changes caused by the transactions expressly contemplated herein, and the Company shall have performed in all material respects all of the covenants required to be performed by it hereunder prior to the Closing. 2.02 Certificate of Incorporation. The Certificate of Incorporation of the Company shall have been filed with the Secretary of State of Delaware in the form attached as EXHIBIT B hereto, shall be in full force and effect under the laws of Delaware as of the Closing and shall not have been amended or modified. 2.03 Management and Employment Agreement. The Company shall have entered into a management agreements (the "Management Agreements") and VICORP shall have entered into employment agreements (the "Employment Agreements"), substantially in the forms of EXHIBITS D and E attached hereto, respectively, with Koenig, Kaltenbach and Trungale effective as of the Closing. Such Management Agreements and Employment Agreements shall not have been amended or modified and shall be in full force and effect as of the Closing, and the Executives shall have purchased the Stock proposed to be purchased by each of them thereunder. 2 2.04 Stockholders Agreement. The Company, the Purchasers and the other parties signatory thereto shall have entered into a stockholders agreement substantially in the form of EXHIBIT F attached hereto (the "Stockholders Agreement"), and the Stockholders Agreement shall be in full force and effect as of the Closing. 2.05 Professional Services Agreement. The Company and WPP shall have entered into a professional services agreement substantially in the form of EXHIBIT G attached hereto (the "Professional Services Agreement"), and the Professional Services Agreement shall be in full force and effect as of the Closing. 2.06 Registration Rights Agreement. The Company, the Purchasers and the other parties signatory thereto shall have entered into a registration rights agreement substantially in the form of EXHIBIT H attached hereto (the "Registration Rights Agreement"), and the Registration Rights Agreement shall be in full force and effect as of the Closing. 2.07 Closing Documents. The Company, on behalf of itself and VICORP, shall have delivered to each Investor all of the following documents: (a) An Officer's Certificate, dated the date of the Closing, stating that the conditions specified in Sections 2.01 through 2.06 have been fully satisfied; (b) Certified copies of the resolutions duly adopted by the Governing Body (if there is a Governing Body for such Person) of VICORP and of Company authorizing the execution, delivery and performance of this Agreement, the Management Agreement, the Employment Agreement, the Stockholders Agreement, the Professional Services Agreement and the Registration Rights Agreement and each of the other agreements contemplated hereby, the filing of the Certificate of Incorporation referred to in Section 2.02, the issuance and sale of the Stock and the consummation of all other transactions contemplated by this Agreement; (c) Certified copies of the Company's Organizational Documents, each as in effect at the Closing; (d) Certified copies of VICORP's Organizational Documents, each as in effect at the Closing; and (e) Such other documents relating to the transactions contemplated by this Agreement as such Purchaser or its counsel may reasonably request. 2.08 Fees and Expenses. The Company shall have reimbursed certain Purchasers for the fees and expenses as and to the extent provided in Section 6.01 hereof. 2.09 Compliance with Applicable Laws. The purchase of Stock by each Purchaser hereunder shall not be prohibited by any applicable law or governmental regulation, shall not subject such Purchaser to any penalty, liability or, in such Purchaser's good faith judgment, other onerous conditions under or pursuant to any applicable law or governmental regulation, and shall be permitted by laws and regulations of the jurisdictions to which such Purchaser is subject. 3 2.10 Waiver. Any condition specified in this Section 2 may be waived only if such waiver is set forth in a writing executed by such Purchaser. SECTION 3. COVENANTS. 3.01 Affirmative Covenants. So long as any Purchaser holds any Stock, the Company shall, and shall cause each Subsidiary to comply with all applicable laws, rules and regulations of all governmental authorities, the violation of which could reasonably be expected to have a material adverse effect upon the financial condition, operating results, assets or operations of the Company and its Subsidiaries taken as a whole, and pay and discharge when payable all material taxes, assessments and governmental charges (except to the extent the same are being contested in good faith and adequate reserves therefor have been established). 3.02 Public Disclosures. The Company shall not, nor shall it permit any Subsidiary to, disclose any Purchaser's name or identity as an investor in the Company in any press release or other public announcement or in any document or material filed with any governmental entity, without the prior written consent of such Purchaser, unless such disclosure is required by applicable law or governmental regulations or by order of a court of competent jurisdiction, in which case prior to making such disclosure the Company shall give written notice to such Purchaser describing in reasonable detail the proposed content of such disclosure and shall permit such Purchaser to review and comment upon the form and substance of such disclosure. 3.03 Financial Statements and Budget Information. (a) At any time prior to the Company's Initial Public Offering, the Company shall deliver to each Investor (so long as such Investor holds any Stock) and to each holder of at least five percent (5%) of the outstanding Series A Preferred Stock or at least five percent (5%) of the outstanding Common Stock: (i) Periodic Statements. As soon as available but in any event within thirty (30) days after the end of each of thirteen (13) twenty-eight (28) day accounting periods in each fiscal year (except for the first three sets of financial statements required under this subsection, which shall be due within forty-five (45) days after the first, second and third month ending after the Closing Date), unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries for such period and for the period from the beginning of the fiscal year to the end of such twenty-eight (28) day period, and consolidated balance sheets of the Company and its Subsidiaries as of the end of such period, all certified on behalf of the Company by an appropriate responsible officer as being complete and correct and fairly presenting, in accordance with GAAP, consistently applied, the financial position and results of operations of the Company and its Subsidiaries, subject to the absence of footnote disclosures and to normal year-end adjustments; and (ii) Annual Statements. As soon as available, but not later than one hundred five (105) days after the end of each fiscal year of the Company, a copy of the audited 4 consolidated balance sheet of the Company as at the end of such year and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, in conformity with GAAP applied on a basis consistent with prior years. (iii) Budget. Within ninety (90) days after the beginning of each fiscal year, an annual budget prepared on a monthly basis for VICORP and its Subsidiaries. (b) Each Purchaser acknowledges that the information provided to Purchasers pursuant to this Section 3.03 is confidential and not for dissemination to any person not a party to this Agreement (other than advisors of such Purchaser who agree to maintain the confidentiality of such information) without the prior written consent of the Company. SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material inducement to the Purchasers to enter into this Agreement and purchase the Stock, the Company hereby represents and warrants to each Purchaser that as of the Closing: 4.01 Organization and Corporate Power. Each of the Company and VICORP is a corporation duly organized, validly existing and in good standing under the laws of its state of organization. Each of the Company and VICORP is qualified to do business in every jurisdiction in which such entity currently conducts, and presently proposes to conduct, its business. Each of the Company and VICORP has all requisite corporate or limited liability company power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its business as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Agreement. 4.02 Capital Stock and Related Matters. (a) As of the Closing and immediately thereafter, the authorized capital stock of the Company shall consist of 3,000,000 shares of Stock, of which (i) 100,000 shares shall be designated as Series A Preferred Stock, 69,428.898 shares of which shall be issued and outstanding pursuant to this Agreement and 1,571.102 shares of which shall be reserved for issuance upon exercise of the Preferred Stock Options, (ii) 100,000 shares of which are undesignated preferred stock, none of which are outstanding as of the Closing, and (iii) 2,800,000 shares shall be designated as Common Stock, (A) 1,440,000 shares of which shall be issued and outstanding pursuant to this Agreement and the Management Agreements with the Executives, (B) 22,800 shares of which shall be issued and outstanding to other management employees of the Company, (C) 37,200 shares of which shall be reserved for issuance to additional executives or management employees of the Company or its Subsidiaries, and (D) 95,745 shares of which shall be reserved for issuance upon the exercise of the Warrants. As of the Closing, the Company shall not have outstanding any stock or securities convertible or exchangeable for any shares of its capital stock or containing any profit participation features, nor shall it have outstanding any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its capital stock or any stock appreciation 5 rights or phantom stock plans other than pursuant to and as contemplated by this Agreement and the Management Agreements. As of the Closing, the Company shall not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock, except pursuant to this Agreement, the Stockholders Agreement and the Management Agreements. As of the Closing, all of the outstanding shares of the Company's capital stock shall be validly issued, fully paid and nonassessable. (b) There are no statutory or, to the best of the Company's knowledge, contractual stockholders' preemptive rights or rights of refusal with respect to the issuance of the Stock hereunder or the issuance of the Stock pursuant to Section 1.02 hereof, except as expressly provided herein. Based in part on the investment representations of the Purchasers in Section 6.03 hereof and of each of the Executives in Section 1(c) of their respective Management Agreements, the Company has not violated any applicable federal or state securities laws in connection with the offer, sale or issuance of any of its capital stock, and the offer, sale and issuance of the Stock hereunder and pursuant to Section 1.02 hereof do not and will not require registration under the Securities Act or any applicable state securities laws. To the best of the Company's knowledge, there are no agreements between the Company's stockholders with respect to the voting or transfer of the Company's capital stock or with respect to any other aspect of the Company's affairs, except for the Stockholders Agreement and the Management Agreement. 4.03 Authorization; No Breach. The execution, delivery and performance of this Agreement, the Management Agreement, the Employment Agreement, the Stockholders Agreement, the Professional Services Agreement, the Registration Rights Agreement and the Acquisition Agreement (hereinafter collectively called the "Agreements") and the transactions contemplated thereby, the filing of the Certificate of Incorporation and the issuance of the Stock have been duly authorized by the Company and VICORP, as applicable, and, when delivered and paid for by their respective Purchasers pursuant to this Agreement, the shares of Stock will be validly issued, fully paid and non-assessable. The Agreements and the Certificate of Incorporation each constitute a valid and binding obligation of the Company, enforceable in accordance with its terms. The execution and delivery by the Company of the Agreements and all other agreements contemplated hereby to which the Company is a party, the offering, sale and issuance of the Stock hereunder, the filing of the Certificate of Incorporation and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the Company's or any of its Subsidiaries' capital stock or assets, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of; or (vi) require any authorization, consent, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to, the Certificate of Incorporation or bylaws of the Company, or any law, statute, rule or regulation to which the Company or any of it Subsidiaries is subject, or any agreement, instrument, order, judgment or decree to which the Company or any of its Subsidiaries is a party or by which it is bound. 6 4.04 Closing Dates. The representations and warranties of the Company contained in this Section 4 and elsewhere in this Agreement and all information contained in any exhibit, schedule or attachment hereto or in any writing delivered by, or on behalf of, the Company to the Purchasers shall be true and correct in all material respects on the date of the Closing as though then made, except as affected by the transactions expressly contemplated by this Agreement. SECTION 5. DEFINITIONS. For the purposes of this Agreement, the following terms have the meanings set forth below: 5.01 "Affiliate" of any particular person or entity means any other person or entity controlling, controlled by or under common control with such particular person or entity and, for any Purchaser that is a partnership, will also include any general or limited partner of such Purchaser. 5.02 "Governing Body" means (i) in the case of a corporation, that corporation's Board of Directors, and (ii) in the case of a limited liability company, that company's Board of Managers or Board of Members, if any. 5.03 "Initial Public Offering" means the initial offering by the Company of shares of Common Stock pursuant to a public distribution under the Securities Act. 5.04 "Officer's Certificate" means a certificate signed by the Company's president or its chief financial officer, stating that (i) the officer signing such certificate has made or has caused to be made such reasonable investigations as are necessary in order to permit him to verify the accuracy of the information set forth in such certificate and (ii) to the best of such officer's knowledge, such certificate does not misstate any material fact and does not omit to state any fact necessary to make the certificate not misleading. 5.05 "Organizational Documents" means, (i) in the case of a corporation, that corporation's charter and by-laws, (ii) in the case of a limited liability company, that company's articles or certificate of organization and operating agreement, if any, and (iii) in the case of a partnership, the partnership agreement. 5.06 "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. 5.07 "Preferred Stock Options" means options issued to certain Executives to purchase a total of 1,571.102 shares of Series A Preferred Stock. 5.08 "Securities Act" means the Securities Act of 1933, as amended, or any similar federal law then in force. 7 5.09 "Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (1) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. 5.10 "Warrants" means the common stock purchase warrants entitling the holders thereof to purchase shares of Common Stock, subject to adjustment as provided therein, issued pursuant that certain Investment Agreement between the Company and the purchasers named therein, dated of even date herewith. SECTION 6. MISCELLANEOUS. 6.01 Expenses. The Company agrees to pay (i) as a transaction fee, One Million Dollars ($1,000,000) to WPP, (ii) the fees and expenses of WPP, including but not limited to their legal counsel and accountants, arising in connection with the negotiation and execution of this Agreement, the Acquisition Agreement and the consummation of the transactions contemplated by this Agreement and the Acquisition Agreement, and (iii) the legal and accounting fees and related reasonable expenses incurred by WPP with respect to any amendments or waivers under or in respect of this Agreement, the Acquisition Agreement, the Stockholders Agreement, the Registration Rights Agreement, the Warrants and the Certificate of Incorporation. 6.02 Remedies. Each holder of Stock shall have all rights and remedies set forth in this Agreement and the Certificate of Incorporation and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. 6.03 Purchaser's Investment Representations. Each Purchaser hereby represents the following: (a) Such Purchaser is acquiring the Stock purchased hereunder at the Closing for its own account with the present intention of holding such securities for purposes of investment, and has no intention of selling such securities in a public distribution in violation of the federal securities laws. Each certificate for the Stock shall be imprinted with a legend in substantially the form set forth in Section 6.04. 8 (b) Such Purchaser has received all the information such Purchaser considers necessary or appropriate for deciding whether to acquire the Stock. Such Purchaser further represents that such Purchaser has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Stock and the business, properties, prospects and financial condition of the Company. (c) Such Purchaser is an investor in securities of privately held companies and acknowledges that such Purchaser can bear the economic risk of such Purchaser's investment, and has such knowledge and experience in financial or business matters that such Purchaser is capable of evaluating the merits and risks of the purchase of the Stock. (d) Such Purchaser is an "accredited investor" as such term is defined in Regulation D of the Securities Act or is an employee of the Company or its Affiliates. (e) Such Purchaser understands that the Stock is not currently being registered under the Securities Act by reason of the contemplated issuance in a transaction exempt from registration and prospectus delivery requirements of the Securities Act pursuant to Section 701, Regulation D and/or Section 4(2) thereof. 6.04 Legend. Each certificate for Stock shall be imprinted with a legend in substantially the following form: "The securities represented by this certificate were originally issued on ___________, 2003 and have not been registered under the Securities Act of 1933, as amended. The transfer of the securities represented by this certificate is subject to the conditions specified in the Stockholders Agreement dated as of ____________, 2003, among the issuer (the "Company") and certain investors, and the Company reserves the right to refuse the transfer of such securities until such conditions have been fulfilled with respect to such transfer. A copy of such conditions shall be furnished by the Company to the holder hereof upon written request and without charge." 6.05 Additional Purchasers. Subject to the terms of the Stockholders Agreement and this Agreement, the Company and/or any of the Purchasers may sell shares of the Stock to any Person, and in such event, by an amendment to this Agreement in the form of a supplement to this Agreement, the Company may permit such Person to become a party to this Agreement and succeed to all of the rights and obligations of an "Investor" hereunder without requiring the consent of any of the other parties to this Agreement. At the time of execution of each supplement to this Agreement, EXHIBIT C shall be revised accordingly. 6.06 Consent to Amendments. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended or waived at any time only by the written agreement of (i) the Company; (ii) WPP, so long as WPP owns at least twenty percent (20%) of the outstanding Common Stock; (iii) Purchasers holding not less than a majority of the Common Stock issued and outstanding at the time, calculated on a fully-diluted basis and 9 including, without limitation, Common Stock issuable upon the exercise of the Warrants; and (iv) Purchasers holding not less than a majority of the Preferred Stock issued and outstanding at the time. Notwithstanding the foregoing, no provision of this Agreement may be amended or waived if such amendment or waiver of any provisions would have the effect of limiting any benefit of, imposing additional obligations on or waiving any rights of any of the Purchasers or treating preferentially in any way any Purchaser over other Purchasers except by written agreement of the Purchaser affected thereby. No other course of dealing between the Company and the holder of any Stock or any delay in exercising any rights hereunder or under the Certificate of Incorporation shall operate as a waiver of any rights of any such holders. For purposes of this Agreement, shares of Stock held by the Company or any Subsidiaries shall not be deemed to be outstanding. 6.07 Survival of Representations and Warranties. All representations and warranties contained herein or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation made by the Purchasers or on their behalf with respect to any claim; provided that any such claim must be made by the Purchasers in writing and delivered to the Company within three (3) years of the Closing. 6.08 Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, and whether or not any express assignment has been made, the provisions of this Agreement which are for any Purchaser's benefit as a purchaser or holder of Stock are also for the benefit of, and enforceable by, any subsequent holder of such Stock. The rights and obligations of each Purchaser under this Agreement and the agreements contemplated hereby may be assigned by such Purchaser at any time in whole or in part to any investment fund managed by Wind Point Investors, L.L.C. or any successor thereto or Affiliate thereof, or as otherwise permitted by this Agreement, the Stockholders Agreement or the Management Agreements, as the case may be. 6.09 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 6.10 Counterparts. This Agreement may be executed in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement. 6.11 Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The use of the word "including" in this Agreement shall be by way of example rather than by limitation. 10 6.12 Governing Law. The corporate law of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. 6.13 Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered personally to the recipient, (b) one (1) business day following deposit with a reputable express courier service for next day delivery (charges prepaid), (c) three (3) business days after it is mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (d) one (1) business day after receipt is electronically confirmed, if sent by fax (provided that a hard copy shall be promptly sent by first class mail, postage prepaid). Such notices, demands and other communications shall be sent to the Purchasers and to the Company at the address indicated below or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. If to the Company VI Acquisition Corp. c/o Wind Point Partners 676 N. Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel.: (312) 255-4800 Attn.: Michael J. Solot If to WPP, to: Wind Point Partners IV, L.P. Wind Point Partners V, L.P. Wind Point IV Executive Advisor Partners, L.P. Wind Point Associates IV, LLC 676 N. Michigan Avenue, Suite 3700 Chicago, Illinois 60611 Fax: (312) 255-4820 Tel: (312) 255-4800 Attn: Michael J. Solot with a copy to: 11 Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-1000 Tel: (312) 207-6400 Attn: Seth M. Hemming, Esq. If to Mid Oaks, to: Mid Oaks Investments LLC 750 Lake Cook Road, Suite 440 Buffalo Grove, Illinois 60089 Fax: (847) 215-3421 Tel: (847) 215-3420 Attn: Wayne C. Kocourek with a copy to: Altheimer & Gray 10 South Wacker Drive Chicago, Illinois 60606-7462 Fax: (312) 715-4800 Tel: (312) 715-4050 Attn: David W. Schoenberg If to AGE, to: A.G. Edwards Capital, Inc. One North Jefferson St. Louis, MO 63103 Fax: (314) 955-8095 Tel: (314) 955-3971 Attn: Patricia A. Dahl If to Koenig, van Benthuysen or an Executive, to his or her address set forth on the Company's records. 6.14 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE COMPANY: VI ACQUISITION CORP. By: /s/ Debra Koenig ------------------------------------------ Name: Debra Koenig Its: Executive Vice President [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stock Purchase Agreement S-1 THE INVESTORS: WIND POINT PARTNERS IV, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ----------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ James P. TenBroek ----------------------------------------------- Name: James P. TenBroek Its: Managing Member WIND POINT PARTNERS V, L.P. By: Wind Point Investors V, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ----------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ James P. TenBroek ----------------------------------------------- Name: James P. TenBroek Its: Managing Member [INVESTOR SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stock Purchase Agreement S-2 MID OAKS INVESTMENTS LLC By: /s/ Wayne Kocourek ------------------ Name: Wayne Kocourek Its: Chairman and CEO [INVESTOR SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stock Purchase Agreement S-3 A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. By: A.G. Edwards Capital, Inc. Its: General Partner By: /s/ Christopher B. Redmond ----------------------------------------------- Name: Christopher B. Redmond Its: Vice President A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P. By: A.G. Edwards Capital, Inc. Its: General Partner By: /s/ Christopher B. Redmond ----------------------------------------------- Name: Christopher B. Redmond Its: Vice President [INVESTOR SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stock Purchase Agreement S-4 /s/ Debra Koenig --------------------------------------------------- DEBRA KOENIG /s/ Walter Van Benthuysen -------------------------------------------------- WALTER VAN BENTHUYSEN [INVESTOR SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stock Purchase Agreement S-5 WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ----------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member WIND POINT ASSOCIATES IV, LLC By: Wind Point Investors IV, L.P. Its: Manager By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ----------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stock Purchase Agreement S-6 EXECUTIVES: /s/ Joseph Trungale --------------------------------------------------- Joseph Trungale /s/ Robert E. Kaltenbach --------------------------------------------------- Robert E. Kaltenbach /s/ Timothy R. Kanaly --------------------------------------------------- Timothy R. Kanaly /s/ Mark A. Hampton --------------------------------------------------- Mark A. Hampton /s/ Daniel W. Gresham --------------------------------------------------- Daniel W. Gresham /s/ Donald R. Prismon --------------------------------------------------- Donald R. Prismon VI Acquisition Corp. Stock Purchase Agreement S-7 LIST OF EXHIBITS Exhibit A Acquisition Agreement Exhibit B Amended and Restated Certificate of Incorporation Exhibit C Stock to be Purchased Exhibit D Form of Management Agreement Exhibit E Form of Employment Agreement Exhibit F Form of Stockholders Agreement Exhibit G Form of Professional Services Agreement Exhibit H Form of Registration Rights Agreement EX-3.1 6 c86044exv3w1.txt AMENDED AND RESTATED ARTICLES OF INCORPORATION Exhibit 3.1 FILED - CUSTOMER COPY DONETTA DAVIDSON COLORADO SECRETARY OF STATE RESTATED CONSTITUENT FILED DOCUMENT Form 170 Revised July 1, 2002 Filing fee: $60.00 Deliver to: Colorado Secretary of State Business Division 1560 Broadway, Suite 200 Denver, CO 80202-5169 This document must be typed or machine printed Copies of filed documents may be obtained at www.sos.state.co.us Pursuant to Section 7-90-304.5, Colorado Revised Statutes (C.R.S.), the individual named below causes this restatement to be delivered to the Colorado Secretary of State for filing, and states as follows: 1. The entity name is: VICORP Restaurants, Inc. ------------------------------------------------------ (as shown on the records of the Secretary of State) organized under the laws of Colorado (state or country) 2. Mark only one box: [ ] This restatement contains NO amendments. OR [X] This restatement contains an amendment to the constituent filed document, and the amendment has been adopted in accordance with the organic statute governing the entity. AND, IF APPLICABLE, [X] The organic statute governing the entity requires that the amendment be approved by the owners - The number of votes cast, and, if appropriate, the number of votes cast by particular owners, for the amendment was sufficient for approval. 3. This restated constituent filed document supersedes the original constituent filed document and all prior amendments to the original constituent filed document. 4. The (a) name or names, and (b) mailing address or addresses, of any one or more of the individuals who cause this document to be delivered for filing, and to whom the Secretary of State may deliver notice if filing of this document is refused, are: Deborah Openshaw, 30 S. Wacker Dr., 29th Floor, Chicago, IL 60606 ATTACH A COPY OF THE RESTATED CONSTITUENT FILED DOCUMENT OPTIONAL. The electronic mail and/or Internet address for this entity is/are: e-mail gary.burke@vicorpinc.com Web site vicorpinc.com The Colorado Secretary of State may contact the following authorized person regarding this document: name Gary F. Burke, VICORP Restaurants, Inc. 400 West 48th Avenue, Denver, Colorado 80216. 2 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF VICORP RESTAURANTS, INC. FIRST: The name of the corporation is "VICORP Restaurants, Inc." (the "Corporation"). SECOND: The Corporation shall engage in any lawful business for which corporations may be organized under the Colorado Business Corporation Act (the "CBCA"). THIRD: The total number of shares which the Corporation shall have the authority to issue is Ten Thousand (10,000) shares of common stock, which shall have unlimited voting rights and shall be entitled to receive the net assets of the Corporation upon dissolution. FOURTH: The name and address of the Corporation's registered agent is: Gary Burke, 400 W. 48th Avenue, Denver, Colorado 80216. FIFTH: Cumulative voting shall not be allowed in the election of directors. SIXTH: There shall be no personal liability, either direct or indirect, of any director of the Corporation to the Corporation or to its shareholders for monetary damages for any breach or breaches of fiduciary duty as a director; except that this provision shall not eliminate the liability of a director to the Corporation or to its shareholders for monetary damages for any breach, act, omission or transaction as to which the CBCA prohibits expressly the elimination of liability. Any repeal or modification of this Article shall not adversely affect any protection of a director of the Corporation under this Article, as in effect immediately prior to such repeal or modification, with respect to any act or omission of such director occurring prior to such repeal or modification. SEVENTH: Notwithstanding any provision in the CBCA, the Corporation shall not be obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of the Corporation. Nothing in this Article shall preclude the Corporation from providing indemnification and advance of expenses to its directors and officers to the fullest extent permitted by the CBCA. EIGHTH: The Corporation shall in all respects be subject to the CBCA, to the exclusion of any predecessor law previously governing the Corporation, including but not limited to matters of shareholder votes and preemptive rights. NINTH: Other than as specifically set forth herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in these Amended and Restated Articles of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are granted subject to this reservation. EX-3.2 7 c86044exv3w2.txt BYLAWS Exhibit 3.2 BYLAWS OF VICORP RESTAURANTS, INC. ARTICLE I OFFICES 1. Business Offices. The principal office of the Corporation shall be located in Denver, Colorado. The Corporation may have such other offices, either within or outside the State of Colorado, as the Board of Directors may from time to time establish. The registered office of the corporation required by the Colorado Business Corporation Act to be maintained in Colorado may be, but need not be, identical with the principal office, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II SHAREHOLDERS 1. Annual Shareholders' Meeting. The annual shareholders' meeting shall be held on the 15th day of March in each year, or on such other day as may be reasonably fixed by the Board of Directors (or by the President in the absence of the Board of Directors); provided, however, that the first annual meeting must be held on a date that is within six months after the close of the first fiscal year of the Corporation, and each successive annual meeting shall be held on a date that is within the earlier of six months after the close of the :last fiscal year or fifteen months after the .last annual meeting. If the day so fixed for such annual meeting shall be a legal holiday, then such meeting shall be held on the next succeeding business day. The purpose of the annual meeting shall be for the electing of directors and for the transaction of such other business as may come before the meeting. If the election of directors shall not be held on the day designated herein for any annual meeting of the ..shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is convenient. Annual meetings shall be held at the principal office of the corporation or at such other place as the Board of Directors or President may determine. 2. Special Shareholders' Meeting. A special shareholders' meeting for any purpose or purposes, may be called by the Board of Directors or the President. The Corporation shall also hold a special shareholders' meeting in the event it receives, in the manner specified in Article XI, one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing not less than one-tenth of all of the votes entitled to be cast on any issue at the meeting. Special meetings shall be held at the principal office of the Corporation or at such other place as the Board of Directors or President may determine. 3. Record Date for Determination of Shareholders. (a) In order to make a determination of shareholders (1) entitled to notice of or to vote at any shareholders' meeting or at any adjournment of a shareholders' meeting, (2) entitled to demand a special shareholders' meeting, (3) entitled to take any other action, (4) entitled to receive payment of a share dividend or a distribution, or (5) for any other purpose, the Board of Directors may fix a future date as the record date for such determination of shareholders. The record date may be fixed not more than seventy days before the date of the proposed action. (b) Unless otherwise specified when the record date is fixed, the time of day for determination of shareholders shall be as of the Corporation's close of business on the record date. (c) A determination of shareholders entitled to be given notice of or to vote at a shareholders' meeting is effective for any adjournment. of the meeting unless the Board of Directors fixes a new record date, which the Board shall do if the meeting is adjourned to a date more than one hundred and twenty days after, the date fixed for the original meeting. d) If no record date is otherwise fixed, the record date for determining shareholders entitled to be given notice of and to vote at an annual or special shareholders' meeting is the day before the first notice is given to shareholders. (e) The record date for determining shareholders entitled to take action without a meeting pursuant to Article II, Sections 10 and 11 is the date a writing upon the action taken is first received by the Corporation. 4. Voting List. (a) After a record date is fixed for a shareholders'. meeting, the Secretary shall prepare a list of the names of all its shareholders who are entitled to be given notice of the meeting. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be alphabetical within each class or series, and shall show the address of, and the number of shares of each such class and series that are held by, each shareholder. (b) The shareholders' list shall be available for inspection by any shareholder, beginning the earlier of ten days before the meeting for which the list was prepared or two business days after notice of the meeting is given and continuing through the meeting, and any adjournment thereof, at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting will be held. 2 (c) The Secretary shall make the shareholders' list available at the meeting, and any shareholder or agent or attorney of a shareholder is entitled to inspect the list at any time during the meeting or any adjournment. 5. Notice to Shareholders. (a) The Secretary shall give notice to shareholders of the date, time and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the date of the meeting; except that, if the Articles of Incorporation are to be amended to increase the number of authorized shares, at least thirty days' notice shall be given. Except as otherwise required by the Colorado Business Corporation Act, the Secretary shall be required to give such notice only to shareholders entitled to vote at the meeting. (b) Notice of an annual shareholders' meeting need not include a description of the purpose or purposes for which the meeting is called unless a purpose of the meeting is to consider an Amendment to the Articles of Incorporation, a Restatement of the Articles of Incorporation, a plan of merger or share exchange, disposition of substantially all of the property of the Corporation, consent by the Corporation to the disposition of property by another entity, or dissolution of the Corporation. (c) Notice of a special shareholders' meeting shall include a description of the purpose or purposes for which the meeting is called. (d) Notice of a shareholders' meeting shall be in writing and shall be given: (1) by deposit in the United States mail, properly addressed to each shareholder's address shown in the Corporation's current record of shareholders, first class postage prepaid, and, if so given, shall be effective when mailed; or (2) by telegraph, teletype, electronically transmitted facsimile, electronic mail, or private carrier or by personal delivery to the shareholder, and, if so given, shall be effective when actually received by the shareholder. (e) If an annual or special shareholders' meeting is adjourned to a different date, tithe, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment; provided, however, that, if a new record date for the adjourned meeting is fixed pursuant to Article II, Section 3(c), notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date. 3 (f) If three successive notices are given by the Corporation, whether with respect to a shareholders' meeting or otherwise, to a shareholder and are returned as undeliverable, no further notices to such shareholder shall be necessary until another address for the shareholder is made known to the Corporation. 6. Quorum. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. A majority of the votes entitled to be cast on the matter by the voting group shall constitute a quorum of that voting group for action on the matter. If a quorum does not exist with respect to any voting group, the President or any shareholder or proxy that is present at the meeting, whether or not a member of that voting group, may adjourn the meeting to a different date, time, or place, and (subject to the next sentence) notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed pursuant to Article 11, Section 3(c), notice of the adjourned meeting shall be given pursuant to Article II, Section 5 to persons who are shareholders as of the new record date. At any adjourned meeting at which a quorum exists, any matter may be acted upon that could have been acted upon at the meeting originally called; provided, however, that, if new notice is given of the adjourned meeting, then such notice shall state the purpose or purposes of the adjourned meeting sufficiently to permit action on such matters. Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or shall be set for that adjourned meeting. 7. Voting Entitlement of Shares. Except as otherwise stated in the Articles of Incorporation, each outstanding share, regardless of class, is entitled to one vote, and each fractional share is entitled to a corresponding fractional vote, on each matter voted on at a shareholders' meeting. 8. Proxies; Acceptance of Votes and Consents. (a) A shareholder may vote either in person or by proxy. (b) An appointment of a proxy is not effective upon the Corporation until the appointment is received by the Corporation. - An appointment is valid for eleven months unless a different period is expressly provided in the appointment form. (c) The Corporation may accept or reject any appointment of a proxy, revocation of. appointment of a proxy; vote, consent, waiver, or ether writing purportedly signed by or for a shareholder, if such acceptance or rejection is in accordance with the provisions of Sections 7-107-203 and 7-107-205 of the Colorado Business Corporation Act. 4 9. Waiver of Notice. (a) A shareholder may waive any notice required by the Colorado Business Corporation Act, the Articles of Incorporation or these Bylaws, whether before or after the date or time stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the shareholder entitled to the notice, and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. (b) A shareholder's attendance at a meeting waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. 10. Action by Shareholders Without a Meeting. Any action required or permitted to be taken at a shareholders' meeting may be taken without a meeting if all of the shareholders entitled to vote thereon consent to such action in writing. Action taken pursuant to this Section shall be effective when the Corporation has received writings that describe .and consent to the action, signed by all of the shareholders entitled to vote thereon. Action taken pursuant to this Section shall be effective as of the date the last writing necessary to effect the action is received by the Corporation, unless all of the writings necessary to effect the action specify another date, which may be before or after the date the writings are received by the Corporation. Such action shall have the same effect as action taken at a meeting of shareholders and may be described as such in any document. Any shareholder who has signed a writing describing and consenting to action taken pursuant to this Section may revoke Such consent by a writing signed by the shareholder describing o the action, and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the Corporation before the effectiveness of the action. 11. Meetings by Telecommunications. Any or all of the shareholders may participate in an annual or special shareholders' meeting by, or the meeting may be conducted through the use of, any means of ( communication by which all persons participating in the meeting may hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting. ARTICLE III DIRECTORS 1. Authority of the Board of Directors. The corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, a Board of Directors. 5 2. Number. The number of directors shall be at least 3. and not more than 9. Within that range, the number of directors shall be as stated by resolution adopted by the shareholders from time to time, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. 3. Qualification. Directors shall be natural persons at least eighteen years old but need not be residents of the State of Colorado or shareholders of the Corporation. 4. Election. The Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose. 5. Term. Each director shall be elected to hold office until the next annual meeting of shareholders and until the director's successor is elected and shall qualify. 6. Resignation. A director may resign at any time by giving written notice of his or her resignation to any other director or (if the director is not also the Secretary) to the Secretary. The resignation shall be effective when it is received by the other director or Secretary, as the case may be, unless the notice of resignation specifies a later effective date. Acceptance of such resignation shall not be necessary to make it effective unless the notice so provides. 7. Removal. Any director may be removed by the shareholders, with or without cause, at a meeting called for that purpose. The notice of the meeting shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may be removed only if the number of votes cast in favor of removal exceeds the number of votes cast against removal [but may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against such removal]. 8. Vacancies. (a) If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (1) The shareholders may fill the vacancy at the next annual meeting or at a special meeting called for that purpose; or (2) The Board of Directors may fill the vacancy; or (3) If the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. (b) Notwithstanding Article III, Section 8(a), if the vacant office was held by a director elected by a voting group of shareholders, then, if one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and only 6 the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. (c) A vacancy that will occur at a specific later date, by reason of a resignation that will become effective at a later date under Article III, Section 6 or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. 9. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this bylaw, immediately after, at the same place as the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or outside Colorado, for the holding of additional regular meetings without other notice than such resolution. 10. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or outside Colorado, as the place for holding any special meeting of the Board of Directors called by them. 11. Notice of Special Meeting. Notice or a special meeting shall be given to every director at least twenty four hours before the time of the meeting, stating the date, time, and place of the meeting. The notice need not describe the purpose of the meeting. Notice may be given orally to the director, personally or by telephone or other wire or wireless communication. Notice may also be given in writing by telegraph, teletype, electronically transmitted facsimile, electronic mail, mail, or private carrier. Notice shall be effective at the earliest of the time it is received; five clays after it is deposited in the United States mail, properly addressed to the last address for the director shown on the records of the Corporation, first class postage prepaid; or the date shown on the return receipt if mailed by registered or certified mail, return receipt requested, postage prepaid, in the United States mail and if the return receipt is signed by the director to which the notice is addressed. 12. Quorum. Except as provided in Article IIi, Section 8, a majority of the number of directors fixed in accordance with these Bylaws shall constitute a quorum for the transaction of business at all meetings of the Board of Directors. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as otherwise specifically required by law. 13. Waiver of Notice. (a) A director may waive any notice of a meeting before or after the time and date of the meeting stated in the notice. Except as provided by Article III, Section 13(b), the waiver shall be in writing and shall be signed by the director. Such waiver shall be delivered to the Secretary for filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. 7 (b) A director's attendance at or participation in a meeting waives any required notice to him or her of the meeting unless, at the beginning of the meeting or promptly upon his or her later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or - defective notice and does not thereafter vote for or assent to action taken at the meeting. 14. Attendance by Telephone. One or more directors may participate in a regular or special meeting by, or conduct the . meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. 15. Deemed Assent to Action. A director who is present at a meeting of the Board of Directors when corporate action is taken shall be deemed to have assented to all action taken at the meeting unless: (a) The director objects at the beginning of the meeting, or promptly upon his or her arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting; (b) The director contemporaneously requests that his or her dissent or abstention as to any specific action taken be entered in the minutes of the meeting; or (c) The director causes written notice of his or her dissent or abstention as to any specific action to be received by the presiding officer of the meeting. before adjournment of the meeting or by the Secretary (or, if the director is the Secretary, by another director) promptly after adjournment of the meeting. The right of dissent or abstention pursuant to this Article III, Section 15 as to a specific action is not available to a director who votes in favor of the action taken. 16. Action by Directors Without a Meeting. Any action required or permitted by law to be taken at a Board of Directors' meeting may be taken without a meeting if all members of the Board consent to such action in writing. Action shall be deemed to have been so taken by the Board at the time the last director signs a writing describing the action taken, unless, before such time, any director has revoked his or her consent by a writing signed by the director and received by the Secretary or any other person authorized by the Bylaws or the Board of Directors to receive such a revocation. Such action shall be effective at the time and date it is so taken unless the directors establish a different effective time or date. Such action has the same effect as action taken at a meeting of directors and may be described as such in any document. 8 ARTICLE IV COMMITTEES OF THE BOARD OF DIRECTORS 1. Committees of the Board of Directors. (a) Subject to the provisions of Section 7-108-206 of the Colorado Business Corporation Act, the Board of Directors may create one or more committees and appoint one or more members of the Board of Directors to serve on them. The creation of a committee and appointment of members to it shall require the approval of a majority of all the directors in office when the action is taken, whether or not those directors constitute a quorum of the Board. (b) The provisions of these Bylaws governing meetings, actions without meeting, notice, waiver of notice, and quorum and voting requirements of the Board of Directors apply to committees and their members as well. (c) To the extent specified by resolution adopted from time to time by a majority of all the directors in office when the resolution is adopted, whether or not those directors constitute a quorum of the Board, each committee shall exercise the authority of the Board of Directors with respect to the corporate powers and the management of the business and affairs of the Corporation; except that a committee shall not: (1) Authorize distributions; (2) Approve or propose to shareholders action that the Colorado Business Corporation Act requires to be approved by shareholders; (3) Fill vacancies on the Board of Directors or on any of its committees; (4) Amend the Articles of Incorporation pursuant to Section 7-110-102 of the Colorado Business Corporation Act; (5) Adopt, amend, or repeal Bylaws; (6) Approve a plan of merger not requiring shareholder approval; 7) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or (8) Authorize or approve the issuance or sale of shares, or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitation of a class or series of shares; except that the Board of Directors may authorize a committee or an officer to do so within limits specifically prescribed by the Board of Directors. 9 (d) The creation of, delegation of authority to, or action by, a committee does not alone constitute compliance by a director with applicable standards of conduct. ARTICLE V Officers and Agents 1. General. The officers of the Corporation shall be a President, Treasurer, and a Secretary. The Board of Directors may appoint such other officers, assistant officers, committees and agents; including a Chairman of the Board, one or more Vice Presidents, Assistant Secretaries and-Assistant Treasurers, as they may consider necessary, who shall be chosen in such manner and hold their offices for such terms and have such authority and duties as from time to time may be determined by the Board of Directors. All officers shall be natural persons of the age of eighteen (18) years or older. The salaries of all the officers of the Corporation shall be fixed by the Board of Directors. One person may hold more than one office. In all cases where the duties of any officer, agent or employee are not prescribed by the Bylaws or by the Board of Directors, such officer, agent or employee shall follow the orders and instructions of the President. 2. Election and Term of Office. The officers of the Corporation shall be elected by the Board of Directors annually at the first meeting of the Board held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until the first of the following occurs: until his successor shall have been duly elected and shall have qualified; or until his death; or until he shall resign; or until he shall have been removed in the manner hereinafter provided. 3. Resignation, Removal and Vacancies. Any officer may resign at any time by giving written notice thereof to the Board of Directors. Such resignation shall take effect on the date specified therein and no acceptance of the same shall be necessary to render the same effective. Any officer may at any time be removed by the affirmative vote of a majority of the directors, or by a duly authorized executive committee. If any office becomes vacant for any reason, the vacancy may be filled by the Board of Directors. Unless otherwise provided by the Board of Directors, an officer appointed to fill a vacancy shall be appointed for the unexpired term of his predecessor in office. 4. President. The President shall, subject to the direction and supervision of the Board of Directors, be the chief executive officer of the Corporation and shall have general and active control of its affairs and business and general supervision of its officers, agents and employees. He shall, unless otherwise directed by the Board of Directors, attend in person or by substitute appointed by him, or shall execute on behalf of the Corporation a written instrument appointing a proxy or proxies to represent the 10 Corporation at, all meetings of the stockholders of any other corporation in which the Corporation shall hold any stock. He may, on behalf of the Corporation, in person or by substitute or by proxy, execute written waivers of notice and consents with respect to any such meetings. At all such meetings and otherwise, the President, in person or by substitute or proxy as aforesaid, may vote the stock so held by the Corporation and may execute written consents and other instruments with respect to such stock .and may exercise any and all rights and powers incident to the ownership of said stock except with respect to the sale, transfer, assignment or pledge of said stock, subject however to the instructions, if any, of the Board of Directors. The President shall have custody of the Treasurer's bond, if any. 5. Vice Presidents. The Vice Presidents, if any, shall assist the President and shall perform such duties as may be assigned to them by the President or by the Board of Directors. In the absence of the President, the Vice President designated by the Board of Directors or (if there be no such designation) designated in writing by the President shall have the powers and perform. the duties of the President. If no such designation shall be made, all Vice Presidents may exercise such powers and perform such duties. 6. Secretary and Assistant Secretaries. The Secretary, if any, shall: (a) keep the minutes of the proceedings of the shareholders, the Board of Directors and any executive committee; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records of the Corporation; (d) keep at the Corporation's registered office or principal place of business within or outside Colorado a record containing the names and addresses of all shareholders and the number and class of shares held by each, unless such a record shall be kept at the office of the Corporation's transfer agent or registrar; (e) sign with the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer .books of the Corporation, unless the Corporation has a transfer agent; and (g) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. The Vice President and Assistant Secretaries, if any, shall have the same duties and powers, subject to supervision by the Secretary. 7. Treasurer and Assistant Treasurers. The Treasurer shall be the principal financial officer of the Corporation and shall have the care and custody of all funds, securities, evidences of indebtedness and other personal property of the Corporation and shall deposit the same in accordance with the instructions of the Board of Directors. He shall receive and give receipts for monies paid in. on account of the Corporation,' and shall pay out of the funds on hand all bills, payrolls and other just debts of the Corporation of whatever nature upon maturity. He shall perform all other duties incident to the office of the Treasurer, and upon request of the Board, shall make such reports to it as may be required at any time. He shall, if required by the Board, give the Corporation a bond in such sums and with such sureties as shall be satisfactory to the Board, conditioned upon the faithful performance of his duties and for the restoration to the Corporation of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. He shall have such other powers and 11 perform such other duties as may be from time to time prescribed by the Board of Directors or the President. The Assistant Treasurers, if any, shall have the same powers and duties, subject to the supervision of the Treasurer. 8. Salaries. Officers of the Corporation shall be entitled to such salaries, emoluments, compensation or reimbursement as shall be fixed or allowed by the Board of Directors. ARTICLE VI INDEMNIFICATION 1. Definitions. As used in this Article: (a) "Corporation" includes any domestic or foreign entity that is a predecessor of the Corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (b) "Director" means an individual who is or was a director of the Corporation or an individual who, while a director of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the Corporation's request if his or her duties to the Corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director. (c) "Expenses" includes reasonable attorneys' fees. (d) "Liability" means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses. (e) "Official capacity" means, when used with respect to a director, the office of director in the Corporation and, when used with respect to a person other than a director as contemplated in Article VI, Section 1(a), the office in the Corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the Corporation. "Official capacity" does not include service for any other domestic or foreign corporation or other person or employee benefit plan. (f) "Party" includes a person who was, is, or is threatened to be made, a named defendant or respondent in a proceeding. 12 (g) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. 2. Authority to Indemnify Directors. (a) Except as provided in Article VI, Section 2(d), the Corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if: (1) The person conducted himself or herself in good faith; and (2) The person reasonably believed: (A) In the case of conduct in an official capacity with the Corporation, that his or her conduct was in the Corporation's best interests; and (B) In all other cases, that his or her conduct was at least not opposed to the Corporation's best interests; and (3) In the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful. (b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of Article VI, Section 2(a)(2)(B). A director's conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of Article VI, Section 2(a)(1). (c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this Article VI, Section 2. (d) The Corporation may not indemnify a director under this Article VI, Section 2: (1) In connection with a proceeding by or in the right of the Corporation in which the director was adjudged liable to the Corporation; or (2) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit. 13 (e) Indemnification permitted under this Article VI, Section 2 in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. 3. Mandatory Indemnification of Directors. The Corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding. 4. Advance of Expenses to Directors. (a) The Corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (1) The director furnishes to the Corporation a written affirmation of the director's good faith belief that he or she has met the standard of conduct described in Article VI, Section 2. (2) The director furnishes to the Corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that he or she did not meet the standard of conduct; and (3) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article. (b) The undertaking required by Article VI, Section 4(a)(2) shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. (c) Determinations and authorizations of payments under this Article VI, Section 4 shall be made in the manner specified in Article VI, Section 6. 5. Court-Ordered indemnification of Directors. A director who is or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification in the following manner: (a) If it determines that the director is entitled to mandatory indemnification under Article VI, Section 3, the court shall order indemnification, in which case the court shall also order the Corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification. 14 (b) If it determines that the director is. fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in Article VI, Section 2(a) or was adjudged liable in the circumstances described in Article VI, Section 2(d), the court may order such indemnification as the court deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described in Article VI, Section 2(d) is limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification. 6. Determination and Authorization of Indemnification of Directors. (a) The Corporation may not indemnify a director under Article VI, Section 2 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in Article VI, Section 2. The Corporation shall not advance expenses to a director under Article VI, Section 4 unless authorized in the specific case after the written affirmation and undertaking required by Article VI, Sections 4(a)(I) and 4(a)(2) are received and the determination required by Article VI, Section 4(a)(3) has been made. (b) The determinations required by Article VI, Section 6(a) shall be made: (1) By the Board of Directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or (2) If a ,quorum cannot be obtained, by a majority vote of a committee of the Board of Directors designated by the Board of Directors, which committee shall consist of two or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee. (c) If a quorum cannot be obtained as contemplated in Article VI, Section 6(b)(1), and a committee cannot be established under Article VI, Section 6(b)(2) if a quorum is obtained or a committee is designated, if a majority of the directors constituting such quorum or such committee so directs, the determination required to be made by Article VI, Section 6(a) shall be made: (1) By independent legal counsel selected by a vote of the Board of Directors or the committee in the manner specified in Article VI, Sections 6(b)(1) or 6(b)(2), or, if a quorum of the full board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full Board of Directors; or (2) By the shareholders. 15 (d) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification . or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel. 7. Indemnification of Officers, Employees, Fiduciaries, and Agents. (a) An officer is entitled to mandatory indemnification under Article VI, Section 3, and is entitled to apply for court-ordered indemnification under Article VI, Section 5, in each case to the same extent as a director; (b) The Corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the Corporation to the same extent as to a director; and (c) The Corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent than is provided in these Bylaws, if not inconsistent with public policy, and if provided for by general or specific action of its Board of Directors or shareholders or by contract. 8. Insurance. The Corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or . who, while a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from his or her status es a director, officer, employee, fiduciary, or agent, whether or }iot the Corporation would have power to indemnify the. person against the same liability under Article VI, Sections 2, 3 or 7. Any such insurance may be procured from any insurance company designated by the Board of Directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise. 9. Notice to Shareholders of Indemnification of Director. If the Corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the Corporation, the Corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the Board of Directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action. 16 ARTICLE VII STOCK 1. Certificates. The shares of stock shall be represented by consecutively numbered certificates signed in the name of the Corporation by its President or a Vice President and the Secretary or an Assistant Secretary. The signatures of the Corporation's officers on such certificate may also be facsimiles if the certificate is countersigned by a transfer-agent, or registered by a registrar, other than the Corporation itself, or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificates shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. Certificates of stock shall be in such form consistent with law as shall be prescribed by the Board of Directors. No certificate shall be issued until the shares represented thereby are fully paid. 2. New Certificates. No new certificates evidencing shares shall be issued unless and until the old certificate or certificates, in lieu of which the new certificate is issued, shall be surrendered for cancellation, except as provided in Section 3 of this Article VII. 3. Lost and Destroyed Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock the Board of Directors may direct the issuance of a new certificate in lieu thereof upon such terms and conditions in conformity with law as it may prescribe. The Board of Directors may in its discretion require a bond in such form and amount and with such surety as the Board may determine before issuing a new certificate. 4. Consideration for Shares. Shares shall be issued for such consideration, expressed in dollars (but not less than the par value thereof) as shall be fixed from time to .time by the Board of Directors. Treasury shares shall be disposed of for such consideration expressed in dollars as may be fixed from time to time by the Board. Such consideration may consist, in whole or in part, of money, other property, tangible or intangible or in labor or services actually performed for the Corporation, but neither promissory notes nor future services shall constitute payment or part payment for shares. 5. Transfer of Shares. Upon surrender to the Corporation or to a transfer agent of the Corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and such documentary stamps as may be required by law, the Corporation shall issue a new certificate to the person entitled thereto and cancel the old certificate. Every such transfer of stock shall be entered on the stock book of the Corporation, which shall be kept at its principal office or by its duly appointed registrar. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof, and, accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as may be required by the laws of Colorado. 17 The Corporation, under the Colorado Business Corporation Act and Articles of Incorporation, has the right to impose restrictions upon the transfer of any shares of the stock of the Corporation, or any interest therein from time to time issued, and any transfer or transfers of any of the shares of the stock of the Corporation, or any interest therein, shall be made in accordance with and subject to any such restrictions from time to time so imposed. 6. Shares Held for Account of Another. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the Corporation may certify in writing to the Corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution shall set forth: (a) The classification of shareholders who may certify; (b) The purpose or purposes for which the certification may be made; (c) The form of certification and information to be contained therein; (d) If the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or the closing of the stock transfer books within which the certification must be received by the Corporation; and (e) Such other provisions with respect to the procedure as are deemed necessary or desirable. Upon receipt by the Corporation of a certification complying with the procedure, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification. 7. Transfer Agents, Registrars and Paying Agents. The Board may at its discretion appoint one or more transfer agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the Corporation. Such agents and registrars may be located either within or outside Colorado. They shall have such rights and duties and shall be entitled to such compensation as the Corporation may agree to by a, written instrument. ARTICLE VIII EXECUTION OF INSTRUMENTS 1. Execution of Instruments. The President shall have power to execute on behalf and in the name of the Corporation any deed, contract, bond, debenture, note or other obligation or evidence of indebtedness, or proxy, or other instrument requiring the signature of an officer of the Corporation, except where the signing and "execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The Board of Directors shall also have the power to execute on 18 behalf and in the name of the Corporation any instrument which the President shall have the power to so execute. Except as provided in Section 5 of Article V herein, unless so authorized, no other officer, agent or employee shall have any power or authority to bind the Corporation in any way, to pledge its credit or to render it liable for any purpose or in any amount. 2. Checks and Endorsements. All checks and drafts upon the funds to the credit of the Corporation in any of its depositories shall be signed by the President, Vice President, Secretary or Treasurer or such officers or agents as shall from time to time be determined by resolution of the Board of Directors which may provide for the use of facsimile signatures under specified conditions, and all notes, bills receivable, trade acceptances, drafts, and other evidences of indebtedness payable to the Corporation shall, for the purpose of deposit, discount or collection, be endorsed by the President, Vice President, Secretary or Treasurer or such officers or agents of the Corporation or in such manner as shall from time to time be determined by resolution of the Board of Directors. 3. Other Corporate Documents. The Board of Directors is expressly authorized to enter into any Agreement which the Board of Directors deems necessary to regulate the Corporation's internal operations. Such agreements may include, without limitation, employment contracts and buy-sell agreements between its key shareholders, officers or employees. ARTICLE IX FISCAL YEAR 1. Fiscal year. The fiscal year of the Corporation shall be such year as shall be adopted by the Board of Directors in its sole discretion. ARTICLE X CORPORATE BOOKS AND RECORDS 1. Corporate Books. Except as otherwise required by statute, the books and records of the Corporation may be kept within or without the State of Colorado at such place or places as may be from time to time designated by the Board of Directors. ARTICLE XI RECEIPT OF NOTICES 1. Receipt of Notices by the Corporation. Notices, shareholder writings consenting to- action, and other documents or writings shall be deemed to have been received by the Corporation when they are received:. (a) At the registered office of the Corporation in the State of Colorado; (b) At the principal office of the Corporation (as that office is designated in the most recent document filed by the Corporation with the Secretary of State for 19 the State of Colorado designating a principal office) addressed to the attention of the Secretary of the. Corporation; (c) By the Secretary of the Corporation wherever the Secretary may be found; or (d) By any other person authorized from time to time by the Board of Directors, the President, or the Secretary to receive such writings, wherever such person is found. ARTICLE XII AMENDED BYLAWS 1. Amendment of Bylaws. All Bylaws of the Corporation shall be subject to alteration, amendment or repeal, and new Bylaws may be added by the affirmative vote of a majority of a quorum of the members of the Board of Directors at any regular or special meeting. ARTICLE XIII GENDER AND NUMBER 1. Construction of Words Denoting Gender and Number. Unless the context requires otherwise, words of one gender may be construed as denoting other genders, words denoting the singular May be construed as denoting the plural, and words of the plural may be construed as denoting the singular, as may be appropriate. 20 AMENDMENT TO THE BY-LAWS OF VICORP RESTAURANTS, INC. Adopted by the Board of Directors on May 14, 2001 A new Article XIV is added as follows: ARTICLE XIV SPECIAL PROVISIONS 1 Special Provisions. Notwithstanding any other provisions herein to the contrary, (a) at any time while the Majority BBV Members or the Majority Marathon Members have designated a director or directors on the Corporation's Board of Directors, the majority of the total number of directors required in order to constitute a quorum shall include at least one director designated by the Majority BBV Members who is also an employee of BBV or one of its Affiliates and at least one director designated by the Majority Marathon Members who is also an employee of Marathon or one of its Affiliates; and (b) for any action taken by the directors of the Corporation (including any amendment to these By-Laws), the act of a majority of the directors present at any meeting at which there is a quorum must include the affirmative vote of at least one director designated by the Majority BBV Members who is also an employee of BBV or one of its Affiliates and at least one director designated by the Majority Marathon Members who is also an employee of Marathon or one of its Affiliates. As used in this Section 1, the terms "Affiliates", "BBV", "Marathon", "Majority BBV Members" and "Majority Marathon Members" shall have the respective meanings set forth for such terms in the Limited Liability Company Agreement, dated as of May 14, 2001, of Midway Investors, LLC, as amended and in effect from time to time. 21 SECOND AMENDMENT TO BY-LAWS OF VICORP RESTAURANTS, INC. RESOLVED: That the By-Laws of the Corporation be, and hereby are, amended to add a new Section 2 to Article XIV thereof, which provides as follows: A new Section 2 to Article XIV is added as follows: MATTERS REQUIRING BOARD APPROVAL. Notwithstanding any other provisions herein to the contrary, none of the following actions may be taken by the Corporation, or by any officer, director, employee or agent on behalf of the Corporation, unless such action has been approved by the Board of Directors: (a) the establishment and modification of the annual budget with respect to income, balance sheets, cash flow, and capital expenditures of the Corporation; (b) except as provided in the annual budget approved pursuant to clause (a) above, (i) the entering into by the Corporation of any operating lease which requires total payments of more than $50,000 in any fiscal year, (ii) the making of any capital expenditure in excess of $50,000 in the aggregate in any fiscal year and (iii) the sale or any commitment for the sale by the Corporation of any assets or property which have a value of more than $50,000 in the aggregate in any fiscal year (excluding any sales of inventory in the ordinary course of business); (c) (i) the issuance, purchase, redemption or repurchase, or determination whether to exercise repurchase rights, of any securities of the Corporation including, without limitation, options and warrants, (ii) the selection of an appraiser for the Corporation in connection with any repurchase of securities from a manager of the Corporation, and (iii) the establishment and terms of, the setting of target levels and the determination of the achievement of such target levels under, and the acceleration of any vesting of rights under, any management equity plan or stock option plan, howsoever characterized, and whether or not the authority for any such action is prescribed to the Board of Directors of the Corporation or any committee thereof under the relevant plan documents; (d) the declaration or payment of any dividends or other distributions in respect of the capital of the Corporation; (e) the making of an initial public offering of the securities of the Corporation; (f) (i) the incurrence by the Corporation of any indebtedness for borrowed money (including, without limitation, the establishment of a line of credit at any bank or other financial institution), other than any indebtedness for borrowed money incurred by the Corporation in connection with its acquisition ("Acquisition Indebtedness") or any trade indebtedness incurred in the ordinary course of business, or (ii) the granting by the 22 Corporation of any liens on any of its properties or assets except (A) liens to secure taxes, assessments and other governmental charges in respect of obligations not overdue, (B) landlord's or lessor's liens under leases under which the Corporation is the lessee, (C) liens being contested by the Corporation in good faith by appropriate proceedings, (D) liens which secure any Acquisition Indebtedness, or (E) other liens not consented to, approved by or acquiesced in by the Corporation that are discharged within 90 days after the creation thereof; (g) the giving by the Corporation of any guaranties or indemnities in connection with the debt or other obligations of any person or entity; (h) the institution or settlement of any lawsuit or other legal proceeding involving a claim by the Corporation of more than One Million Dollars; (i) any action to effect the voluntary, or which would precipitate an involuntary, dissolution or winding-up of the Corporation; (j) the entering into by the Corporation of any entity which constitutes a partnership or joint venture for tax purposes; (k) the creation, modification, amendment or repeal of the charter documents or by-laws of the Corporation, or the formation of any subsidiary of the Corporation; (l) the entering into or consummating of any merger or consolidation, or the sale, lease, sublease or other transfer or disposition of all or substantially all of the assets of the Corporation or any capital stock of the Corporation or any subsidiary of the Corporation; (m) the acquisition by the Corporation of any stock, indebtedness, obligations or liabilities of, or the acquisition by the Corporation of any division or line of business, or the making by the Corporation of any loans, advances, capital contributions to, any person or entity (other than employee loans or advances individually not to exceed $50,000 and in the aggregate not to exceed $250,000 at any time outstanding); (n) (i) the entering into by the Corporation of any transaction with any affiliate on terms more favorable to such affiliate than would have been obtainable on an arms-length basis in the ordinary course of business; (o) any amendment or modification of, or the granting of any waiver, or the failure to enforce any of the rights of the Corporation pursuant to any agreement relating to capital stock; (p) any amendment or modification of, or the granting of any waiver, or the failure to enforce any of the rights of the Company related to (i) the Revolving Credit and Term Loan Agreement dated as of May 14, 2001, among Midway Investors Holdings, Inc., VICORP Restaurants, Inc., the Lenders, and SunTrust Bank as Administrative Agent ("Credit Agreement"); or (ii) Investment Agreement dated as of May 14, 2001, between 23 VICORP Restaurants, Inc., Midway Investors Holdings, Inc., the Lenders, and SunTrust Bank as Administrative Agent ("Investment Agreement") or any successor or replacement of such agreements; (q) the appointment, replacement, or termination of the President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer or Controller (or persons holding equivalent positions), the entry into, termination of, or extension of any term under any employment agreement with any officers, the establishment of, or any material modification to, the amount of annual compensation or similar benefits payable to any of such officers, and the establishment of, the setting of target levels and the determination of the achievement of such target levels under, any bonus plan or incentive compensation to be payable to any of such officers, and the determination to prepay any amounts owed to any of such officers; (r) the appointment and retention of auditors for the Corporation; (s) the establishment of any pension, insurance or benefit plan for any employee of the Corporation (including, without limitation, officers and directors liability insurance) whose cost exceeds on an annual basis $150,000; (t) except as provided in the annual budget approved pursuant to clause (a) above, the entering into by the Corporation of any oral or written contract outside the ordinary course of business which contemplates the payment to or by the Corporation of more than $100,000; (u) the establishment and composition of any committee or sub-committee of the Board of Directors of the Corporation; and (v) the entering into by the Corporation of any agreement obliging, committing or binding the Corporation to do any thing or take any action referred to in clauses (a) - (u) above. 24 BYLAWS AMENDMENT FOR VICORP RESTAURANTS, INC. BYLAW AMENDMENT ADOPTED ON JUNE 13, 2003. FURTHER RESOLVED, that pursuant to Article II, Section 2 of the By-laws of the Corporation (the "BY-LAWS") that the number of directors of the Corporation is hereby set at seven (7). BYLAW AMENDMENT ADOPTED ON MARCH 19, 2004 That Article XIV is hereby deleted in its entirety and that Article VI of the Bylaws is deleted in its entirety and replaced with the: "1. Indemnification. Notwithstanding any provision in the Colorado Business Corporation Act ("CBCA"), the Corporation shall not be obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of the Corporation. Nothing in this Article shall preclude the Corporation from providing indemnification and advance of expenses to its directors and officers to the fullest extent permitted by the CBCA." 25 EX-3.3 8 c86044exv3w3.txt AMENDED AND RESTATED CERTIFICATE OF INCORPORATION Exhibit 3.3 State of Delaware Secretary of State Division of Corporations Delivered 11:28 AM 06/12/2003 FILED 11:22 AM 06/12/2003 SRV 030388116 - 3620146 FILE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF VI ACQUISITION CORP. The undersigned, VI Acquisition Corp. (the "Corporation"), having filed its original Certificate of Incorporation with the Secretary of State of the State of Delaware on January 30, 2003, does hereby amend and restate its Certificate of Incorporation and certify as follows: I. That the Board of Directors of the Corporation, adopted a resolution by written consent in accordance with Section 141(f) of the General Corporation Law of the State of Delaware, as amended from time to time (the "GCL") setting forth the Amended and Restated Certificate of Incorporation set forth below (the "Certificate"), declaring it advisable and voting in favor of the adoption of the Certificate. II. That the Corporation has not received any payment for any of its stock. III. That the Certificate has been duly adopted in accordance with Section 241 of the GCL: FIRST: Corporate Name. The name of the corporation is "VI Acquisition Corp." SECOND: Registered Office. The address of the registered office of the Corporation is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle. The name of the registered agent of the Corporation at such address is Corporation Service Company. THIRD: Corporate Purpose. The nature of the business of the Corporation or the purposes of the Corporation to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the GCL. FOURTH: Capital Stock. (A) Authorized Shares. The total number of shares of all classes of stock which the Corporation shall have the authority to issue is Three Million (3,000,000) shares, of which (i) Two Million Eight Hundred Thousand (2,800,000) shares shall be designated Common Stock, $0.0001 par value per share (the "Common Shares"), and (ii) Two Hundred Thousand (200,000) shares shall be designated Preferred Stock, $0.0001 par value per share (the "Preferred Stock"), of which One Hundred Thousand (100,000) shares of Preferred Stock shall be designated Series A Preferred Stock, $0.0001 par value per share (the "Series A Preferred Stock"). (B) Terms of Preferred Stock. Section 1. Authority of Board to Fix Terms of Certain Preferred Stock. The Board of Directors of the Corporation is hereby expressly authorized at any time and from time to time to provide for the issuance of all or any shares of the Preferred Stock other than the Series A Preferred Stock in one or more additional classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and to the fullest extent as may now or hereafter be permitted by the GCL, including, without limiting the generality of the foregoing, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, or other securities or property, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions. Unless otherwise provided in such resolution or resolutions, shares of Preferred Stock of such class or series which shall be issued and thereafter acquired by the Corporation through purchase, redemption, exchange, conversion or otherwise shall return to the status of authorized but unissued Preferred Stock. Section 2. Series A Preferred Stock. Notwithstanding the provisions of Section 1, the terms of the Series A Preferred Stock are established in Article FOURTH Section (D) below and nothing in Section 1 shall be deemed to confer any authority on the Board of Directors to establish different or additional terms applicable to the Series A Preferred Stock. (C) Common Stock. Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings set forth in Article FOURTH Section (G) below. Section 1. General. The voting, dividend and liquidation rights of the holders of Common Shares are subject to, and qualified by, the rights of the holders of Preferred Stock of any series as may be designated by the Board of Directors. Section 2. Voting. At every meeting of the stockholders of the Corporation, every holder of Common Shares shall be entitled to one (1) vote per person or by proxy for each Common Share standing in such holder's name on the transfer books of the Corporation. 2 Section 3. Dividends. Subject to the terms of the Financing Documents, dividends may be declared and paid on the Common Shares from funds lawfully available therefor as, if and when determined by the Board of Directors and subject to any limitations or restrictions contained in, or any preferential dividend rights of, any then outstanding series of Preferred Stock. Stock dividends payable on Common Shares may be paid only in Common Shares. Section 4. Liquidation. Upon the voluntary or involuntary liquidation, sale, merger, consolidation, dissolution or winding up of the Corporation, holders of Common Shares will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential rights of any then outstanding series of Preferred Stock. (D) Series A Preferred Stock. Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings set forth in Article FOURTH Section (G) below. Section 1. Dividends. 1A. General Obligation. Subject to the terms of the Financing Documents, when and as declared by the Corporation's Board of Directors and to the extent permitted under the GCL, the Corporation shall pay preferential dividends in cash to the holders of the Series A Preferred Stock as provided in this Section 1. Dividends on each share of the Series A Preferred Stock (a "Share") shall accrue on a daily basis at the rate of ten percent (10%) per annum of the sum of the Liquidation Value thereof plus all accumulated and unpaid dividends thereon from and including the date of issuance of such Share to and including the first to occur of (i) the date on which the Liquidation Value of such Share (plus all accrued and unpaid dividends thereon) is paid to the holder thereof in connection with the liquidation of the Corporation or the redemption of such Share by the Corporation or (ii) the date on which such Share is otherwise acquired by the Corporation. Such dividends shall accrue whether or not they have been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and such dividends shall be cumulative such that all accrued and unpaid dividends shall be fully paid or declared with funds irrevocably set apart for payment before any dividends, distributions, redemptions or other payments may be made with respect to any Junior Securities. The date on which the Corporation initially issues any Share shall be deemed to be its "date of issuance" regardless of the number of times transfer of such Share is made on the stock records maintained by or for the Corporation and regardless of the number of certificates which may be issued to evidence such Share. 1B. Dividend Reference Dates. To the extent not paid on March 31, June 30, September 30 and December 31 of each year, beginning September 30, 2003 (the "Dividend Reference Dates"), all dividends which have accrued on each Share outstanding during the three-month period (or other period in the case of the initial Dividend Reference Date) ending upon each such Dividend Reference Date shall he accumulated and shall remain accumulated dividends with respect to such Share until paid to the holder thereof. 3 1C. Distribution of Partial Dividend Payments. Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series A Preferred Stock, such payment shall be distributed pro rata among the holders thereof based upon the aggregate accrued but unpaid dividends on the Shares held by each such holder. Section 2. Liquidation. Subject to the terms of the Financing Documents, upon any liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary), each holder of Series A Preferred Stock shall be entitled to be paid, before any distribution or payment is made upon any Junior Securities, an amount in cash equal to the aggregate Liquidation Value of all Shares held by such holder plus all accrued and unpaid dividends thereon, and the holders of Series A Preferred Stock shall not be entitled to any further payment. If upon any such liquidation, dissolution or winding up of the Corporation the Corporation's assets to be distributed among the holders of the Series A Preferred Stock are insufficient to permit payment to such holders of the aggregate amount which they are entitled to be paid under this Section 2, then the entire assets available to be distributed to the Corporation's stockholders shall be distributed pro rata among such holders based upon the aggregate Liquidation Value plus all accrued and unpaid dividends of the Series A Preferred Stock held by each such holder. Prior to the liquidation, dissolution or winding up of the Corporation, the Corporation shall declare for payment all accrued and unpaid dividends with respect to the Series A Preferred Stock, but only to the extent of funds of the Corporation legally available for the payment of dividends. Not less than sixty (60) days prior to the payment date stated therein, the Corporation shall mail written notice of any such liquidation, dissolution or winding up to each record holder of Series A Preferred Stock, setting forth in reasonable detail the amount of proceeds to be paid with respect to each Share and each Common Share in connection with such liquidation, dissolution or winding up. Section 3. Voting Rights. Except as otherwise provided herein and as otherwise required by applicable law, the Series A Preferred Stock shall have no voting rights; provided that each holder of Series A Preferred Stock shall be entitled to notice of all stockholders meetings at the same time and in the same manner as notice is given to all stockholders entitled to vote at such meetings. Section 4. Amendment and Waiver. No amendment, modification or waiver shall be binding or effective with respect to any provision of ARTICLE FOUR Section (D) hereof without the prior written consent of the holders of a majority of the Series A Preferred Stock outstanding at the time such action is taken; provided that no such action shall change (i) the rate at which or the manner in which dividends on the Series A Preferred Stock accrue or the times at which such dividends become payable or (ii) the percentage required to approve any change described in clause (i) above, without the prior written consent of the holders of a majority of the Series A Preferred Stock then outstanding; and provided further that no change in the terms hereof may be accomplished by merger or consolidation of the Corporation with another corporation or entity unless the 4 Corporation has obtained the prior written consent of the holders of a majority of the Series A Preferred Stock then outstanding. (E) Registration of Transfer. The Corporation shall keep at its principal office a register for the registration of shares of its capital stock. Upon the surrender of any certificate representing any shares of capital stock of the Corporation at such place, the Corporation shall, at the request of the record holder of such certificate, execute and deliver (at the Corporation's expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate, and, with respect to the Series A Preferred Stock, dividends shall accrue on the Series A Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such Series A Preferred Stock represented by the surrendered certificate to the holder thereof. (F) Replacement. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of capital stock, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and, with respect to the Series A Preferred Stock, dividends shall accrue on the Series A Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate to the holder thereof. (G) Definitions. "Financing Documents" means collectively, the following documents, each of which is anticipated to be dated as of June 13, 2003 (provided that if such documents are actually dated a later date, this definition will be automatically amended to mean the following documents dated as of such date), and all amendments or supplements to any such documents: (i) that certain Credit Agreement by and among the Corporation, Midway Investors Holdings, Inc., VICORP Restaurants, Inc., Suntrust Bank, a Georgia banking corporation, as Issuing Bank and Administrative Agent for the lending institutions described below, BNP Paribas, as Syndication Agent, Suntrust Capital Markets, Inc., as a Joint Lead Arranger, BNP Paribas Securities Corporation, as a Joint Lead Arranger, and the various lending institutions listed on Schedule 1 to the Credit Agreement, (ii) that certain Investment Agreement by and among the Corporation, Midway Investors Holdings, Inc., VICORP Restaurants, Inc., certain subsidiaries of VICORP 5 Restaurants, Inc., Allied Capital Corporation, Gleacher Mezzanine Fund I, L.P., Gleacher Mezzanine Fund P, L.P., and SunTrust Equity Funding, LLC (the "Investment Agreement"), (iii) those certain Preferred Warrants issued in connection with the Investment Agreement, and (iv) the documents executed and delivered pursuant to such agreements. "Liquidation Value" of any share of Series A Preferred Stock as of any particular date shall be equal to $1,000.00. (H) Notices. Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier service, charges prepaid, and shall be deemed to have been given when so mailed or sent (i) to the Corporation, at its principal executive offices and (ii) to any stockholder and any warrantholder, at such holder's address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder). (I) Senior Indebtedness. In the event that any payment or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, shall be received by the holders of Common Shares or Preferred Stock on account of any Liquidation Value or any Dividends, as the case may be, before all indebtedness for borrowed money under the Financing Documents is paid in full in cash, or otherwise consented to in writing by the parties to the Financing Documents, such payment or distribution shall be received and held in trust by such holder of Common Shares or Preferred Stock for the benefit of the holders of such indebtedness for borrowed money under the Financing Documents, or their respective representative, ratably according to the respective amounts of such indebtedness held or represented by each, to the extent necessary to make payment in full in cash of all such indebtedness remaining unpaid after giving effect to all concurrent payments and distributions and all provisions therefore to or for the holders of such indebtedness. FIFTH: Elections of directors need not be by written ballot. SIXTH: The Board of Directors shall have the power, in addition to the stockholders, to make, alter, or repeal the bylaws of the Corporation. SEVENTH: The Corporation shall have the right to indemnify the officers and directors of the Corporation to the fullest extent permitted under the GCL, as well as to reimburse indemnified officers and directors for fees and costs incurred to enforce any indemnification rights granted to them by the Corporation. EIGHTH: A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing 6 violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. All references in this paragraph to a director shall also be deemed to refer to such other person or persons, if any, who, pursuant to any provision of this Certificate of Incorporation in accordance with subsection (a) of Section 141 of the GCL, exercise or perform any of the powers or duties otherwise conferred or imposed upon the Board of Directors by the GCL. NINTH: Other than as specifically set forth herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 241 and 245 of the GCL. [REMAINDER OF PAGE INTENTIONALLY BLANK.] 7 IN WITNESS WHEREOF, VI Acquisition Corp. has caused this Amended and Restated Certificate of Incorporation to be executed on this 12th day of June, 2003. VI ACQUISITION CORP. By: /s/ Michael J. Solot ----------------------- Michael J. Solot President 8 EX-3.4 9 c86044exv3w4.txt BYLAWS Exhibit 3.4 BYLAWS OF VI ACQUISITION CORP. ADOPTED AS OF JANUARY 30, 2003 ARTICLE 1 OFFICES The principal office of the Corporation may be, within or without the State of Delaware as the business of the Corporation may require from time to time. The registered office of the Corporation required by the General Corporation Law of Delaware to be maintained in the State of Delaware shall be 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808. The name of the registered agent of the Corporation in Delaware shall be Corporation Service Company. ARTICLE 2 STOCKHOLDERS SECTION 2.1. ANNUAL MEETING. The annual meeting of the stockholders shall be held on March 1st of each year (beginning with the year 2004), or on such other date as determined by the Board of Directors, at such hour as shall be designated in the notice of the meeting for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for any annual meeting, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a meeting of the stockholders as soon thereafter as conveniently may be. SECTION 2.2. SPECIAL MEETINGS. Special meetings of the stockholders may be called by the President, by the Board of Directors, or by the holders of not less than one-fifth of all the outstanding shares of the Corporation. SECTION 2.3. PLACE OF MEETING. The Board of Directors may designate any place, if any, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the President or Board of Directors. A waiver of notice signed by all stockholders may designate any place, if any, either within or without the State of Delaware, as the place for the holding of such meeting. If no designation is made, or if a special meeting is otherwise called, the place of meeting, if any, shall be at the principal office of the Corporation in the State of Illinois, except as otherwise provided in Section 2.5 of these Bylaws. The Board of Directors may, in its sole discretion, determine that a meeting or meetings of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized and in the manner set forth in paragraph (a)(2) of Section 211 of the Delaware General Corporation Law ("DGCL"). SECTION 2.4. NOTICE OF MEETING. Written or printed notice stating the place, if any, day, hour of the meeting, and means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at stockholder meetings, and in the case of a special meeting, the purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, or in the case of a merger or consolidation not less than twenty nor more than sixty days before the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the records of the Corporation, with postage thereon prepaid. Stockholders may consent to receiving electronic delivery of notice of stockholder meetings, subject to the limitations found in Section 232 of the DGCL. Any waiver of notice of a stockholder meeting may be given by electronic transmission in the manner set forth in Section 229 of the DGCL. SECTION 2.5. MEETING OF ALL STOCKHOLDERS. If all of the stockholders shall meet at any time and place, if any, either within or without the State of Delaware, and consent to the holding of a meeting at such time and place, if any, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken. SECTION 2.6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days, or in the case of a merger or consolidation, at least twenty days, immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty days and, for a meeting of stockholders, not less than ten days, or in the case of a merger or consolidation, not less than twenty days, immediately preceding such meeting. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. SECTION 2.7. VOTING LISTS. The officer or agent having charge of the transfer books for shares of the Corporation shall make at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and the number of shares held by each. Such list need not include electronic mail addresses or other electronic contact information and shall be open to the examination of any stockholder for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting, (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting or (ii) 2 during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonable accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. SECTION 2.8. QUORUM. A majority of the outstanding shares of the Corporation, represented in person or by proxy, shall constitute a quorum at any meeting of stockholders; provided, that if less than a majority of the outstanding shares are represented at said meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by the DGCL or the Certificate of Incorporation. SECTION 2.9. PROXIES. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meetings. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. SECTION 2.10. VOTING OF SHARES. Subject to the provisions of Section 2.12 of these Bylaws, the Certificate of Incorporation and the Certificate of Designations, if any, of any class of stock of the Corporation, each outstanding share, regardless of class, shall be entitled to one vote upon each matter submitted to vote at a meeting of stockholders. SECTION 2.11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the Bylaws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by his administrator or executor, either in person or by proxy. Shares standing in the name of a guardian, conservator or trustee may be voted by such fiduciary, either in person or by proxy, but no guardian, conservator or trustee shall be entitled, as such fiduciary, to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. 3 A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to this Corporation shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time. SECTION 2.12. WRITTEN ACTION BY STOCKHOLDERS. Any action required to be taken at any annual or special meeting of the stockholders, or any other action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Written consent includes the use of telegram, cablegram, or other electronic transmission as described in Section 219 of the DGCL. However, unless the Board of Directors of the Corporation provide otherwise, such transmission must be reproduced in paper form and delivered to the Corporation's registered office, principal place of business or its officer or agent having custody of the book in which proceeding of meetings of stockholders are recorded, in order to be deemed delivered. SECTION 2.13. VOTING BY BALLOT AND PROXY. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any stockholder shall demand that voting be by ballot or proxy. When counting written ballots and proxies to determine their validity, inspectors of election may rely on any verification information required of stockholders voting electronically. Written ballots and proxies include those submitted electronically as set forth in paragraph (e) of Section 211 of the DGCL. ARTICLE 3 DIRECTORS SECTION 3.1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. SECTION 3.2. NUMBER, TENURE AND QUALIFICATION. The number of directors of the Corporation shall be no less than one (1) and no more than seven (7). The exact number of directors may be fixed from time to time by resolution of the Board of Directors of the Corporation. Each director shall hold office until the next annual meeting of stockholders or until his successor shall have been duly elected and qualified. Directors need not be residents of Delaware or stockholders of the Corporation 4 SECTION 3.3. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held without other notice than this bylaw, immediately after, and at the same place, if any, as the annual meeting of stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Delaware, for the holding of additional regular meetings without other notice than such resolution. SECTION 3.4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the President or any two Directors or by the sole Director if there remains only one. The person or persons authorized to call special meetings of the Board of Directors may fix any place, if any, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them. SECTION 3.5. NOTICE. Notice of any special meeting shall be given at least 24 hours previous thereto by written notice delivered personally, by courier or mailed to each director at his business address, or by telegram or facsimile. If notice is given by courier, such notice shall be deemed to be delivered one business day following deposit with the courier. If mailed, such notice shall be deemed to be delivered two days following deposit in the United States mail. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. If notice is given by facsimile, such notice shall be deemed to be delivered on the day of transmission if transmitted during the recipient's normal business hours or one business day following transmission if transmitted after business hours. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 3.6. QUORUM. A majority of the number of directors fixed by these Bylaws shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided, that if less than a majority of such number of directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 3.7. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 3.8. VACANCIES. Any vacancy occurring in the Board of Directors and any directorship to be filled by reason of an increase in the number of directors may be filled by the directors at a special or regular meeting called for such purpose or by unanimous written consent in lieu thereof pursuant to Section 3.13 of these Bylaws. Any director elected to such vacancy shall hold office until the next annual meeting of stockholders. 5 SECTION 3.9. RESIGNATIONS. Any Director of the Corporation may resign at any time by giving notice in writing or by electronic transmission (as such term is defined in subsection (c) of Section 232 of the DGCL) to the Board of Directors, the chairman, if any, the chief executive officer, the president, the chief financial officer or the secretary of the Corporation. Such resignation shall take effect at the time specified therein and, unless tendered to take effect upon acceptance thereof, the acceptance of such resignation shall not be necessary to make it effective. SECTION 3.10. REMOVAL OF DIRECTORS. Any director or the entire Board of Directors of this Corporation may be removed with or without cause at any annual or special meeting of stockholders by the holders of a majority of the shares then entitled to vote at an election of directors. SECTION 3.11. COMPENSATION. The Board of Directors, by the affirmative vote of a majority of directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the Corporation as directors, officers or otherwise. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board. In the event the Internal Revenue Service shall deem any compensation (including any fringe benefit) paid to a director to be unreasonable or excessive, such director must repay to the Corporation the excess over what is determined by the Internal Revenue Service to be reasonable compensation, with interest on such excess at the minimum applicable federal rate, within ninety days after notice from the Corporation. SECTION 3.12. PRESUMPTION OF ASSENT. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 3.13. INFORMAL ACTION BY BOARD OF DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee consent thereto in writing or by electronic transmission (as such term is defined in subsection (c) of Section 232 of the DGCL), and the writing(s) or electronic transmissions(s) are filed with the minutes of proceedings of the Board of Directors or committee thereof. Such filing(s) shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. SECTION 3.14. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the Board of Directors or of any committee designated by the Board of Directors may participate in a 6 meeting of such Board or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. SECTION 3.15 COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, or in these Bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation by the Board of Directors, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the Board of Directors, Bylaws or Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a Certificate of Ownership and Merger. ARTICLE 4 OFFICERS SECTION 4.1. NUMBER. The officers of the Corporation shall be, at minimum, a President, a Treasurer or Chief Financial Officer, and a Secretary. The Board may also choose a Chairman of the Board, a Chief Executive Officer and such Vice Presidents (the number thereof to be determined by the Board of Directors), Assistant Treasurers, Assistant Secretaries or other officers as may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person. SECTION 4.2. ELECTION AND TERMS OF OFFICE. The officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until he or she shall resign or shall have been removed in the manner 7 hereinafter provided. Election or appointment of an officer or agent shall not of itself create contract rights. SECTION 4.3. REMOVAL. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4.4. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, or because of the creation of an office, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 4.5. THE CHAIRMAN. The Chairman of the Board, if one is appointed, the Chief Executive Officer, if one is appointed, or the President shall preside at all meetings of the stockholders and of the Board of Directors and shall see that orders and resolutions of the Board of Directors are carried into effect. He or she shall have concurrent power with the Chief Executive Officer, if any, and the President to sign bonds, mortgages, certificates for shares and other contracts and documents, whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation. The Chairman of the Board shall perform such duties as the Board of Directors may from time to time prescribe. SECTION 4.6. THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the principal executive officer of the Corporation and shall, in general, supervise and control all of the business and affairs of the Corporation, unless otherwise provided by the Board of Directors. He or she may sign bonds, mortgages, certificates for shares and all other contracts and documents whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation. He or she shall have general powers of supervision and shall be the final arbiter of all differences between officers of the Corporation and his or her decision as to any matter affecting the Corporation shall be final and binding as between the officers of the Corporation subject only to its Board of Directors. SECTION 4.7. THE PRESIDENT. If no Chief Executive Officer is appointed, or in the absence of the Chief Executive Officer, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. He or she shall have concurrent power with the Chief Executive Officer to sign bonds, mortgages, certificates for shares and other contracts and documents, whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation. In general, he or she shall perform all duties incident to the office of President and such other duties as the Chief Executive Officer or the Board of Directors may from time to time prescribe. 8 SECTION 4.8. THE VICE PRESIDENTS. In the absence of the President or in the event of his inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the Corporation, and shall perform such other duties as from time to time may be assigned to him by the President or by the Board of Directors. SECTION 4.9 THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be the principal financial and accounting officer of the Corporation, and shall (a) have charge and custody of, and be responsible for, all funds and securities of the Corporation; (b) keep or cause to be kept correct and complete books and records of account including a record of all receipts and disbursements; (c) deposit all funds and securities of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with these Bylaws; (d) from time to time prepare or cause to be prepared and render financial statements of the Corporation at the request of the Chief Executive Officer, the President, the Chairman of the Board, if any, or the Board of Directors; and (e), in general, perform all duties incident to the office of Chief Financial Officer and such other duties as from time to time may be prescribed by the Chairman of the Board, if any, the Chief Executive Officer, the President or the Board of Directors; provided, however, that in connection with the election of the Chief Financial Officer, the Board of Directors may limit in any manner the duties (other than those specified in clauses (a) through (d) hereof) which may be prescribed to be performed by the Chief Financial Officer by the Chairman of the Board, if any, the Chief Executive Officer and/or the President. SECTION 4.10. THE TREASURER. If no Chief Financial Officer is appointed, or in his or her absence or in the event of his or her inability or refusal to act, the Treasurer shall perform the duties of the Chief Financial Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Financial Officer. He or she shall, in general, perform all the duties incident to the office of Treasurer and such other duties and have such other powers as the Chief Executive Officer, the President or the Board of Directors may from time to time prescribe. SECTION 4.11. THE SECRETARY. The Secretary shall: (a) keep the minutes of the stockholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these Bylaws; (d) keep a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (e) sign with the President, or a Vice President, certificates for shares of the Corporation, the issue of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in 9 general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. SECTION 4.12. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries as thereunto authorized by the Board of Directors may sign with the President or a Vice President certificates for shares of the Corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers and Assistant Secretaries, in general, shall perform such duties as shall be assigned to them by the Treasurer or the Secretary, respectively, or by the President or the Board of Directors. SECTION 4.13. SALARIES. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. In the event that the Internal Revenue Service shall deem any compensation (including any fringe benefit) paid to an officer to be unreasonable or excessive, such officer must repay to the Corporation the excess over what is determined by the Internal Revenue Service to be reasonable compensation, with interest on such excess at the minimum applicable federal rate, within 90 days after notice from the Corporation. ARTICLE 5 INDEMNIFICATION OF OFFICERS AND DIRECTORS SECTION 5.1. INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Corporation shall: (a) indemnify, to the fullest extent permitted by the DGCL, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or if such person has previously been designated for indemnification by the resolution of the Board of Directors, an officer, employee or agent of the Corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best 10 interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful; and (b) indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, joint venture, trust or other enterprise, or if such person has previously been designated for indemnification by the resolution of the Board of Directors, an officer, employee or agent of the Corporation, against expenses (including attorney's fees) actually and reasonably incurred by each person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper; and (c) indemnify any director, or, if such person has previously been designated for indemnification by the resolution of the Board of Directors, an officer, employee or agent against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith, to the extent that such director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Article 5, Section 5.1 (a) and (b), or in defense of any claim, issue or matter therein; and (d) make any indemnification under Article 5, Section 5.1 (a) and (b) (unless ordered by a court) only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such director, officer, employee or agent has met the applicable standard of conduct set forth in Article 5, Section 5.1 (a) and (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders of the Corporation; and (e) pay expenses incurred by a director or officer in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Article 5. Notwithstanding the foregoing, the Corporation shall not be obligated to pay expenses incurred by a director or officer with respect to any 11 threatened, pending, or completed claim, suit or action, whether civil, criminal, administrative, investigative or otherwise ("Proceedings") initiated or brought voluntarily by a director or officer and not by way of defense (other than Proceedings brought to establish or enforce a right to indemnification under the provisions of this Article 5 unless a court of competent jurisdiction determines that each of the material assertions made by the director or officer in such proceeding were not made in good faith or were frivolous). The Corporation shall not be obligated to indemnify the director or officer for any amount paid in settlement of a Proceeding covered hereby without the prior written consent of the Corporation to such settlement; and (f) not deem the indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this Article 5 exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such director's or officer's official capacity and as to action in another capacity while holding such office; and (g) have the right, authority and power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person' s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article 5; and (h) deem the provisions of this Article 5 to be a contract between the Corporation and each director, or appropriately designated officer, employee or agent who serves in such capacity at any time while this Article 5 is in effect and any repeal or modification of this Article 5 shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon such state of facts. The provisions of this Article 5 not be deemed to be a contract between the Corporation and any directors, officers, employees or agents of any other Corporation (the "Second Corporation") which shall merge into or consolidate with this Corporation when this Corporation shall be the surviving or resulting Corporation, and any such directors, officers, employees or agents of the Second Corporation shall be indemnified to the extent required under the DGCL only at the discretion of the Board of Directors of this Corporation; and (i) continue the indemnification and advancement of expenses provided by, or granted pursuant to, this Article 5, unless otherwise provided when authorized or ratified, as to a person who has ceased to be a director, officer, employee or agent of the Corporation and such rights shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 5.2. Elimination of Certain Liability of Directors. As provided for in the Certificate of Incorporation of the Corporation, no director of the Corporation shall be personally 12 liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the DGCL, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by a amended DGCL. Any repeal or modification of this Article 5 by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. ARTICLE 6 CERTIFICATES FOR SHARES AND THEIR TRANSFER SECTION 6.1. CERTIFICATES FOR SHARES. Certificates representing shares of the Corporation shall be in such form as may be determined by the Board of Directors. Such certificates shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary and shall be sealed with the seal of the Corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. SECTION 6.2. TRANSFER OF SHARES. Transfers of shares of the Corporation shall be made only on the books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. ARTICLE 7 FISCAL YEAR The fiscal year of the Corporation shall begin on the first day of January in each year and end on the last day of December in each year. 13 ARTICLE 8 DIVIDENDS The Board of Directors may from time to time, declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Certificate of Incorporation. ARTICLE 9 SEAL The Board of Directors may approve a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation and the words, "Corporate Seal, Delaware." ARTICLE 10 WAIVER OF NOTICE Whenever any notice whatever is required to be given under the provisions of these Bylaws or under the provisions of the Certificate of Incorporation or under the provisions of the DGCL law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE 11 AMENDMENTS TO THE BYLAWS These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by unanimous written consent of the Board of Directors or at any meeting of the Board of Directors of the Corporation by a majority of the directors present at the meeting, subject to the power of the stockholders to alter or repeal Bylaws made by the Board of Directors. 14 BYLAWS AMENDMENT FOR VI ACQUISITION CORP. BYLAW AMENDMENT ADOPTED ON JUNE 13, 2003. RESOLVED, that pursuant to Article III, Section 3.2 of the Bylaws, that the number of directors of the Corporation is hereby set at seven (7); BYLAW AMENDMENT ADOPTED ON MARCH 19, 2004 Article 5 of the Bylaws is hereby deleted in its entirety and replaced with the following: "SECTION 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Notwithstanding any provision in the Delaware General Corporation Law (the "DGCL"), the Corporation shall not be obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of the Corporation. Nothing in this Article shall preclude the Corporation from providing indemnification and advance of expenses to its directors and officers to the fullest extent permitted by the DGCL." 15 EX-3.5 10 c86044exv3w5.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.5 -------------------- RECEIVED OCT 13'60 CORP. COMM. CORP. DEPT. -------------------- CERTIFICATE OF INCORPORATION OF F. A. M. INC. - -------------------------------------------------------------------------------- (No Stockholders' Liability) KNOW ALL MEN BY THESE PRESENTS, that we, Jim P. Mola, Merton S. Anderson, Duane E. Feiring and Mary Ann Feiring, desiring to form a corporation for the objects herein set forth under and by virtue of the laws of the State of New Mexico, and in accordance with the provisions and requirements thereof, do hereby make, execute and acknowledge this certificate in writing, stating: ARTICLE I The name of this corporation is F.A.M. Inc., no stockholders' liability. ARTICLE II The principal office of this corporation shall be 5505 East Central Street, Albquerque, New Mexico. ARTICLE III The agent in charge of the principal office of this corporation shall be Duane E. Feiring whose address is 5505 East Central Street, Albquerque, New Mexico. ARTICLE IV The purposes for which this corporation is organized are: 1. To conduct, own, buy, sell, lease, equip and operate restaurants, cafes, theaters, amusement parks and amusement enter- prises of all kinds; to manufacture, grow, compound, create and generally deal in all kinds of food, food stuffs and food products; to manufacture, purchase, sell and generally deal in restaurant equip- ment and supplies of all kinds and to manufacture, own, operate and generally deal in and with all kinds of facilities and appurtenances convenient, desirable or necessary in the conduct and operation of the foregoing. 2. To take, purchase or otherwise acquire and to own, hold, sell, convey, exchange, hire, lease, pledge, mortgage, and otherwise deal in and dispose of all kinds of personal property, chattels, chattels real, choses in action, notes, bonds, mortgages and securities of whatsoever kind and wheresoever situated. 3. To purchase, improve, develop, subdivide, lease, exchange, sell, dispose of mortgage, pledge and otherwise deal in and turn to account, real estate or any interests therein, to purchase, lease, alter, remodel, build, construct, erect, occupy and manage buildings and improvements of every kind and character whatsoever and to finance the purchase, improvement, development and construction of land, buildings or other improvements to real estate or any interests therein, whether such real estate be located within or without the state of New Mexico. 4. To borrow money for any of the purposes of this corpora- tion and to issue notes or other obligations therefor and to secure the same by pledge or mortgage of the whole or any part of the pro- perty of this corporation, whether real or personal and to issue bonds, notes or other obligations with or without any such security. 5. To loan money to and to borrow money from any other corporation, company, association, partnership or individual now or hereafter existing either with or without security therefor. 6. To acquire, by purchase or otherwise, to hold and vote, to sell, transfer, pledge or otherwise dispose of, stocks, bonds, or other securities or assets of this or any other corporation, company, association, partnership or individual now or hereafter existing, and to acquire, manage, operate, sell or lease, or otherwise dis- pose of, all or any part of the business, properties or assets of any of said corporations, companies, associations, partnerships or individuals which may be acquired by this corporation. The foregoing clauses shall be construed both as objects and powers, and shall not be held to limit or restrict in any manner -2- the powers of the corporation; and it is the intention that the purposes, objects and powers specified in each of the paragraphs of this Article IV of this Certificate of Incorporation shall, except as otherwise expressly provided, in nowise be limited or restricted by reference to or inference from the terms of any other article of this Certificate of Incorporation, but that each of the purposes, objects and powers specified in this art- icle and each of the articles or paragraphs of this Certificate of Incorporation shall be regarded as independent purposes, objects and powers. ARTICLE V The total capital of the corporation shall consist of 250,000 shares of capital stock, which shares shall have a par value of $1.00 each. Any or all of such shares may be issued by the corporation from time to time, for such consideration in money, property or services as may be fixed from time to time by the Board of Directors, but only upon the affirmative vote of two-thirds (2/3) of all of the shareholders of the corpora- tion, such vote to be taken at a special meeting called for that purpose. All such shares shall be issued fully paid and nonassessable. ARTICLE VI The business and affairs of the corporation shall be under the control and management of a Board of Directors consisting of four members who need not be shareholders of the corporation, who are to be elected by ballot annually and are to serve until their successors shall be elected and qualified unless they sooner resign. The names and addresses of the persons who are to serve as directors for the first three months and until their success- sors are elected and qualified are: Jim P. Mola, 11 Cresent Lane, Colorado Springs, Colorado; Merton S. Anderson, 15 Cresent Lane, Colorado Springs, Colorado; Duane E. Feiring, 5505 East Central Street, Albuquerque, New Mexico and Mary Ann Feiring, 5505 East Central Street, Albuquerque, New Mexico. ARTICLE VII The names and addresses of the incorporators hereof, and the number of shares subscribed for by them are as follows: -3-

ARTICLE VIII Each shareholder of record shall have one vote for each share of stock standing in his name on the books of the corporation and entitled to vote, except that in the election of directors he shall have the right to vote such number of shares for as many persons as there are directors to be elected. Cumulative voting shall not be allowed in the election of directors or for any other purpose. Share- holders shall have no pre-emptive right to subscribe to additional shares of the corporation except as may be provided by the by-laws or from time to time by the Board of Directors. ARTICLE IX The amount of capital with which the corporation will commence business is one thousand ($1,000) dollars. ARTICLE X The corporation shall have the right to conduct and transact any and all of its business within or without the state of New Mexico. Meetings of stockholders and directors may be held within or without the state of New Mexico, at such places as may be deemed advisable from time to time by the Board of Directors. Dated at Denver, Colorado this 30th day of September, 1960. /s/ Jim P. Mola --------------------------------- Jim P. Mola /s/ Morton S. Anderson --------------------------------- Merton S. Anderson /s/ Duane E. Feiring --------------------------------- Duane E. Feiring /s/ Mary Ann Feiring --------------------------------- Mary Ann Feiring -4- CITY AND COUNTY OF DENVER ) ) ss. STATE OF COLORADO ) On this 22nd day of September, 1960, before me personally appeared Jim P. Mola, Merton S. Anderson, Duane E. Feiring and Mary Ann Feiring, personally known to me, and acknowledged that they executed the above and foregoing certificate as their free act and deed. Witness my hand and seal the day and year last above written. My commission expires: March 28, 1964 ---------------------------------------------- /s/ Notary Public ---------------------------------------------- Notary Public -1- [STATE OF NEW MEXICO SEAL] CERTIFICATE OF FILING United States of America ) ) ss. State of New Mexico ) It is hereby certified that there was filed for record in the office of the State Corporation Commission of the State of New Mexico on the------------ 24th ------------------ day of ----------------------------------------February, 1965----------------------------------------- CERTIFICATE OF AMENDMENT OF F.A.M. INC. (No Stockholders' Liability) (Amending Articles I, II and III of the Articles Of Incorporation by changing name from P.A.M. INC. (No Stockholders' Liability) to VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.; by changing principal office of the corporation to 2437 Central Avenue, N. W., Albuquerque, New Mexico and Statutory agent from Duane N. Feiring to Ben Bronstein.) (52,831) In Testimony Whereof, the State Corporation Commission of the State of New Mexico has caused this certificate to be signed by its Chairman and the seal of said Commission to be affixed at the City of Santa Fe on this ------------- 24th-------------- day of -----------February. 1965------- ATTEST: /s/ Barney Cruz, Jr. /s/ M. E. Morgan - ------------------------------- ---------------------------------- BARNEY CRUZ, JR., Clerk M. E. MORGAN, Chairman -2- CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF F.A.M., INC. (NO STOCKHOLDERS LIABILITY) KNOW ALL MEN BY THESE PRESENTS THAT: F.A.M., INC. (NO STOCKHOLDERS LIABILITY), a New Mexico corporation, hereby certifies, pursuant to New Mexico Statutes Annotated, Section 51-2-20 (1953) that: A. The location of the principal office of the corporation in the State of New Mexico is 2437 Central Ave., N. W., Albuquerque, New Mexico, and the name of the agent therein and in charge thereof upon whom process against the corporation may be served is Ben Bronstein, B. The following resolutions were unanimously adopted by a quorum of the Board of Directors at a Special Meeting duly held on November 4, 1964: RESOLVED, That it is advisable to amend Article I of the Articles of Incorpora- tion to read: "The name of the Corporation is: VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC." and, -------------------- RECEIVED -------------- ST. CORP. COMM. CORP. DEPT. -------------------- -3- RESOLVED, That it is advisable to amend Articles II and III of the Articles of Incorporation to delete "5505 Central, N. E." as principal office of the Cor- poration and substitute "2437 Central Ave., N. W." in lieu thereof; and to delete Duane Feiring as Statutory Agent and substitute Ben Bronstein in lieu thereof; and RESOLVED, That a Special Meeting of Stock- holders of the Corporation be called to consider these amendments. C. Pursuant to the aforesaid resolutions, a Special Meeting of the Stockholders of the Corporation was held on November 4, 1964, at the Corporation offices, on Waiver of Notice signed by the Stockholders, at which meeting there were two thirds in interest of each class of Stockholders having voting powers represented and voting in favor of such amendments. Attached hereto is the Affi- davit of the President and Secretary of the Corporation attesting to such action by the Stockholders. IN WITNESS WHEREOF, F.A.M., INC. (NO STOCKHOLDERS LIABILITY) has caused this Certificate of Amendment to be signed by its President and Secretary, and its corporate seal to be affixed this 22nd day of February, 1965, -4- CORPORATE /s/ Merton S. Anderson SEAL ---------------------------------- MERTON S. ANDERSON, President /s/ Ben Bronstein ----------------------------------- BEN BRONSTEIN, Secretary STATE OF NEW MEXICO ) ) ss. COUNTY OF BERNALILLO ) The foregoing instrument was acknowledged before me the 22nd day of February, 1965, by BEN BRONSTEIN, Secretary of F.A.M., Inc., a New Mexico corporation, on behalf of said corporation. /s/Graham Browne ----------------------------------- Notary Public My commission expires: 9-14-67 - --------------------------- STATE OF NEW MEXICO ) ) ss. COUNTY OF BERNALILLO ) The foregoing instrument was acknowledged before me the 22nd day of February, 1965, by MERTON S. ANDERSON, President of F.A.M., Inc., a New Mexico corporation, on behalf of said corporation. /s/ Graham Browne ----------------------------------- Notary Public My commission expires: 9-14-67 - --------------------------- -5- AFFIDAVIT MERTON S. ANDERSON and BEN BRONSTEIN, each being duly sworn on their oath, depose and say that: They are President and Secretary, respectively, of F.A.M., INC. (NO STOCKHOLDERS LIABILITY), a New Mexico corporation; At a Special Meeting of the Stockholders of the Corporation held on November 4, 1964, at the corporation offices, two thirds in interest of each class of Stock- holders having voting powers were represented and voted in favor of the amendments to the Articles of Incorpora- tion of F.A.M., Inc. (No Stockholders Liability) set forth in the Certificate of Amendment to which this is attached. WITNESS the hands of the parties hereto this 22nd of February, 1965. /s/ Merton S. Anderson ----------------------------------- MERTON S. ANDERSON /s/ Ben Bronstein ----------------------------------- BEN BRONSTEIN STATE OF NEW MEXICO ) ) ss. COUNTY OF BERNALILLO ) The foregoing instrument was acknowledged and sworn to before me this 22nd day of February, 1965, by BEN BRONSTEIN, Secretary of F.A.M., INC. (NO STOCKHOLDERS LIABILITY), a New Mexico corporation. /s/ Notary Public -------------------------------- Notary Public My commission expires: 9-14-67 - ------------------------ STATE OF NEW MEXICO ) ) ss. COUNTY OF BERNALILLO ) The foregoing instrument was acknowledged and sworn to before me this 22nd day of February, 1965, by MERTON S. ANDERSON, President of F.A.M., INC. (NO STOCKHOLDERS LIABILITY), a New Mexico corporation. /s/ Notary Public -------------------------------- Notary Public My commission expires: 9-14-67 - ------------------------ STATE OF NEW MEXICO CERTIFICATE OF MERGER OF VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. (83,606) The State Corporation Commission certifies that duplicate originals of the Articles of Merger attached hereto, duly signed and verified pursuant to the provisions of the Business Corporation Act, have been received by it and are found to conform to law. Accordingly, by virtue of the authority vested in it by law, the State Corporation Commission issues this Certificate of Merger and attaches hereto a duplicate original of the Articles of Merger In Testimony Whereof, the State Corporation Commission of the State of New Mexico has caused this certificate to be signed by its Chairman and the seal of said Commission to be affixed at the City of Santa Fe on this 1st day of April, 1975 ATTEST /s/ Manuel L. Salinas /s/ Floyd Cross - ------------------------------------ --------------------------------- MANUEL L. SALINAS, DIRECTOR FLOYD CROSS, Chairman --------------------- FILED IN OFFICE OF STATE CORPORATION COMMISSION APR 1 - 1975 CORPORATION AND FRANCHISE TAX DEPTS. --------------------- ARTICLES OF MERGER OF SODA STRAW, INC. INTO VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. 1. Plan of Merger. Soda Straw, Inc., shall merge into Village Inn Pancake House of Albuquerque, Inc., on April 1, 1975. At that time Soda Straw, Inc. shall cease to exist and Village Inn Pancake House of Albuquerque, Inc. shall be the surviving corporation, under its present name and without any changes in its Articles of Incorporation. On the effective date of the merger, all of the property, rights, privileges, immunities, powers and franchises, of whatsoever nature and description, of Soda Straw, Inc. shall devolve upon and be succeeded to by Village Inn Pancake House of Albuquerque, Inc. without other transfer, act or deed, and the same shall be subject to all the restrictions, disabilities and duties of Soda Straw, Inc.; and the debts, obligations, liabilities, damages and expenses of or due from Soda Straw, Inc. shall be those of Village Inn Pancake House of Albuquerque, Inc. without further assumption by Village Inn Pancake House of Albuquerque, Inc; and all property, rights, privileges, immunities, powers and franchises, and every other interest, shall be as effectually the property of Village Inn Pancake House of Albuquerque, Inc. as they were of Soda Straw, Inc.; and the title to all real estate and interests in all leaseholds vested in Soda Straw, Inc. shall not be deemed to revert or to be in any way impaired by reason of the merger, but shall be vested in Village Inn Pancake House of Albuquerque, Inc. Village Inn Pancake House of Albuquerque, Inc. shall issue two hundred fifty (250) of its authorized but unissued common shares to the shareholders of Soda Straw, Inc. in exchange for all the outstanding stock of Soda Straw, -------------------- RECEIVED APR - 1 1975 ST. CORP. COMM. FRANCHISE TAX DEPT. -------------------- Inc. consisting of one thousand (1,000) common shares. The shareholders of Soda Straw, Inc. shall therefore receive twenty-five one hundredths (.25) of a share of Village Inn Pancake House of Albuquerque, Inc. for each share of Soda Straw, Inc. which they currently hold. The shareholders of Village Inn Pancake House of Albuquerque, Inc. shall retain all shares of the currently outstanding common shares of Village Inn Pancake House of Albuquerque, Inc. consisting of one thousand (1,000) common shares. After the merger, Village Inn Pancake House of Albuquerque, Inc. shall have one thousand two hundred fifty (1,250) common shares outstanding. The Board of Directors of Village Inn Pancake House of Albuquerque, Inc. shall be increased to four members who shall be:

Lawrence J. Bielat shall be Vice President of Village Inn Pancake House of Albuquerque, Inc. All other officers remain the same as prior to the merger. 2. Stock of Parties. Immediately prior to the merger, Village Inn Pancake House of Albuquerque, Inc. had one thousand (1,000) shares of no par common stock outstanding, none of which were entitled to vote as a class, and Soda Straw, Inc. had one thousand (1,000) shares of no par common stock outstanding, none of which were entitled to vote as a class. 3. Vote On Merger. The plan of merger was adopted unanimously by the shareholders of both corporations. In Village Inn Pancake House of -2- Albuquerque, Inc. one thousand (1,000) share: were voted for the plan of merger and none against. In Soda Straw, Inc. one thousand (1,000) shares voted for the plan of merger and none against. IN WITNESS WHEREOF, each of the parties has caused these Articles of Merger to be executed by its President and Secretary, on this 31st day of March, 1975. VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By /s/ Ben Bronstein -------------------------------------------- Ben Bronstein, President /s/ Mary Jo Bronstein -------------------------------------------- Mary Jo Bronstein, Secretary SODA STRAW, INC. By /s/ Lawrence J. Bielat -------------------------------------------- Lawrence J. Bielat, President /s/ Ben Bronstein -------------------------------------------- Ben Bronstein, Secretary -3- VERIFICATION STATE OF NEW MEXICO ) ) ss. COUNTY OF BERNALILLO ) BEN BRONSTEIN, being first duly sworn, upon his oath states that the foregoing Articles of Merger were executed by him as President of Village Inn Pancake House of Albuquerque, Inc. and that the contents thereof are true and correct. /s/ Ben Bronstein --------------------------------- Ben Bronstein SUBSCRIBED and SWORN to before me this 31 day of March, 1975. /s/ Notary Public --------------------------------- Notary Public My Commission Expires: August 1, 1975 - ------------------------- STATE OF NEW MEXICO ) ) ss COUNTY OF BERNALILLO ) LAWRENCE J. BIELAT, being first duly sworn, upon his oath states that the foregoing Articles of Merger were executed by him as President of Soda Straw, Inc., and that the contents thereof are true and correct. /s/ Lawrence J. Bielat --------------------------------- Lawrence J. Bielat SUBSCRIBED and SWORN to before me this 31st day of March, 1975. /s/ Notary Public --------------------------------- Notary Public My Commission Expires: August 1, 1975 - ------------------------- -4- EX-3.6 11 c86044exv3w6.txt BYLAWS Exhibit 3.6 BY-LAWS OF VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. I STOCKHOLDERS 1. Meetings. The Annual Meeting of Stockholders of the Corporation will be held without notice' at the principal corporation office on the first. Monday in December at 10:00 a.m. Special Meetings, of Stockholders. will be held at the time and place fixed by the President, and may be called 'by' any Director, or the owners of 10% of the corporation stock, on notice given to each stockholder at least ten days before the meeting. Presence in person or by proxy of a majority of shares will constitute a quorum. 2. Voting. Each stockholder will at every stockholders meeting be entitled to one vote for all purposes in person or by proxy for each share of stock owned by the stockholder on: the day preceding the meeting as shown by the stock ledger. Proxies must be, in writing, subscribed by the stockholders, and presented to the Secretary of the meeting for validation prior to being voted. The action of a majority of shares present in person or by proxy at a meeting will constitute stockholder action unless a different amount is required by law. II BOARD OF DIRECTORS 1. Number, Tenure; Qualifications and Vacancies. The Board will consist of not less than three nor more than five Directors who will be elected annually by ballot by the stockholders at their Annual Meeting. Directors need not be stockholders or residents of New Mexico, and will, hold office until their successors are elected and qualified. A Director may resign or may be removed by the majority vote of the stockholders. Vacancies and newly created Directorships may be filled by a majority of Directors then in office. 2. Meetings. The-Annual Meeting of the-Board of Directors will be held without notice immediately following the Annual Stock-holders Meeting. Special meetings of the Board of Directors will be held at the time and place fixed by the President, and may be called by any Director on Notice given to each Director at least two days before the meeting. A majority of Directors will constitute a quorum. 3. Action. The Directors will manage the Corporation, and may act only as a Board with each Director having one vote. The action of a majority of Directors present at a meeting, or, in absence of a. meeting, the action of a majority of Directors, assented to in writing by all the Directors, will be the action of the Board unless a greater amount is required by law. III OFFICERS 1. Number, Tenure, Qualification and Vacancies. The Officers of the Corporation will be a President, Vice President, Secretary and Treasurer, and such other officers as the Board may decide, each of whom will be elected annually by the Board. Officers will hold office until their successors are elected and qualified and, except for the President, need not be Directors. An Officer may resign or may be removed by the majority vote of the Board. Vacancies and newly created Offices shall be filled by the Board. One person may hold more than one office except that no person may be President and Secretary. Officers will perform the duties and have the powers assigned by the Board and incident to the office. 2. President. The President will be the chief executive officer of the Corporation, will preside at all corporation meetings, and, when authorized, will execute and deliver documents in the name of the Corporation. 3. Vice President. Any Vice President may perform the duties of the President during the disability or absence of the President. 4. Secretary. The Secretary, or any Assistant Secretary during the absence, or disability of the Secretary, will have custody of the seal, books and records of the Corporation, will keep the minutes of all meetings, will give all Notices required, and, when authorized, will execute, attest, deliver, and seal documents of the Corporation. 5. Treasurer. The Treasurer, or any Assistant Treasurer during the absence or disability of the Treasurer, will have custody of the funds, securities, property and books of account of the Corporation, and. will keep strict account of funds, securities and property received, owned and disbursed by the Corporation. IV NOTICE AND WAIVER OF NOTICE Any Notice of Meeting will state the time, place and purpose of the meeting, may be given by mail to the person entitled thereto at the address shown on the Corporation books, and will be considered given when sent. Any Notice will be considered waived by any person who waives the Notice in writing, or who appears at a meeting in person or by proxy. V SEAL AND STOCK The Board will adopt the form of Seal and Stock Certificate to be used by the Corporation. Each Stockholder is entitled to a Stock Certificate, signed by the President or a Vice President, impressed with the Corporate Seal, and countersigned by the Secretary or Treasurer, or an Assistant. Stock issuance and transfer will be done by the Secretary or the designee thereof, as provided by the New Mexico Uniform Commercial Code. VI MONETARY MATTERS 1. Funds and Borrowing. The depository for corporate funds, the persons entitled to draw against these funds, the persons entitled to borrow on behalf of the Corporation, and the manner of accomplishing these matters will be determined by-the Board. 2. Dividends and Working Capital. The Board may, in its absolute discretion, and at such times as it may choose, set aside from the corporate net profits such amounts as they deem advisable as working capital, and may declare dividends from the corporation surplus or net profits. 3. Compensation. The compensation for Directors and Officers will be established by the Board. Compensation of employees will be established by the President subject to review by the Board. VII AMENDMENTS These By-laws may be amended by the majority vote of the Stockholders, and subject to revision by the Stockholders, by 'a majority vote of the Board. Exhibit 3.6 CERTIFICATE OF AMENDMENT OF BY-LAWS OF VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By resolution of the shareholders as of December 6, 1976, the Article III of the By-Laws was amended to read as follows: III OFFICERS 1. Number, Tenure, Qualification and Vacancies. The officers of the corporation will be a Chairman of the Board, President, Vice President, Secretary and Treasurer, and such other officers as the Board may decide, each of whom will be elected annually by the Board. Officers will hold office until their successors are elected and qualified and, except for the Chairman of the Board, need not be directors. An officer may resign or may be removed by the majority vote of the Board. Vacancies and newly created Offices shall be-filled by the Board. One person may bold more than one office, except that no person may be Chairman of the Board and Secretary or President and Secretary. Officers will perform the duties and have the powers assigned by the Board and incident to the office. 2. Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the company, and, subject to the control of the Board of Directors, shall be in general charge of the affairs of the company. He shall preside at all meeting of the stockholders and of .the Board of Directors. Notwithstanding the authority of the President hereinafter stated, all contracts of duration of six months or longer shall be subject to the approval of the Chairman of the Board and any contract involving the expenditure of funds in excess of $10,000.00 shall likewise be subject to the approval of the Chairman of the Board. 3. President. The President shall have the general charge of the business and affairs of the corporation. He may sign, with the Secretary or any other proper officer of the corporation thereunto authorized by the Board of Directors, Certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by the By-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of the President and such other duties as may prescribed by the Chairman of the Board of Directors or the Board itself from time to time. 4. Vice President. Any Vice President may perform the duties of the President during the disability or absence of the President. 5. Secretary. The Secretary or any Assistant Secretary during the absence or disability of the Secretary, will have custody of the seal, books, and records of the corporation, keep minutes of all meetings, will give all notices required, and, will authorize, execute, attest, deliver, and seal documents of the corporation. 6. Treasurer. The Treasurer or any Assistant Treasurer during the absence or disability of the treasurer will have custody of the funds, securities, property and books of account of the corporation, and will keep strict account of funds, securities and properties received owned and disbursed by the corporation." FIRST AMENDMENT TO THE BY-LAWS OF VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. The By-laws of Village Inn Pancake House of Albuquerque, Inc. were made amended to include the following numbered paragraphs by action of the Board of Directors taken on September 21, 1967. "VIII INDEMNITY Each director, officer and employee of the corporation, and their heirs, representatives and assigns, shall be indemnified by the corporation against expenses and liabilities reasonably incurred by him in connection with any action, suit or proceedings to which he may be made a party by reason of his being or having been a director, officer or employee. The foregoing right of indemnification shall not be exclusive of other rights to which any director, officer or employee may be entitled as a matter of law and shall include reimbursement of any amount and expenses paid or incurred in settling any such action, suit or proceeding when such settlement has been approved by the Board of Directors. IX INTERESTED PARTIES No transaction of the corporation will be affected because a Stockholder, Director, Officer or Employee of the corporation is interested in the transaction. Such interested parties will be counted for quorum purposes, and may vote, when the corporation considers the transaction. Such interested persons will not be liable to the corporation for the party's profits, or the corporation's losses from the transaction." BYLAWS AMENDMENT FOR VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. BYLAW AMENDMENT ADOPTED ON MARCH 19, 2004 Article VIII of the Bylaws is deleted in its entirety and replaced with the following: "1. Indemnification. Notwithstanding any provision in the New Mexico Business Corporation Act (the "NMBCA"), the Corporation shall not be obligated to indemnify any person who is a party to a proceeding because such person is or was a director or officer of the Corporation. Nothing in this Article shall preclude the Corporation from providing indemnification and advance of expenses to its directors and officers to the fullest extent permitted by the NMBCA." EX-4.1 12 c86044exv4w1.txt INDENTURE Exhibit 4.1 EXECUTION COPY ===================================== VICORP RESTAURANTS, INC. THE SECURITIES GUARANTORS PARTIES HERETO, AND WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE 10 1/2% Senior Notes due 2011 ============== INDENTURE Dated as of April 14, 2004 ============== ===================================== TABLE OF CONTENTS

ii SECTION 3.11. SEC Reports............................................................................. 78 SECTION 3.12. Future Securities Guarantors............................................................ 79 SECTION 3.13. Maintenance of Office or Agency......................................................... 79 SECTION 3.14. Corporate Existence..................................................................... 79 SECTION 3.15. Payment of Taxes and Other Claims....................................................... 80 SECTION 3.16. Payments for Consent.................................................................... 80 SECTION 3.17. Compliance Certificate.................................................................. 80 SECTION 3.18. Further Instruments and Acts............................................................ 80 SECTION 3.19. Limitation on Lines of Business......................................................... 80 SECTION 3.20. Statement by Officers as to Default..................................................... 80 ARTICLE IV SUCCESSOR COMPANY SECTION 4.1. Merger and Consolidation................................................................. 81 ARTICLE V REDEMPTION OF SECURITIES SECTION 5.1. Redemption............................................................................... 82 SECTION 5.2. Applicability of Article................................................................. 82 SECTION 5.3. Election to Redeem; Notice to Trustee.................................................... 82 SECTION 5.4. Selection by Trustee of Securities to Be Redeemed........................................ 82 SECTION 5.5. Notice of Redemption..................................................................... 83 SECTION 5.6. Deposit of Redemption Price.............................................................. 84 SECTION 5.7. Securities Payable on Redemption Date.................................................... 84 SECTION 5.8. Securities Redeemed in Part.............................................................. 84 ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.1. Events of Default........................................................................ 85 SECTION 6.2. Acceleration............................................................................. 88 SECTION 6.3. Other Remedies........................................................................... 88 SECTION 6.4. Waiver of Past Defaults.................................................................. 89 SECTION 6.5. Control by Majority...................................................................... 89 SECTION 6.6. Limitation on Suits...................................................................... 89 SECTION 6.7. Rights of Holders to Receive Payment..................................................... 90 SECTION 6.8. Collection Suit by Trustee............................................................... 90 SECTION 6.9. Trustee May File Proofs of Claim......................................................... 90 SECTION 6.10. Priorities.............................................................................. 90 SECTION 6.11. Undertaking for Costs................................................................... 91 ARTICLE VII TRUSTEE SECTION 7.1. Duties of Trustee........................................................................ 91

iii SECTION 7.2. Rights of Trustee........................................................................ 92 SECTION 7.3. Individual Rights of Trustee............................................................. 93 SECTION 7.4. Trustee's Disclaimer..................................................................... 93 SECTION 7.5. Notice of Defaults....................................................................... 94 SECTION 7.6. Reports by Trustee to Holders............................................................ 94 SECTION 7.7. Compensation and Indemnity............................................................... 94 SECTION 7.8. Replacement of Trustee................................................................... 95 SECTION 7.9. Successor Trustee by Merger.............................................................. 96 SECTION 7.10. Eligibility; Disqualification........................................................... 96 SECTION 7.11. Preferential Collection of Claims Against the Company................................... 96 SECTION 7.12. Trustee's Application for Instruction from the Company.................................. 96 SECTION 7.13. Paying Agents........................................................................... 97 ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.1. Discharge of Liability on Securities; Defeasance......................................... 97 SECTION 8.2. Conditions to Defeasance................................................................. 98 SECTION 8.3. Application of Trust Money............................................................... 100 SECTION 8.4. Repayment to the Company................................................................. 100 SECTION 8.5. Indemnity for U.S. Government Obligations................................................ 100 SECTION 8.6. Reinstatement............................................................................ 100 ARTICLE IX AMENDMENTS SECTION 9.1. Without Consent of Holders............................................................... 101 SECTION 9.2. With Consent of Holders.................................................................. 102 SECTION 9.3. Compliance with Trust Indenture Act...................................................... 103 SECTION 9.4. Revocation and Effect of Consents and Waivers............................................ 103 SECTION 9.5. Notation on or Exchange of Securities.................................................... 103 SECTION 9.6. Trustee To Sign Amendments............................................................... 104 ARTICLE X SECURITIES GUARANTEE SECTION 10.1. Securities Guarantee.................................................................... 104 SECTION 10.2. Limitation on Liability; Termination, Release and Discharge............................. 106 SECTION 10.3. Right of Contribution................................................................... 107 SECTION 10.4. No Subrogation.......................................................................... 107 ARTICLE XI MISCELLANEOUS SECTION 11.1. Trust Indenture Act Controls............................................................ 108 SECTION 11.2. Notices................................................................................. 108 SECTION 11.3. Communication by Holders with other Holders............................................. 109

iv SECTION 11.4. Certificate and Opinion as to Conditions Precedent...................................... 109 SECTION 11.5. Statements Required in Certificate or Opinion........................................... 109 SECTION 11.6. When Securities Disregarded............................................................. 110 SECTION 11.7. Rules by Trustee, Paying Agent and Registrar............................................ 110 SECTION 11.8. Legal Holidays.......................................................................... 110 SECTION 11.9. GOVERNING LAW........................................................................... 110 SECTION 11.10. No Recourse Against Others............................................................. 110 SECTION 11.11. Successors............................................................................. 110 SECTION 11.12. Multiple Originals..................................................................... 110 SECTION 11.13. Qualification of Indenture............................................................. 111 SECTION 11.14. Table of Contents; Headings............................................................ 111

ANNEX 3.4 Documents Containing Permitted Encumbrances EXHIBIT A Form of the Series A Note EXHIBIT B Form of the Series B Note EXHIBIT C Form of Indenture Supplement to Add Securities Guarantors v CROSS-REFERENCE TABLE
TIA Indenture Section Section ------- ------- 310(a)(1) ............................................................. 7.10 (a)(2) ............................................................. 7.10 (a)(3) ............................................................. N.A. (a)(4) ............................................................. N.A. (a)(5) ............................................................. 7.10 (b) ............................................................. 7.8; 7.10 (c) ............................................................. N.A. 311(a) ............................................................. 7.11 (b) ............................................................. 7.11 (c) ............................................................. N.A. 312(a) ............................................................. 2.5 (b) ............................................................. 11.3 (c) ............................................................. 11.3 313(a) ............................................................. 7.6 (b)(1) ............................................................. N.A. (b)(2) ............................................................. 7.6 (c) ............................................................. 7.6 (d) ............................................................. 7.6 314(a) ............................................................. 3.11; 3.17; 11.5 (b) ............................................................. N.A. (c)(1) ............................................................. 11.4 (c)(2) ............................................................. 11.4 (c)(3) ............................................................. N.A. (d) ............................................................. N.A. (e) ............................................................. 11.5 315(a) ............................................................. 7.1 (b) ............................................................. 7.5; 11.2 (c) ............................................................. 7.1 (d) ............................................................. 7.1 (e) ............................................................. 6.11 316(a)(last sentence) ............................................................. 11.6 (a)(1)(A) ............................................................. 6.5 (a)(1)(B) ............................................................. 6.4 (a)(2) ............................................................. N.A. (b) ............................................................. 6.7 (c) ............................................................. 6.5 317(a)(1) ............................................................. 6.8 (a)(2) ............................................................. 6.9 (b) ............................................................. 2.4 318(a) ............................................................. 11.1
N.A. means Not Applicable. Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. vi INDENTURE dated as of April 14, 2004, among VICORP RESTAURANTS, INC., a Colorado corporation (the "Company"), THE SECURITIES GUARANTORS (as defined herein) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America (the "Trustee"), as Trustee. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, each party hereto covenants and agrees as follows for the benefit of the other parties and for the equal and ratable benefit of all Holders of (i) the Company's 10 1/2% Senior Notes, Series A, due 2011, issued on the date hereof and the guarantees thereof by VI Acquisition Corp., a Delaware corporation and the parent company of the Company ("Holdings"), and certain of the Company's subsidiaries (the "Initial Securities"), (ii) if and when issued, an unlimited principal amount of additional 10 1/2% Senior Notes, Series A, due 2011 in a non-registered offering or 10 1/2% Senior Notes, Series B, due 2011 in a registered offering of the Company, and the guarantees thereof by Holdings and certain of the Company's subsidiaries that may be offered from time to time subsequent to the Issue Date (the "Additional Securities") and (iii) if and when issued, the Company's 10 1/2% Senior Notes, Series B, due 2011 and the guarantees thereof by Holdings and certain of the Company's subsidiaries that may be issued from time to time in exchange for Initial Securities or any Additional Securities in an offer registered under the Securities Act as provided in a Registration Rights Agreement (as hereinafter defined, the "Exchange Securities," and together with the Initial Securities and Additional Securities, the "Securities"). ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. Definitions. "Acquired Indebtedness" means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets. "Additional Assets" means: (1) any property, plant or equipment, including improvements on property, plant and equipment, to be used by the Company or a Restricted Subsidiary in a Related Business; (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary; or (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; provided, however, that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Related Business. "Additional Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the possession, directly or indirectly, through one or more intermediaries, of the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. "Applicable Premium" has the meaning ascribed to it in paragraph 5 of the form of Securities set forth in Exhibit A and Exhibit B hereto, which are hereby incorporated by reference and made part of this Indenture. "Asset Disposition" means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors' qualifying shares), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction. Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions: (1) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary; (2) the sale of Cash Equivalents in the ordinary course of business; (3) a disposition of inventory in the ordinary course of business; (4) a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business; (5) transactions permitted pursuant to Section 4.1; (6) an issuance of Capital Stock by a Restricted Subsidiary to the Company or to a Wholly-Owned Subsidiary; 2 (7) for purposes of Section 3.5 only, the making of a Permitted Investment or a disposition subject to Section 3.3; (8) an Asset Swap effected in compliance with Section 3.5; (9) dispositions of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than $1.0 million (with unused amounts in any calendar year being carried over to the next succeeding calendar year subject to maximum dispositions of $2.0 million in such next succeeding fiscal year); (10) dispositions in connection with Permitted Liens; (11) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; (12) the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims; (13) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Company and its Restricted Subsidiaries; and (14) foreclosure on assets. "Asset Swap" means concurrent purchase and sale or exchange of Related Business Assets between the Company or any of its Restricted Subsidiaries and another Person; provided that any cash received must be applied in accordance with Section 3.5. "Attributable Indebtedness" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Securities, compounded semi-annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments. "Bankruptcy Law" means Title 11 of the United States Code or any similar federal or state law for the relief of debtors. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted by the Board of Directors of such 3 Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "Business Day" means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. "Cash Equivalents" means (1) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States (provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than one year from the date of acquisition; (2) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition of the United States (provided that the full faith and credit of the United States is pledged in support thereof) and, at the time of acquisition, having a credit rating of "A" or better from either Standard & Poor's Ratings Services or Moody's Investors Service, Inc.; (3) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers' acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition thereof at least "A" or the equivalent thereof by Standard & Poor's Ratings Services, or "A" or the equivalent thereof by Moody's Investors Service, Inc., and having combined capital and surplus in excess of $250 million; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into with any bank meeting the qualifications specified in clause (3) above; 4 (5) commercial paper rated at the time of acquisition thereof at least "A-2" or the equivalent thereof by Standard & Poor's Ratings Services or "P-2" or the equivalent thereof by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and (6) interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above. "Change of Control" means: (1) prior to the first public offering of Common Stock of the Company or Holdings, the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority in the aggregate of the total voting power (whether by ownership of Voting Stock or contractual arrangements to vote such Voting Stock) of the Voting Stock of the Company or Holdings, whether as a result of the issuance of securities of the Company or Holdings, any merger, consolidation, liquidation or dissolution of the Company or Holdings, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (1) and clause (2) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of an entity (the "specified entity") held by any other entity (the "parent entity") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity); or (2) on the date of or after the first public offering of Common Stock referred to in clause (1), (A) any "person" or "group" of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have "beneficial ownership" of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company or Holdings (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of the Company or Holdings held by a parent entity, if such person or group "beneficially owns" (as defined above), directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent entity); and (B) the Permitted Holders "beneficially own" (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company or Holdings, as the case may be, (or its successor by merger, consolidation or purchase of all or substantially all of its assets) than such other person or group and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of the Company or Holdings or such successor (for the purposes of this clause, 5 such other person or group shall be deemed to beneficially own any Voting Stock of a specified entity held by a parent entity, if such other person or group "beneficially owns" directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent entity and the Permitted Holders "beneficially own" directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent entity); or (3) the first day on which a majority of the members of the Board of Directors of the Company or Holdings are not Continuing Directors; or (4) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company or Holdings and its Restricted Subsidiaries taken as a whole to any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; or (5) the adoption by the stockholders of the Company or Holdings of a plan or proposal for the liquidation or dissolution of the Company or Holdings. "Clearstream" means Clearstream Banking, societe anonyme, or any successor securities clearing agency. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person's common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock. "Company" means VICORP Restaurants, Inc. or its successors and assigns. "Consolidated Coverage Ratio" means as of any date of determination, with respect to any Person, the ratio of (x) the aggregate amount of Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are in existence to (y) Consolidated Interest Expense for such four fiscal quarters, provided, however, that: (1) if the Company or any Restricted Subsidiary: (a) has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the 6 amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or (b) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period; (2) if since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition, including, without limitation, by way of Sale/Leaseback Transaction, or disposed of any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is such an Asset Disposition: (a) the Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and (b) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly 7 attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (3) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business, group of related assets or line of business, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and (4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have Incurred any Indebtedness or discharged any Indebtedness, made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such transactions occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). If any Indebtedness that is being given pro forma effect bears an interest rate at the option of the Company, the interest rate shall be calculated by applying such optional rate chosen by the Company. "Consolidated EBITDA" for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (1) Consolidated Interest Expense; (2) Consolidated Income Taxes; 8 (3) consolidated depreciation expense; (4) consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 "Goodwill and Other Intangibles"; (5) other noncash charges reducing Consolidated Net Income (excluding any such noncash charge to the extent 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 not included in the calculation). Notwithstanding the preceding sentence, clauses (2) through (5) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (2) through (5) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated EBITDAR" for any period means, without duplication, the Consolidated EBITDA for such period, plus Consolidated Rent Expense, to the extent deducted in calculating Consolidated Net Income. Notwithstanding the preceding sentence, solely for the purposes of calculating Consolidated EBITDAR, Consolidated Rent Expense relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent Consolidated Rent Expense is in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Income Taxes" means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental authority. 9 "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, to the extent not included in such interest expense: (1) (a) interest expense attributable to Capitalized Lease Obligations and (b) the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with GAAP and the interest component of any deferred payment obligations; provided however, that if Attributable Indebtedness is classified as a Capitalized Lease Obligation, interest expense shall be calculated in accordance with subclause (a) above, rather than subclause (b); (2) amortization of debt discount and debt issuance cost (provided that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense); (3) noncash interest expense; (4) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; (5) the interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries; (6) costs associated with Hedging Obligations (including amortization of fees) provided, however, that if Hedging Obligations result in net benefits rather than costs, such benefits shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated Net Income; (7) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; (8) the product of (a) all dividends paid or payable, in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on Preferred Stock of its Restricted Subsidiaries payable to a party other than the Company or a Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP; (9) Receivable Fees; and 10 (10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company and its Restricted Subsidiaries) in connection with Indebtedness Incurred by such plan or trust. For the purpose of calculating the Consolidated Coverage Ratio in connection with the Incurrence of any Indebtedness described in the final paragraph of the definition of "Indebtedness," the calculation of Consolidated Interest Expense shall include all interest expense (including any amounts described in clauses (1) through (10) above) relating to any Indebtedness of the Company or any Restricted Subsidiary described in the final paragraph of the definition of "Indebtedness." For purposes of the foregoing, total interest expense will be determined (i) after giving effect to any net payments made or received by the Company and its Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance sheet of the Company. Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the Company or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense. "Consolidated Leverage Ratio" as of any date of determination, means the ratio of: (1) the sum of (A) the aggregate outstanding Indebtedness of the Company and its Restricted Subsidiaries (assuming all committed amounts under any revolving credit facility are fully drawn) and (B) the product of (i) eight and (ii) the Consolidated Rent Expense of the Company and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of determination, each as of the date of calculation on a consolidated basis in accordance with GAAP to (2) Consolidated EBITDAR of the Company and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination; provided, however, that: (3) if the Company or any Restricted Subsidiary: (a) has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio is an Incurrence of Indebtedness, Indebtedness at the end of such period and Consolidated EBITDAR and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving 11 credit facility outstanding on the date of such calculation will be deemed to be: (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or (b) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Indebtedness at the end of such period and Consolidated EBITDAR and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period; (4) if since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition, including, without limitation, by way of Sale/Leaseback Transactions, or disposed of any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Leverage Ratio is such an Asset Disposition: (a) Indebtedness at the end of such period will be reduced by an amount equal to the Indebtedness discharged, defeased or retired with the Net Available Cash of such Asset Disposition and the assumption of Indebtedness by the Transferee; (b) the Consolidated EBITDAR for such period will be reduced by an amount equal to the Consolidated EBITDAR (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated EBITDAR (if negative) directly attributable thereto for such period; and (c) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted 12 Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (5) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business or group of related assets or line of business, Indebtedness at the end of such period and Consolidated EBITDAR, Consolidated Interest Expense and Consolidated Rent Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and (6) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have Incurred any Indebtedness, discharged any Indebtedness, made any Asset Disposition or any Investment or acquisition of assets, or Incurred or discharged any obligations relating to operating leases that would have required an adjustment pursuant to clause (3), (4) or (5) above if made by the Company or a Restricted Subsidiary during such period, Indebtedness at the end of such period and Consolidated EBITDAR and Consolidated Rent Expense for such period will be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period. The pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act). "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its consolidated Restricted Subsidiaries determined in accordance with GAAP; provided, however, that there will not be included in such Consolidated Net Income: (1) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that: 13 (a) subject to the limitations contained in clauses (3), (4) and (5) below, the Company's equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below); and (b) the Company's equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary; (2) any net income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that: (a) subject to the limitations contained in clauses (3), (4) and (5) below, the Company's equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and (b) the Company's equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income; (3) any gain (loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Restricted Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person; (4) any extraordinary gain or loss; and (5) the cumulative effect of a change in accounting principles. "Consolidated Rent Expense" for any period means the total rental expense relating to operating leases of the Company and its consolidated Restricted Subsidiaries, whether paid or accrued, less cash rent income received by the Company and its consolidated Restricted Subsidiaries; provided that for the purposes of calculating the Consolidated Leverage Ratio of 14 the Company and its consolidated Restricted Subsidiaries, Consolidated Rent Expense will exclude any rental expense that would be classified as Indebtedness. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company or Holdings, as the case may be, who: (1) was a member of such Board of Directors on the date of this Indenture; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the relevant Board at the time of such nomination or election. "Credit Facility" means, with respect to the Company or any Subsidiary Guarantor, one or more credit facilities, including, without limitation, the Senior Secured Credit Agreement or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders and whether provided under the original Senior Secured Credit Agreement or any other credit or other agreement or indenture). "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary. "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Definitive Securities" means certificated Securities. "Disqualified Stock" means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event: (1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; (2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or (3) is redeemable at the option of the holder of the Capital Stock in whole or in part, in each case on or prior to the date that is 91 days after the earlier of the date (a) of the Stated Maturity of the Securities or (b) on which there are no Securities outstanding, provided that only 15 the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in this Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with the provisions of this Indenture described under Section 3.5 and Section 3.10 and such repurchase or redemption complies with Section 3.3. "DTC" means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Company. "Earn-Out Payment" means any contingent consideration based on future operating or other performance relating to an Investment of the type described in clause (1) or (2) of the definition "Permitted Investment," following the consummation of such Investment, based on criteria set forth in the documentation governing or relating to such Investment. "Euroclear" means Euroclear Bank S.A./N.V. or any successor securities clearing agency. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Exchange Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. "Fiscal Year" means the fiscal year of the Company ending on the Thursday nearest to October 31 of each year. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the date of this Indenture, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by 16 virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" will not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Guarantor Subordinated Obligation" means, with respect to a Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate in right of payment to the obligations of such Subsidiary Guarantor under its Securities Guarantee pursuant to a written agreement. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. "Holder" or "Securityholder" means a Person in whose name a Security is registered on the Registrar's books. "Holdings" has the meaning ascribed to it in the second introductory paragraph of this Indenture. "IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Incur" means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative to the foregoing. "Indebtedness" means, with respect to any Person on any date of determination (without duplication): (1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; (2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (3) the principal component of all obligations of such Person in respect of letters of credit (not cash collateralized), bankers' acceptances or other similar instruments (including reimbursement obligations with respect, in either case, thereto except to the extent such reimbursement obligation 17 relates to (i) a trade payable or (ii) the ordinary course operations of the Company or any of its Restricted Subsidiaries; provided that the underlying obligation would not otherwise constitute Indebtedness, and such obligation is satisfied within 30 days of Incurrence); (4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except trade payables), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto, excluding any Earn-Out Payment obligation relating to any Investment made in accordance with clause (1) or (2) of the definition of "Permitted Investment"; (5) Capitalized Lease Obligations and all Attributable Indebtedness of such Person; (6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Restricted Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock; (7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons; (8) the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person; and (9) to the extent not otherwise included in this definition, net obligations of such Person under Currency Agreements and Interest Rate Agreements (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time). The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Notwithstanding the foregoing, money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of interest on such Indebtedness shall not be deemed to be "Indebtedness" provided that such money is held to secure the payment of such interest. In addition, "Indebtedness" of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if: 18 (1) such Indebtedness is the obligation of a partnership or joint venture that is not a Restricted Subsidiary (a "Joint Venture"); (2) such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a "General Partner"); and (3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of such Person; and then such Indebtedness shall be included in an amount not to exceed: (a) the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or (b) if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount. "Indenture" means this Indenture as amended or supplemented from time to time. "Initial Purchasers" means, together, J.P. Morgan Securities Inc. and CIBC World Markets Corp., with respect to the Initial Securities. "Initial Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. "Investment" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment: 19 (1) Hedging Obligations entered into in the ordinary course of business and in compliance with this Indenture; (2) endorsements of negotiable instruments and documents in the ordinary course of business; and (3) an acquisition of assets, Capital Stock or other securities by the Company or a Restricted Subsidiary for consideration to the extent such consideration consists of Common Stock of the Company. For purposes of Section 3.3: (1) "Investment" will include the portion (proportionate to the Company's equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company's "Investment" in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary; and (2) any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value (as conclusively determined by the Board of Directors of the Company in good faith) of the Capital Stock of such Subsidiary not sold or disposed of. "Issue Date" means the closing date for the sale and issuance of the Initial Securities. "Legal Holiday" has the meaning ascribed to it in Section 11.8. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). 20 "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal (but not interest) pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred (including severance and relocation costs and expenses), and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition; (2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition; (3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and (4) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition. "Net Cash Proceeds," with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements). "Non-Recourse Debt" means Indebtedness of a Person: (1) as to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); (2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted 21 Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (3) the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries. "Non-U.S.Person" means a Person who is not a U.S. Person (as defined in Regulation S). "Officer" means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company. Officer of any Securities Guarantor has a correlative meaning. "Officers' Certificate" means a certificate signed by two Officers or by an Officer and either the Assistant Treasurer or the Assistant Secretary of the Company. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Pari Passu Indebtedness" means Indebtedness that ranks equally in right of payment to the Securities. "Permitted Holders" means Wind Point Partners IV, L.P., Wind Point Partners V, L.P. and any Affiliate or Related Person thereof. "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in: (1) the Company or a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that the primary business of such Restricted Subsidiary is a Related Business; (2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary business is a Related Business; (3) cash and Cash Equivalents; (4) receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company 22 or any such Restricted Subsidiary deems reasonable under the circumstances; (5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (6) loans or advances to employees (other than executive officers) made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; (7) Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor; (8) Investments made as a result of the receipt of noncash consideration from an Asset Disposition that was made pursuant to and in compliance with Section 3.5; (9) Investments in existence on the Issue Date; (10) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 3.2; (11) Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the time of such Investment not to exceed $5.0 million outstanding at any one time (with the fair market value of such Investment being measured at the time made and without giving effect to subsequent changes in value); (12) Guarantees issued in accordance with Section 3.2; and (13) any Asset Swap made in accordance with Section 3.5. "Permitted Liens" means, with respect to any Person: (1) Liens securing Indebtedness and other obligations under the Senior Secured Credit Agreement and related Hedging Obligations and liens on assets of Restricted Subsidiaries securing Guarantees of Indebtedness and other obligations of the Company under this Senior Secured Credit Agreement permitted to be Incurred under this Indenture in an aggregate principal amount at any one time outstanding not to exceed $50.0 million; 23 (2) pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business; (3) Liens imposed by law, including carriers', warehousemen's and mechanics' Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof; (4) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves required pursuant to GAAP have been made in respect thereof; (5) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers' acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness; (6) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (7) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same property securing such Hedging Obligation; (8) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; (9) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may 24 have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired; (10) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, purchase money obligations or other payments Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business; provided that: (a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under this Indenture and does not exceed the cost of the assets or property so acquired or constructed; and (b) such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto; (11) Liens arising solely by virtue of any statutory or common law provisions relating to banker's Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that: (a) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board; and (b) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution; (12) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business; (13) Liens existing on the Issue Date; (14) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary; 25 (15) Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary; (16) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or a Wholly-Owned Subsidiary; (17) Liens securing the Securities and Guarantees; (18) Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder; (19) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; (20) Liens on property of the Company or any Restricted Subsidiary that are the subject of a Sale/Leaseback Transaction securing Attributable Indebtedness Incurred in connection with such Sale/Leaseback Transaction; provided that the Net Available Cash from such Sale/Leaseback Transaction is applied in accordance with Section 3.5; (21) Liens securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at any one time not to exceed 10% of Total Tangible Assets at the time of determination. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision thereof or any other entity. "Preferred Stock" as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "Professional Services Agreement" means the Professional Services Agreement, dated as of June 13, 2003, among Holdings, Wind Point Investors IV, L.P. and Wind Point Investors V, L.P., as amended from time to time. 26 "Public Equity Offering" means a primary public offering for cash by the Company or Holdings, as the case may be, of its Common Stock, or options, warrants or rights with respect to its Common Stock made pursuant to a registration statement that has been declared effective by the SEC, other than public offerings with respect to the Company's or Holdings' Common Stock, or options, warrants or rights, registered on Form S-4 or S-8. A "Public Market" exists at any time with respect to the Common Stock of the Company or Holdings, as the case may be, if: (1) the Common Stock of the Company or Holdings, as the case may be, is then registered with SEC pursuant to Section 12(b) or 12(g) of Exchange Act and traded either on a national securities exchange or in the National Association of Securities Dealers Automated Quotation System; and (2) at least 15% of the total issued and outstanding Common Stock of the Company or Holdings, as the case may be, has been distributed prior to such time by means of an effective registration statement under the Securities Act of 1933, as amended. "QIB" means any "qualified institutional buyer" as such term is defined in Rule 144A. "Qualified Equity Offering" means a primary public or private sale for cash by the Company or Holdings, as the case may be, of its Common Stock, or options, warrants or rights with respect to its Common Stock, other than a public offering with respect to the Company's or Holdings' Common Stock, or options, warrants or rights, registered on Form S-4 or S-8. "Receivable" means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an "account," "chattel paper," "payment intangible" or "instrument" under the Uniform Commercial Code as in effect in the State of New York and any "supporting obligations" as so defined. "Receivables Fees" means any fees or interest paid to purchasers or lenders providing the financing in connection with a factoring agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a factoring agreement or other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off-balance sheet or through a Restricted Subsidiary or an Unrestricted Subsidiary. "Redemption Date" means, with respect to any redemption of Securities, the date of redemption with respect thereto. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or 27 discharge mechanism) (collectively, "refinance," "refinances," and "refinanced" shall have a correlative meaning) any Indebtedness existing on the date of this Indenture or Incurred in compliance with this Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that: (1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Securities, the Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Securities; (2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; (3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees Incurred in connection therewith); and (4) if the Indebtedness being refinanced is subordinated in right of payment to the Securities or the Securities Guarantee of a Subsidiary Guarantor, such Refinancing Indebtedness is subordinated in right of payment to the Securities or the Securities Guarantee of a Subsidiary Guarantor on terms at least as favorable to the holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Registered Exchange Offer" shall have the meaning set forth in the Registration Rights Agreement. "Registration Rights Agreement" means that certain registration rights agreement dated as of the date of this Indenture by and among the Company, the Securities Guarantors and the initial purchasers set forth therein; and with respect to any Additional Securities, one or more substantially similar registration rights agreement among the Company and the other parties thereto, as such agreement(s) may be amended from time to time. "Regulation S" means Regulation S under the Securities Act. 28 "Related Business" means any business which is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the date of this Indenture. "Related Person" with respect to any Permitted Holder means: (1) any controlling stockholder or a majority (or more) owned Subsidiary of such Permitted Holder or, in the case of an individual, any spouse or immediate family member of such Permitted Holder, any trust created for the benefit of such individual or such individual's estate, executor, administrator, committee or beneficiaries; or (2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a majority (or more) controlling interest of which consist of such Permitted Holder and/or such other Persons referred to in the immediately preceding clause (1). "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Period", with respect to any Securities, means the period of 40 consecutive days beginning on and including the later of (A) the day on which the Securities are first offered to Persons other than distributors (as defined in Regulation S), notice of which day shall be promptly given by the Company to the Trustee, and (B) the issue date with respect to such Securities. "Restricted Securities Legend" means the Private Placement Legend set forth in clause (1) of Section 2.1(d)(A) or the Regulation S Legend set forth in clause (2) of Section 2.1(d)(B), as applicable. "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Rule 144A" means Rule 144A under the Securities Act. "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person. "SEC" means the United States Securities and Exchange Commission. "Securities" has the meaning ascribed to it in the second introductory paragraph of this Indenture. "Securities Act" means the Securities Act of 1933 (15 U.S.C. Sections 77a-77aa), as amended, and the rules and regulations of the SEC promulgated thereunder. 29 "Securities Custodian" means the custodian with respect to the Global Securities (as appointed by DTC), or any successor Person thereto and shall initially be the Trustee. "Securities Guarantee" means, individually, any Guarantee of payment of the Securities and Exchange Securities issued in a registered exchange offer pursuant to a Registration Rights Agreement by a Securities Guarantor pursuant to the terms of this Indenture and any supplemental indenture thereto (including pursuant to Exhibit C). Each such Securities Guarantee will be in the form prescribed by this Indenture. "Securities Guarantor" means Holdings, and each Subsidiary of the Company in existence on the Issue Date that provides a guarantee under the Senior Secured Credit Agreement and any other Subsidiary of the Company that provides a Securities Guarantee in accordance with this Indenture; provided that upon the release or discharge of such Person from its Securities Guarantee in accordance with this Indenture, such Person shall cease to be a Securities Guarantor. "Securities Register" means the register of Securities, maintained by the Registrar, pursuant to Section 2.3. "Senior Secured Credit Agreement" means the Credit Facility to be entered into among the Company, Wells Fargo Foothill, Inc. as Administrative Agent and the lenders parties thereto from time to time, as the same may be amended, supplemented or otherwise modified from time to time. "Shelf Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof. "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities pursuant to a written agreement. "Subsidiary" of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership 30 interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company. "Subsidiary Guarantor" means each Subsidiary of the Company that is a Securities Guarantor. "TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture. "Total Tangible Assets" means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company, less goodwill, patents, trademarks, franchise rights and other intangible assets as determined in accordance with GAAP. "Treasury Rate" has the meaning ascribed to it in paragraph 5 of the form of Securities set forth in Exhibit A and Exhibit B hereto. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "Unrestricted Subsidiary" means: (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if: (1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; 31 (2) all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt; (3) such designation and the Investment of the Company in such Subsidiary complies with Section 3.3; (4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries; (5) such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation: (a) to subscribe for additional Capital Stock of such Person; or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (6) on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Company could Incur at least $1.00 of additional Indebtedness under the first paragraph of Section 3.2 (without giving effect to clause (2) thereof) on a pro forma basis taking into account such designation. "U.S. Government Obligations" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as 32 custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt. "Voting Stock" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors. "Wholly-Owned Subsidiary" means a Restricted Subsidiary, all of the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary. 33 SECTION 1.2. Other Definitions.
Defined in Term Section - ---- ------- "Additional Restricted Securities".......................................................... 2.1(b) "Affiliate Transaction"..................................................................... 3.8 "Agent"..................................................................................... 3.13 "Agent Members"............................................................................. 2.1(e) "Asset Disposition Offer"................................................................... 3.5 "Asset Disposition Offer Amount"............................................................ 3.5 "Asset Disposition Purchase Date"........................................................... 3.5 "Authenticating Agent"...................................................................... 2.2 "Certificate of Destruction"................................................................ 2.12 "Change of Control Offer"................................................................... 3.10 "Change of Control Payment"................................................................. 3.10 "Change of Control Payment Date"............................................................ 3.10 "Company Order"............................................................................. 2.2 "covenant defeasance option"................................................................ 8.1 "cross acceleration provision".............................................................. 6.1 "Defaulted Interest"........................................................................ 2.13 "Event of Default".......................................................................... 6.1 "Excess Proceeds"........................................................................... 3.5 "Exchange Global Note"...................................................................... 2.1(b) "Guarantor Obligations"..................................................................... 10.1 "Global Securities"......................................................................... 2.1(b) "Institutional Accredited Investor Global Note"............................................. 2.1(b)
34
Defined in Term Section - ---- ------- "Institutional Accredited Investor Notes"................................................... 2.1(b) "judgment default provision"................................................................ 6.1 "legal defeasance option"................................................................... 8.1 "Pari Passu Notes".......................................................................... 3.5 "payment default"........................................................................... 6.1 "Paying Agent".............................................................................. 2.3 "Permanent Regulation S Global Note"........................................................ 2.1(b) "Private Placement Legend".................................................................. 2.1(d) "protected purchaser"....................................................................... 2.9 "Registrar"................................................................................. 2.3 "Regulation S Global Note".................................................................. 2.1(b) "Regulation S Legend"....................................................................... 2.1(d) "Regulation S Notes"........................................................................ 2.1(b) "Resale Restriction Termination Date"....................................................... 2.6(a) "Restricted Payment"........................................................................ 3.3 "Restricted Securities"..................................................................... 2.1(a) "Rule 144A Global Note"..................................................................... 2.1(b) "Rule 144A Notes"........................................................................... 2.1(b) "Special Interest Payment Date"............................................................. 2.13(a) "Special Record Date"....................................................................... 2.13(a) "Successor Company"......................................................................... 4.1 "Temporary Regulation S Global Note"........................................................ 2.1(b)
35 SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company, and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined in the TIA by reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.4. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) "including" means including without limitation; (5) words in the singular include the plural and words in the plural include the singular; (6) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; (7) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; (8) all amounts expressed in this Indenture or in any of the Securities in terms of money refer to the lawful currency of the United States of America; (9) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 36 ARTICLE II THE SECURITIES SECTION 2.1. Form, Dating and Terms. (a) The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Initial Securities issued on the date hereof will be in an aggregate principal amount of $126,530,000. In addition, the Company may issue, from time to time in accordance with the provisions of this Indenture, Additional Securities and Exchange Securities. Furthermore, Securities may be authenticated and delivered upon registration or transfer, or in lieu of, other Securities pursuant to Section 2.6, 2.9, 2.11 or 9.5 or in connection with a Change of Control Offer pursuant to Section 3.10. The Initial Securities shall be known and designated as "10-1/2% Senior Notes, Series A, due 2011 of the Company. Additional Securities issued as securities bearing one of the restrictive legends described in Section 2.1(d) ("Restricted Securities") shall be known and designated as "10-1/2% Senior Notes, Series A, due 2011" of the Company. Additional Securities issued other than as Restricted Securities shall be known and designated as "10-1/2% Senior Notes, Series B, due 2011" of the Company, and Exchange Securities shall be known and designated as "10-1/2% Senior Notes, Series B, due 2011" of the Company. With respect to any Additional Securities, the Company shall set forth in (a) a Board Resolution of the Company and (b) (i) an Officers' Certificate or (ii) one or more indentures supplemental hereto, the following information: (1) the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture; (2) the issue price and the issue date of such Additional Securities, including the date from which interest shall accrue; and (3) whether such Additional Securities shall be Restricted Securities issued in the form of Exhibit A hereto and/or shall be issued in the form of Exhibit B hereto. The Initial Securities, the Additional Securities and the Exchange Securities shall be considered collectively as a single class for all purposes of this Indenture. Holders of the Initial Securities, the Additional Securities and the Exchange Securities will vote and consent together on all matters to which such Holders are entitled to vote or consent as one class, and none of the Holders of the Initial Securities, the Additional Securities or the Exchange Securities shall have the right to vote or consent as a separate class on any matter to which such Holders are entitled to vote or consent. If any of the terms of any Additional Securities are established by action taken pursuant to Board Resolutions of the Company, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate or the indenture supplemental hereto setting forth the terms of the Additional Securities. 37 (b) The Initial Securities are being offered and sold by the Company pursuant to a Purchase Agreement, dated April 6, 2004, among VICORP Restaurants, Inc., the Securities Guarantors and the Initial Purchasers. The Initial Securities and any Additional Securities (if issued as Restricted Securities) (the "Additional Restricted Securities") will be resold initially only to (A) QIBs in reliance on Rule 144A and (B) Non-U.S. Persons in reliance on Regulation S. Such Initial Securities and Additional Restricted Securities may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and IAIs in accordance with Rule 501 of the Securities Act, in each case, in accordance with the procedure described herein. Additional Securities offered after the date hereof may be offered and sold by the Company from time to time pursuant to one or more purchase agreements in accordance with applicable law. Initial Securities and Additional Restricted Securities offered and sold to QIBs in the United States of America in reliance on Rule 144A (the "Rule 144A Notes") shall be issued in the form of a permanent global Security substantially in the form of Exhibit A, which is hereby incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in Section 2.1(d) (the "Rule 144A Global Note"), deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. Initial Securities and Additional Securities offered and sold outside the United States of America (the "Regulation S Notes") in reliance on Regulation S shall initially be issued in the form of a temporary global Security (the "Temporary Regulation S Global Note"), without interest coupons. Beneficial interest in the Temporary Regulation S Global Note will be exchanged for beneficial interests in a corresponding permanent global Security, without interest coupons, substantially in the form of Exhibit A including appropriate legends as set forth in Section 2.1(d) (the "Permanent Regulation S Global Note" and, together with the Temporary Regulation S Global Note, each a "Regulation S Global Note") within a reasonable period after the expiration of the Restricted Period (as defined below) upon delivery of the certification contemplated by Section 2.7. Each Regulation S Global Note will be deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC in the manner described in this Article II for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at Euroclear or Clearstream. Prior to the 40th day after the later of the commencement of the offering of the Initial Securities and the Issue Date (such period through and including such 40th day, the "Restricted Period"), interests in the Temporary Regulation S Global Note may only be held through Euroclear or Clearstream (as indirect participants in DTC) unless exchanged for interests in a Global Security in accordance with the transfer and certification requirements described herein. Investors may hold their interests in the Regulation S Global Note directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations which are participants in such systems. After the expiration of the Restricted Period (but not earlier), investors may also hold such interests through organizations other than 38 Euroclear or Clearstream that are participants in DTC's system. Euroclear and Clearstream will hold such interests in the Regulation S Global Note on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries. Such depositaries, in turn, will hold such interests in the applicable Regulation S Global Note in customers' securities accounts in the depositaries' names on the books of DTC. The Regulation S Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. Initial Securities and Additional Securities resold to IAIs (the "Institutional Accredited Investor Notes") in the United States of America shall be issued in the form of a permanent global Security substantially in the form of Exhibit A including appropriate legends as set forth in Section 2.1(d) (the "Institutional Accredited Investor Global Note") deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Institutional Accredited Investor Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Institutional Accredited Investor Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. Exchange Securities exchanged for interests in the Rule 144A Notes, the Regulation S Notes and the Institutional Accredited Investor Notes will be issued in the form of a permanent global Security, substantially in the form of Exhibit B, which is hereby incorporated by reference and made a part of this Indenture, deposited with the Trustee as hereinafter provided, including the appropriate legend set forth in Section 2.1(d) (the "Exchange Global Note"). The Exchange Global Note will be deposited upon issuance with, or on behalf of, the Trustee as custodian for DTC, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Exchange Global Note may be represented by more than one certificate, if so required by DTC's rules regarding the maximum principal amount to be represented by a single certificate. The Rule 144A Global Note, the Regulation S Global Note, the Institutional Accredited Investor Global Note and the Exchange Global Note are sometimes collectively herein referred to as the "Global Securities." The principal of (and premium, if any) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York, State of New York, or at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 2.3; provided, however, that, at the option of the Company, each installment of interest may be paid by (i) check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Securities Register or (ii) wire transfer to an account located in the United States maintained by the payee. Payments in respect of Securities represented by a Global Security (including principal, 39 premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC. Payments in respect of Securities represented by Definitive Securities (including principal, premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate principal amount of Securities represented by Definitive Securities will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibit A and Exhibit B and in Section 2.1(d). The Company and the Trustee shall approve the forms of the Securities and any notation, endorsement or legend on them. Each Security shall be dated the date of its authentication. The terms of the Securities set forth in Exhibit A and Exhibit B are part of the terms of this Indenture and, to the extent applicable, the Company, the Securities Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms. (c) Denominations. The Securities shall be issuable only in fully registered form, without coupons, and only in denominations of $1,000 and an integral multiple thereof. (d) Restrictive Legends. Unless and until (i) an Initial Security is sold under an effective registration statement or (ii) an Initial Security is exchanged for an Exchange Security in connection with an effective registration statement, in each case pursuant to the Registration Rights Agreement or a similar agreement, (A) the Rule 144A Global Note and the Institutional Accredited Investor Global Note shall bear the following legend (the "Private Placement Legend") on the face thereof: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE 40 SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS. (B) the Regulation S Global Note shall bear the following legend (the "Regulation S Legend") on the face thereof: 41 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. 42 BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS. (C) Each Global Security, whether or not an Initial Security, shall bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. 43 (e) Book-Entry Provisions. (i) This Section 2.1(e) shall apply only to Global Securities deposited with the Trustee, as custodian for DTC. (ii) Each Global Security initially shall (x) be registered in the name of DTC for such Global Security or the nominee of DTC, (y) be delivered to the Trustee as custodian for DTC and (z) bear legends as set forth in Section 2.1(d). (iii) Members of, or participants in, DTC ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by DTC or by the Trustee as the custodian of DTC or under such Global Security, and DTC may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of a Holder of a beneficial interest in any Global Security. (iv) In connection with any transfer of a portion of the beneficial interest in a Global Security pursuant to subsection (f) of this Section 2.1 to beneficial owners who are required to hold Definitive Securities, the Securities Custodian shall reflect on its books and records the date and a decrease in the principal amount of such Global Security in an amount equal to the principal amount of the beneficial interest in the Global Security to be transferred, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, one or more Definitive Securities of like tenor and amount. (v) In connection with the transfer of an entire Global Security to beneficial owners pursuant to subsection (f) of this Section 2.1, such Global Security shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations. (vi) The registered Holder of a Global Security may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (vii) Any Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by (a) the Holder of such Global Security (or its agent) or (b) any Holder of a beneficial interest in such Global Security, and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book entry. (e) Definitive Securities. (i) Except as provided below, owners of beneficial interests in Global Securities will not be entitled to receive Definitive Securities. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Definitive 44 Securities in exchange for their beneficial interests in a Global Security upon written request in accordance with DTC's and the Registrar's procedures. In addition, Definitive Securities shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Security if (A) DTC notifies the Company that it is unwilling or unable to continue as depositary for such Global Security or DTC ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice or, (B) the Company in its sole discretion executes and delivers to the Trustee and Registrar an Officers' Certificate stating that such Global Security shall be so exchangeable or (C) an Event of Default has occurred and is continuing and the Registrar has received a request from DTC. In the event of the occurrence of any of the events specified in clause (A), (B) or (C) of the preceding sentence, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Securities in fully registered form without interest coupons. (i) Any Definitive Security delivered in exchange for an interest in a Global Security pursuant to Section 2.1(e)(iv) or (v) shall, except as otherwise provided by Section 2.6(c), bear the applicable legend regarding transfer restrictions applicable to the Definitive Security set forth in Section 2.1(d). (ii) In connection with the exchange of a portion of a Definitive Security for a beneficial interest in a Global Security, the Trustee shall cancel such Definitive Security, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, to the transferring Holder a new Definitive Security representing the principal amount not so transferred. SECTION 2.2. Execution and Authentication. One Officer shall sign the Securities for the Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually authenticates the Security. The signature of the Trustee on a Security shall be conclusive evidence that such Security has been duly and validly authenticated and issued under this Indenture. A Security shall be dated the date of its authentication. At any time and from time to time after the execution and delivery of this Indenture, the Trustee shall authenticate and make available for delivery: (1) Initial Securities for original issue on the Issue Date in an aggregate principal amount of $126,530,000 (2) subject to the terms of this Indenture, Additional Securities for original issue in an unlimited principal amount and (3) Exchange Securities for issue only in a Registered Exchange Offer or upon resale under an effective Shelf Registration Statement, and only in exchange for Initial Securities or Additional Securities of an equal principal amount, in each case upon a written order of the Company signed by two Officers of the Company (the "Company Order"). Such Company Order shall specify whether the Securities will be in the form of Definitive Securities or Global Securities, the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Securities, Additional Securities or Exchange Securities. 45 The Trustee may appoint an agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate the Securities. Any such instrument shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by the Authenticating Agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. In case the Company, pursuant to Article IV, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article IV, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Order of the successor Person, shall authenticate and make available for delivery Securities as specified in such order for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section 2.2 in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time outstanding for Securities authenticated and delivered in such new name. SECTION 2.3. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Company shall cause each of the Registrar and the Paying Agent to maintain an office or agency in New York, New York. The Registrar shall keep a register of the Securities and of their transfer and exchange (the "Securities Register"). The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent and the term "Registrar" includes any co-registrar. The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of each such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.7. Any of the Company's Wholly-Owned Subsidiaries organized in the United States may act as Paying Agent, Registrar or transfer agent. 46 The Company initially appoints the Trustee as Registrar and Paying Agent for the Securities. The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee. SECTION 2.4. Paying Agent to Hold Money in Trust. By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Security is due and payable, the Company shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay such principal, premium, if any, or interest when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by such Paying Agent for the payment of principal, premium, if any, of or interest on the Securities (whether such assets have been distributed to it by the Company or other obligors on the Securities) and shall notify the Trustee in writing of any default by the Company or any Securities Guarantor in making any such payment. If a Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by them as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for any funds or assets disbursed by such Paying Agent. Upon complying with this Section, the Paying Agent (if other than a Subsidiary of the Company) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Securities. SECTION 2.5. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, or to the extent otherwise required under the TIA, the Company, on its own behalf and on behalf of each of the Subsidiary Guarantors, shall furnish or cause the Registrar to furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders and the Company shall otherwise comply with TIA Section 312(a). SECTION 2.6. Transfer and Exchange. (a) The following provisions shall apply with respect to any proposed transfer of a Rule 144A Note or an Institutional Accredited Investor Note prior to the date which is two years after the later of the date of its original issue and the last date on which the Company or any Affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date"): 47 (i) a transfer of a Rule 144A Note or an Institutional Accredited Investor Note or a beneficial interest therein to a QIB shall be made upon the representation of the transferee in the form as set forth on the reverse of the Security that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; (ii) a transfer of a Rule 144A Note or an Institutional Accredited Investor Note or a beneficial interest therein to an IAI shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.7 from the proposed transferee and, if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them; and (iii) a transfer of a Rule 144A Note or an Institutional Accredited Investor Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.8 from the proposed transferee and, if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them. (b) The following provisions shall apply with respect to any proposed transfer of a Regulation S Note prior to the expiration of the Restricted Period: (i) a transfer of a Regulation S Note or a beneficial interest therein to a QIB shall be made upon the representation of the transferee, in the form of assignment on the reverse of the certificate, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; (ii) a transfer of a Regulation S Note or a beneficial interest therein to an IAI shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.7 from the proposed transferee and, if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them; and (iii) a transfer of a Regulation S Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.8 hereof from the proposed transferee and, 48 if requested by the Company or the Trustee, receipt by the Trustee or its agent of an opinion of counsel, certification and/or other information satisfactory to each of them. After the expiration of the Restricted Period, interests in the Regulation S Note may be transferred in accordance with applicable law without requiring the certification set forth in Section 2.8 or any additional certification. (c) Restricted Securities Legend. Upon the transfer, exchange or replacement of Securities not bearing a Restricted Securities Legend, the Registrar shall deliver Securities that do not bear a Restricted Securities Legend. Upon the transfer, exchange or replacement of Securities bearing a Restricted Securities Legend, the Registrar shall deliver only Securities that bear a Restricted Securities Legend unless (i) Initial Securities are being exchanged for Exchange Securities in a Registered Exchange Offer in which case the Exchange Securities shall not bear a Restricted Securities Legend, (ii) an Initial Security is being transferred pursuant to the Shelf Registration Statement or other effective registration statement or (iii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. Any Additional Securities sold in a registered offering shall not be required to bear the Restricted Securities Legend. (d) The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.1 or this Section 2.6. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable prior written notice to the Registrar. (e) Obligations with Respect to Transfers and Exchanges of Securities. (i) To permit registrations of transfers and exchanges, the Company shall, subject to the other terms and conditions of this Article II, execute and the Trustee shall authenticate Definitive Securities and Global Securities at the Registrar's request. (ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require the Holder to pay a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charges payable upon exchange or transfer pursuant to Sections 2.6 or 9.5). (iii) The Company (and the Registrar) shall not be required to register the transfer of or exchange of any Security for a period beginning (1) 15 days before the mailing of a notice of an offer to repurchase or redeem Securities and ending at the close of business on the day of such mailing or (2) 15 days before an interest payment date and ending on such interest payment date. (iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of, premium, if any, and interest on such Security and for all other purposes whatsoever, including without limitation the transfer 49 or exchange of such Security, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary. (v) Any Definitive Security delivered in exchange for an interest in a Global Security pursuant to Section 2.1(e) shall, except as otherwise provided by Section 2.6(c), bear the applicable legend regarding transfer restrictions applicable to the Definitive Security set forth in Section 2.1(d). (vi) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. (f) No Obligation of the Trustee. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in, DTC or other Person with respect to the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice (including any notice of redemption) or the payment of any amount or delivery of any Securities (or other security or property) under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Securities shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among DTC participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 2.7. Form of Certificate to be Delivered in Connection with Transfers to Institutional Accredited Investors. [Date] VICORP Restaurants, Inc. c/o Wells Fargo Bank, National Association Wells Fargo, National Association 50 MAC N9303-120 Sixth and Marquette Minneapolis, MN 55479 Attention: Corporate Trust Department Dear Sirs: This certificate is delivered to request a transfer of $[_________] principal amount of the 10-1/2% Senior Notes due 2011 (the "Securities") of VICORP Restaurants, Inc. (the "Company"). Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows: Name:_______________________________________________________________ Address:____________________________________________________________ Taxpayer ID Number:_________________________________________________ The undersigned represents and warrants to you that: 1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")) purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of our investment in the Securities and we invest in or purchase securities similar to the Securities in the normal course of our business. We and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act, to a person we reasonably believe is a "qualified institutional buyer" under Rule 144A of the Securities Act (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in a minimum principal amount of Securities of 51 $250,000 for investment purposes and not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Termination Date of the Securities pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee. TRANSFEREE:________________________ BY:________________________________ SECTION 2.8. Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S. [Date] VICORP Restaurants, Inc. c/o Wells Fargo Bank, National Association Wells Fargo, National Association MAC N9303-120 Sixth and Marquette Minneapolis, MN 55479 Attention: Corporate Trust Department Re: VICORP Restaurants, Inc. 10-1/2% Senior Notes due 2011 (the "Securities") Ladies and Gentlemen: In connection with our proposed sale of $[________] aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: 52 (a) the offer of the Securities was not made to a person in the United States; (b) either (i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (c) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of Regulation S, as applicable; and (d) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a restricted period and the provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may be. The Trustee and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:____________________________ Authorized Signature SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Securityholder (a) satisfies the Company or the Trustee within a reasonable time after such Securityholder has notice of such loss, destruction or wrongful taking and the Registrar has not registered a transfer prior to receiving such notification, (b) makes such request to the Company or Trustee prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and (c) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying 53 Agent and the Registrar from any loss which any of them may suffer if a Security is replaced, and, in the absence of notice to the Company, any Securities Guarantor or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon receipt of a Company Order the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require that such Holder pay a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of counsel and of the Trustee) in connection therewith. Every new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, any Securities Guarantor (if applicable) and any other obligor upon the Securities, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.10. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding in the event either of the Company or an Affiliate of the Company holds the Security, provided, however, that (i) for purposes of determining which are outstanding for consent or voting purposes hereunder, the provisions of Section 11.6 shall apply and (ii) in determining whether the Trustee shall be protected in making a determination whether the Holders of the requisite principal amount of outstanding Securities are present at a meeting of Holders of Securities for quorum purposes or have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum, consent or vote, only Securities which a Trust Officer of the Trustee actually knows to be held by the Company or an Affiliate of the Company shall not be considered outstanding. If a Security is replaced pursuant to Section 2.9 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a protected purchaser. A mutilated Security ceases to be outstanding upon surrender of such Security and replacement pursuant to Section 2.9. 54 If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Redemption Date or maturity date money sufficient to pay all principal, premium, if any, and accrued interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.11. Temporary Securities. In the event that Definitive Securities are to be issued under the terms of this Indenture, until such Definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form, and shall carry all rights, of Definitive Securities but may have variations that the Company consider appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Securities. After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at any office or agency maintained by the Company for that purpose and such exchange shall be without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, one or more Definitive Securities representing an equal principal amount of Securities. Until so exchanged, the Holder of temporary Securities shall in all respects be entitled to the same benefits under this Indenture as a Holder of Definitive Securities. SECTION 2.12. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and destroy such Securities in accordance with its internal policies and customary procedures including delivery of a certificate (a "Certificate of Destruction") describing such Securities disposed (subject to the record retention requirements of the Exchange Act) or deliver canceled Securities to the Company pursuant to written direction by an Officer of the Company. If the Company or any Securities Guarantor acquires any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.12. The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation for any reason other than in connection with a transfer or exchange. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, transferred, redeemed, repurchased or canceled, such Global Security shall be returned by DTC to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for Definitive Securities, transferred in exchange for an interest in another Global Security, redeemed, repurchased or canceled, the principal amount of Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records 55 of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. SECTION 2.13. Payment of Interest; Defaulted Interest. Interest on any Security which is payable, and is punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Security (or one or more predecessor Securities) is registered at the close of business on the regular record date for such payment at the office or agency of the Company maintained for such purpose pursuant to Section 2.3. Any interest on any Security which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular record date, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Securities (such defaulted interest and interest thereon herein collectively called "Defaulted Interest") shall be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective predecessor Securities) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date (not less than 30 days after such notice) of the proposed payment (the "Special Interest Payment Date"), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a record date (the "Special Record Date") for the payment of such Defaulted Interest, which date shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 11.2, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Securities (or their respective predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b). (b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment 56 pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of, transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 2.14. Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 2.15. CUSIP, Common Code and ISIN Numbers. The Company in issuing the Securities may use "CUSIP," "Common Code" and "ISIN" numbers and, if so, the Trustee shall use "CUSIP," "Common Code" and "ISIN" numbers in notices of redemption or purchase as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption or purchase and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption or purchase shall not be affected by any defect in or omission of such CUSIP, Common Code and ISIN numbers. The Company shall promptly notify the Trustee in writing of any change in the CUSIP, Common Code and ISIN numbers. ARTICLE III COVENANTS SECTION 3.1. Payment of Securities. The Company shall promptly pay the principal of, premium, if any, and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture immediately available funds sufficient to pay all principal, premium, if any, and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal, premium or interest payments hereunder. SECTION 3.2. Limitation on Indebtedness. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired 57 Indebtedness); provided, however, that the Company and the Subsidiary Guarantors may Incur Indebtedness if on the date thereof: (1) the Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is at least 2.00 to 1.00; (2) the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries is less than 6.50 to 1.00; and (3) no Default or Event of Default shall have occurred or be continuing or would occur as a consequence of Incurring the Indebtedness or transactions relating to such Incurrence. The first paragraph of this covenant shall not prohibit the Incurrence of the following Indebtedness: (1) Indebtedness of the Company Incurred pursuant to a Credit Facility in an aggregate amount up to $50.0 million less the aggregate principal amount of all principal repayments with proceeds from Asset Dispositions utilized in accordance with clause (3)(a) of Section 3.5 that permanently reduce the commitments thereunder; (2) Guarantees by the Company or the Subsidiary Guarantors of Indebtedness Incurred in accordance with the provisions of this Indenture; provided that in the event such Indebtedness that is being Guaranteed is a Subordinated Obligation or a Guarantor Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to Securities or the applicable Securities Guarantee, as applicable; (3) Indebtedness of the Company owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any Wholly-Owned Subsidiary; provided, however, (a) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Securities; (b) if a Subsidiary Guarantor is the obligor on such Indebtedness and the Company or another Subsidiary Guarantor is not the obligee, such Indebtedness is subordinated in right of payment to the Securities Guarantee of such Subsidiary Guarantor; and (c) (i) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Company or a Wholly-Owned Subsidiary of the Company; and 58 (ii) any sale or other transfer of any such Indebtedness to a Person other than the Company or a Wholly-Owned Subsidiary of the Company; shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be. (4) Indebtedness represented by (a) the Securities issued on the Issue Date, the Exchange Securities issued in a Registered Exchange Offer and the Securities Guarantees, (b) any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8), (9) and (10)) outstanding on the Issue Date and (c) any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (4) or clause (5) or Incurred pursuant to the first paragraph of this covenant; (5) Indebtedness of a Subsidiary Guarantor Incurred and outstanding on the date on which such Subsidiary Guarantor was acquired by the Company (other than Indebtedness Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Subsidiary Guarantor became a Restricted Subsidiary or was otherwise acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Restricted Subsidiary is acquired by the Company, the Company would have been able to Incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the Incurrence of such Indebtedness pursuant to this clause (5); (6) Indebtedness under Currency Agreements and Interest Rate Agreements; provided, that in the case of Currency Agreements, such Currency Agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business or in the case of Currency Agreements and Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Company) and substantially correspond in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Company or its Restricted Subsidiaries Incurred without violation of this Indenture; (7) the Incurrence by the Company or any Subsidiary Guarantors of Attributable Indebtedness and Indebtedness represented by Capitalized Lease Obligations, mortgage financings or purchase money obligations with respect to assets other than Capital Stock or other Investments, in each case Incurred for the purpose of financing all or any part of the 59 purchase price or cost of construction or improvements of property used in the business of the Company or such Subsidiary Guarantor, in an aggregate principal amount not to exceed $15.0 million at any time outstanding; (8) Indebtedness Incurred in respect of workers' compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or a Restricted Subsidiary in the ordinary course of business; (9) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary, provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (10) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence; and (11) in addition to the items referred to in clauses (1) through (10) above, Indebtedness of the Company and its Subsidiary Guarantors in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not exceed $10.0 million at any time outstanding. The Company shall not Incur any Indebtedness under the preceding paragraph if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations of the Company unless such Indebtedness will be subordinated to the Securities to at least the same extent as such Subordinated Obligations. No Subsidiary Guarantor shall Incur any Indebtedness if the proceeds thereof are used, directly or indirectly, to refinance any Guarantor Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the obligations of such Subsidiary Guarantor under its Securities Guarantee to at least the same extent as such Guarantor Subordinated Obligations. No Restricted Subsidiary may Incur any Indebtedness if the proceeds are used to refinance Indebtedness of the Company. For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant: 60 (1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, the Company, in its sole discretion, shall classify such item of Indebtedness on the date of Incurrence and only be required to include the amount and type of such Indebtedness in one of such clauses; (2) all Indebtedness outstanding on the date of this Indenture under the Senior Secured Credit Agreement shall be deemed initially Incurred on the Issue Date under clause (1) of the second paragraph of this covenant and not the first paragraph or clause (4) of the second paragraph of this covenant; (3) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included; (4) if obligations in respect of letters of credit are Incurred pursuant to a Credit Facility and are being treated as Incurred pursuant to clause (1) of the second paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included; (5) the principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor, shall be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof; (6) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and (7) the amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock shall not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. In addition, the Company shall not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of 61 such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Section 3.2, the Company shall be in Default of this covenant). For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company and the Subsidiary Guarantors may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. SECTION 3.3. Limitation on Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to: (1) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) except: (a) dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Company; and (b) dividends or distributions payable to the Company or a Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis); (2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company held by Persons other than the Company or a Restricted Subsidiary (other than in exchange for Capital Stock of the Company (other than Disqualified Stock)); 62 (3) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations or Guarantor Subordinated Obligations (other than the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement); or (4) make any Restricted Investment in any Person; (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) shall be referred to herein as a "Restricted Payment"), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (a) a Default shall have occurred and be continuing (or would result therefrom); or (b) the Company is not able to Incur an additional $1.00 of Indebtedness pursuant to the first paragraph under Section 3.2 (without giving effect to clause (2) thereof) after giving effect, on a pro forma basis, to such Restricted Payment; or (c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date would exceed the sum of: (i) 50% of Consolidated Net Income for the period (treated as one accounting period) from the beginning of the first fiscal quarter commencing after the date of this Indenture to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are in existence (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit); (ii) 100% of the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Issue Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless 63 such loans have been repaid with cash on or prior to the date of determination); (iii) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair market value of any other property, distributed by the Company upon such conversion or exchange); and (iv) the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries in any Person resulting from: (A) repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to the Company or any Restricted Subsidiary; or (B) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of "Investment") not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income. The provisions of the preceding paragraph shall not prohibit: (1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is 64 financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that (a) such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale of Capital Stock will be excluded from clause (c)(ii) of the preceding paragraph; (2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of Subordinated Obligations of the Company or any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Guarantor Subordinated Obligations made by exchange for or out of the proceeds of the substantially concurrent sale of Guarantor Subordinated Obligations that, in each case, is permitted to be Incurred pursuant to Section 3.2 and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments; (3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to Section 3.2 and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement shall be excluded in subsequent calculations of the amount of Restricted Payments; (4) so long as no Default or Event of Default has occurred and is continuing, any purchase or redemption of Subordinated Obligations or Guarantor Subordinated Obligations of a Subsidiary Guarantor from Net Available Cash to the extent permitted under Section 3.5 below; provided, however, that such purchase or redemption shall be excluded in subsequent calculations of the amount of Restricted Payments; (5) dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividends shall be included in subsequent calculations of the amount of Restricted Payments; (6) so long as no Default or Event of Default has occurred and is continuing, 65 (a) the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of the Company or any Restricted Subsidiary or any parent of the Company held by any existing or former employees or management of the Company or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause shall not exceed $2.0 million in the aggregate during any calendar year (with 50% of unused amounts in any calendar year being carried over to the next succeeding calendar year) and $4.0 million in the aggregate for all such redemptions and repurchases; provided, however, that the amount of any such repurchase or redemption shall be included in subsequent calculations of the amount of Restricted Payments provided, further, however, that such amount in any calendar year may be increased by an amount not to exceed the cash proceeds of key man life insurance policies received by the Company or any Restricted Subsidiary after the Issue Date, which amounts shall be excluded in subsequent calculations of Restricted Payments; and (b) loans or advances to employees or directors of the Company or any Restricted Subsidiary of the Company the proceeds of which are used to purchase Capital Stock of the Company, in an aggregate amount not in excess of $1.0 million at any one time outstanding; provided, however, that the amount of such loans and advances shall be included in subsequent calculations of the amount of Restricted Payments; provided, however, that the Company and its Subsidiaries shall comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances; (7) so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued in accordance with the terms of this Indenture to the extent such dividends are included in the definition of "Consolidated Interest Expense"; provided that the payment of such dividends shall be excluded from the calculation of Restricted Payments; (8) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however, that such repurchases shall be excluded from subsequent calculations of the amount of Restricted Payments; 66 (9) cash dividends or loans to Holdings in amounts equal to: (a) the amounts required for Holdings to pay any Federal, state or local income taxes to the extent that such income taxes are directly attributable to the income of the Company and its Restricted Subsidiaries and to pay franchise taxes and other fees required to maintain its legal existence; (b) the amounts required to enable Holdings to effect any transaction permitted under clause (6) of this paragraph, to the extent permitted by such clause, in lieu of the Company or any Restricted Subsidiary; (c) an amount not to exceed $0.1 million in any fiscal year to permit Holdings to pay its corporate overhead expenses Incurred in the ordinary course of business, and to pay salaries or other compensation of employees who perform services for both Holdings and the Company; and (d) the amounts Holdings is required to pay pursuant to the terms of the Professional Services Agreement, in an amount not to exceed in any fiscal year the greater of (i) $850,000 and (ii) 2% of Consolidated EBITDA for the immediately preceding fiscal year; provided, that such dividends or loans shall be excluded from subsequent calculations of the amount of Restricted Payments. (10) the payment of dividends on the Company's Common Stock (or dividends, distributions or advances to Holdings to allow Holdings to pay dividends on Holdings' Common Stock) following the first Public Equity Offering of the Company's Common Stock or of Holdings' Common Stock, as the case may be, after the Issue Date, of, whichever is earlier, (i) in the case of the first public offering of the Company's Common Stock, up to 6% per annum of the Net Cash Proceeds received by the Company in such Public Equity Offering or (ii) in the case of the first public offering of Holdings' Common Stock, up to 6% per annum of the amount contributed by Holdings to the Company from the Net Cash Proceeds received by Holdings in such public offering, in each case, other than public offerings of the Company or Holdings' Common Stock registered on Form S-4 or S-8; provided, however, that such payment shall be included in subsequent calculations of the amount of Restricted Payments; (11) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to Section 3.10 or (ii) at a purchase price not greater 67 than 100% of the principal amount thereof in accordance with provisions similar to Section 3.5; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such covenant with respect to the Securities and has completed the repurchase or redemption of all Securities validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; and (12) the declaration and payment of dividends in an amount not to exceed $46.1 million to repay existing subordinated indebtedness of Holdings being refinanced on the Issue Date with proceeds from the offering of the Securities and the Senior Secured Credit Agreement, provided that such dividends or loans shall be excluded from subsequent calculations of the amount of Restricted Payments. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value is estimated in good faith by the Board of Directors of the Company to exceed $5.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 3.3 were computed, together with a copy of any fairness opinion or appraisal required by this Indenture. SECTION 3.4. Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any Restricted Subsidiary (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock); (2) make any loans or advances to the Company or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred 68 by the Company or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or (3) transfer any of its property or assets to the Company or any Restricted Subsidiary. The preceding provisions shall not prohibit: (i) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the date of this Indenture and identified in an annex to this Indenture, including, without limitation, this Indenture and the Senior Secured Credit Agreement in effect on such date; (ii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Capital Stock or Indebtedness Incurred by a Restricted Subsidiary on or before the date on which such Restricted Subsidiary was acquired by the Company (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company or in contemplation of the transaction) and outstanding on such date, provided that any such encumbrance or restriction shall not extend to any assets or property of the Company or any other Restricted Subsidiary other than the assets and property so acquired; (iii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of this paragraph or this clause (iii) or contained in any amendment to an agreement referred to in clause (i) or (ii) of this paragraph or this clause (iii); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are no less favorable in any material respect to the Holders of the Securities than the encumbrances and restrictions contained in such agreements referred to in clauses (i) or (ii) of this paragraph on the Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary, whichever is applicable; (iv) in the case of clause (3) of the first paragraph of this covenant, any encumbrance or restriction: (a) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is 69 subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract; (b) contained in mortgages, pledges or other security agreements permitted under this Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or (c) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary; (v) (a) purchase money obligations for property acquired in the ordinary course of business and (b) Capitalized Lease Obligations permitted under this Indenture, in each case, that impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired; (vi) any restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; (vii) net worth provisions in leases and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business; and (viii) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order. SECTION 3.5. Limitation on Sales of Assets and Subsidiary Stock. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the fair market value (such fair market value to be determined on the date of contractually agreeing to such Asset Disposition), as determined in good faith by the Board of Directors of the Company (including as to the value of all noncash consideration), of the shares and assets subject to such Asset Disposition; 70 (2) at least 75% of the consideration from such Asset Disposition received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and (3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company or such Restricted Subsidiary, as the case may be: (a) first, to the extent the Company or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of any Indebtedness), to prepay, repay or purchase secured Indebtedness of the Company (other than any Disqualified Stock or Subordinated Obligations) or secured Indebtedness of a Wholly-Owned Subsidiary (other than any Disqualified Stock or Guarantor Subordinated Obligation of a Subsidiary Guarantor) (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (a), the Company or such Restricted Subsidiary shall retire such Indebtedness and shall cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; and (b) second, to the extent of the balance of such Net Available Cash after application in accordance with clause (a), to the extent the Company or such Restricted Subsidiary elects, to invest in Additional Assets within 360 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided that pending the final application of any such Net Available Cash in accordance with clause (a) or clause (b) above, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by this Indenture. Any Net Available Cash from Asset Dispositions that are not applied or invested as provided in the preceding paragraph shall be deemed to constitute "Excess Proceeds." On the 361st day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall be required to make an offer ("Asset Disposition Offer") to all Holders of Securities and to the extent required by the terms of other Pari Passu Indebtedness, to all holders of other Pari Passu Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Pari Passu Indebtedness with the proceeds from any Asset Disposition ("Pari Passu Notes"), to purchase the maximum principal amount of Securities and any such Pari Passu Notes to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Securities and Pari Passu Notes plus accrued and unpaid interest to the 71 date of purchase, in accordance with the procedures set forth in this Indenture or the agreements governing the Pari Passu Notes, as applicable, in each case in integral multiples of $1,000. To the extent that the aggregate amount of Securities and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to the other covenants contained in this Indenture. If the aggregate principal amount of Securities surrendered by Holders thereof and other Pari Passu Notes surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Securities and Pari Passu Notes to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Securities and Pari Passu Notes. Upon completion of such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero. The Asset Disposition Offer shall remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the "Asset Disposition Offer Period"). No later than five Business Days after the termination of the Asset Disposition Offer Period (the "Asset Disposition Purchase Date"), the Company shall purchase the principal amount of Securities and Pari Passu Notes required to be purchased pursuant to this covenant (the "Asset Disposition Offer Amount") or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Securities and Pari Passu Notes validly tendered in response to the Asset Disposition Offer. If the Asset Disposition Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Security is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Securities pursuant to the Asset Disposition Offer. On or before the Asset Disposition Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Securities and Pari Passu Notes or portions of Securities and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Securities and Pari Passu Notes so validly tendered and not properly withdrawn, in each case in integral multiples of $1,000. The Company shall deliver to the Trustee an Officers' Certificate stating that such Securities or portions thereof were accepted for payment by the Company in accordance with the terms of this covenant and, in addition, the Company shall deliver all certificates and notes required, if any, by the agreements governing the Pari Passu Notes. The Company or the Paying Agent, as the case may be, shall promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail or deliver to each tendering Holder of Securities or holder or lender of Pari Passu Notes, as the case may be, an amount equal to the purchase price of the Securities or Pari Passu Notes so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Company for purchase, and the Company will promptly issue a new Security, and the Trustee, upon delivery of an Officers' Certificate from the Company, shall authenticate and mail or deliver such new Security to such Holder, in a principal amount equal to any unpurchased portion of the Security surrendered; provided that each such new Security shall be in a principal amount of $1,000 or an integral multiple of $1,000. In addition, the Company 72 shall take any and all other actions required by the agreements governing the Pari Passu Notes. Any Security not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date. For the purposes of this covenant, the following shall be deemed to be cash: (1) the assumption by the transferee of Indebtedness (other than Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness of a Wholly-Owned Subsidiary (other than Guarantor Subordinated Obligations or Disqualified Stock of any Wholly-Owned Subsidiary that is a Subsidiary Guarantor) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition (in which case the Company will, without further action, be deemed to have applied such deemed cash to Indebtedness in accordance with clause (a) above); and (2) securities, notes or other obligations received by the Company or any Restricted Subsidiary from the transferee that are promptly converted within 90 days by the Company or such Restricted Subsidiary into cash or Cash Equivalents. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any Asset Swaps, unless: (1) at the time of entering into such Asset Swap and immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (2) in the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Board of Directors of the Company in good faith, in excess of $5.0 million, the terms of such Asset Swap have been approved by a majority of the members of the Board of Directors of the Company; and (3) in the event such Asset Swap involves the transfer by the Company or any Restricted Subsidiary of assets having an aggregate fair market value, as determined by the Board of Directors of the Company in good faith, in excess of $10.0 million, the Company has received a written opinion from an independent investment banking firm of nationally recognized standing that such Asset Swap is fair to the Company or such Restricted Subsidiary, as the case may be, from a financial point of view. The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company shall comply with the 73 applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of any conflict. SECTION 3.6. Limitation on Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Restricted Subsidiaries), whether owned on the date of this Indenture or acquired after that date, which Lien is securing any Indebtedness, unless contemporaneously with the Incurrence of such Liens effective provision is made to secure the Indebtedness due under this Indenture and the Securities or, in respect of Liens on any Restricted Subsidiary's property or assets, any Securities Guarantee of such Restricted Subsidiary, equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations or Guarantor Subordinated Obligations, as the case may be) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured. SECTION 3.7. Limitation on Sale/Leaseback Transactions. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any Sale/Leaseback Transaction with respect to any property unless: (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration in respect of such Sale/Leaseback Transaction at least equal to the fair market value, as measured for the transaction taken as whole (as evidenced by a resolution of the Board of Directors of the Company), of the property subject to such transaction; (2) the Company or such Restricted Subsidiary could have Incurred Indebtedness in an amount equal to the Attributable Indebtedness in respect of such Sale/Leaseback Transaction pursuant to Section 3.2 (without giving effect to clause (2) of the first paragraph thereof); (3) the Company or such Restricted Subsidiary would be permitted to create a Lien on the property subject to such Sale/Leaseback Transaction without securing the Securities pursuant to Section 3.6; and (4) the Sale/Leaseback Transaction is treated as an Asset Disposition and all of the conditions of this Indenture described in Section 3.5 (including the provisions concerning the application of Net Available Cash) are satisfied with respect to such Sale/Leaseback Transaction, treating all of the consideration received in such Sale/Leaseback Transaction as Net Available Cash for purposes of such covenant; provided, that in the case of assets disposed of in a Sale/Leaseback Transaction that occurs within 270 days of the acquisition of such assets by the Company or any Restricted Subsidiary, such Net Available Cash shall be reduced by the amount paid (or payable) by the Company and its Restricted Subsidiaries for such assets. 74 SECTION 3.8. Limitation on Affiliate Transactions. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless: (1) the terms of such Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate; (2) in the event such Affiliate Transaction involves an aggregate consideration in excess of $5.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company and by a majority of the members of such Board of Directors having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (1) above); and (3) in the event such Affiliate Transaction involves an aggregate consideration in excess of $10.0 million, the Company has received a written opinion from an independent investment banking, accounting or appraisal firm of nationally recognized standing that such Affiliate Transaction is not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate. The preceding paragraph shall not apply to: (1) any Restricted Payment (other than a Restricted Investment) permitted to be made pursuant to Section 3.3; (2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Capital Stock of the Company, restricted stock plans, long-term incentive plans, stock appreciation rights plans, expense reimbursement, severance or other employment related agreements, participation plans or similar employee benefits plans and/or indemnity provided on behalf of officers and employees approved by the Board of Directors of the Company; (3) loans or advances to employees, officers or directors in the ordinary course of business of the Company or any of its Restricted Subsidiaries but in any event not to exceed $1.0 million in the aggregate outstanding (without giving effect to the forgiveness of any such loans) at any one time with respect to all loans or advances made since the Issue Date; provided, however, that the Company and its Subsidiaries shall comply in 75 all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith relating to such loans and advances; (4) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and Guarantees issued by the Company or a Restricted Subsidiary for the benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance with Section 3.2; (5) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, directors of the Company or any Restricted Subsidiary; (6) the performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any agreement to which the Company or any of its Restricted Subsidiaries is a party as of or on the Issue Date and identified on a schedule to this Indenture on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date shall be permitted to the extent that its terms are not more disadvantageous, taken as a whole, to the Holders of the Securities than the terms of the agreements in effect on the Issue Date; and (7) the payment of amounts contemplated by the Professional Services Agreement, in an amount not to exceed in any fiscal year the greater of (i) $850,000 and (ii) 2% of Consolidated EBITDA for the immediately preceding fiscal year. SECTION 3.9. Limitation on Sale of Capital Stock of Restricted Subsidiaries. The Company shall not, and shall not permit any Restricted Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any Restricted Subsidiary or to issue any of the Voting Stock of a Restricted Subsidiary (other than, if necessary, shares of its Voting Stock constituting directors' qualifying shares) to any Person except: (1) to the Company or a Wholly-Owned Subsidiary; or (2) in compliance with Section 3.5 and immediately after giving effect to such issuance or sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary. Notwithstanding the preceding paragraph, the Company or any Restricted Subsidiary may sell all the Voting Stock of a Restricted Subsidiary as long as the Company or such Restricted Subsidiary complies with the terms of Section 3.5. SECTION 3.10. Change of Control. Upon the occurrence of a Change of Control, unless the Company has exercised its right to redeem all of the Securities pursuant to Article V, each Holder of Securities shall have the right to require the Company to repurchase all 76 or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount of the Securities plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Within 30 days following any Change of Control, unless the Company has exercised its right to redeem all of the Securities pursuant to Article V, the Company shall mail a notice (the "Change of Control Offer") to each Holder, with a copy to the Trustee, stating: (1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount of such Securities plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on a record date to receive interest on the relevant interest payment date) (the "Change of Control Payment"); (2) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the "Change of Control Payment Date"); and (3) the procedures determined by the Company, consistent with this Indenture, that a Holder must follow in order to have its Securities repurchased. On the Change of Control Payment Date, the Company shall, to the extent lawful: (1) accept for payment all Securities or portions of Securities (in integral multiples of $1,000) properly tendered pursuant to the Change of Control Offer; (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Securities or portions of Securities so tendered; and (3) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers' Certificate stating the aggregate principal amount of Securities or portions of Securities being purchased by the Company. The Paying Agent shall promptly mail to each Holder of Securities so tendered the Change of Control Payment for such Securities, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Security equal in principal amount to any unpurchased portion of the Securities surrendered, if any; provided that each such new Security shall be in a principal amount of $1,000 or an integral multiple thereof. If the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Security is registered at the close of business on such record 77 date, and no additional interest shall be payable to Holders who tender pursuant to the Change of Control Offer. Prior to mailing a Change of Control Offer, and as a condition to such mailing (i) the requisite holders of each issue of Indebtedness issued under an indenture or other agreement that may be violated by such payment shall have consented to such Change of Control Offer being made and waived the event of default, if any, caused by the Change of Control or (ii) the Company shall repay all outstanding Indebtedness issued under an indenture or other agreement that may be violated by a payment to the Holders of Securities under a Change of Control Offer or the Company must offer to repay all such Indebtedness, and make payment to the holders of such Indebtedness that accept such offer, and obtain waivers of any event of default from the remaining holders of such Indebtedness. The Company covenants to effect such repayment or obtain such consent within 30 days following any Change of Control, it being a default of the Change of Control provisions of this Indenture if the Company fails to comply with such covenant. The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer. The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue of the conflict. SECTION 3.11. SEC Reports. Notwithstanding that Holdings may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted by the Exchange Act, Holdings shall file with the SEC, and make available to the Trustee and the registered Holders of the Securities, the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act within the time periods specified therein. In the event that Holdings is not permitted to file such reports, documents and information with the SEC pursuant to the Exchange Act, Holdings shall nevertheless make available such Exchange Act information to the Trustee and the Holders of the Securities as if Holdings were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act within the time periods specified therein. If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes to the financial statements and in Management's Discussion and Analysis of Results of Operations and Financial Condition, of the financial condition and results of operations of Holdings, the Company and the Restricted Subsidiaries of the Company. 78 SECTION 3.12. Future Securities Guarantors. After the Issue Date, the Company shall cause each Restricted Subsidiary that Guarantees any Indebtedness of the Company or any of its Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any and interest on the Securities on a senior basis and all other obligations under this Indenture. Notwithstanding the foregoing, in the event the Subsidiary Guarantor is released and discharged in full from all of its obligations under Guarantees of (1) any Credit Facility and (2) all other Indebtedness of the Company and its Restricted Subsidiaries, then the Securities Guarantee of such Securities Guarantor shall be automatically and unconditionally released or discharged; provided, that such Restricted Subsidiary has not Incurred any Indebtedness in reliance on its status as a Subsidiary Guarantor pursuant to Section 3.2 unless such Subsidiary Guarantor's obligations under such Indebtedness so Incurred are satisfied in full and discharged. SECTION 3.13. Maintenance of Office or Agency. The Company shall maintain an office or agency where the Securities may be presented or surrendered for payment, where, if applicable, the Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The agency of Wells Fargo Bank, National Association (the "Agent") currently located at Wells Fargo Bank, National Association, 608 2nd Avenue South, Minneapolis, Minnesota 55479 shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company shall give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Agent of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation. The Company shall give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency. SECTION 3.14. Corporate Existence. Except as otherwise provided in this Article III, Article IV and Section 10.2(b), Holdings and the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership, limited liability company or other existence of each Securities Guarantor in accordance with their respective organizational documents (as the same may be amended from time to time) and the rights (charter and statutory) licenses and franchises of the Company and each such Securities Guarantor; provided, however, that the Company shall not be required to preserve any such right, license or franchise or the corporate, partnership, limited liability company or other existence of any Securities Guarantor if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders; 79 provided, further, that the foregoing shall not prohibit a sale, transfer, or conveyance of a Restricted Subsidiary or any of its assets in compliance with the terms of this Indenture. SECTION 3.15. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary and (ii) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a material liability or lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Company), are being maintained in accordance with GAAP or where the failure to effect such payment will not be disadvantageous to the Holders. SECTION 3.16. Payments for Consent. Neither the Company nor any of its Restricted Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fees or otherwise, to any Holder of any Securities for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid or is paid to all Holders of the Securities that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment. SECTION 3.17. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each Fiscal Year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default or Event of Default and whether or not the signers know of any Default or Event of Default that occurred during the previous Fiscal Year. If they do, the certificate shall describe the Default or Event of Default, its status and the action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA Section 314(a)(4). SECTION 3.18. Further Instruments and Acts. Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 3.19. Limitation on Lines of Business. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Related Business. Holdings shall not, and shall not permit any of its Subsidiaries other than the Company and its Subsidiaries to, engage in any business other than investing directly in the Capital Stock of the Company. SECTION 3.20. Statement by Officers as to Default. The Company shall deliver to the Trustee, as soon as possible and in any event within 10 days after the Company becomes aware of the occurrence of any Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the 80 details of such Event of Default or Default, its status and the actions which the Company are taking or propose to take with respect thereto. ARTICLE IV SUCCESSOR COMPANY SECTION 4.1. Merger and Consolidation. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) the resulting, surviving or transferee Person (the "Successor Company") will be a corporation organized and existing under the laws of the United States of America, any State of the United States or the District of Columbia and the Successor Company (if not the Company) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture; (2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (3) immediately after giving effect to such transaction, the Successor Company would be able to Incur at least an additional $1.00 of Indebtedness pursuant to the first paragraph of Section 3.2 (without giving effect to clause (2) thereof); (4) each Securities Guarantor (unless it is the other party to the transactions above, in which case clause (1) shall apply) shall have by supplemental indenture confirmed that its Securities Guarantee shall apply to such Person's obligations in respect of this Indenture and the Securities and its obligations under the Registration Rights Agreement shall continue to be in effect; and (5) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. For purposes of this Section 4.1, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, 81 would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. The predecessor company shall be released from its obligations under this Indenture and the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, but, in the case of a lease of all or substantially all its assets, the predecessor Company shall not be released from the obligation to pay the principal of and interest on the Securities. Notwithstanding the preceding clause (3), (x) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (y) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax benefits; provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company will not be required to comply with the preceding clause (5). ARTICLE V REDEMPTION OF SECURITIES SECTION 5.1. Redemption. The Securities may be redeemed, as a whole or from time to time in part, subject to the conditions and at the redemption prices specified in paragraph 5 of the form of Securities set forth in Exhibit A and Exhibit B hereto, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest to the Redemption Date. SECTION 5.2. Applicability of Article. Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article. SECTION 5.3. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities pursuant to Section 5.1 shall be evidenced by a Board Resolution of the Company. In case of any redemption at the election of the Company, the Company shall, upon not later than the earlier of the date that is 45 days prior to the Redemption Date fixed by the Company or the date on which notice is given to the Holders (except as provided in Section 5.5 or unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to Section 5.4. Any such notice may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 5.4. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities are to be redeemed at any time pursuant to an optional redemption, the particular Securities to be redeemed shall be selected not more than 60 days prior to the 82 Redemption Date by the Trustee, from the outstanding Securities not previously called for redemption, in compliance with the requirements of the principal securities exchange, if any, on which such Securities are listed, or, if such Securities are not so listed, on a pro rata basis among the classes of Securities, by lot or by such other method as the Trustee shall deem fair and appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of the principal of the Securities; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the method it has chosen for the selection of Securities and the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 5.5. Notice of Redemption. Notice of redemption shall be given in the manner provided for in Section 11.2 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. At the Company's request, the Trustee shall give notice of redemption in the Company's name and at the Company's expense; provided, however, that the Company shall deliver to the Trustee, at least 45 days prior to the Redemption Date, an Officers' Certificate requesting that the Trustee give such notice at the Company's expense and the form of notice that shall include the following items. All notices of redemption shall state: (1) the Redemption Date, (2) the redemption price and the amount of accrued interest to the Redemption Date payable as provided in Section 5.7, if any, (3) if less than all outstanding Securities are to be redeemed, the identification of the particular Securities (or portion thereof) to be redeemed, as well as the aggregate principal amount of Securities to be redeemed and the aggregate principal amount of Securities to be outstanding after such partial redemption, (4) in case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such Security, the Holder will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed, (5) that on the Redemption Date the redemption price (and accrued interest, if any, to the Redemption Date payable as provided in Section 5.7) will become due and payable upon each such Security, or the portion thereof, to be redeemed, and, unless the 83 Company defaults in making the redemption payment, that interest on Securities called for redemption (or the portion thereof) will cease to accrue on and after said date, (6) the place or places where such Securities are to be surrendered for payment of the redemption price and accrued interest, if any, (7) the name and address of the Paying Agent, (8) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price, (9) the CUSIP, Common Code and ISIN numbers, if applicable, and that no representation is made as to the accuracy or correctness of the CUSIP, Common Code and ISIN numbers, if applicable, if any, listed in such notice or printed on the Securities, and (10) the paragraph of the Securities pursuant to which the Securities are to be redeemed. SECTION 5.6. Deposit of Redemption Price. Prior to 10:00 a.m., New York City time, on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or any of the Company's Subsidiaries is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the redemption price of, and accrued interest on, all the Securities which are to be redeemed on that date, other than Securities or portions of Securities called for redemption that are beneficially owned by the Company and have been delivered by the Company to the Trustee for cancellation. SECTION 5.7. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities or portions of Securities so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to the Redemption Date), and on and after such date (unless the Company shall default in the payment of the redemption price and accrued interest) such Securities shall cease to bear interest and the only right of the Holders thereof will be to receive payment of the redemption price and, subject to the next sentence, unpaid interest on such Securities to the Redemption Date. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the redemption price, together with accrued interest, if any, to the Redemption Date (subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the unpaid principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Securities. SECTION 5.8. Securities Redeemed in Part. Any Security which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 3.13 (with, if the Company or the Trustee so require, due endorsement by, or a written instrument of transfer in 84 form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security at the expense of the Company, a new Security or Securities, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered, provided, that each such new Security will be in a principal amount of $1,000 or integral multiple thereof. ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.1. Events of Default. Each of the following constitutes an "Event of Default": (1) default in any payment of interest or additional interest (as required by the Registration Rights Agreement) on any Security when due, continued for 30 days; (2) default in the payment of principal of or premium, if any, on any Security when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise; (3) failure by the Company or any Securities Guarantor to comply with its obligations under Section 4.1 or clause (b) of Section 10.2, respectively; (4) failure by the Company or any Securities Guarantor to comply for 30 days after notice with any of its obligations pursuant to Section 3.2 through Section 3.12 inclusive, Section 3.16 and Section 3.19 (in each case, other than a failure to purchase Securities which will constitute an Event of Default under clause (2) above and other than a failure to comply with Section 4.1 which is covered by clause (3)); (5) the Company or a Securities Guarantor defaults in the performance of or a breach by the Company or a Securities Guarantor of any other covenant or agreement in this Indenture or under the Securities (other than those referred to in (1), (2), (3) or (4) above) and such default continues for 60 days after the notice specified below; (6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or 85 guarantee now exists, or is created after the date of this Indenture, which default: (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness within the grace period provided in such Indebtedness ("payment default"); or (b) results in the acceleration of such Indebtedness prior to its maturity (the "cross acceleration provision"); and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (7) (a) the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding; (ii) consents to the entry of judgment, decree or order for relief against it in an involuntary case or proceeding; (iii) consents to the appointment of a Custodian of it or for any substantial part of its property; (iv) makes a general assignment for the benefit of its creditors; (v) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it; (vi) takes any corporate action to authorize or effect any of the foregoing; or (vii) takes any comparable action under any foreign laws relating to insolvency; or (b) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief in an involuntary case against the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would 86 constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law; (ii) appoints a Custodian for all or substantially all of the property of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law; or (iii) orders the winding up or liquidation of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law; and (iv) in each case the order, decree or relief remains unstayed and in effect for 60 days; (8) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days (the "judgment default provision"); or (9) any Securities Guarantee ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared null and void in a judicial proceeding or any Securities Guarantor denies or disaffirms its obligations under this Indenture or its Securities Guarantee, and such Securities Guarantor fails to cure such default for 30 days after notice. However, a default under clauses (4), (5) and (9) of this paragraph shall not constitute an Event of Default until the Trustee or the Holders of 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified in clauses (4), (5) and (9) of this paragraph after receipt of such notice. The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company or any Securities Guarantor with the intention of avoiding payment of the premium that the Company would have had to pay if the 87 Company then had elected to redeem the Securities pursuant to the optional redemption provisions of this Indenture or was required to repurchase the Securities, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Securities. If an Event of Default occurs prior to April 15, 2008 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company or any Securities Guarantor with the intention of avoiding the prohibition on redemption of the Securities prior to April 15, 2008, the maximum premium specified in this Indenture shall also become immediately due and payable (or if no premium is contemplated for the time at which such Event of Default occurs, the premium shall be calculated in accordance with the fifth paragraph of Section 5 of Exhibit A and Exhibit B) to the extent permitted by law upon the acceleration of the Securities. SECTION 6.2. Acceleration. If an Event of Default (other than an Event of Default described in clause (7) of Section 6.1) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the outstanding Securities by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Securities to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest shall be due and payable immediately. In the event of a declaration of acceleration of the Securities because an Event of Default described in clause (6) of Section 6.1 has occurred and is continuing, the declaration of acceleration of the Securities shall be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to clause (6) of Section 6.1 shall be remedied or cured by the Company or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Securities would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Securities that became due solely because of the acceleration of the Securities, have been cured or waived. If an Event of Default described in clause (7) of Section 6.1 occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of (or premium, if any) or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. 88 SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in principal amount of the outstanding Securities by notice to the Trustee may (a) waive, by their consent (including, without limitation consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities), an existing Default or Event of Default and its consequences except a Default or Event of Default in the payment of the principal of, or premium, if any, or interest on a Security and (b) rescind any such acceleration with respect to the Securities and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Securities that have become due solely by such declaration of acceleration, have been cured or waived. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right. SECTION 6.5. Control by Majority. The Holders of a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Sections 7.1 and 7.2, that the Trustee determines is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.6. Limitation on Suits. Subject to the provisions of this Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Securities unless: (1) such Holder has previously given the Trustee notice that an Event of Default is continuing; (2) Holders of at least 25% in principal amount of the outstanding Securities have requested the Trustee to pursue the remedy; (3) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period. 89 A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture (including, without limitation, Section 6.6), the right of any Holder to receive payment of principal of, premium, if any, or interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.8. Collection Suit by Trustee. If an Event of Default specified in clauses (1) or (2) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.7. SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Securityholders allowed in any judicial proceedings relative to the Company, its Subsidiaries or its or their respective creditors or properties and, unless prohibited by law or applicable regulations, may be entitled and empowered to participate as a member of any official committee of creditors appointed in such matter and may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.7. SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.7; SECOND: to Securityholders for amounts due and unpaid on the Securities for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and THIRD: to the Company or, to the extent the Trustee collects any amount for any Securities Guarantor, to such Securities Guarantor. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid. 90 SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Securities. ARTICLE VII TRUSTEE SECTION 7.1. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (a) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, opinions or orders furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (b) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5. 91 (c) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (d) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (f) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. (g) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses (including reasonable attorneys' fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.2. Rights of Trustee. Subject to Section 7.1: (a) The Trustee may conclusively rely on any document (whether in its original or facsimile form) reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. The Trustee shall receive and retain financial reports and statements of the Company as provided herein, but shall have no duty to review or analyze such reports or statements to determine compliance under covenants or other obligations of the Company. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate and/or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, unless the Trustee's conduct constitutes willful misconduct or negligence. (e) The Trustee may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect of any action taken, 92 omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the corporate trust office of the Trustee specified in Section 11.2, and such notice references the Securities and this Indenture. (g) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. (h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby. (i) The Trustee shall not be deemed to have knowledge of any fact or matter unless such fact or matter is known to a Trust Officer of the Trustee. (j) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may request, and in the absence of bad faith or willful misconduct on its part, rely upon an Officers' Certificate and an Opinion of Counsel. SECTION 7.3. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company, Subsidiary Guarantors or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. In addition, the Trustee shall be permitted to engage in transactions with the Company; provided, however, that if the Trustee acquires any conflicting interest the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest, (ii) apply to the SEC for permission to continue acting as Trustee or (iii) resign. SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, shall not be accountable for the Company's use of the proceeds from the sale of the Securities, shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee or any money paid to the Company pursuant to the terms of this Indenture and shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. 93 SECTION 7.5. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if a Trust Officer has actual knowledge thereof, the Trustee shall mail by first class mail to each Securityholder at the address set forth in the Securities Register notice of the Default or Event of Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Security (including payments pursuant to the optional redemption or required repurchase provisions of such Security, if any), the Trustee may withhold the notice if and so long as its board of directors, a committee of its board of directors or a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 7.6. Reports by Trustee to Holders. As promptly as practicable after each May 15 beginning May 15, 2004 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall mail to each Securityholder a brief report dated as of such July 15 that complies with TIA Section 313(a) if and to the extent required thereby. The Trustee also shall comply with TIA Section 313(b) and TIA Section 313(c). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof and the Trustee shall comply with TIA Section 313(d). SECTION 7.7. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder as the Company and the Trustee shall from time to time agree in writing. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Securityholders and reasonable costs of counsel retained by the Trustee in connection with the delivery of an Opinion of Counsel or otherwise, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify the Trustee against any and all loss, liability, damages, claims or expense (including reasonable attorneys' fees and expenses) incurred by it without negligence, bad faith or willful misconduct on its part in connection with the administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture (including this Section 7.7) and of defending itself against any claims (whether asserted by any Securityholder, the Company or otherwise). The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and shall have the authority to settle the claim, and the Trustee shall provide reasonable cooperation at the Company's expense in the defense. The Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel, provided that the Company shall not be required to pay such fees and expenses if they assume the Trustee's defense, and, in the reasonable judgment of outside counsel to the Trustee, there is no conflict of interest between the Company and the Trustee in connection with such defense. Notwithstanding the foregoing, the Company 94 and the Subsidiary Guarantors need not reimburse any expense or indemnify against any loss, liability or expense which is finally determined by a court of competent jurisdiction to have been incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture. The Trustee's right to receive payment of any amounts due under this Section 7.7 shall not be subordinate to any other liability or Indebtedness of the Company. The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in clause (7) or clause (8) of Section 6.1 with respect to the Company, the expenses are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.8. Replacement of Trustee. The Trustee may resign at any time by so notifying the Company in writing. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the removed Trustee in writing and may appoint a successor Trustee with the Company's written consent, which consent will not be unreasonably withheld. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10 hereof; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns or is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee as described in the preceding paragraph, or if a vacancy exists in the office of the Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.7. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Securities may petition, at the Company's expense, any court of competent jurisdiction for the appointment of a successor Trustee. 95 If the Trustee fails to comply with Section 7.10, unless the Trustee's duty to resign is stayed as provided in TIA Section 310(b), any Securityholder, who has been a bona fide holder of a Security for at least six months, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. SECTION 7.9. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; provided that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall only apply to its successor or successors by merger, consolidation or conversion. SECTION 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee that satisfies the requirements of TIA Section 310(a)(1), (2) and (5) in every respect. The Trustee shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. SECTION 7.11. Preferential Collection of Claims Against the Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. SECTION 7.12. Trustee's Application for Instruction from the Company. Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case 96 of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted. SECTION 7.13. Paying Agents. The Company shall cause each Paying Agent other than the Trustee to execute and deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.13: (1) that it will hold all sums held by it as agent for the payment of principal of, or premium, if any, or interest on, the Securities (whether such sums have been paid to it by the Company or by any obligor on the Securities) in trust for the benefit of Holders of the Securities or the Trustee; (2) that it will at any time during the continuance of any Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it together with a full accounting thereof; and (3) that it will give the Trustee written notice within three Business Days of any failure of the Company (or by any obligor on the Securities) in the payment of any installment of the principal of, premium, if any, or interest on, the Securities when the same shall be due and payable. ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.1. Discharge of Liability on Securities; Defeasance. (a) Subject to Section 8.1(c), when (i)(x) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.9) for cancellation or (y) all outstanding Securities not theretofore delivered for cancellation have become due and payable, whether at maturity or upon redemption or will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption pursuant to Article V hereof and the Company or any Securities Guarantor irrevocably deposit or cause to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders money in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Subsidiary Guarantor is a party or by which the Company or any Subsidiary Guarantor is bound; (iii) the Company or any Subsidiary Guarantor have paid or caused to be paid all sums payable under this Indenture and the Securities; and (iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Securities at maturity or the Redemption 97 Date, as the case may be, then upon demand of the Company (accompanied by an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with) this Indenture shall cease to be of further effect with respect to the Securities and the Trustee shall acknowledge satisfaction and discharge of this Indenture, at the cost and expense of the Company. (b) Subject to Sections 8.1(c) and 8.2, the Company at any time may terminate (i) all its obligations under the Securities and this Indenture ("legal defeasance option"), and after giving effect to such legal defeasance, any omission to comply with such obligations shall no longer constitute a Default or Event of Default or (ii) their obligations under Section 3.2, Section 3.3, Section 3.4, Section 3.5, Section 3.6, Section 3.7, Section 3.8, Section 3.9, Section 3.10, Section 3.11, Section 3.12, Section 3.16, Section 3.19 and Section 4.1(3), and the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply with such covenants shall no longer constitute a Default or an Event of Default under Section 6.1(3) (only with respect to Section 4.1(3)), Section 6.1(4), Section 6.1(6), Section 6.1(7) (with respect to Significant Subsidiaries), Section 6.1(8) (with respect only to Significant Subsidiaries) and Section 6.1(9), and the events specified in such Sections shall no longer constitute an Event of Default (clause (ii) being referred to as the "covenant defeasance option"), but except as specified above, the remainder of this Indenture and the Securities shall be unaffected thereby. The Company may exercise its legal defeasance option notwithstanding its prior exercise of their covenant defeasance option. If the Company exercises its covenant defeasance option, the Company may elect to have any Securities Guarantees in effect at such time terminate. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Section 6.1(3) (only with respect to Section 4.1(3)), Section 6.1(4), Section 6.1(6), Section 6.1(7) (with respect only to Significant Subsidiaries), Section 6.1(8) (with respect only to Significant Subsidiaries) or Section 6.1(9). Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminate. (b) Notwithstanding the provisions of Sections 8.1(a) and (b), the Company's obligations in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.9, 2.10, 2.11, 2.12, 3.1, 3.13, 3.14, 3.15, 3.17, 3.18, 3.20, 6.7, 7.7 and 7.8 and in this Article VIII shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall survive. SECTION 8.2. Conditions to Defeasance. The Company may exercise its legal defeasance option or its covenant defeasance option only if: 98 (1) the Company irrevocably deposits in trust with the Trustee for the benefit of the Holders money in U.S. dollars or U.S. Government Obligations or a combination thereof, the principal of and interest (without reinvestment) on which will be sufficient, or a combination thereof sufficient, for the payment of principal, premium, if any, and interest on the Securities to maturity or redemption, as the case may be; (2) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; (3) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or, with respect to certain bankruptcy or insolvency Events of Default, on the later of (i) the 91st day after such date of deposit or (ii) the day ending on the day following the expiration of the longest preference period under any bankruptcy law applicable to the Company in respect of such deposit; (4) such legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a Default under, this Indenture or any other agreement or instrument to which Holdings or any of its Subsidiaries is a party or by which Holdings or any of its Subsidiaries is bound; (5) the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that (A) the Securities and (B) assuming no intervening bankruptcy of the Company between the date of deposit and the 91st day following the deposit and that no Holder of the Securities is an insider of the Company, after the 91st day following the deposit, the trust funds, will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' right generally; (6) the Company delivers to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; (7) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) in the United States stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable federal income tax law, in either case to 99 the effect that, and based thereon such Opinion of Counsel shall confirm that, the Securityholders will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (8) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary assumptions and exclusions) in the United States to the effect that the Securityholders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred; and (9) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the legal defeasance or covenant defeasance, as the case may be, as contemplated by this Article VIII have been complied with. SECTION 8.3. Application of Trust Money. The Trustee shall hold in trust all money or U.S. Government Obligations (including proceeds thereof) deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture and the Securities to the Holders of the Securities of all sums due in respect of the payment of principal of, premium, if any, and accrued interest on the Securities. SECTION 8.4. Repayment to the Company. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money, U.S. Government Obligations or securities held by them upon payment of all the obligations under this Indenture. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal of or premium, if any, or interest on the Securities that remains unclaimed by the Holders thereof for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as unsecured general creditors. SECTION 8.5. Indemnity for U.S. Government Obligations. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the 100 Company and each Subsidiary Guarantor under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if the Company or the Subsidiary Guarantors have made any payment of principal, premium, if any, interest on or principal of any Securities because of the reinstatement of its obligations, the Company or Subsidiary Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. The Trustee's rights under this Article VIII shall survive termination of this Indenture. ARTICLE IX AMENDMENTS SECTION 9.1. Without Consent of Holders. The Company, the Securities Guarantors and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to provide for the assumption by a successor corporation of the obligations of the Company or any Securities Guarantor under this Indenture; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; (4) to add Guarantees with respect to the Securities or release a Securities Guarantor upon its designation as an Unrestricted Subsidiary; provided, however, that the designation is in accord with the applicable provisions of this Indenture; (5) to secure the Securities; (6) to add to the covenants of the Company and the Securities Guarantors for the benefit of the Holders or surrender any right or power conferred upon the Company; (7) to make any change that does not adversely affect the rights of any Holder; (8) to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA; 101 (9) to provide for the issuance of the Exchange Securities which will have terms substantially identical in all respects to the Securities (except that the transfer restrictions contained in the Securities shall be modified or eliminated, as appropriate) and which shall be treated, together with any outstanding Securities, as a single class of securities; or (10) to provide for the appointment of a successor trustee, provided that the successor trustee be otherwise qualified and eligible to act as such under the terms of this Indenture. After an amendment or supplement under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment or supplement. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment or supplement under this Section. SECTION 9.2. With Consent of Holders. The Company, the Securities Guarantors and the Trustee may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities). Any past default or compliance with any provision of this Indenture or the Securities may be waived with the written consent of the Holders of a majority in principal amount of the Securities then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities). However, without the consent of each Securityholder affected, an amendment, supplement or waiver may not (with respect to any Securities held by a non-consenting Holder of Securities): (1) reduce the principal amount of Securities outstanding whose Holders must consent to an amendment; (2) reduce the stated rate of or extend the stated time for payment of interest or additional interest on any Security; (3) reduce the principal of or extend the Stated Maturity of any Security; (4) reduce the premium payable upon the redemption or repurchase of any Security or change the time at which any Security may or shall be redeemed or repurchased as described under Section 3.5, Section 3.10 (including an amendment to the definition of "Change of Control") or Article V or any similar provision, whether through an amendment or waiver of Section 3.5, Section 3.10 or Article V, definitions or otherwise; (5) make any Security payable in money other than that stated in the Security; (6) impair the right of any Holder to receive payment of, premium, if any, principal of and interest on such Holder's Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Securities; 102 (7) make any change to the amendment provisions which require each Holder's consent or to the waiver provisions; or (8) modify the Securities Guarantees in any manner adverse to the Holders. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. A consent to any amendment, supplement or waiver under this Indenture by any Holder of the Securities given in connection with a tender or exchange of such Holder's Securities will not be rendered invalid by such tender or exchange. After an amendment or supplement under this Section becomes effective, the Company shall mail to Securityholders a notice briefly describing such amendment. The failure to give such notice to all Securityholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.3. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 9.4. Revocation and Effect of Consents and Waivers. A consent to an amendment, supplement or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. Any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective or otherwise in accordance with any related solicitation documents. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in any of clauses (1) through (8) of Section 9.2, in which case the amendment, supplement, waiver or other action shall bind each Securityholder who has consented to it and every subsequent Securityholder that evidences the same debt as the consenting Holder's Securities. An amendment, supplement or waiver shall become effective upon receipt by the Trustee of the requisite number of written consents under Section 9.1 or 9.2 as applicable. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Securityholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Securityholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall become valid or effective more than 120 days after such record date. SECTION 9.5. Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the 103 Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment, supplement or waiver the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in relying upon an Officers' Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Subsidiary Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.3). ARTICLE X SECURITIES GUARANTEE SECTION 10.1. Securities Guarantee. Subject to the provisions of this Article X, each Securities Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, jointly and severally with each other Securities Guarantor, to the extent lawful, to each Holder of the Securities, and the Trustee the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Securities and all other obligations and liabilities of the Company under this Indenture (including without limitation interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Company or any Securities Guarantor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding and the obligations under Section 7.7) (all the foregoing being hereinafter collectively called the "Guarantor Obligations"). Each Securities Guarantor agrees that the Guarantor Obligations will rank equally in right of payment with other Indebtedness of such Securities Guarantor, except to the extent such other Indebtedness is subordinate to the Guarantor Obligations. Each Securities Guarantor further agrees (to the extent permitted by law) that the Guarantor Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article X notwithstanding any extension or renewal of any Guarantor Obligation. Each Securities Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guarantor Obligations and also waives notice of protest for nonpayment. Each Securities Guarantor waives notice of any default under the Securities or the Guarantor Obligations. 104 Each Securities Guarantor further agrees that its Securities Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guarantor Obligations. Except as set forth in Section 10.2, the obligations of each Securities Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guarantor Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantor Obligations or otherwise. Without limiting the generality of the foregoing, to the extent lawful, the obligations of each Securities Guarantor herein shall not be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Guarantor Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Securities Guarantor, or (f) any change in the ownership of the Company; (g) by any default, failure or delay, willful or otherwise, in the performance of the Guarantor Obligations, or (h) by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Securities Guarantor or would otherwise operate as a discharge of such Securities Guarantor as a matter of law or equity. Subject to the provisions of Section 3.12, each Securities Guarantor agrees that its Securities Guarantee herein shall remain in full force and effect until payment in full of all the Guarantor Obligations or such Securities Guarantor is released from its Securities Guarantee upon the merger or the sale of all the Capital Stock or assets of the Securities Guarantor in compliance with Section 10.2. Each Securities Guarantor further agrees that its Securities Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any of the Guarantor Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Securities Guarantor by virtue hereof, upon the failure of the Company to pay any of the Guarantor Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Securities Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such Guarantor Obligations then due and owing and (ii) accrued and unpaid interest on such Guarantor Obligations then due and owing (but only to the extent not prohibited by law). Each Securities Guarantor further agrees that, as between such Securities Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guarantor Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes 105 of its Securities Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guarantor Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guarantor Obligations, such Guarantor Obligations (whether or not due and payable) shall forthwith become due and payable by the Securities Guarantor for the purposes of this Securities Guarantee. Each Securities Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under this Section. SECTION 10.2. Limitation on Liability; Termination, Release and Discharge. (a) Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Securities Guarantor hereunder will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Securities Guarantor (including, without limitation, any guarantees under the Senior Secured Credit Agreement) and after giving effect to any collections from or payments made by or on behalf of any other Securities Guarantor in respect of the obligations of such other Securities Guarantor under its Securities Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Securities Guarantor under its Securities Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally. (b) In addition, the Company shall not permit any Securities Guarantor to consolidate with, merge with or into any person (other than another Securities Guarantor) and shall not permit the conveyance, transfer or lease of substantially all of the assets of any Securities Guarantor unless: (1) (x) the resulting, surviving or transferee Person shall be a corporation, partnership, trust or limited liability company organized and existing under the laws of the United States of America, any State of the United States or the District of Columbia and such Person (if not such Securities Guarantor) shall expressly assume, by supplemental indenture, executed and delivered to the Trustee, all the obligations of such Securities Guarantor under its Securities Guarantee; (y) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of such transaction as having been Incurred by such Person or such Restricted Subsidiary at the time of such transaction), no Default of Event of Default shall have occurred and be continuing; and (z) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; or 106 (2) in the case of a Securities Guarantor that is a Subsidiary Guarantor, the transaction is made in compliance with Section 3.5, Section 3.9 and Section 4.1. Upon the sale or disposition of a Securities Guarantor (by merger, consolidation, the sale of its Capital Stock or the sale of all or substantially all of its assets) and whether or not the Securities Guarantor is the surviving corporation in such transaction, to a Person which is not the Company or a Securities Guarantor, which sale or disposition is otherwise in compliance with this Indenture, such Securities Guarantor will be automatically released from all its obligations under this Indenture and its Securities Guarantee and the Registration Rights Agreement and such Securities Guarantee will terminate; provided, however, that (x) the sale or other disposition is in compliance with this Indenture, including Section 3.5, Section 3.9 and Section 4.1 and (y) all the obligations of such Securities Guarantor under all Credit Facilities and related documentation and any other agreements relating to any other Indebtedness of the Company or its Restricted Subsidiaries terminate upon consummation of such transaction. (c) Each Securities Guarantor shall be deemed released from all its obligations under this Indenture, its Securities Guarantee and the Registration Rights Agreement and such Securities Guarantee will terminate upon the legal defeasance or covenant defeasance of the Securities pursuant to the provisions of Article VIII hereof. (d) Each Securities Guarantor shall be released from its obligations under this Indenture and its Securities Guarantee if the Company designates such Securities Guarantor as an Unrestricted Subsidiary and such designation complies with the other applicable provisions of this Indenture. SECTION 10.3. Right of Contribution. Each Securities Guarantor hereby agrees that to the extent that any Securities Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Securities Guarantees, such Securities Guarantor shall be entitled to seek and receive contribution from and against the Company, or any other Securities Guarantor who has not paid its proportionate share of such payment. The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Securities Guarantor to the Trustee and the Holders and each Securities Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Securities Guarantor hereunder. SECTION 10.4. No Subrogation. Notwithstanding any payment or payments made by each Securities Guarantor hereunder, no Securities Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Securities Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guarantor Obligations, nor shall any Securities Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Securities Guarantor in respect of payments made by such Securities Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Guarantor Obligations are paid in full. If any amount shall be paid to any Securities Guarantor on account of such subrogation rights at any time when all of the Guarantor Obligations shall not have been paid in full, such amount shall be held by such Securities Guarantor in trust for the Trustee and 107 the Holders, segregated from other funds of such Securities Guarantor, and shall, forthwith upon receipt by such Securities Guarantor, be turned over to the Trustee in the exact form received by such Securities Guarantor (duly indorsed by such Securities Guarantor to the Trustee, if required), to be applied against the Guarantor Obligations. ARTICLE XI MISCELLANEOUS SECTION 11.1. Trust Indenture Act Controls. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the provision required by the TIA shall control. Each Subsidiary Guarantor in addition to performing its obligations under its Securities Guarantee shall perform such other obligations as may be imposed upon it with respect to this Indenture under the TIA. SECTION 11.2. Notices. Any notice or communication shall be in writing and delivered in person, sent by facsimile, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows: if to the Company: VICORP Restaurants, Inc. 400 West 48th Avenue Denver, CO 80216 Attention: Anthony Carroll Chief Financial Officer with copies to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, IL 60606 Attention: Bradley Schmarak, Esq. if to the Trustee: Wells Fargo Bank, National Association MAC N9303-120 Sixth and Marquette Minneapolis, MN 55479 Attention: Corporate Trust Department 108 The Company or the Trustee by written notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication to the Company or the Subsidiary Guarantors shall be deemed to have been given or made as of the date so delivered if personally delivered; when answered back, if telexed; when receipt is acknowledged, if telecopied; and five calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a registered Securityholder shall be mailed to the Securityholder at the Securityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee shall be effective only upon receipt. SECTION 11.3. Communication by Holders with other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 11.4. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 11.5. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 109 (3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers' Certificate or on certificates of public officials. SECTION 11.6. When Securities Disregarded. In determining whether the Holders of the required aggregate principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company, any Subsidiary Guarantor or any Affiliate of them shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. SECTION 11.7. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or at meetings of, Securityholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 11.8. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or other day on which commercial banking institutions are authorized or required to be closed in New York, New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 11.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE SECURITIES GUARANTEES. SECTION 11.10. No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Company or a Securities Guarantor, as such, shall have any liability for any obligations of the Company or such Securities Guarantor under the Securities, this Indenture or a Securities Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability to the extent permitted by applicable law. The waiver and release are part of the consideration for issuance of the Securities. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. 110 SECTION 11.11. Successors. All agreements of the Company and each Subsidiary Guarantor in this Indenture and the Securities shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 11.13. Qualification of Indenture. The Company shall qualify this Indenture under the TIA in accordance with the terms and conditions of the Registration Rights Agreement and shall pay all reasonable costs and expenses (including attorneys' fees and expenses for the Company, the Trustee and the Holders) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Securities and printing this Indenture and the Securities. The Trustee shall be entitled to receive from the Company any such Officers' Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA. SECTION 11.14. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. 111 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written. VICORP RESTAURANTS, INC. By /s/ Debra Koenig ---------------------------------- Name: Debra Koenig Title: Chief Executive Officer VI ACQUISITION CORP. By /s/ Debra Koenig ---------------------------------- Name: Debra Koenig Title: Executive Vice President and Secretary VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By /s/ Debra Koenig ---------------------------------- Name: Debra Koenig Title: Chief Executive Officer and President WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By /s/ Michael T. Lechner --------------------------------- Name: Michael T. Lechner Title: Assistant Vice President ANNEX 3.4 DOCUMENTS CONTAINING PERMITTED ENCUMBRANCES The Indenture Amended and Restated Loan and Security Agreement, dated April 14, 2004, among VI Acquisition Corp., VICORP Restaurants, Inc., the Lenders that are signatories thereto and Wells Fargo Foothill, Inc., as Arranger and Administrative Agent. EXHIBIT A [FORM OF FACE OF SERIES A NOTE] [Applicable Restricted Securities Legend] [Depository Legend, if applicable] No. [___] Principal Amount $[___________], as revised by the Schedule of Increases and Decreases in Global Security attached hereto CUSIP NO. __________________________ ISIN: _______________________________ VICORP RESTAURANTS, INC. 10-1/2% Senior Note, Series A, due 2011 VICORP Restaurants, Inc., a Colorado corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of [_______________] Dollars, as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on April 15, 2011. Interest Payment Dates: April 15 and October 15, commencing on October 15, 2004 Record Dates: April 1 and October 1 Additional provisions of this Security are set forth on the other side of this Security. VICORP RESTAURANTS, INC. By: ______________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee, certifies that this is one of the Securities referred to in the Indenture. By________________________________ Authorized Signatory Date: ________ __, 20__ A-1 [FORM OF REVERSE SIDE OF SERIES A NOTE] VICORP RESTAURANTS, INC. 10-1/2% Senior Note, Series A, due 2011 1. Interest VICORP Restaurants, Inc., a Colorado corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on April 15 and October 15, commencing on October 15, 2004. Interest on the Securities will accrue from the most recent date to which interest has been paid on the Securities or, if no interest has been paid, from April 14, 2004. The Company shall pay interest on overdue principal, and on overdue premium, if any (plus interest on such interest to the extent lawful), at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If an exchange offer (the "Exchange Offer") registered under the Securities Act is not consummated or a shelf registration statement (the "Shelf Registration Statement") under the Securities Act with respect to resales of the Securities is not declared effective by the SEC on or before the date that is 180 days after the Issue Date (the "Target Registration Date") in accordance with the terms of the Registration Rights Agreement dated April 14, 2004 among the Company, the Securities Guarantors and the Initial Purchasers, the annual interest rate borne by the Securities shall be increased from the rate shown above by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required hereby, is declared effective by the Securities and Exchange Commission or the Securities become freely tradable under the Securities Act, up to a maximum of 1.00% per annum of additional interest. The Holder of this Security is entitled to the benefits of such Registration Rights Agreement. 2. Method of Payment By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Security is due and payable, the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except Defaulted Interest) to the Persons who are registered Holders of Securities at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are cancelled, repurchased or redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal, premium, if any, and interest in money of the United States that at the time of payment A-2 is legal tender for payment of public and private debts. Payments in respect of Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by the transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depository. The Company will make all payments in respect of a Definitive Security (including principal, premium, if any, and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 3. Paying Agent and Registrar Initially, Wells Fargo Bank, National Association (the "Trustee") will act as Trustee, Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Securityholder. Any of the domestically organized Wholly-Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. Indenture The Company issued the Securities under an Indenture dated as of April 14, 2004 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the "Indenture"), among the Company, the Securities Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured, senior obligations of the Company. The aggregate principal amount of securities that may be authenticated and delivered under the Indenture is unlimited. This Security is one of the 10-1/2% Senior Notes, Series A, due 2011 referred to in the Indenture. The Securities include (i) $126,530,000 aggregate principal amount of the Company's 10-1/2% Senior Notes, Series A, due 2011 issued under the Indenture on April 14, 2004 (herein called "Initial Securities"), (ii) if and when issued, additional 10-1/2% Senior Notes, Series A, due 2011 or 10-1/2% Senior Notes, Series B, due 2011 of the Company that may be issued from time to time under the Indenture subsequent to April 14, 2004 (herein called "Additional Securities") and (iii) if and when issued, the Company's 10-1/2% Senior Notes, Series B, due 2011 that may be issued from time to time under the Indenture in exchange for Initial Securities or Additional Securities in an offer registered under the Securities Act as provided in the Registration Rights Agreement (herein called "Exchange Securities"). The Initial Securities, Additional Securities and Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the incurrence of indebtedness, the making of restricted payments, the sale of assets and subsidiary stock, the incurrence of certain A-3 liens, sale-leaseback transactions, the sale of capital stock of restricted subsidiaries, the making of payments for consents, the entering into of agreements that restrict distribution from restricted subsidiaries and the consummation of mergers and consolidations. The Indenture also imposes requirements with respect to the provision of financial information and the provision of guarantees of the Securities by certain subsidiaries. To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Securities Guarantors have unconditionally guaranteed (and future guarantors, together with the Securities Guarantors, will unconditionally Guarantee), jointly and severally, such obligations on a senior basis pursuant to the terms of the Indenture. 5. Redemption Except as set forth below, the Securities will not be redeemable at the option of the Company prior to April 15, 2008. On and after such date, the Securities will be redeemable, at the Company's option, in whole or in part, at any time upon not less than 30 nor more than 60 days prior notice mailed by first class mail to each Holder's registered address, at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on February 1 of the years set forth below:
PERIOD REDEMPTION PRICE - ------ ---------------- ~~2008 105.250% 2009 102.625% 2010 and thereafter 100.000%~~
In addition, at any time and from time to time prior to April 15, 2007, the Company may redeem in the aggregate up to 35% of the original principal amount of the Securities with the proceeds of one or more Qualified Equity Offerings at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the original principal amount of the Securities (after giving effect to any future issuance of Additional Securities) must remain outstanding after each such redemption; provided further, that each such redemption occurs within 60 days of the date of closing of such Qualified Equity Offering. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Security is registered at the close of business on such record date, A-4 and no additional interest will be payable to Holders whose Securities will be subject to redemption by the Company. In the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Securities are listed or, if the Securities are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Securities of $1,000 in original principal amount or less will be redeemed in part. Any such notice to the Trustee may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the redemption date, interest will cease to accrue on Securities or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. At any time prior to April 15, 2008, within 90 days following the occurrence of a Change of Control, the Company may redeem the Securities, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Notice of redemption of the Securities pursuant to this paragraph shall be mailed to Holders of the Securities not more than 60 days following the occurrence of a Change of Control, which notice shall state the redemption date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed). "Applicable Premium" means, with respect to a Security at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Security and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Security at April 15, 2008 (such redemption price being described in this section) plus (2) all required interest payments due on such Security through April 15, 2008, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Security. "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to April 15, 2008; provided, however, that if the period from the Redemption Date to April 15, 2008 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to April 15, 2008 is less than one year, the weekly average A-5 yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. 6. Repurchase Provisions If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Securities as described under paragraph 5 of the Securities, then such Change of Control shall constitute a triggering event which shall trigger the obligation of the Company to offer to repurchase from each Holder all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) as provided in, and subject to the terms of, the Indenture. 7. Denominations; Transfer; Exchange The Securities are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay a sum sufficient to cover any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange (i) any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) for a period beginning 15 days before the mailing of a notice of Securities to be redeemed and ending on the date of such mailing or (ii) any Securities for a period beginning 15 days before an interest payment date and ending on such interest payment date. 8. Persons Deemed Owners The registered Holder of this Security may be treated as the owner of it for all purposes. 9. Unclaimed Money If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company for payment as general creditors unless an abandoned property law designates another person and not to the Trustee for payment. 10. Defeasance Subject to certain exceptions and conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal, premium, if any, and interest on the Securities to redemption or maturity, as the case may be. A-6 11. Amendment, Supplement, Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended or supplemented by the Company, the Securities Guarantors and the Trustee with the written consent of the Holders of at least a majority in principal amount of the then outstanding Securities and (ii) any default (other than with respect to nonpayment or in respect of a provision that cannot be amended without the written consent of each Securityholder affected) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the then outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Securities Guarantors and the Trustee may amend or supplement the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Securities in addition to or in place of certificated Securities, to comply with Article IV or Article X in respect of the assumption by a Successor Company of an obligation of the Company or any Securities Guarantor under this Indenture, to add Guarantees with respect to the Securities or release a Securities Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in accordance with the Indenture, to secure the Securities, to make any change that would provide any additional rights or benefits to the Holders of the Securities or that does not materially adversely affect the legal rights under the Indenture of any such Holder; to comply with any requirement of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, or to provide for the issuance of the Exchange Securities. 12. Defaults and Remedies Under the Indenture, Events of Default include (each of which are more specially described in the Indenture) (i) default for 30 days in payment of interest when due on the Securities; (ii) default in payment of principal or premium, if any, on the Securities at Stated Maturity, upon required repurchase or upon optional redemption pursuant to paragraph 5 of the Securities, upon declaration or otherwise; (iii) the failure by the Company or any Securities Guarantor to comply with its obligations under Article IV or Section 10.2 of the Indenture; (iv) failure by the Company to comply for 30 days after written notice with any of their obligations under the covenants described under Sections 3.2 through 3.12 inclusive, Section 3.16 and Section 3.19 of the Indenture (in each case, other than a failure to purchase Securities when required under the Indenture, which failure shall constitute an Event of Default under clause (ii) above); (v) the failure by the Company to comply for 60 days after written notice with their other agreements contained in the Indenture or under the Securities (other than those referred to in (i), (ii), (iii) or (iv) above); (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries or is recourse to the Company or its Restricted Subsidiaries, by contract or operation of law), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay any Indebtedness at maturity prior to the expiration of the grace period provided in such Indebtedness ("payment default") or (b) results in the acceleration of such Indebtedness prior to its final maturity (the "cross acceleration provision") and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such A-7 Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (vii) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (the "bankruptcy provisions"); (viii) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged, waived or stayed for a period of 60 days (the "judgment default provision"); or (ix) any Securities Guarantee ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Securities Guarantor denies or disaffirms its obligations under the Indenture or its Securities Guarantee. However, a default under clauses (iv), (v) and (ix) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified in clauses (iv), (v) and (ix) hereof after receipt of such notice. If an Event of Default (other than an Event of Default described in (viii) hereof) occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in principal amount of the outstanding Securities may declare all the Securities to be due and payable immediately. If an Event of Default described in (viii) hereof occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Securities will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest. 13. Trustee Dealings with the Company Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. A-8 14. No Recourse Against Others No director, officer, employee, incorporator or stockholder of the Company or a Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or such Subsidiary Guarantor under the Securities, this Indenture or a Securities Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. 15. Authentication This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Security. 16. Abbreviations Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors Act). 17. CUSIP, Common Code and ISIN Numbers The Company has caused CUSIP, Common Code and ISIN numbers, if applicable, to be printed on the Securities and have directed the Trustee to use CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 18. Governing Law This Security shall be governed by, and construed in accordance with, the laws of the State of New York. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to: VICORP Restaurants, Inc. 400 West 48th Avenue Denver, CO 80216 Attention: Anthony Carroll A-9 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to: ________________________________________________________________________________ (Print or type assignee's name, address and zip code) ________________________________________________________________________________ (Insert assignee's social security or tax I.D. No.) and irrevocably appoint ___________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Date:____________________ Your Signature:___________________ Signature Guarantee:____________________________________________________________ (Signature must be guaranteed) ________________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company, or any Affiliate of the Company, the undersigned confirms that such Securities are being: CHECK ONE BOX BELOW: 1[ ] acquired for the undersigned's own account, without transfer; or 2[ ] transferred to the Company; or 3[ ] transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); or 4[ ] transferred pursuant to an effective registration statement under the Securities Act; or 5[ ] transferred pursuant to and in compliance with Regulation S under the Securities Act; or A-10 6[ ] transferred to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter appears as Section 2.7 of the Indenture); or 7[ ] transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (5), (6) or (7) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in its sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended, such as the exemption provided by Rule 144 under such Act. _________________________________ Signature Signature Guarantee: ______________________________ _________________________________ (Signature must be guaranteed) Signature ________________________________________________________________________________ The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. ___________________________________ Dated: A-11 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Security authorized signatory Date of Principal Amount of Principal Amount of following such of Trustee or Exchange this Global Security this Global Security decrease or increase Securities Custodian - -------- -------------------- -------------------- -------------------- --------------------
A-12 OPTION OF HOLDER TO ELECT PURCHASE If you elect to have this Security purchased by the Company Pursuant to Section 3.5 or 3.10 of the Indenture, check either box: [ ] [ ] 3.5 3.10 If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.5 or Section 3.10 of the Indenture, state the amount in principal amount (must be integral multiple of $1,000): $____________________________________________ Date: __________ Your Signature ________________________________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guarantee: ___________________________________________________________ (Signature must be guaranteed) The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. A-13 EXHIBIT B [FORM OF FACE OF SERIES B NOTE] [Depository Legend, if applicable] No.[___] Principal Amount $[___________], as revised by the Schedule of Increases and Decreases in Global Security attached hereto CUSIP NO. __________________________________ ISIN:_______________________________________ VICORP RESTAURANTS, INC. 10 1/2% Senior Note, Series B, due 2011 VICORP Restaurants, Inc., a Colorado corporation, promises to pay to Cede & Co., or its registered assigns, the principal sum of [_______________] Dollars, as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on April 15, 2011. Interest Payment Dates: April 15 and October 15, commencing on October 15, 2004 Record Dates: April 1 and October 1 Additional provisions of this Security are set forth on the other side of this Security. VICORP RESTAURANTS, INC. By:____________________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee, certifies that this is one of the Securities referred to in the Indenture. By________________________________ Authorized Signatory Date: ________ __, 20__ B-1 [FORM OF REVERSE SIDE OF SERIES B NOTE] VICORP RESTAURANTS, INC. 10-1/2% Senior Note, Series B, due 2011 1. Interest VICORP Restaurants, Inc., a Colorado corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on April 15 and October 15, commencing on October 15, 2004. Interest on the Securities will accrue from the most recent date to which interest has been paid on the Securities or, if no interest has been paid, from April 14, 2004. The Company shall pay interest on overdue principal, and on overdue premium, if any (plus interest on such interest to the extent lawful), at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment By no later than 10:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Security is due and payable, the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except Defaulted Interest) to the Persons who are registered Holders of Securities at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are cancelled, repurchased or redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Securities represented by a Global Security (including principal, premium, if any, and interest) will be made by the transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depository. The Company will make all payments in respect of a Definitive Security (including principal, premium, if any, and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Securities may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). B-2 3. Paying Agent and Registrar Initially, Wells Fargo Bank, National Association (the "Trustee") will act as Trustee, Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Securityholder. Any of the domestically organized Wholly-Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. Indenture The Company issued the Securities under an Indenture dated as of April 14, 2004 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the "Indenture"), among the Company, the Securities Guarantors and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all terms and provisions of the Indenture, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured senior obligations of the Company. The aggregate principal amount of securities that may be authenticated and delivered under the Indenture is unlimited. This Security is one of the 10-1/2% Senior Notes, Series B, due 2011 referred to in the Indenture. The Securities include (i) $126,530,000 aggregate principal amount of the Company's 10-1/2% Senior Notes, Series A, due 2011 issued under the Indenture on April 14, 2004 (herein called "Initial Securities"), (ii) if and when issued, additional 10-1/2% Senior Notes, Series A, due 2011 or 10-1/2% Senior Notes, Series B, due 2011 of the Company that may be issued from time to time under the Indenture subsequent to April 14, 2004 (herein called "Additional Securities") and (iii) if and when issued, the Company's 10-1/2% Senior Notes, Series B, due 2011 that may be issued from time to time under the Indenture in exchange for Initial Securities or Additional Securities in an offer registered under the Securities Act as provided in the Registration Rights Agreement (herein called "Exchange Securities"). The Initial Securities, Additional Securities and Exchange Securities are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the incurrence of indebtedness, the making of restricted payments, the sale of assets and subsidiary stock, the incurrence of certain liens, sale-leaseback transactions, the sale of capital stock of restricted subsidiaries, the making of payments for consents, the entering into of agreements that restrict distribution from restricted subsidiaries and the consummation of mergers and consolidations. The Indenture also imposes requirements with respect to the provision of financial information and the provision of guarantees of the Securities by certain subsidiaries. To guarantee the due and punctual payment of the principal, premium, if any, and interest (including post-filing or post-petition interest) on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Securities Guarantors have unconditionally guaranteed (and future guarantors, together with the Securities Guarantors, will unconditionally Guarantee), jointly and severally, such obligations on a senior basis pursuant to the terms of the Indenture. B-3 5. Redemption Except as set forth below, the Securities will not be redeemable at the option of the Company prior to April 15, 2008. On and after such date, the Securities will be redeemable, at the Company's option, in whole or in part, at any time upon not less than 30 nor more than 60 days prior notice mailed by first class mail to each Holder's registered address, at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on February 1 of the years set forth below:
REDEMPTION PERIOD PRICE - ------ ----------- ~~2008 105.250% 2009 102.625% 2010 and thereafter 100.000%~~
In addition, at any time and from time to time prior to April 15, 2007, the Company may redeem in the aggregate up to 35% of the original principal amount of the Securities with the proceeds of one or more Qualified Equity Offerings at a redemption price (expressed as a percentage of principal amount) of 110.5% plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the original principal amount of the Securities (after giving effect to any future issuance of Additional Securities) must remain outstanding after each such redemption; provided further, that each such redemption occurs within 60 days of the date of closing of such Qualified Equity Offering. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Security is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Securities will be subject to redemption by the Company. In the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Securities are listed or, if the Securities are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Securities of $1,000 in original principal amount or less will be redeemed in part. Any such notice to the Trustee may be cancelled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the redemption date, B-4 interest will cease to accrue on Securities or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. At any time prior to April 15, 2008, within 90 days following the occurrence of a Change of Control, the Company may redeem the Securities, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Notice of redemption of the Securities pursuant to this paragraph shall be mailed to Holders of the Securities not more than 60 days following the occurrence of a Change of Control, which notice shall state the redemption date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed). "Applicable Premium" means, with respect to a Security at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Security and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Security at April 15, 2008 (such redemption price being described in this section) plus (2) all required interest payments due on such Security through April 15, 2008, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B) the principal amount of such Security. "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to April 15, 2008; provided, however, that if the period from the Redemption Date to April 15, 2008 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the Redemption Date to April 15, 2008 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. 6. Repurchase Provisions If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Securities as described under paragraph 5 of the Securities, then such Change of Control shall constitute a triggering event which shall trigger the obligation of the Company to offer to repurchase from each Holder all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) as provided in, and subject to the terms of, the Indenture. B-5 7. Denominations; Transfer; Exchange The Securities are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay a sum sufficient to cover any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange (i) any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) for a period beginning 15 days before the mailing of a notice of Securities to be redeemed and ending on the date of such mailing or (ii) any Securities for a period beginning 15 days before an interest payment date and ending on such interest payment date. 8. Persons Deemed Owners The registered Holder of this Security may be treated as the owner of it for all purposes. 9. Unclaimed Money If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company for payment as general creditors unless an abandoned property law designates another person and not to the Trustee for payment. 10. Defeasance Subject to certain exceptions and conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal, premium, if any, and interest on the Securities to redemption or maturity, as the case may be. 11. Amendment, Supplement, Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended or supplemented by the Company, the Securities Guarantors and the Trustee with the written consent of the Holders of at least a majority in principal amount of the then outstanding Securities and (ii) any default (other than with respect to nonpayment or in respect of a provision that cannot be amended without the written consent of each Securityholder affected) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the then outstanding Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Securities Guarantors and the Trustee may amend or supplement the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Securities in addition to or in place of certificated Securities, to comply with Article IV or Article X in respect of the assumption by a Successor Company of an obligation of the Company B-6 or any Securities Guarantor under this Indenture, to add Guarantees with respect to the Securities or release a Securities Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in accordance with the Indenture, to secure the Securities, to make any change that would provide any additional rights or benefits to the Holders of the Securities or that does not materially adversely affect the legal rights under the Indenture of any such Holder; to comply with any requirement of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, or to provide for the issuance of the Exchange Securities. 12. Defaults and Remedies Under the Indenture, Events of Default include (each of which are more specially described in the Indenture) (i) default for 30 days in payment of interest when due on the Securities; (ii) default in payment of principal or premium, if any, on the Securities at Stated Maturity, upon required repurchase or upon optional redemption pursuant to paragraph 5 of the Securities, upon declaration or otherwise; (iii) the failure by the Company or any Securities Guarantor to comply with its obligations under Article IV or Section 10.2 of the Indenture; (iv) failure by the Company to comply for 30 days after written notice with any of their obligations under the covenants described under Sections 3.2 through 3.12 inclusive, Section 3.16 and Section 3.19 of the Indenture (in each case, other than a failure to purchase Securities when required under the Indenture, which failure shall constitute an Event of Default under clause (ii) above); (v) the failure by the Company to comply for 60 days after written notice with their other agreements contained in the Indenture or under the Securities (other than those referred to in (i), (ii), (iii) or (iv) above); (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries or is recourse to the Company or its Restricted Subsidiaries, by contract or operation of law), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay any Indebtedness at maturity prior to the expiration of the grace period provided in such Indebtedness ("payment default") or (b) results in the acceleration of such Indebtedness prior to its final maturity (the "cross acceleration provision") and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (vii) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (the "bankruptcy provisions"); (viii) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $10.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged, waived or stayed for a period of 60 days (the "judgment default provision"); or (ix) any Securities Guarantee ceases to be in full force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Securities Guarantor B-7 denies or disaffirms its obligations under the Indenture or its Securities Guarantee. However, a default under clauses (iv), (v) and (ix) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities notify the Company of the default and the Company does not cure such default within the time specified in clauses (iv), (v) and (ix) hereof after receipt of such notice. If an Event of Default (other than an Event of Default described in (viii) hereof) occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in principal amount of the outstanding Securities may declare all the Securities to be due and payable immediately. If an Event of Default described in (viii) hereof occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Securities will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest. 13. Trustee Dealings with the Company Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 14. No Recourse Against Others An incorporator, director, officer, employee, Affiliate or stockholder, of the Company, or any Subsidiary Guarantor, solely by reason of this status, shall not have any liability for any obligations of the Company or any Subsidiary Guarantor under the Securities, the Indenture or any Securities Guarantees or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 15. Authentication This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Security. B-8 16. Abbreviations Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors Act). 17. CUSIP, Common Code and ISIN Numbers The Company has caused CUSIP, Common Code and ISIN numbers, if applicable, to be printed on the Securities and have directed the Trustee to use CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 18. Governing Law This Security shall be governed by, and construed in accordance with, the laws of the State of New York. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: VICORP Restaurants, Inc. 400 West 48(th) Avenue Denver, CO 80216 Attention: Anthony Carroll B-9 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to: - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) - -------------------------------------------------------------------------------- (Insert assignee's social security or tax I.D. No.) and irrevocably appoint --------------- agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ----------------- Your Signature ----------------------------------------- Signature Guarantee: ----------------------------------------------------------- (Signature must be guaranteed) - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Security. The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. B-10 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made:
Principal Amount of Signature of Amount of decrease in Amount of increase in this Global Security authorized signatory Date of Principal Amount of Principal Amount of following such of Trustee or Exchange this Global Security this Global Security decrease or increase Securities Custodian - -------- --------------------- --------------------- -------------------- --------------------
B-11 OPTION OF HOLDER TO ELECT PURCHASE If you elect to have this Security purchased by the Company Pursuant to Section 3.5 or 3.10 of the Indenture, check either box: [ ] [ ] 3.5 3.10 If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.5 or Section 3.10 of the Indenture, state the amount in principal amount (must be integral multiple of $1,000): $-------------------------- Date: -------------- Your Signature: ----------------------------------------- (Sign exactly as your name appears on the other side of the Security) Signature Guarantee: ----------------------------------------------------------- (Signature must be guaranteed) The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. B-12 EXHIBIT C FORM OF INDENTURE SUPPLEMENT TO ADD SECURITIES GUARANTORS This Supplemental Indenture, dated as of [_______ __], 20__ (this "Supplemental Indenture" or "Guarantee"), among [name of future Securities Guarantor] (the "Guarantor"), VICORP Restaurants, Inc. (together with its successors and assigns, the "Company"), each other then existing Securities Guarantor under the Indenture referred to below, and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below. W I T N E S S E T H: WHEREAS, the Company, the Securities Guarantors and the Trustee have heretofore executed and delivered an Indenture, dated as of April 14, 2004 (as amended, supplemented, waived or otherwise modified, the "Indenture"), providing for the issuance of an aggregate principal amount of $126,530,000 of 10-1/2% Senior Notes due 2011 of the Company (the "Securities"); WHEREAS, Section 3.12 of the Indenture provides that the Company is required to cause each Restricted Subsidiary that Guarantees any Indebtedness of the Company or any of its Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will unconditionally Guarantee, on a joint and several basis with the other Securities Guarantors, the full and prompt payment of the principal of, premium, if any, and interest on the Securities on a senior basis; and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture to amend or supplement the Indenture, without the consent of any Securityholder; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor, the Company, the other Securities Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows: ARTICLE I Definitions SECTION 1.1 Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term "Holders" in this Guarantee shall refer to the term "Holders" as defined in the Indenture and the Trustee acting on behalf or for the benefit of such Holders. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. ARTICLE II Agreement to be Bound; Guarantee SECTION 2.1 Agreement to be Bound. The Guarantor hereby becomes a party to the Indenture as a Securities Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Securities Guarantor under the Indenture. The Guarantor agrees to be bound by all of the provisions of the Indenture applicable to a Securities Guarantor and to perform all of the obligations and agreements of a Securities Guarantor under the Indenture. SECTION 2.2 Guarantee. The Guarantor agrees, on a joint and several basis with all the existing Securities Guarantors, to fully, unconditionally and irrevocably Guarantee to each Holder of the Securities and the Trustee the Guarantor Obligations pursuant to Article X of the Indenture on a senior basis. ARTICLE III Miscellaneous SECTION 3.1 Notices. All notices and other communications to the Guarantor shall be given as provided in the Indenture to the Guarantor, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company. SECTION 3.2 Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained. SECTION 3.3 Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 3.4 Severability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability. SECTION 3.5 Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every C-2 Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture. SECTION 3.6 Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. SECTION 3.7 Headings. The headings of the Articles and the sections in this Guarantee are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. C-3 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written. [SECURITIES GUARANTOR], as a Guarantor By: ------------------------------------------- Name: Title: [Address] WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By: ------------------------------------------- Name: Title: VICORP RESTAURANTS, INC. By: ------------------------------------------- Name: Title: VI ACQUISITION CORP. By: ------------------------------------------- Name: Title: VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By: ------------------------------------------- Name: Title: EX-4.2 13 c86044exv4w2.txt PURCHASE AGREEMENT Exhibit 4.2 EXECUTION COPY $126,530,000 VICORP RESTAURANTS, INC. 10-1/2% Senior Notes due 2011 Purchase Agreement April 6, 2004 J.P. Morgan Securities Inc. As Representative of the several Initial Purchasers listed in Schedule 1 hereto c/o J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 Ladies and Gentlemen: VICORP Restaurants, Inc., a Colorado corporation (the "Company"), proposes to issue and sell to the several Initial Purchasers listed in Schedule 1 hereto (the "Initial Purchasers"), for whom you are acting as representative (the "Representative"), $126,530,000 principal amount of its 10-1/2% Senior Notes due 2011 (the "Securities"). The Securities will be issued pursuant to an Indenture to be dated as of April 14, 2004 (the "Indenture") among the Company, VI Acquisition Corp., a Delaware corporation (the "Parent"), Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation ("VI New Mexico" and together with the Parent, the "Guarantors") and Wells Fargo Bank, National Association, as trustee (the "Trustee"), and will be guaranteed on an unsecured senior basis by each of the Guarantors (the "Guarantees"). The Securities will be sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon an exemption therefrom. The Company has prepared a preliminary offering memorandum dated March 22, 2004 (the "Preliminary Offering Memorandum") and will prepare an offering memorandum dated the date hereof (the "Offering Memorandum") setting forth information concerning the Company and the Securities. Copies of the Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this Agreement. The Company hereby confirms that it has authorized the use of the Preliminary Offering Memorandum and the Offering Memorandum in connection with the offering and resale of the Securities by the Initial Purchasers in the manner contemplated by this Agreement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Offering Memorandum. 1 Holders of the Securities (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of a Registration Rights Agreement, to be dated the Closing Date (as defined below) and substantially in the form attached hereto as Exhibit A (the "Registration Rights Agreement"), pursuant to which the Company and the Guarantors will agree to file one or more registration statements with the Securities and Exchange Commission (the "Commission") providing for the registration under the Securities Act of the Securities or the Exchange Securities referred to (and as defined) in the Registration Rights Agreement. The Company hereby confirms its agreement with the several Initial Purchasers concerning the purchase and resale of the Securities, as follows: 1. Purchase and Resale of the Securities. (a) The Company agrees to issue and sell the Securities to the several Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth opposite such Initial Purchaser's name in Schedule 1 hereto at a price equal to 96.4002% of the principal amount thereof plus accrued interest, if any, from April 14, 2004 to the Closing Date. The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein. (a) The Company understands that the Initial Purchasers intend to offer the Securities for resale on the terms set forth in the Offering Memorandum. Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that: (i) it is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act (a "QIB") and an accredited investor within the meaning of Rule 501(a) under the Securities Act; (ii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and (iii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities as part of their initial offering except: (A) within the United States to persons whom it reasonably believes to be QIBs in transactions pursuant to Rule 144A under the Securities Act ("Rule 144A") and in connection with each such sale, it has taken or will take reasonable steps to ensure 2 that the purchaser of the Securities is aware that such sale is being made in reliance on Rule 144A; or (B) in accordance with the restrictions set forth in Annex A hereto. (b) Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 5(f), counsel for the Company and counsel for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers, and compliance by the Initial Purchasers with their agreements, contained in paragraph (b) above (including Annex A hereto), and each Initial Purchaser hereby consents to such reliance. (c) The Company acknowledges and agrees that the Initial Purchasers may offer and sell Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may offer and sell Securities purchased by it to or through any Initial Purchaser, in each case in accordance with the agreements in paragraph (b) above (including Annex A hereto). 2. Payment and Delivery. (a) Payment for and delivery of the Securities will be made at the offices of Simpson Thacher & Bartlett LLP at 10:00 A.M., New York City time, on April 14, 2004, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representative and the Company may mutually agree upon in writing. The time and date of such payment and delivery is referred to herein as the "Closing Date". (b) Payment for the Securities shall be made by wire transfer in immediately available funds to the account(s) specified by the Company to the Representative against delivery to the nominee of The Depository Trust Company, for the account of the Initial Purchasers, of one or more global notes representing the Securities (collectively, the "Global Note"), with any transfer taxes payable in connection with the sale of the Securities duly paid by the Company. The Global Note will be made available for inspection by the Representative not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date. 3. Representations and Warranties of the Company and the Guarantors. The Company and the Guarantors jointly and severally represent and warrant to each Initial Purchaser that: (a) Offering Memorandum. The Preliminary Offering Memorandum, as of its date, did not, and the Offering Memorandum, in the form first used by the Initial Purchasers to confirm sales of the Securities and as of the Closing Date, will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company and the Guarantors make no representation or warranty with respect to any statements or omissions made in 3 reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in the Preliminary Offering Memorandum and the Offering Memorandum. (b) Financial Statements. The financial statements and the related notes thereto included in the Preliminary Offering Memorandum and the Offering Memorandum present fairly in all material respects the financial position of the Parent and its subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods covered thereby, subject in the case of interim statements, to normal year-end adjustments; the other financial information included in the Preliminary Offering Memorandum and the Offering Memorandum has been derived from the accounting records of the Parent and its subsidiaries and presents fairly in all material respects the information shown thereby; and, other than the inclusion of a presentation of (i) pro forma adjustments relating to the offering of the Securities and the related refinancing and (ii) pro forma statements of operations for the twelve month period ended January 22, 2004, the pro forma financial information and the related notes thereto included in the Preliminary Offering Memorandum and the Offering Memorandum has been prepared in accordance with the Commission's rules and guidance with respect to pro forma financial information, and the assumptions underlying the pro forma financial information presented in the Preliminary Offering Memorandum and the Offering Memorandum are reasonable and are set forth in the Preliminary Offering Memorandum and the Offering Memorandum. (c) No Material Adverse Change. Since the date of the most recent financial statements of the Parent included in the Preliminary Offering Memorandum and the Offering Memorandum, (i) there has not been any change in the capital stock or long-term debt of the Parent or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Parent or the Company on any class of capital stock, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, management, financial position, results of operations or prospects of the Parent and its subsidiaries taken as a whole; (ii) neither the Parent nor any of its subsidiaries has entered into any transaction or agreement that is material to the Parent and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Parent and its subsidiaries taken as a whole; and (iii) neither the Parent nor any of its subsidiaries has sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority; except in each case as otherwise disclosed in the Preliminary Offering Memorandum and the Offering Memorandum. (d) Organization and Good Standing. The Parent and each of its subsidiaries have been duly organized and are validly existing and in good standing under the laws 4 of their respective jurisdictions of organization, are duly qualified to do business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and have all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to be so qualified or have such power or authority would not, individually or in the aggregate, have a material adverse effect on the business, properties, management, financial position, results of operations or prospects of the Parent and its subsidiaries taken as a whole or on the performance by the Company and the Guarantors of their obligations under the Securities and the Guarantees (a "Material Adverse Effect"). The Company has no Significant Subsidiaries as such term is defined in Rule 1-02(x) of Regulation S-X under the Exchange Act. (e) Capitalization. The Parent has an authorized capitalization as set forth in the Preliminary Offering Memorandum and the Offering Memorandum under the heading "Capitalization"; and all the outstanding shares of capital stock or other equity interests of each subsidiary of the Parent have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Parent, free and clear of any lien, charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any third party (other than those granted under (i) the existing senior credit facilities prior to the Closing Date, which shall be released in connection with the refinancing contemplated by the Offering Memorandum and (ii) the Senior Secured Credit Facility (as defined herein) granted in connection with such refinancing; each as described in the Preliminary Offering Memorandum and the Offering Memorandum). (f) Due Authorization. The Company and each of the Guarantors have full right, power and authority to execute and deliver this Agreement, the Securities, the Indenture (including each Guarantee set forth therein), the Exchange Securities and the Registration Rights Agreement (collectively, the "Transaction Documents") and to perform their respective obligations hereunder and thereunder; and all action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby has been duly and validly taken. (g) The Indenture. The Indenture has been duly authorized by the Company and each of the Guarantors and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability (collectively, the "Enforceability Exceptions"); and on the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder. 5 (h) The Securities and the Guarantees. The Securities have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture; and the Guarantees have been duly authorized by each of the Guarantors and, when the Securities have been duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be valid and legally binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture. (i) The Exchange Securities. On the Closing Date, the Exchange Securities (including the related guarantees) will have been duly authorized by the Company and each of the Guarantors and, when duly executed, authenticated, issued and delivered as contemplated by the Registration Rights Agreement, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company, as issuer, and each of the Guarantors, as guarantor, enforceable against the Company and each of the Guarantors in accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture. (j) Purchase and Registration Rights Agreements. This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors; and the Registration Rights Agreement has been duly authorized by the Company and each of the Guarantors and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with its terms, subject to the Enforceability Exceptions, and except that rights to indemnity and contribution thereunder may be limited by applicable law and public policy. (k) Descriptions of the Transaction Documents. Each Transaction Document conforms in all material respects to the description thereof contained in the Preliminary Offering Memorandum and the Offering Memorandum. (l) No Violation or Default. Neither the Parent nor any of its subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Parent or any of its subsidiaries is a party or by which the Parent or any of its subsidiaries is bound or to which any of the property or assets of the Parent or any of its subsidiaries is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect. 6 (m) No Conflicts. The execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Parent or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Parent or any of its subsidiaries is a party or by which the Parent or any of its subsidiaries is bound or to which any of the property or assets of the Parent or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Parent or any of its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach or violation that would not, individually or in the aggregate, have a Material Adverse Effect. (n) No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required (i) under applicable state securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers and (ii) with respect to the Exchange Securities (including the related guarantees) under the Securities Act and applicable state securities laws as contemplated by the Registration Rights Agreement. (o) Legal Proceedings. Except as described in the Preliminary Offering Memorandum and the Offering Memorandum, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Parent or any of its subsidiaries is a party or to which any property of the Parent or any of its subsidiaries is the subject that, individually or in the aggregate, if determined adversely to the Parent or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect; and no such investigations, actions, suits or proceedings, to the best knowledge of the Company and each of the Guarantors, contemplated by any governmental or regulatory authority or threatened by others. (p) Independent Accountants. Ernst & Young LLP, who have certified certain financial statements of the Parent and its subsidiaries, are independent public accountants with respect to the Parent and its subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants and its interpretations and rulings thereunder. 7 (q) Title to Real and Personal Property. The Parent and its subsidiaries have good and marketable title in fee simple to, or have valid leases or rights to lease or otherwise use, all items of real and personal property that are material to the respective businesses of the Parent and its subsidiaries, in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except those that (i) do not materially interfere with the use made and proposed to be made of such property by the Parent and its subsidiaries or (ii) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. (r) Title to Intellectual Property. The Parent and its subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses; and the conduct of their respective businesses will not conflict in any material respect with any such rights of others, and the Parent and its subsidiaries have not received any notice of any claim of infringement of or conflict with any such rights of others, except, in each case, where the failure to own or possess such rights or any such conflict or infringement will not, individually or in the aggregate, result in a Material Adverse Effect. (s) Investment Company Act. Neither the Parent nor any of its subsidiaries is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Offering Memorandum none of them will be, an "investment company" or an entity "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, "Investment Company Act"). (t) Taxes. The Parent and its subsidiaries have paid all federal, state, local and foreign taxes and filed all tax returns required to be paid or filed through the date hereof; and except as otherwise disclosed in the Preliminary Offering Memorandum and the Offering Memorandum or for taxes the failure of which to pay or file could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Parent or any of its subsidiaries or any of their respective properties or assets that has had or could reasonably be expected to have a Material Adverse Effect. (u) Licenses and Permits. The Parent and its subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the Preliminary Offering Memorandum and the Offering Memorandum, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in the Preliminary Offering Memorandum and the Offering Memorandum, neither the Parent nor any of its subsidiaries has received notice of any 8 revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course. (v) No Labor Disputes. No labor strike, slowdown, work stoppage, lockout or other labor disturbance by or collective dispute with employees of the Parent or any of its subsidiaries exists or, to the best knowledge of the Company and each of the Guarantors, is contemplated or threatened that, individually or in the aggregate, could reasonably be expected to give rise to a Material Adverse Effect. Except as otherwise disclosed in the Preliminary Offering Memorandum and the Offering Memorandum, no action, complaint, charge, inquiry, proceeding or investigation by or on behalf of any employee, prospective employee, former employee, labor organization or other representative of the Company's employees is pending or, to the best knowledge of the Company and each of the Guarantors, contemplated or threatened that, individually or in the aggregate, could reasonably be expected to give rise to a Material Adverse Effect. The Parent and its subsidiaries are not a party to, or otherwise bound by, any consent decree with, or citation by, any government agency relating to employees or employment practices. (w) Compliance With Environmental Laws. The Parent and its subsidiaries (i) are in compliance with all, and have not violated any, applicable federal, state, local and foreign laws, rules, regulations, decisions, orders or other legally enforceable requirements relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, "Environmental Laws"); (ii) have received and are in compliance with all, and have not violated any, permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; and (iii) have not received notice of any actual or potential liability (including, without limitation, such liability of a third party which could reasonably be expected to adversely affect the Parent or any of its subsidiaries) for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, or any actual or alleged violation of any Environmental Laws, and there is no basis for any such liability, except in any such case for any failure to comply with or violation of Environmental Laws, or failure to receive or comply with such required permits, licenses or approvals, or liability, as would not, individually or in the aggregate, have a Material Adverse Effect. (x) Compliance With ERISA. Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is maintained, administered or contributed to by the Parent or any of its affiliates for employees or former employees of the Parent and its affiliates has been maintained in all material respects in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the "Code"); no material prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption; and for each such plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated funding deficiency" as defined in Section 412 of the Code has been 9 incurred, whether or not waived, and the fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid contributions) exceeds the present value of all benefits accrued under such plan determined using reasonable actuarial assumptions. (y) Accounting Controls. The Parent and its subsidiaries maintain systems of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (z) Insurance. The Parent and its subsidiaries have insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are adequate to protect the Parent and its subsidiaries and their respective businesses; and neither the Parent nor any of its subsidiaries has (i) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business. (aa) No Unlawful Payments. Neither the Parent nor any of its subsidiaries nor, to the best knowledge of the Company and each of the Guarantors, any director, officer, agent, employee or other person associated with or acting on behalf of the Parent or any of its subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (bb) Solvency. On and immediately after the Closing Date, each of the Parent and the Company (after giving effect to the issuance of the Securities and the other transactions related thereto as described in the Offering Memorandum) will be Solvent. As used in this paragraph, the term "Solvent" means, with respect to a particular date, that on such date (i) the present fair market value (or present fair saleable value) of the assets of each of the Parent and the Company is not less than the total amount required to pay the liabilities of the Parent and the Company on its respective total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; (ii) each of the Parent and the Company is able to realize upon its assets and pay its respective debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business; (iii) assuming consummation 10 of the issuance of the Securities as contemplated by this Agreement and the Offering Memorandum, each of the Parent and the Company is not incurring debts or liabilities beyond its respective ability to pay as such debts and liabilities mature; (iv) each of the Parent and the Company is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its respective property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company is engaged; and (v) neither the Parent nor the Company is a defendant in any civil action that could result in a judgment that the Parent or the Company is or would become unable to satisfy. (cc) No Restrictions on Subsidiaries. No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary's capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's properties or assets to the Company or any other subsidiary of the Company. (dd) No Broker's Fees. Neither the Parent nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or any Initial Purchaser for a brokerage commission, finder's fee or like payment in connection with the offering and sale of the Securities. (ee) Rule 144A Eligibility. On the Closing Date, the Securities will not be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in an automated inter-dealer quotation system; and each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, contains or will contain all the information that, if requested by a prospective purchaser of the Securities, would be required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the Securities Act. (ff) No Integration. Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act. (gg) No General Solicitation or Directed Selling Efforts. None of the Company or any of its affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, their agents and affiliates, as to which no representation is made) has (i) solicited offers for, or offered or sold, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engaged in any directed selling efforts within the meaning of Regulation S under the Securities Act ("Regulation S"), and all such persons have complied with the offering restrictions requirement of Regulation S. 11 (hh) Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 1(b) (including Annex A hereto) and their compliance with their agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by this Agreement and the Offering Memorandum, to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act. (ii) No Stabilization. Neither the Company nor any of the Guarantors has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities. (jj) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the application of the proceeds thereof by the Company as described in the Offering Memorandum will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors. (kk) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Preliminary Offering Memorandum and the Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith. (ll) Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included in the Preliminary Offering Memorandum and the Offering Memorandum is not based on or derived from sources that are reliable and accurate in all material respects. 4. Further Agreements of the Company and the Guarantors. The Company and each of the Guarantors jointly and severally covenant and agree with each Initial Purchaser that: (a) Delivery of Copies. The Company will deliver to the Initial Purchasers as many copies of the Preliminary Offering Memorandum and the Offering Memorandum (including all amendments and supplements thereto) as the Representative may reasonably request. (b) Amendments or Supplements. Before making or distributing any amendment or supplement to the Preliminary Offering Memorandum or the Offering Memorandum, the Company will furnish to the Representative and counsel for the Initial Purchasers a copy of the proposed amendment or supplement for review, and will not distribute any such proposed amendment or supplement to which the Representative reasonably objects. (c) Notice to the Representative. The Company will advise the Representative promptly, and confirm such advice in writing, (i) of the issuance by any 12 governmental or regulatory authority of any order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any event at any time prior to the completion of the initial offering of the Securities as a result of which the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or suspending any such qualification of the Securities and, if any such order is issued, will obtain as soon as possible the withdrawal thereof. (d) Ongoing Compliance of the Offering Memorandum. If at any time prior to the completion of the initial offering of the Securities (i) any event shall occur or condition shall exist as a result of which the Offering Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Offering Memorandum to comply with law, the Company will promptly notify the Initial Purchasers thereof and forthwith prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements to the Offering Memorandum as may be necessary so that the statements in the Offering Memorandum as so amended or supplemented will not, in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, be misleading or so that the Offering Memorandum will comply with law. (e) Blue Sky Compliance. The Company will qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representative shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Securities; provided that neither the Company nor any of the Guarantors shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject. (f) Clear Market. During the period from the date hereof through and including the date that is 180 days after the date hereof, the Company and each of the Guarantors will not, without the prior written consent of the Representative, offer, sell, contract to sell or otherwise dispose of any debt securities issued or guaranteed by the Company or any of the Guarantors and having a tenor of more than one year, provided that this clause (f) shall not prevent the Company from making any borrowings under 13 the Senior Secured Credit Agreement (or a similar senior secured credit facility refinancing the Senior Secured Credit Agreement), or enter into any sale/leaseback transactions or equipment financing transactions in the ordinary course of business, consistent with past practice. (g) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities as described in the Offering Memorandum under the heading "Use of Proceeds". (h) Supplying Information. While the Securities remain outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Company and each of the Guarantors will, during any period in which the Company is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, furnish to holders of the Securities and prospective purchasers of the Securities designated by such holders, upon the request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (i) PORTAL and DTC. The Company will assist the Initial Purchasers in arranging for the Securities to be designated Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market and for the Securities to be eligible for clearance and settlement through The Depository Trust Company ("DTC"). (j) No Resales by the Company. Until the issuance of the Exchange Securities, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Securities that have been acquired by any of them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act. (k) No Integration. Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act. (l) No General Solicitation or Directed Selling Efforts. None of the Company or any of its affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no covenant is given) will (i) solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed selling efforts within the meaning of Regulation S, and all such persons will comply with the offering restrictions requirement of Regulation S. 14 (m) No Stabilization. Neither the Company nor any of the Guarantors will take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities. 5. Conditions of Initial Purchasers' Obligations. The obligation of each Initial Purchaser to purchase Securities on the Closing Date as provided herein is subject to the performance by the Company and each of the Guarantors of their respective covenants and other obligations hereunder and to the following additional conditions: (a) Representations and Warranties. The representations and warranties of the Company and the Guarantors contained herein shall be true and correct on the date hereof and on and as of the Closing Date; and the statements of the Company, the Guarantors and their respective officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date. (b) No Downgrade. Subsequent to the execution and delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other debt securities or preferred stock issued or guaranteed by the Company or any of the Guarantors by any "nationally recognized statistical rating organization", as such term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act; and (ii) no such organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of the Securities or of any other debt securities or preferred stock issued or guaranteed by the Company or any of the Guarantors (other than an announcement with positive implications of a possible upgrading). (c) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement, no event or condition of a type described in Section 3(c) hereof shall have occurred or shall exist, which event or condition is not described in the Offering Memorandum (excluding any amendment or supplement thereto) and the effect of which in the reasonable judgment of the Representative makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement and the Offering Memorandum. (d) Officer's Certificate. The Representative shall have received on and as of the Closing Date a certificate of an executive officer of the Company and of each Guarantor who has specific knowledge of the Company's or such Guarantor's financial matters and is satisfactory to the Representative (i) confirming that such officer has carefully reviewed the Offering Memorandum and, to the best knowledge of such officer, the representation set forth in Section 3(a) hereof is true and correct, (ii) confirming that the other representations and warranties of the Company and the Guarantors in this Agreement are true and correct and that the Company and the Guarantors have complied with all agreements and satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the effect set forth in paragraphs (b) and (c) above. 15 (e) Comfort Letters. On the date of this Agreement and on the Closing Date, Ernst & Young LLP shall have furnished to the Representative, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Preliminary Offering Memorandum and the Offering Memorandum; provided that the letter delivered on the Closing Date shall use a "cut-off" date no more than three business days prior to the Closing Date. (f) Opinion of Counsel for the Company and the Guarantors. Sachnoff & Weaver, Ltd., counsel for the Company, shall have furnished to the Representative, at the request of the Company, their written opinion, dated the Closing Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, to the effect set forth in Annex B hereto. (g) Opinion of Colorado Counsel for the Company and the Guarantors. Gorsuch Kirgis LLP, Colorado counsel for the Company and the Guarantors, shall have furnished to the Representative, at the request of the Company, their written opinion, dated the Closing Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, to the effect set forth in Annex C hereto. (h) Opinion of New York Counsel for the Company and the Guarantors. Willkie Farr & Gallagher LLP, New York counsel for the Company and the Guarantors, shall have furnished to the Representative, at the request of the Company, their written opinion, dated the Closing Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, to the effect set forth in Annex D. (i) Opinion of Counsel for VI New Mexico. Myers, Oliver & Price, P.C., counsel for VI New Mexico, shall have furnished to the Representative, at the request of the Company, their written opinion, dated the Closing Date and addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, to the effect set forth in Annex E hereto. (j) Opinion of Counsel for the Initial Purchasers. The Representative shall have received on and as of the Closing Date an opinion of Simpson Thacher & Bartlett LLP, counsel for the Initial Purchasers, with respect to such matters as the Representative may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters. (k) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees; and no injunction or order of any federal, state or foreign court shall have 16 been issued that would, as of the Closing Date, prevent the issuance or sale of the Securities or the issuance of the Guarantees. (l) Good Standing. The Representative shall have received on and as of the Closing Date satisfactory evidence of the good standing of the Company and the Guarantors in their respective jurisdictions of organization and their good standing in such other jurisdictions as the Representative may reasonably request, in each case in writing or any standard form of telecommunication, from the appropriate governmental authorities of such jurisdictions. (m) Registration Rights Agreement. The Initial Purchasers shall have received a counterpart of the Registration Rights Agreement that shall have been executed and delivered by a duly authorized officer of the Company and each of the Guarantors. (n) PORTAL and DTC. The Securities shall have been approved by the NASD for trading in the PORTAL Market and shall be eligible for clearance and settlement through DTC. (o) Senior Secured Credit Agreement. The Company shall have entered into the Credit Agreement, dated as of the Closing Date, by and among the Parent, the Company, the lenders party thereto and Wells Fargo Foothill, Inc., as Arranger and Administrative Agent, as amended from time to time after the Closing Date (the "Senior Secured Credit Agreement"), which shall have the terms and conditions described in the Offering Memorandum in all material respects, and such agreement shall be in full force and effect, and the closing conditions to the initial borrowings thereunder shall have been satisfied such that simultaneously with the payment for the Securities all borrowings (including letters of credit) requested by the Company to be made on the Closing Date under the Senior Secured Credit Facility shall have been received, which amounts, along with proceeds from the sale by the Company of the Securities, shall be sufficient to effect the refinancing contemplated in the Offering Memorandum under the heading "The refinancing," and the Parent and its subsidiaries shall have taken all actions as may be required to effect the repayment of their existing indebtedness, as contemplated in the Offering Memorandum. The Company shall have provided to the Representative and counsel to the initial purchasers the reasonable opportunity to review, as may be requested, copies of the Senior Secured Credit Agreement and related documents. (p) Additional Documents. On or prior to the Closing Date, the Company and the Guarantors shall have furnished to the Representative such further certificates and documents as the Representative may reasonably request. All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers. 17 6. Indemnification and Contribution. (a) Indemnification of the Initial Purchasers. The Company and each of the Guarantors jointly and severally agree to indemnify and hold harmless each Initial Purchaser, its affiliates, directors and officers and each person, if any, who controls such Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or supplement thereto) or any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use therein; provided, that with respect to any such untrue statement in or omission from the Preliminary Offering Memorandum, the indemnity agreement contained in this paragraph (a) shall not inure to the benefit of any Initial Purchaser to the extent that the sale to the person asserting any such loss, claim, damage or liability was an initial resale by such Initial Purchaser and any such loss, claim, damage or liability of or with respect to such Initial Purchaser results from the fact that both (i) a copy of the Offering Memorandum was not sent or given to such person at or prior to the written confirmation of the sale of such Securities to such person and (ii) the untrue statement in or omission from such Preliminary Offering Memorandum was corrected in the Offering Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of non-compliance by the Company with the provisions of Section 4 hereof. (b) Indemnification of the Company. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, each of the Guarantors, each of their respective officers and directors and each person, if any, who controls the Company or any of the Guarantors within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representative expressly for use in the Preliminary Offering Memorandum and the Offering Memorandum (or any amendment or supplement thereto), it being understood and agreed that the only such information consists of the following: the statements concerning the Initial Purchasers contained in the third paragraph, the fifth and sixth sentences of the eighth paragraph and the tenth paragraph, in each case under the heading of "Plan of distribution." 18 (c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such person (the "Indemnified Person") shall promptly notify the person against whom such indemnification may be sought (the "Indemnifying Person") in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 6. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 6 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded upon advice of counsel that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any Initial Purchaser, its affiliates, directors and officers and any control persons of such Initial Purchaser shall be designated in writing by J.P. Morgan Securities Inc. and any such separate firm for the Company, the Guarantors and any control persons of the Company and the Guarantors shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its prior written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified 19 Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. (d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Initial Purchasers on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Initial Purchasers on the other shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company from the sale of the Securities and the total discounts and commissions received by the Initial Purchasers in connection therewith, as provided in this Agreement, bear to the aggregate offering price of the Securities. The relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers on the other 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 any Guarantor or by the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) Limitation on Liability. The Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 6, in no event shall an Initial Purchaser be required to 20 contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the offering of the Securities exceeds the amount of any damages that such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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 Initial Purchasers' obligations to contribute pursuant to this Section 6 are several in proportion to their respective purchase obligations hereunder and not joint. (f) Non-Exclusive Remedies. The remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity. 7. Termination. This Agreement may be terminated in the absolute discretion of the Representative, by notice to the Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date (i) trading generally shall have been suspended or materially limited on the New York Stock Exchange or the over-the-counter market; (ii) trading of any securities issued or guaranteed by the Company or any of the Guarantors shall have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the reasonable judgment of the Representative, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement and the Offering Memorandum. 8. Defaulting Initial Purchaser. (a) If, on the Closing Date, any Initial Purchaser defaults on its obligation to purchase the Securities that it has agreed to purchase hereunder, the non-defaulting Initial Purchasers may in their discretion arrange for the purchase of such Securities by other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such default by any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such Securities on such terms. If other persons become obligated or agree to purchase the Securities of a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may postpone the Closing Date for up to five full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Offering Memorandum or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Offering Memorandum that effects any such changes. As used in this Agreement, the term "Initial Purchaser" includes, for all purposes of this Agreement unless the context otherwise requires, any 21 person not listed in Schedule 1 hereto that, pursuant to this Section 8, purchases Securities that a defaulting Initial Purchaser agreed but failed to purchase. (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder plus such Initial Purchaser's pro rata share (based on the principal amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been made. (c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers. Any termination of this Agreement pursuant to this Section 8 shall be without liability on the part of the Company or the Guarantors, except that the Company and each of the Guarantors will continue to be liable for the payment of expenses as set forth in Section 9 hereof and except that the provisions of Section 6 hereof shall not terminate and shall remain in effect. (d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company, the Guarantors or any non-defaulting Initial Purchaser for damages caused by its default. 9. Payment of Expenses. (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company and each of the Guarantors jointly and severally agree to pay or cause to be paid all of the following costs and expenses incident to the performance of their respective obligations hereunder: (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (ii) the costs incident to the preparation and printing of the Preliminary Offering Memorandum and the Offering Memorandum (including any amendment or supplement thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of the Company's and the Guarantors' counsel and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities under the laws of such states and other foreign jurisdictions as the Representative may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel for the Initial 22 Purchasers); (vi) any fees charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee and any paying agent (including related fees and expenses of any counsel to such parties); (viii) all expenses and application fees incurred in connection with the application for the inclusion of the Securities on the PORTAL Market and the approval of the Securities for book-entry transfer by DTC; and (ix) all expenses incurred by the Company in connection with any "road show" presentation to potential investors, provided that the Initial Purchasers will pay 50% of the aircraft expenses incurred in connection with such road show. (b) If (i) this Agreement is terminated pursuant to Section 7, (ii) the Company for any reason fails to tender the Securities for delivery to the Initial Purchasers or (iii) the Initial Purchasers decline to purchase the Securities for any reason permitted under this Agreement, the Company and each of the Guarantors jointly and severally agrees to reimburse the Initial Purchasers for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement and the offering contemplated hereby. 10. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and any controlling persons referred to herein, and the affiliates, officers and directors of each Initial Purchaser referred to in Section 6 hereof. Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Securities from any Initial Purchaser shall be deemed to be a successor merely by reason of such purchase. 11. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Guarantors and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company, the Guarantors or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company, the Guarantors or the Initial Purchasers. 12. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act; (b) the term "business day" means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term "Exchange Act" means the Securities Exchange Act of 1934, as amended; and (d) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act. 13. Miscellaneous. (a) Authority of the Representative. Any action by the Initial Purchasers hereunder may be taken by J.P. Morgan Securities Inc. on behalf of the Initial Purchasers, and any such action taken by J.P. Morgan Securities Inc. shall be binding upon the Initial Purchasers. 23 (a) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the Initial Purchasers shall be given to the Representative c/o J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York 10017 (fax: (212) 270-1063); Attention: Gerry Murray. Notices to the Company and the Guarantors shall be given to them at VICORP Restaurants, Inc., 400 West 48th Avenue, Denver, Colorado 80216, (fax: (303) 672-2668); Attention: Debra Koenig. (b) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (c) Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument. (d) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. (e) Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 24 If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below. Very truly yours, VICORP RESTAURANTS, INC. By /s/ Debra Koenig ------------------------------------------- Name: Debra Koenig Title: Chief Executive Officer VI ACQUISITION CORP. By /s/ Debra Koenig ------------------------------------------- Name: Debra Koenig Title: Executive Vice President and Secretary VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By /s/ Debra Koenig --------------------------------------------- Name: Debra Koenig Title: Chief Executive Officer and President Accepted: April 6, 2004 J.P. MORGAN SECURITIES INC. For itself and on behalf of the several Initial Purchasers listed in Schedule 1 hereto. By /s/ John Abraham -------------------------------- Name: John Abraham Title: Vice President 25 Schedule 1
Initial Purchaser Principal Amount ----------------- ---------------- J.P. Morgan Securities Inc. $ 92,025,000 CIBC World Markets Corp. $ 34,505,000 ------------- Total $ 126,530,000
Annex A Restrictions on Offers and Sales Outside the United States In connection with offers and sales of Securities outside the United States: (a) Each Initial Purchaser acknowledges that the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act. (b) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that: (i) Such Initial Purchaser has offered and sold the Securities, and will offer and sell the Securities, (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering of the Securities and the Closing Date, only in accordance with Regulation S under the Securities Act ("Regulation S") or Rule 144A or any other available exemption from registration under the Securities Act. (ii) None of such Initial Purchaser or any of its affiliates or any other person acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and all such persons have complied and will comply with the offering restrictions requirement of Regulation S. (iii) At or prior to the confirmation of sale of any Securities sold in reliance on Regulation S, such Initial Purchaser will have sent to each distributor, dealer or other person receiving a selling concession, fee or other remuneration that purchase Securities from it during the distribution compliance period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the Securities and the date of original issuance of the Securities, except in accordance with Regulation S or Rule 144A or any other available exemption from registration under the Securities Act. Terms used above have the meanings given to them by Regulation S." A-1 (iv) Such Initial Purchaser has not and will not enter into any contractual arrangement with any distributor with respect to the distribution of the Securities, except with its affiliates or with the prior written consent of the Company. Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in this Agreement have the meanings given to them by Regulation S. (c) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that: (i) it has not offered or sold and, prior to the date six months after the Closing Date, will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the United Kingdom Public Offers of Securities Regulations 1995 (as amended); (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the United Kingdom Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of any Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Company or the Guarantors; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom. (d) Each Initial Purchaser acknowledges that no action has been or will be taken by the Company that would permit a public offering of the Securities, or possession or distribution of the Preliminary Offering Memorandum, the Offering Memorandum or any other offering or publicity material relating to the Securities, in any country or jurisdiction where action for that purpose is required. A-2 Annex B Form of Opinion of Sachnoff & Weaver, Ltd. April 14, 2004 J.P. Morgan Securities Inc. CIBC World Markets Corp. c/o J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 Re: Purchase of Securities of VICORP Restaurants, Inc. Ladies and Gentlemen: We have acted as counsel for VI Acquisition Corp., a Delaware corporation ("Holdings"), VICORP Restaurants, Inc., a Colorado corporation (the "Company") and Village Inn Pancake House of Albuquerque, Inc. ("VI New Mexico" and together with Holdings, the "Guarantors") in connection with the sale by the Company of $126,530,000 aggregate principal amount of the Company's 10 1/2% Senior Notes due 2011 (the "Notes"), which Notes have been unconditionally guaranteed by the Guarantors (the "Guarantees" and together with the Notes, the "Securities"), pursuant to the Purchase Agreement dated April 6, 2004, among the Company, the Guarantors and J.P. Morgan Securities Inc., as representative for the Initial Purchasers identified in Schedule 1 thereto, and matters related thereto. The Notes and Guarantees are to be issued pursuant to an Indenture, dated as of April 14, 2004 (the "Indenture"), among the Company, the Guarantors, and Wells Fargo Bank, National Association (the "Trustee"). Except as otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Purchase Agreement. We have examined the preliminary offering memorandum dated March 22, 2004 relating to the sale of the Notes (the "Preliminary Offering Memorandum") and the offering memorandum dated April 6, 2004, relating to the Securities (the "Offering Memorandum"). We have also examined (i) the Certificate of Incorporation of Holdings, as amended, as on file with the Secretary of the State of Delaware, and the certificate or articles of incorporation of the Company and VI New Mexico as on file with the Secretaries of State of Colorado and New Mexico, respectively, (ii) the By-Laws of the Company and each of the Guarantors as amended to date, certified by the applicable secretary or assistant secretary, (iii) the Purchase Agreement, (iv) the Indenture, (v) the Registration Rights Agreement, (vi) the global notes representing the Notes, (vii) resolutions adopted by the respective Boards of Directors of the Company authorizing, inter alia, the delivery of the Preliminary Offering Memorandum and the Offering Memorandum, the issuance of the Securities and related matters, certified by the B-1 Secretary of the Company and resolutions adopted by the Board of Directors of each of the Guarantors authorizing the issuance of the Guarantees and other matters related to the offering of the Securities, and (viii) such other documents, certificates, legal opinions, corporate records, statutes and decisions as we deemed necessary or appropriate for the purposes of this opinion. The documents, agreements and instruments referred to in clauses (iii) through (vi) above are referred to herein as the "Transaction Documents." In rendering the opinions expressed below, we have assumed the following: (i) all signatures appearing in all documents are valid and genuine; (ii) the documents shown to us are complete and no modifications exist to any of such documents that were shown to us; (iii) the documents submitted to us as certified or photostatic copies of original documents conform to such original documents; (iv) the originals of such certified or photostatic copies are authentic; and (v) each party other than the Company and the Guarantors that has executed or will execute a document to which the Company or any Guarantor is a signatory has all requisite power and authority and has taken all necessary action to duly and validly execute and deliver such document and to perform the transactions contemplated thereby and such party's obligations thereunder are its legal, valid and binding obligations, and are enforceable against such party in accordance with their respective terms, except as hereinafter noted. We have made no independent investigation of such assumptions, but have no reason to believe that such assumptions are untrue. Our opinion is limited to the laws of the State of Illinois, the Delaware General Corporation Law, and the Federal laws of the United States, and we express no opinion with respect to the laws of any other jurisdiction. Based and relying upon the foregoing, and subject to the qualifications, exceptions, and limitations hereinafter set forth, we are of the opinion that: (a) Holdings has been duly incorporated and is validly existing and is in good standing under the laws of the State of Delaware and has all power and authority necessary to own or hold its properties and conduct the business in which it is engaged. (b) Holdings has all requisite corporate power and authority to execute and deliver each of the Transaction Documents to which each is a party and to perform its obligations thereunder; and all action required to be taken by it for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby has been duly and validly taken. (c) The Indenture has been duly authorized, executed and delivered by Holdings and the Indenture conforms in all material respects with the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder. B-2 (d) The Guarantee (including the guarantee of the Exchange Securities) of Holdings has been duly authorized by Holdings. (e) The Purchase Agreement has been duly authorized, executed and delivered by Holdings; and the Registration Rights Agreement has been duly authorized, executed and delivered by Holdings. (f) Each Transaction Document conforms in all material respects to the description thereof contained in the Preliminary Offering Memorandum and the Offering Memorandum. (g) The execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not (i) to our knowledge, conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of VICORP or any of its subsidiaries pursuant to, any material contract, agreement, indenture, deed of trust or instrument hereto (provided that in each case we express no opinion as to compliance with any financial test or cross-default provision in any such agreement), (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Company or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any governmental or regulatory authority or, to our knowledge, of any court or arbitrator, except, in the case of clauses (i) and (iii) above, for any such conflict, breach or violation that would not, individually or in the aggregate, have a Material Adverse Effect. (h) No consent, approval, authorization, order, registration or qualification of or with any governmental or regulatory authority or, to our knowledge, of or with any court or arbitrator, is required for the execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required (i) under applicable state securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers, and (ii) with respect to the Exchange Securities (including the related Guarantees) under the Securities Act and applicable state securities laws as contemplated by the Registration Rights Agreement and (iii) which would not result in a Material Adverse Effect if not obtained. (i) To our knowledge, except as described in the Offering Memorandum, there are no legal, governmental or regulatory investigations, actions, B-3 suits or proceedings pending to which Holdings or any of the Guarantors is or may be a party or to which any property of Holdings or any of the Guarantors is or may be the subject that, individually or in the aggregate, if determined adversely to the Holdings or any of the Guarantors, could reasonably be expected to have a Material Adverse Effect; and no such investigations, actions, suits or proceedings are threatened or, to the best knowledge of such counsel, contemplated by any governmental or regulatory authority or threatened by others. (j) The information in the Offering Memorandum under the headings "Description of notes," "Exchange offer; registration rights," "Transfer restrictions," "Certain ERISA restrictions" and "Certain United States federal income and estate tax considerations," to the extent that they constitute summaries of matters of law or regulation or legal conclusions, fairly summarize the matters described therein in all material respects. (k) Neither the Company nor any of the Guarantors is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Offering Memorandum none of them will be, an "investment company" or an entity "controlled" by an "investment company" within the meaning of the Investment Company Act. (l) Neither the issuance, sale and delivery of the Securities nor the application of the proceeds thereof by the Company or the Guarantors as described in the Offering Memorandum will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors. (m) Assuming the accuracy of the representations, warranties and agreements of the Company, the Guarantors and the Initial Purchasers contained in the Purchase Agreement, it is not necessary, in connection with the issuance and sale of the Securities to the Initial Purchasers and the offer, resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by the Purchase Agreement and the Offering Memorandum, to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act. We make no representation that we have independently verified the accuracy, completeness or fairness of the statements made in the Offering Memorandum or that the actions taken in connection with the preparation of the Offering Memorandum (including the actions described in the next paragraph) were sufficient to cause the Offering Memorandum to be accurate, complete or fair. We are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the Offering Memorandum except to the extent otherwise explicitly indicated in paragraph (j) above. Nothing has come to our attention that would lead us to believe that the Preliminary Offering Memorandum as of the date thereof and the Offering Memorandum as of the date thereof or hereof, or any amendment or supplement thereto, as of its date or as of the date hereof contained any untrue statement of a material fact or omitted to B-4 state a material fact required to be stated therein or necessary in order to make the statements therein, not misleading; it being understood that we express no opinion as to the financial statements, and supporting schedules included therein or omitted therefrom or other financial data contained in the Preliminary Offering Memorandum or the Offering Memorandum. This opinion is provided to J.P. Morgan Securities, Inc., as representative for the Initial Purchasers solely for the purposes of complying with Section 5(f) of the Purchase Agreement, and it may not be relied upon in any other manner for any other purpose by any other person, except Willkie Farr & Gallagher LLP, New York counsel for the Company and the Guarantors. This opinion may not be quoted in whole or in part or otherwise referred to in any report or document or furnished to any other party except in connection with the matters pertaining to the Purchase Agreement, unless pursuant to our written consent. Very truly yours, SACHNOFF & WEAVER, LTD. Attachments B-5 Annex C Form of Opinion of Gorsuch Kirgis, LLP April 14, 2004 J.P. Morgan Securities Inc. CIBC World Markets Corp. 270 Park Ave. New York, New York 10017 Ladies and Gentlemen: We have acted as special, local counsel in the State of Colorado for VICORP Restaurants, Inc., a Colorado corporation (the "Company"), in connection with a Purchase Agreement dated as of April 6, 2004, by and among the Company, VI Acquisition Corp., a Delaware corporation ("VI"), Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation ("Village Inn") and J.P. Morgan Securities Inc. for itself and on behalf of the several Initial Purchasers listed in Schedule 1 to the Purchase Agreement (the "Purchase Agreement"). The Company will sell $126,530,000 principal amount of its 10-1/2% Senior Notes due 2011 (the "Securities"), unconditionally guaranteed by VI and Village Inn, which will be issued pursuant to an Indenture to be dated as of April 14, 2004 among the Company, VI, Village Inn, and Wells Fargo Bank, National Association, as trustee. Defined terms used herein but not defined herein shall have the definitions set forth in the Indenture. This opinion is being delivered to you pursuant to Section 5(g) of the Purchase Agreement. For the purpose of rendering this opinion, we have reviewed copies of the following documents: a. Purchase Agreement; b. Indenture; c. Registration Rights Agreement by and among the Company, VI, Village Inn and J.P. Morgan Securities, Inc. and CIBC World Markets Corp; d. Specimen of Notes representing the Securities and the Exchange Securities; e. Final Offering Memorandum, dated April 6, 2004; f. Preliminary Offering Memorandum, dated March 22, 2004; g. Amended and Restated Articles of Incorporation of the Company, filed March 31, 2004; C-1 h. Bylaws of the Company, certified by the corporate Secretary; i. Unanimous Written Consent of the Pricing Committee of the Board of Directors of the Company, certified by the corporate Secretary, authorizing the offer and sale of Senior Notes on certain terms and conditions. j. Unanimous Written Consent of the Board of Directors of the Company, certified by the corporate Secretary, authorizing the Offering, the Preliminary Offering Memorandum, the Offering Memorandum, the designation of a Pricing Committee, the Purchase Agreement, the Registration Rights Agreement, the Indenture, the Issuance of Exchange Notes and a Registration Statement, the Exchange Offer and related matters. k. Secretary's Certificate certifying to true, complete and correct copies of (x) the amended and restated articles of incorporation of the Company and all amendments thereto, and (y) the bylaws and any amendments thereto, and certifying that there are no shareholder agreements, voting trusts or similar arrangements applicable to any of the Company's Stock. l. Certificate of Good Standing for the Company issued by the Colorado Secretary of State, having a date of March 31, 2004. m. Incumbency Certificate of the Company, dated April 14, 2004; Items "a" through "d" above are collectively referred to as the "Transaction Documents" and items "g" through "m" above are collectively referred to as the "Organizational Documents." For purposes of this opinion, we have assumed, with your approval and without independent investigation, the following: A. Each document submitted to us for review is accurate and complete, each such document that is an original is authentic, each such document that is a copy conforms to an authentic original, and all signatures on each such document are genuine. B. The correctness of public files, records and certificates, of or furnished by, governmental or regulatory agencies or authorities. C. Each of the Organizational Documents remains in full force and effect and none of the Organizational Documents labeled have been modified, amended, supplemented or superseded. D. The Organizational Documents have been properly executed by the parties. E. We are entitled to rely on the Secretary's Certificate. C-2 Based on the foregoing, it is our opinion that: 1. The Company has been duly organized and is validly existing and in good standing under the laws of the State of Colorado and has all power and authority necessary to own or hold its properties located in Colorado and to conduct the businesses in which it is engaged in Colorado. 2. The Company has all requisite power and authority to execute and deliver each of the Transaction Documents and to perform its obligations thereunder. All necessary corporate action has been taken by the Company to duly and validly authorize the execution and delivery the Transaction Documents and the performance of its obligations thereunder. 3. The Indenture has been duly authorized and executed by the Company. 4. The Securities have been duly authorized and executed by the Company and the Exchange Securities have been duly authorized by the Company. 5. The Purchase Agreement has been duly authorized and executed by the Company; and the Registration Rights Agreement has been duly authorized and executed by the Company. 6. The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the Exchange Securities, and compliance by the Company with the terms thereof and consummation of the transactions contemplated by the Transaction Documents will not (i) result in the violation of the provisions of the Organizational Documents; (ii) result in the violation of any Colorado law or statute, or (iii) to our knowledge, result in the violation of any judgment, decree or order of any court, arbitrator, governmental or regulatory authority specifically directed to the Company, except for, in the case of clause (ii), violations of Colorado securities laws, and except for, in the case of clause (iii), any such violation that would not, individually or in the aggregate, have a Material Adverse Effect. 7. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of each of the Transaction Documents, compliance by the Company with the terms thereof, the consummation of the transactions contemplated by the Transaction Documents, or the issuance and sale of the Securities, except for such consents, approvals, authorizations, orders, registrations or qualifications as may be required under federal or state securities laws. 8. To our knowledge, except as described in the Preliminary Offering Memorandum and the Final Offering Memorandum, (i) there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Company is or may C-3 be a party or to which any property of the Company is or may be the subject that, individually or in the aggregate, if determined adversely to the Company, could reasonably be expected to have a Material Adverse Effect, and (ii) no such investigations, actions, suits or proceedings have been overtly threatened in writing. In addition to the assumptions set forth above, the opinions set forth above are also subject to the following qualifications: i. Whenever the opinions express herein are qualified by the phrase "to our knowledge" or words of similar import, it means that the opinion is limited to the current conscious awareness of facts or other information by the lawyers in this firm who have participated in preparing this opinion, without independent investigation. As special Colorado counsel, we are not involved in the general representation of the Company and have little, if any, factual information of Borrower's affairs beyond the examination of the Organizational Documents and the Transaction Documents. ii. The power and authority of the Company to execute and deliver the Transaction Documents, and the performance of the obligations of the Company under the Transaction Documents will be subject to and may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or similar laws relating to or limiting the rights of creditors generally. iii.We render no opinion with respect to state or federal securities laws, rules or regulations; federal and state tax laws and regulations; nor patent, copyright and trademark and other intellectual property laws and regulations. The foregoing opinion is limited to matters governed by the laws of the State of Colorado in effect as of this date, and we express no opinion with regard to any matter which may be governed by the laws of any other jurisdiction. This opinion is in all respects subject to and may be limited by future legislation as well as developing case law. We do not undertake to update or to revise this opinion in the event of any change in law whether by legislative action, judicial decision, the rights of initiative and referendum guaranteed by Colorado law, or otherwise, or in the event of any change in any factual circumstance. No implication of any other term or statement may be drawn from any express term or statement set forth herein. This opinion is furnished by us as special counsel to the Company and only the Company, the Initial Purchasers, the Trustee and their respective successors and assigns, and their respective legal counsel, and Sachnoff & Weaver, Ltd. are entitled to rely on this opinion. Very truly yours, C-4 Annex D Form of Opinion of Wilkie Farr & Gallagher LLP April 14, 2004 J.P. Morgan Securities Inc. CIBC World Markets Corp. c/o J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 Ladies and Gentlemen: We have acted as special New York counsel to VICORP Restaurants, Inc., a Colorado corporation (the "COMPANY"), VI Acquisition Corp., a Delaware corporation ("HOLDINGS") and Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation (together with Holdings, the "GUARANTORS") in connection with the sale by the Company and the purchase by you (collectively, the "INITIAL PURCHASERS") of $126,530,000 aggregate principal amount of 10-1/2% Senior Notes due 2011 (the "SECURITIES"), guaranteed by the Guarantors, pursuant to the Purchase Agreement, dated April 6, 2004 by and among the Company, the Initial Purchasers and the Guarantors (the "PURCHASE AGREEMENT"). We are providing this opinion to the Initial Purchasers at the request of the Company. Capitalized terms used herein without being defined herein have the respective meanings ascribed thereto in the Purchase Agreement. In such capacity we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Purchase Agreement, the form of the Securities, the Indenture (including each Guarantee set forth therein), the form of the Exchange Securities and the Registration Rights Agreement (collectively, the "Transaction Documents"). In such examination, we have assumed (A) the genuineness of all signatures, (B) the authenticity of all documents submitted to us as originals and the conformity to originals of all documents submitted to us as certified copies or photocopies, (C) the due authorization, execution and delivery of all documents and agreements by all parties thereto, other than the Company and the Guarantors and the binding effect of such documents and agreements of such parties, (D) the legal right and power of all such parties other than the Company and the Guarantors under all applicable laws and regulations to enter into, execute and deliver such agreements and documents, and (E) the absence of any requirement of consent, approval or authorization by any person or entity, including any Governmental Authority, with respect to any party to the Transaction Documents, other than the Company and the Guarantors under Applicable Laws (as hereinafter defined). As to various questions of fact material to such opinions, we have relied upon representations and public filings D-1 made by the Company and the Guarantors, and upon certificates of, or communications with, officers of the Company and the Guarantors. A. Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that: (i) The Indenture has been duly executed and delivered by the Company and each of the Guarantors and, assuming due execution and delivery thereof by the Trustee, constitutes a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with its terms. (ii) The Securities have been duly executed and delivered by the Company and, when duly authenticated as provided in the Indenture and paid for as provided in the Purchase Agreement, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms and will be entitled to the benefits of the Indenture. When the Securities have been duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided in the Purchase Agreement, the Guarantees will be valid and legally binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms and will be entitled to the benefits of the Indenture. (iii) When the Exchange Securities (including the related guarantees) are duly executed, authenticated, issued and delivered as contemplated by the Registration Rights Agreement, they will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company, as issuer, and each of the Guarantors, as guarantor, enforceable against the Company and each of the Guarantors in accordance with their terms and will be entitled to the benefits of the Indenture. (iv) The Purchase Agreement and the Registration Rights Agreement have been duly executed and delivered by the Company and the Guarantors and, when duly executed and delivered by the other parties thereto, each will constitute a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with its terms. (v) The execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not result in the violation of any New York law or statute (assuming compliance with applicable New York securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers, as to D-2 which we express no view) or any judgment, order, rule or regulation of any New York court or arbiter or governmental or regulatory authority, except for any such conflict, breach or violation that would not, individually or in the aggregate, have a Material Adverse Effect. (vi) No consent, approval, authorization, order, registration or qualification of or with any New York court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company and each of the Guarantors of each of the Transaction Documents to which each is a party, the issuance and sale of the Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for each consents, approvals, authorizations, orders and registrations or qualifications as may be required (i) under applicable New York securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers and (ii) with respect to the Exchange Securities (including the related guarantees) under applicable New York securities laws and contemplated by the Registration Rights Agreement. B. Our opinions set forth above are subject to the following qualifications: (i) The opinions set forth above, insofar as they relate to the legality, validity or enforceability of the Transaction Documents, are subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting or limiting the enforcement of creditors' rights generally and to equitable principles affecting the availability of equitable relief (regardless of whether enforcement is considered in a proceeding in equity or at law), including principles of commercial reasonableness or conscionability and an implied covenant of good faith and fair dealing. Such principles of equity are of general application, and in applying such principles, a court, among other things, might not allow a creditor to accelerate the maturity of a debt for an immaterial default. Such principles applied by a court might include a requirement that a creditor act with reasonableness and good faith. Such a requirement might be applied, for example, to any provision of the Transaction Documents purporting to authorize conclusive determinations by any party to the Transaction Documents. The opinions set forth above, insofar as they relate to the enforceability of the Transaction Documents, do not mean or imply that any particular right or remedy contained in the Transaction Documents, whether legal or equitable (such as, without limitation, specific performance) and whether judicial or non-judicial, would necessarily be available or precluded, upon a breach or default under any of the Transaction Documents, even if specifically stated to be available or precluded, as the case may be, but the inclusion of such provisions does not affect the validity of the Transaction Documents, taken as a whole, and the Transaction Documents, taken as a whole, together with applicable law, contain adequate provisions for the practical realization of the benefits granted thereunder. D-3 Insofar as the Transaction Documents provide for indemnification or contribution or waivers of rights or defenses, the enforcement thereof may be limited by public policy considerations or other applicable law. (ii) We express no opinion as to the enforceability of provisions of the Transaction Documents insofar as such provisions relate to (i) severability, (ii) limitations on the effectiveness of oral amendments, modifications, consents and waivers, or (iii) whether the payment of the redemption price of any Securities or Exchange Securities will at the time of such payment be permissible under Applicable Laws. In addition, we express no opinion as to the effect of applicable laws relating to fiduciary duties. (iii) We have made no independent investigations except as specifically set forth herein. (iv) We are members of the bar of the State of New York, and we express no opinion as to the laws of any jurisdiction other than the present laws of the State of New York of a type typically applicable to transactions of the type contemplated by the Transaction Documents and to the specific legal matters expressly addressed herein (the "Applicable Laws"), but excluding any New York rule or regulation applicable to the specific nature of the business of the Company or any Guarantor. The term "Governmental Approval" means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any New York Governmental Authority pursuant to the Applicable Laws. We do not express any opinion as to any document, instrument or agreement entered into at any time by the Company or any Guarantor at any time after the date hereof. (v) As to certain matters governed by the laws of other jurisdictions, we have relied without independent verification on the opinions of Sachnoff & Weaver, Ltd., Gorsuch Kingis, LLP and Myers, Oliver & Price, P.C. dated as of the date hereof and addressed to you. (vi) This opinion letter speaks only as of the date hereof and we undertake no responsibility to update or supplement this opinion letter after the date hereof. This opinion letter is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. (vii) This opinion letter is given solely for the benefit of the Initial Purchasers in connection with the Transaction Documents and may not be relied upon by, nor may copies be delivered to, any other person, entity or agency for any purpose whatsoever. This opinion letter shall not be quoted or otherwise included, summarized or referred to in any publication or document (other than the Purchase Agreement), in whole or in part, for any purposes whatsoever, or furnished to any other person, entity or agency. Very truly yours, D-4 Annex E Form of Opinion of Myers, Oliver & Price, P.C. April 14, 2004 J.P. Morgan Securities Inc. CIBC World Markets Corp. c/o J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 Re: Purchase of Securities of VICORP Restaurants, Inc. Ladies and Gentlemen: We have acted as special counsel in the State of New Mexico for Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation ("VI New Mexico"), a subsidiary of VICORP Restaurants, Inc., a Colorado corporation ("VICORP"), in connection with the sale by VICORP of $150,000,000 aggregate principal amount of VICORP's 10-1/2% Senior Notes due 2011 (the "Notes") unconditionally guaranteed by VI New Mexico and VI Acquisition Corp., a Delaware corporation ("Holdings" and together with VI New Mexico the "Guarantors"), pursuant to the Purchase Agreement dated April 1, 2004, among VICORP, the Guarantors and J.P. Morgan Securities Inc., as representative for the Initial Purchasers. The Notes and Guarantees (as defined in the Purchase Agreement) are to be issued pursuant to an Indenture, dated as of April 14, 2004 (the "Indenture"), among the Company, the Guarantors and Wells Fargo Bank, National Association, a national banking association (the "Trustee"). VI New Mexico is guaranteeing the Notes pursuant to the terms of the Indenture (the "VI New Mexico Guarantee"). Except as otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Purchase Agreement. We have examined, (i) the Purchase Agreement, (ii) the Indenture, (iii) the Registration Rights Agreement, (iv) the articles and bylaws of VI New Mexico, and (v) such other documents, certificates, legal opinions, corporate records, statutes and decisions as we deemed necessary or appropriate for the purposes of this opinion. The documents, agreements and instruments referred to in clauses (i), (ii) and (iii) above are referred to herein as the "Transaction Documents". We have also obtained and relied upon such certificates and assurances from public officials as we have deemed necessary. We have investigated such questions of law and fact for the purpose of rendering this opinion as we have deemed necessary. In rendering the opinions expressed below, we have assumed the following: (i) all signatures appearing in all documents are valid and genuine; (ii) the documents shown to us are complete and no modifications to any of such documents exist; (iii) the E-1 documents submitted to us as certified or photostatic copies of original documents conform to such original documents; (iv) the originals of such certified or photostatic copies are authentic; and (v) each party other than VI New Mexico that has executed or will execute a document delivered in connection with the transactions contemplated by the Purchase Agreement and the Indenture has all requisite power and authority and has taken all necessary action to duly and validly execute and deliver such document and to perform the transactions contemplated thereby and such party's obligations thereunder are its legal, valid and binding obligations, and are enforceable against such party in accordance with their respective terms, (vi) each natural person who has executed or will execute any one or more of the Transaction Documents has sufficient legal capacity to enter into and perform their obligations hereunder, (vii) all parties (other than VI New Mexico) to the Transaction Documents are duly organized, validly existing and in good standing under the laws of their respective jurisdictions of organization, (viii) the conduct of the parties to the Transaction Documents has complied with any requirement of good faith, fair dealing and conscionability and there has been no material mistake of fact, fraud, duress or undue influence, and (ix) VI New Mexico's business as currently conducted consists of owning and operating restaurants in New Mexico and it lawfully conducts such business. We have made no independent investigation of such assumptions, but have no reason to believe that such assumptions are untrue. Certain of the opinions rendered herein are qualified by the discussion following the numbered paragraphs. On the basis of the foregoing, and in reliance thereon, we are of the opinion that: (a) VI New Mexico has been duly organized and is validly existing and in good standing under the laws of the State of New Mexico and has all power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged, except where the failure to be so qualified or have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect. (b) VI New Mexico has full right, power and authority to execute and deliver each of the Transaction Documents and to perform its obligations thereunder; and all action required to be taken for the due and proper authorization, execution and delivery by VI New Mexico of each such Transaction Document and for the consummation by VI New Mexico of the transactions contemplated thereby has been duly and validly taken by VI New Mexico. (c) The Indenture has been duly authorized, executed and delivered by VI New Mexico. (d) The VI New Mexico Guarantee has been duly authorized, executed and delivered by VI New Mexico. (e) The guarantee by VI New Mexico of the Exchange Securities has E-2 been duly authorized by VI New Mexico. (f) The Purchase Agreement has been duly authorized, executed and delivered by VI New Mexico; and the Registration Rights Agreement has been duly authorized, executed and delivered by VI New Mexico. (g) The execution, delivery and performance by VI New Mexico of each of the Transaction Documents to which it is a party, the compliance by VI New Mexico with the terms thereof and the consummation by VI New Mexico of the transactions contemplated by such Transaction Documents will not (i) result in any violation of the provisions of the charter or by-laws or similar organizational documents of VI New Mexico or (ii) result in the violation of any New Mexico law, statute rule or regulation, or, based solely on the Certificate of Secretary, VI New Mexico and our actual knowledge, without additional inquiry, any judgment or order, of any New Mexico court or arbitrator or governmental or regulatory authority. (h) No consent, approval, authorization, order, registration or qualification of or with any New Mexico court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by VI New Mexico of each of the Transaction Documents to which it is a party, the compliance by VI New Mexico with the terms thereof and the consummation by VI New Mexico of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders and registrations or qualifications as may be required (i) under applicable New Mexico securities laws in connection with the purchase and resale of the Securities by the Initial Purchasers and (ii) with respect to the Exchange Securities (including the related guarantees) under the Securities Act and New Mexico securities laws as contemplated by the Registration Rights Agreement. (i) Based only on the Certificate of Secretary, VI New Mexico and our actual knowledge, without additional inquiry, except as described in the Offering Memorandum, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which VI New Mexico is or may be a party or to which any property of VI New Mexico is or may be the subject that, individually or in the aggregate, if determined adversely to VI New Mexico, could reasonably be expected to have a Material Adverse Effect; and no such investigations, actions, suits or proceedings are threatened or, to the best knowledge of such counsel, contemplated by any governmental or regulatory authority or threatened by others. The opinions expressed above are subject to the following qualifications: 1. We express no opinion as to securities laws. 2. We are licensed to practice law only in the State of New Mexico. We express no opinion as to the laws of any jurisdiction other than the laws of New Mexico. E-3 3. We assume no obligation to supplement this opinion if any applicable laws change after the date of this opinion, or if we become aware of any facts that might change the opinions expressed above after the date of this opinion. 4. We make no opinion as to any Transaction Document or document that is referenced in the Transaction Document other than as specifically set forth herein. 5. Section 56-7-1 NMSA 1978 may limit the enforceability of each Transaction Document that contains an indemnification provision, to the extent New Mexico law is applied. This opinion is provided to you solely for the purposes of complying with Section 5(i) of the Purchase Agreement, and it may not be relied upon in any other manner for any other purpose by any other person except as specifically provided below. This opinion may not be quoted in whole or in part or otherwise referred to in any report or document or furnished to any other party except in connection with the matters pertaining to the Purchase Agreement, unless pursuant to our written consent. This opinion shall be rendered to the Initial Purchasers at the request of the Company. This opinion may be relied upon by Sachnoff & Weaver, Ltd. and Willkie Farr & Gallagher in rendering their opinions relating to the transactions described herein and may be relied upon by the Trustee in connection with the transactions described herein. Sincerely, Myers, Oliver & Price, P.C. By:----------------------------------- Kevin J. McCready E-4 Exhibit A [Form of Registration Rights Agreement] REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT dated April 14, 2004 (the "Agreement") is entered into by and among VICORP Restaurants, Inc., a Colorado corporation (the "Company"), VI Acquisition Corp., a Delaware corporation, and Village Inn Pancake House of Albuquerque, Inc. (together, the "Guarantors"), and J.P. Morgan Securities Inc. and CIBC World Markets Corp. (the "Initial Purchasers"). The Company, the Guarantors and the Initial Purchasers are parties to the Purchase Agreement dated April 1, 2004 (the "Purchase Agreement"), which provides for the sale by the Company to the Initial Purchasers of $126,530,000 aggregate principal amount of the Company's 10-1/2% Senior Notes due 2011 (the "Securities") which will be guaranteed on an unsecured senior basis by each of the Guarantors. As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Business Day" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed. "Closing Date" shall mean the Closing Date as defined in the Purchase Agreement. "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Exchange Dates" shall have the meaning set forth in Section 2(a)(ii) hereof. "Exchange Offer" shall mean the exchange offer by the Company and the Guarantors of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof. "Exchange Offer Registration" shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof. "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "Exchange Securities" shall mean senior notes issued by the Company and guaranteed by the Guarantors under the Indenture containing terms identical to the Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. "Guarantors" shall have the meaning set forth in the preamble and shall also include any Guarantor's successors. "Holders" shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the term "Holders" shall include Participating Broker-Dealers. "Initial Purchasers" shall have the meaning set forth in the preamble. "Indenture" shall mean the Indenture relating to the Securities dated as of April 14, 2004 among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, and as the same may be amended from time to time in accordance with the terms thereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities owned directly or indirectly by the Company or any of its affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount. "Participating Broker-Dealers" shall have the meaning set forth in Section 4(a) hereof. "Person" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. 2 "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble. "Registrable Securities" shall mean the Securities; provided that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has been declared effective under the Securities Act and such Securities have been exchanged or disposed of pursuant to such Registration Statement, (ii) when such Securities are eligible to be sold pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the Securities Act or (iii) when such Securities cease to be outstanding. "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of a single counsel for the Underwriters or Holders, as applicable, in connection with blue sky qualification of any Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements of the independent public accountants of the Company and the Guarantors, including the expenses of any special audits or "comfort" letters required by or incident to the performance of and compliance with this Agreement, but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "Registration Statement" shall mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable 3 Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time. "Shelf Effectiveness Period" shall have the meaning set forth in Section 2(b) hereof. "Shelf Registration" shall mean a registration effected pursuant to Section 2(b) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Guarantors that covers all the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are to be covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended from time to time. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "Underwriter" shall have the meaning set forth in Section 3 hereof. "Underwritten Offering" shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public. 2. Registration Under the Securities Act. (a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff of the SEC, the Company and the Guarantors shall use their reasonable best efforts to (i) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Registrable Securities for Exchange Securities and (ii) have such Registration Statement remain effective until 180 days after the closing of the Exchange Offer. The Company and the Guarantors shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their reasonable best efforts to complete the Exchange Offer not later than 60 days after such effective date. 4 The Company and the Guarantors shall commence the Exchange Offer by mailing the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: (i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange; (ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the "Exchange Dates"); (iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement; (iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the appropriate letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) and in the manner specified in the notice, prior to the close of business on the last Exchange Date; and (v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged. As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantors that (i) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of the provisions of the Securities Act, (iii) it is not an "affiliate" (within the meaning of Rule 405 under Securities Act) of the Company or any Guarantor and (iv) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market-making or other trading activities, then such Holder will deliver a Prospectus in connection with any resale of such Exchange Securities. As soon as practicable after the last Exchange Date, the Company and the Guarantors shall: 5 (i) accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities surrendered by such Holder. The Company and the Guarantors shall use their reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff of the SEC. (b) In the event that (i) the Company and the Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be completed as soon as practicable after the last Exchange Date because it would violate any applicable law or applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason completed by November [__], 2004 or (iii) if any Holder shall notify the Company within 30 days after the completion of the Exchange Offer that such Holder is prohibited by law from participating in the Exchange Offer or such Holder may not resell the Securities acquired by it in the Exchange Offer without delivery of a Prospectus and the Prospectus available in the Exchange Offer Registration Statement is not appropriate or available for resales by such Holder, the Company and the Guarantors shall use their reasonable best efforts to cause to be filed as soon as practicable after such determination, date or request, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement declared effective by the SEC. In the event that the Company and the Guarantors are required to file a Shelf Registration Statement pursuant to clause (iii) of the preceding sentence, the Company and the Guarantors shall use their reasonable best efforts to file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer. The Company and the Guarantors agree to use their reasonable best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) under the Securities Act with respect to the Registrable Securities or such shorter period that will terminate when all the Registrable Securities 6 covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (the "Shelf Effectiveness Period"). The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement and the related Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use their reasonable best efforts to cause any such amendment to become effective and such Shelf Registration Statement and Prospectus to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) The Company and the Guarantors shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement and any of such Holder's personal legal fees and expenses (except as expressly set forth in the definition of Registration Expenses). (d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. In the event that either the Exchange Offer is not completed or the Shelf Registration Statement, if required hereby, is not declared effective on or prior to October [__], 2004 (the "Target Registration Date"), the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required hereby, is declared effective by the SEC or the Securities become freely tradable under the Securities Act, up to a maximum of 1.00% per annum of additional interest. If the Shelf Registration Statement has been declared effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 30 consecutive days (or more than 60 days total, whether or not consecutive) in any 12-month period, then the interest rate on the Registrable Securities will be increased by 0.25% per annum commencing on the 31st day or 61st day, as applicable, in such 12-month period (for the first 60 days thereafter and an additional 0.25% per annum with respect to each subsequent 60-day period), in each case ending on such date that the Shelf Registration Statement has again been declared effective or the Prospectus again becomes usable, up to a maximum of 1.00% per annum. 7 (e) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Guarantors acknowledge that any failure by the Company or the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's and the Guarantors' obligations under Section 2(a) and Section 2(b) hereof. 3. Registration Procedures. In connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company and the Guarantors (provided that the Company at its option may file a combined Shelf Registration Statement with the Exchange Offer Registration Statement, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their reasonable best efforts to cause such Registration Statement to become effective and remain effective for the applicable period in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each 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 keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for the Initial Purchasers, to a single counsel for such Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto, in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and the Company and the Guarantors consent to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; 8 (d) use their reasonable best efforts to register or qualify the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC; cooperate with the Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc.; and do any and all other acts and things that may be reasonably necessary or advisable to enable each Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Holder; provided that neither the Company nor any Guarantor shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not so subject; (e) in the case of a Shelf Registration, notify each Holder of Registrable Securities, a single counsel for such Holders and counsel for the Initial Purchasers promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC 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 SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or any Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or any Guarantor receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (vi) of any determination by the Company or any Guarantor that a post-effective amendment to a Registration Statement would be appropriate; (f) use their reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide prompt notice to each Holder of the withdrawal of any such order; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement 9 and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested); (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent with the provisions of the Indenture) as the selling Holders may reasonably request at least one Business Day prior to the closing of any sale of Registrable Securities; (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use their reasonable best efforts to prepare and file with the SEC a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities, 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 the light of the circumstances under which they were made, not misleading; and the Company and the Guarantors shall notify the Holders of Registrable Securities to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and such Holders hereby agree to suspend use of the Prospectus until the Company and the Guarantors have amended or supplemented the Prospectus to correct such misstatement or omission; (j) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or of any document that is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, to the Holders of Registrable Securities and their counsel) and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities or their counsel) available for discussion of such document; and the Company and the Guarantors shall not, at any time after initial filing of a Registration Statement, file any Prospectus, any amendment of or supplement to a Registration Statement or a Prospectus, or any document that is to be incorporated by reference into a Registration Statement or a Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall reasonably object (provided that the failure to provide any objections in writing within five Business Days after receipt shall be deemed approval); 10 (k) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; (l) use reasonable best efforts to cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (m) in the case of a Shelf Registration, make available for inspection by a representative of the Holders of the Registrable Securities (an "Inspector"), any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and a single set of attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of the Company and the Guarantors, and cause the respective officers, directors and employees of the Company and the Guarantors to supply all information reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; provided that if any such information is identified by the Company or any Guarantor as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of any Inspector, Holder or Underwriter the transactions contemplated hereunder); (n) in the case of a Shelf Registration, use their reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued or guaranteed by the Company or any Guarantor are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements; (o) if reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company has received notification of the matters to be incorporated in such filing; and (p) in the case of a Shelf Registration, enter into such customary agreements and take all such other customary actions in connection therewith (including those requested by the Holders of a majority in principal amount of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable 11 Securities including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company and the Guarantors (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "comfort" letters from the independent certified public accountants of the Company and the Guarantors (and, if necessary, any other certified public accountant of any subsidiary of the Company or any Guarantor, or of any business acquired by the Company or any Guarantor for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "comfort" letters in connection with underwritten offerings and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company such information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company and the Guarantors may from time to time reasonably request in writing. In the case of a Shelf Registration Statement, each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in Section 3(e)(iii) or 3(e)(v) hereof, or in Section 3(e)(vi) if the Company reasonably and in good faith determines that sales of Registrable Securities would require premature disclosure of material nonpublic information, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof and, if so directed by the Company and the Guarantors, such Holder will deliver to the Company and the Guarantors all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities that is current at the time of receipt of such notice. 12 If the Company and the Guarantors shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantors shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. The Company and the Guarantors may give any such notice only twice during any 365-day period and any such suspensions shall not exceed 30 days for each suspension and there shall not be more than two suspensions in effect during any 365-day period. The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the offering will be selected by the Majority Holders (and reasonably acceptable to the Company) of the Registrable Securities to be included in such offering. 4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff of the SEC has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker-Dealer") may be deemed to be an "underwriter" within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities. The Company and the Guarantors understand that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act. (b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period of up to 180 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 3 of this Agreement), if requested by the Initial Purchasers or by one or more Participating Broker-Dealers, in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantors further agree that Participating Broker-Dealers shall be authorized to deliver 13 such Prospectus during such period in connection with the resales contemplated by this Section 4. (c) The Initial Purchasers shall have no liability to the Company, any Guarantor or any Holder with respect to any request that they may make pursuant to Section 4(b) above. 5. Indemnification and Contribution. (a) The Company and each Guarantor, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser and each Holder, their respective affiliates, directors and officers and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any Prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser or any Holder furnished to the Company in writing through J.P. Morgan Securities Inc. or any selling Holder expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantors, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the other selling Holders, their respective affiliates, the directors of the Company and the Guarantors, each officer of the Company and the Guarantors who signed the Registration Statement and each Person, if any, who controls the Company, the Guarantors, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement and any Prospectus. 14 (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the "Indemnified Person") shall promptly notify the Person against whom such indemnification may be sought (the "Indemnifying Person") in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 5 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 5. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 5 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded upon advice of counsel that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and any control Persons of such Initial Purchaser shall be designated in writing by J.P. Morgan Securities Inc., (y) for any Holder, its affiliates, directors and officers and any control Persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its prior written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying 15 Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. (d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors on the one hand and the Holders on the other 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 and the Guarantors or by the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company, the Guarantors and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person 16 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. (f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity. (g) The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers or any Holder, their respective affiliates or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the Guarantors, their respective affiliates or the officers or directors of or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement. 6. General. (a) No Inconsistent Agreements. The Company and the Guarantors represent, warrant and agree that (i) 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 any other outstanding securities issued or guaranteed by the Company or any Guarantor under any other agreement and (ii) neither the Company nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. (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 and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 6(b) shall be by a writing executed by each of the parties hereto. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; (ii) if 17 to the Company and the Guarantors, initially at the Company's address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) to such other persons at their respective addresses as provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). 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; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. (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; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities 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. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company or the Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement. (e) Purchases and Sales of Securities. The Company and the Guarantors shall not, and shall use their reasonable best efforts to cause their affiliates (as defined in Rule 405 under the Securities Act) not to, purchase and then resell or otherwise transfer any Registrable Securities. (f) Third Party Beneficiaries. Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder. (g) 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. 18 (h) Headings. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (j) Miscellaneous. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantors and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions. [Remainder of page intentionally left blank] 19 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. VICORP RESTAURANTS, INC. By: ------------------------------- Name: Title: VI ACQUISITION CORP. By: ------------------------------- Name: Title: VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE INC. By: ------------------------------- Name: Title: Confirmed and accepted as of the date first above written: J.P. MORGAN SECURITIES INC. For itself and on behalf of the several Initial Purchasers By------------------------------ Authorized Signatory 20 EX-4.3 14 c86044exv4w3.txt AMENDMENT NO.1 TO PURCHASE AGREEMENT Exhibit 4.3 $126,530,000 VICORP RESTAURANTS, INC. 10-1/2% Senior Notes due 2011 Amendment No. 1 to Purchase Agreement April 14, 2004 J.P. Morgan Securities Inc. As Representative for the Initial Purchasers c/o J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 Ladies and Gentlemen: Reference is made to the Purchase Agreement (the "Purchase Agreement") dated April 6, 2004, among VICORP Restaurants, Inc., a Colorado corporation (the "Issuer"), VI Acquisition Corp., a Delaware corporation, Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation, and J.P. Morgan Securities Inc., as Representative of the several Initial Purchasers listed on Schedule 1 thereto concerning the purchase of the Securities (as defined in the Purchase Agreement) from the Issuer by the Initial Purchasers. Capitalized terms used herein but not defined herein shall have the meanings assigned to such terms in the Purchase Agreement. 1. Amendment to Section 1. The first paragraph of Section 1 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows: "1. Purchase and Resale of the Securities. a) The Company agrees to issue and sell the Securities to the several Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth opposite such Initial Purchaser's name in Schedule 1 hereto at a price equal to 96.5237% of the principal amount thereof plus accrued interest, if any, from April 14, 2004 to the Closing Date. The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein." 2. GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 3. Counterparts. This letter agreement may be executed in one or more counterparts (which may include counterparts delivered by telecopier) and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 4. Amendments. No amendment or waiver of any provision of this letter agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 5. Headings. The headings herein are inserted for the convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this letter agreement. 6. Purchase Agreement. The Purchase Agreement, as amended hereby, remains in full force and effect. If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below. 2 Very truly yours, VICORP RESTAURANTS, INC. By /s/ Anthony Carroll ------------------------------------- Name: Anthony Carroll Title: Chief Financial Officer VI ACQUISITION CORP. By /s/ Anthony Carroll ------------------------------------- Name: Anthony Carroll Title: Vice President and Assistant Secretary VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By /s/ Anthony Carroll ------------------------------------- Name: Anthony Carroll Title: Assistant Secretary Accepted: April 14, 2004 J.P. MORGAN SECURITIES INC. For itself and on behalf of the several Initial Purchasers By /s/ John Abraham ---------------------------- Name: John Abraham Title: Vice President 3 EX-4.4 15 c86044exv4w4.txt REGISTRATION RIGHTS AGREEMENT Exhibit 4.4 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT dated April 14, 2004 (the "Agreement") is entered into by and among VICORP Restaurants, Inc., a Colorado corporation (the "Company"), VI Acquisition Corp., a Delaware corporation, and Village Inn Pancake House of Albuquerque, Inc. (together, the "Guarantors"), and J.P. Morgan Securities Inc. and CIBC World Markets Corp. (the "Initial Purchasers"). The Company, the Guarantors and the Initial Purchasers are parties to the Purchase Agreement dated April 1, 2004 (the "Purchase Agreement"), which provides for the sale by the Company to the Initial Purchasers of $126,530,000 aggregate principal amount of the Company's 10 1/2% Senior Notes due 2011 (the "Securities") which wiLl be guaranteed on an unsecured senior basis by each of the Guarantors. As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Business Day" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed. "Closing Date" shall mean the Closing Date as defined in the Purchase Agreement. "Company" shall have the meaning set forth in the preamble and shall also include the Company's successors. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Exchange Dates" shall have the meaning set forth in Section 2(a)(ii) hereof. "Exchange Offer" shall mean the exchange offer by the Company and the Guarantors of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof. "Exchange Offer Registration" shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof. "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "Exchange Securities" shall mean senior notes issued by the Company and guaranteed by the Guarantors under the Indenture containing terms identical to the Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. "Guarantors" shall have the meaning set forth in the preamble and shall also include any Guarantor's successors. "Holders" shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the term "Holders" shall include Participating Broker-Dealers. "Initial Purchasers" shall have the meaning set forth in the preamble. "Indenture" shall mean the Indenture relating to the Securities dated as of April 14, 2004 among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee, and as the same may be amended from time to time in accordance with the terms thereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities owned directly or indirectly by the Company or any of its affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount. "Participating Broker-Dealers" shall have the meaning set forth in Section 4(a) hereof. "Person" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble. "Registrable Securities" shall mean the Securities; provided that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has been declared effective under the Securities Act and such Securities have been exchanged or disposed of pursuant to such Registration Statement, (ii) when such Securities are eligible to be sold pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the Securities Act or (iii) when such Securities cease to be outstanding. "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of a single counsel for the Underwriters or Holders, as applicable, in connection with blue sky qualification of any Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements of the independent public accountants of the Company and the Guarantors, including the expenses of any special audits or "comfort" letters required by or incident to the performance of and compliance with this Agreement, but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "Registration Statement" shall mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time. "Shelf Effectiveness Period" shall have the meaning set forth in Section 2(b) hereof. "Shelf Registration" shall mean a registration effected pursuant to Section 2(b) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Guarantors that covers all the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are to be covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as amended from time to time. "Trustee" shall mean the trustee with respect to the Securities under the Indenture. "Underwriter" shall have the meaning set forth in Section 3 hereof. "Underwritten Offering" shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public. 2. Registration Under the Securities Act. (a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff of the SEC, the Company and the Guarantors shall use their reasonable best efforts to (i) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Registrable Securities for Exchange Securities and (ii) have such Registration Statement remain effective until 180 days after the closing of the Exchange Offer. The Company and the Guarantors shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their reasonable best efforts to complete the Exchange Offer not later than 60 days after such effective date. The Company and the Guarantors shall commence the Exchange Offer by mailing the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: (i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange; (ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the "Exchange Dates"); (iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement; (iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the appropriate letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) and in the manner specified in the notice, prior to the close of business on the last Exchange Date; and (v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged. As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantors that (i) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of the provisions of the Securities Act, (iii) it is not an "affiliate" (within the meaning of Rule 405 under Securities Act) of the Company or any Guarantor and (iv) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market-making or other trading activities, then such Holder will deliver a Prospectus in connection with any resale of such Exchange Securities. As soon as practicable after the last Exchange Date, the Company and the Guarantors shall: (i) accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities surrendered by such Holder. The Company and the Guarantors shall use their reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff of the SEC. (b) In the event that (i) the Company and the Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be completed as soon as practicable after the last Exchange Date because it would violate any applicable law or applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason completed by November 10, 2004 or (iii) if any Holder shall notify the Company within 30 days after the completion of the Exchange Offer that such Holder is prohibited by law from participating in the Exchange Offer or such Holder may not resell the Securities acquired by it in the Exchange Offer without delivery of a Prospectus and the Prospectus available in the Exchange Offer Registration Statement is not appropriate or available for resales by such Holder, the Company and the Guarantors shall use their reasonable best efforts to cause to be filed as soon as practicable after such determination, date or request, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement declared effective by the SEC. In the event that the Company and the Guarantors are required to file a Shelf Registration Statement pursuant to clause (iii) of the preceding sentence, the Company and the Guarantors shall use their reasonable best efforts to file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer. The Company and the Guarantors agree to use their reasonable best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) under the Securities Act with respect to the Registrable Securities or such shorter period that will terminate when all the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (the "Shelf Effectiveness Period"). The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement and the related Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use their reasonable best efforts to cause any such amendment to become effective and such Shelf Registration Statement and Prospectus to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) The Company and the Guarantors shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement and any of such Holder's personal legal fees and expenses (except as expressly set forth in the definition of Registration Expenses). (d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. In the event that either the Exchange Offer is not completed or the Shelf Registration Statement, if required hereby, is not declared effective on or prior to October 11, 2004 (the "Target Registration Date"), the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required hereby, is declared effective by the SEC or the Securities become freely tradable under the Securities Act, up to a maximum of 1.00% per annum of additional interest. If the Shelf Registration Statement has been declared effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 30 consecutive days (or more than 60 days total, whether or not consecutive) in any 12-month period, then the interest rate on the Registrable Securities will be increased by 0.25% per annum commencing on the 31st day or 61st day, as applicable, in such 12-month period (for the first 60 days thereafter and an additional 0.25% per annum with respect to each subsequent 60-day period), in each case ending on such date that the Shelf Registration Statement has again been declared effective or the Prospectus again becomes usable, up to a maximum of 1.00% per annum. (e) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Guarantors acknowledge that any failure by the Company or the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's and the Guarantors' obligations under Section 2(a) and Section 2(b) hereof. 3. Registration Procedures. In connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company and the Guarantors (provided that the Company at its option may file a combined Shelf Registration Statement with the Exchange Offer Registration Statement, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their reasonable best efforts to cause such Registration Statement to become effective and remain effective for the applicable period in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each 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 keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for the Initial Purchasers, to a single counsel for such Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto, in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and the Company and the Guarantors consent to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; (d) use their reasonable best efforts to register or qualify the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC; cooperate with the Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc.; and do any and all other acts and things that may be reasonably necessary or advisable to enable each Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Holder; provided that neither the Company nor any Guarantor shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not so subject; (e) in the case of a Shelf Registration, notify each Holder of Registrable Securities, a single counsel for such Holders and counsel for the Initial Purchasers promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC 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 SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or any Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or any Guarantor receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (vi) of any determination by the Company or any Guarantor that a post-effective amendment to a Registration Statement would be appropriate; (f) use their reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide prompt notice to each Holder of the withdrawal of any such order; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested); (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent with the provisions of the Indenture) as the selling Holders may reasonably request at least one Business Day prior to the closing of any sale of Registrable Securities; (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use their reasonable best efforts to prepare and file with the SEC a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities, 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 the light of the circumstances under which they were made, not misleading; and the Company and the Guarantors shall notify the Holders of Registrable Securities to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and such Holders hereby agree to suspend use of the Prospectus until the Company and the Guarantors have amended or supplemented the Prospectus to correct such misstatement or omission; (j) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or of any document that is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, to the Holders of Registrable Securities and their counsel) and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities or their counsel) available for discussion of such document; and the Company and the Guarantors shall not, at any time after initial filing of a Registration Statement, file any Prospectus, any amendment of or supplement to a Registration Statement or a Prospectus, or any document that is to be incorporated by reference into a Registration Statement or a Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall reasonably object (provided that the failure to provide any objections in writing within five Business Days after receipt shall be deemed approval); (k) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; (l) use reasonable best efforts to cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (m) in the case of a Shelf Registration, make available for inspection by a representative of the Holders of the Registrable Securities (an "Inspector"), any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and a single set of attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of the Company and the Guarantors, and cause the respective officers, directors and employees of the Company and the Guarantors to supply all information reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; provided that if any such information is identified by the Company or any Guarantor as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of any Inspector, Holder or Underwriter the transactions contemplated hereunder); (n) in the case of a Shelf Registration, use their reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued or guaranteed by the Company or any Guarantor are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements; (o) if reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company has received notification of the matters to be incorporated in such filing; and (p) in the case of a Shelf Registration, enter into such customary agreements and take all such other customary actions in connection therewith (including those requested by the Holders of a majority in principal amount of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company and the Guarantors (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "comfort" letters from the independent certified public accountants of the Company and the Guarantors (and, if necessary, any other certified public accountant of any subsidiary of the Company or any Guarantor, or of any business acquired by the Company or any Guarantor for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "comfort" letters in connection with underwritten offerings and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company such information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company and the Guarantors may from time to time reasonably request in writing. In the case of a Shelf Registration Statement, each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in Section 3(e)(iii) or 3(e)(v) hereof, or in Section 3(e)(vi) if the Company reasonably and in good faith determines that sales of Registrable Securities would require premature disclosure of material nonpublic information, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof and, if so directed by the Company and the Guarantors, such Holder will deliver to the Company and the Guarantors all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities that is current at the time of receipt of such notice. If the Company and the Guarantors shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantors shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. The Company and the Guarantors may give any such notice only twice during any 365-day period and any such suspensions shall not exceed 30 days for each suspension and there shall not be more than two suspensions in effect during any 365-day period. The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the offering will be selected by the Majority Holders (and reasonably acceptable to the Company) of the Registrable Securities to be included in such offering. 4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff of the SEC has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker-Dealer") may be deemed to be an "underwriter" within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities. The Company and the Guarantors understand that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act. (b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period of up to 180 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 3 of this Agreement), if requested by the Initial Purchasers or by one or more Participating Broker-Dealers, in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantors further agree that Participating Broker-Dealers shall be authorized to deliver such Prospectus during such period in connection with the resales contemplated by this Section 4. (c) The Initial Purchasers shall have no liability to the Company, any Guarantor or any Holder with respect to any request that they may make pursuant to Section 4(b) above. 5. Indemnification and Contribution. (a) The Company and each Guarantor, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser and each Holder, their respective affiliates, directors and officers and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any Prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser or any Holder furnished to the Company in writing through J.P. Morgan Securities Inc. or any selling Holder expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantors, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the other selling Holders, their respective affiliates, the directors of the Company and the Guarantors, each officer of the Company and the Guarantors who signed the Registration Statement and each Person, if any, who controls the Company, the Guarantors, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement and any Prospectus. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the "Indemnified Person") shall promptly notify the Person against whom such indemnification may be sought (the "Indemnifying Person") in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 5 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 5. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 5 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person 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 Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded upon advice of counsel that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and any control Persons of such Initial Purchaser shall be designated in writing by J.P. Morgan Securities Inc., (y) for any Holder, its affiliates, directors and officers and any control Persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its prior written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. (d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors on the one hand and the Holders on the other 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 and the Guarantors or by the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company, the Guarantors and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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. (f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity. (g) The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers or any Holder, their respective affiliates or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the Guarantors, their respective affiliates or the officers or directors of or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement. 6. General. (a) No Inconsistent Agreements. The Company and the Guarantors represent, warrant and agree that (i) 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 any other outstanding securities issued or guaranteed by the Company or any Guarantor under any other agreement and (ii) neither the Company nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. (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 and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 6(b) shall be by a writing executed by each of the parties hereto. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; (ii) if to the Company and the Guarantors, initially at the Company's address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) to such other persons at their respective addresses as provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). 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; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. (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; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities 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. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company or the Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement. (e) Purchases and Sales of Securities. The Company and the Guarantors shall not, and shall use their reasonable best efforts to cause their affiliates (as defined in Rule 405 under the Securities Act) not to, purchase and then resell or otherwise transfer any Registrable Securities. (f) Third Party Beneficiaries. Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder. (g) 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. (h) Headings. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (j) Miscellaneous. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantors and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. VICORP RESTAURANTS, INC. By: /s/ Debra Koenig ------------------------------- Name: Debra Koenig Title: Chief Executive Officer VI ACQUISITION CORP. By: /s/ Debra Koenig ------------------------------- Name: Debra Koenig Title: Executive Vice President VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE INC. By: /s/ Debra Koenig ------------------------------- Name: Debra Koenig Title: Chief Executive Officer Confirmed and accepted as of the date first above written: J.P. MORGAN SECURITIES INC. For itself and on behalf of the several Initial Purchasers By /s/ John Abraham ----------------------------------- Authorized Signatory EX-10.1 16 c86044exv10w1.txt STOCKHOLDERS AGREEMENT Exhibit 10.1 EXECUTION COPY STOCKHOLDERS AGREEMENT THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made as of June 13, 2003, by and among (i) VI ACQUISITION CORP., a Delaware corporation (the "Company"), (ii) WIND POINT PARTNERS IV, L.P., WIND POINT PARTNERS V, L.P. and WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P., each of which is a Delaware limited partnership, and WIND POINT ASSOCIATES IV, LLC, a Delaware limited liability company (collectively, "WPP"), (iii) MID OAKS INVESTMENTS LLC, a Delaware limited liability company ("Mid Oaks"), (iv) A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. and A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P., each of which is a Delaware limited partnership (collectively, "AGE"), (v) DEBRA KOENIG ("Koenig"), (vi) WALTER VAN BENTHUYSEN ("van Benthuysen," and together with WPP, Mid Oaks, AGE, Koenig, and any additional purchaser deemed an Investor pursuant to Section 14 hereof, the "Investors"), (vii) the executives and other employees identified on the signature pages to this Agreement (each individually, an "Executive" and collectively the "Executives"), and (viii) each of the entities set forth on Exhibit A attached hereto (the "Initial Warrantholders"), and each of their permitted assigns who executes a counterpart to become a party to this Agreement (collectively, together with the Initial Warrantholders, the "Warrant Security Holders.") The Investors, the Executives and the Warrant Security Holders are collectively referred to herein, along with other stockholders who become parties to this Agreement pursuant to the provisions of Section 14, as the "Stockholders" and each, individually, as a "Stockholder." Capitalized terms used but not otherwise defined herein are defined in Section 12 hereof. In connection with the execution of this Agreement, the Investors and the Executives purchased shares of the Company's Common Stock, par value $0.0001 per share (the "Common Stock"), and shares of the Company's Series A Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), pursuant to that certain Stock Purchase Agreement among the Investors, the Executives and the Company dated as of the date hereof (as amended or supplemented from time to time, the "Stock Purchase Agreement") or otherwise have acquired Common Stock or options to purchase Preferred Stock. In connection with the execution of an Investment Agreement among the Company, VICORP Restaurants Inc., a Colorado corporation and wholly-owned subsidiary of the Company ("VICORP"), and the initial Warrant Security Holders dated as of the date hereof (the "Investment Agreement") and this Agreement, the initial Warrant Security Holders received warrants to purchase shares of Common Stock, subject to adjustment as provided therein (the "Common Warrants") and warrants to purchase a number of shares of Preferred Stock of the Company equal in the aggregate to 6% of all amounts accreted and distributed upon the outstanding Preferred Stock in excess of the initial aggregate liquidation value thereof (the "Preferred Warrants" and, together with the Common Warrants, the "Warrants"). The execution and delivery of this Agreement is a condition to the Investors' purchase of Common Stock and Preferred Stock pursuant to the Stock Purchase Agreement and the issuance of the Warrants pursuant to the Investment Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties to this Agreement hereby agree as follows: 1. Governing Bodies. (a) Voting Agreement. Each Stockholder (other than the Warrant Security Holders) agrees that so long as WPP or any of its Affiliates owns at least twenty percent (20%) of the outstanding Common Stock, such Stockholder shall vote all of such Stockholder's shares of Common Stock and any other voting Securities of the Company over which such Stockholder has voting control and shall take all other actions reasonably necessary or desirable within such Stockholder's control (whether in such Stockholder's capacity as a stockholder, director, member of a board committee or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary and desirable actions within its control (including, without limitation, calling special board and stockholder meetings), so that: (i) the authorized number of members on the Governing Bodies of Company and VICORP shall comprise at least five (5) but no more than seven (7) members; and (ii) the following Persons shall be elected to the Governing Bodies of Company and VICORP: (A) at least two (2) members designated by WPP (the "WPP Members"); (B) one (1) member designated by Mid Oaks (during such times as Mid Oaks holds at least 85,655 shares (as adjusted for stock splits, stock dividends, recapitalizations and the like) of the Common Stock and subject to WPP's reasonable approval (the "Mid Oaks Member"); provided, however, that during such times as Mid Oaks holds less than 85,655 shares (as adjusted for stock splits, stock dividends, recapitalizations and the like) of the Common Stock, there shall be no Mid Oaks Member and, in order to fill the vacancy created by the absence of the Mid Oaks Member, there shall be an additional WPP Member designated by WPP, and provided further that for purposes of this section Mid Oaks shall be deemed to own any shares that are transferred by Mid Oaks to its Affiliates or employees pursuant to Section 5(f)(ii); (C) up to three (3) members designated by WPP (the "Outside Members"); provided that no Outside Member shall be (x) a member of the Company's management or an employee or officer of the Company or its subsidiaries, or (y) a member of WPP's management or management of any of its affiliates, it being understood that nothing in this clause (y) shall disqualify any person from being an "Outside Member" solely by reason of (A) such person holding an ownership interest in any WPP executive advisor entity and/or (B) such person serving as a director or non-executive chairman of any WPP or Company affiliate; and 2 (D) one (1) member designated by WPP who shall be an executive officer of the Company; it being understood that so long as WPP owns at least twenty percent (20%) of the outstanding Common Stock, WPP shall at all times have the right, exercisable in its sole discretion, to select at least a majority of any Governing Body; (iii) the removal from any Governing Body (with or without cause) of any WPP Member or the Mid Oaks Member, if applicable, shall be only upon the written request to the Board of the Stockholder or Stockholders entitled to designate such director pursuant to Section 1(a)(ii) above; (iv) in the event that any representative designated hereunder for any reason ceases to serve as a member of any Governing Body during his or her term of office, the resulting vacancy on the Governing Body shall be filled by a representative designated by the Person or Persons entitled to designate such director pursuant to Section 1(a)(ii) above; and (v) if any party fails (but is otherwise entitled) to designate a representative to any Governing Body pursuant to the terms of this Section 1, the election of a Person to such Governing Body shall be accomplished in accordance with the Organizational Documents and applicable law; provided that the parties shall take all necessary actions to remove such individual if the party or parties which failed (and are otherwise entitled) to designate such a representative so directs. (b) Other Subsidiaries. The Governing Bodies of VICORP's subsidiaries shall be comprised as determined by the Governing Body of VICORP. (c) Required Meetings; Expenses; Insurance. There shall be at least four (4) meetings of the Governing Body of Company during every fiscal year, at least one (1) of which shall be held in each ninety (90) day period during the Company's fiscal year. The Company or VICORP, as the case may be, shall pay all out-of-pocket expenses incurred by each member of such Person's Governing Body in connection with attending regular and special meetings of that Governing Body. The Company and VICORP, as applicable, shall maintain customary directors and officers' insurance covering members of such Person's Governing Body in amounts commensurate with similarly-situated companies. (d) Observer Rights. (i) The following persons shall have observer rights with respect to meetings of the Governing Bodies of the Company and its subsidiaries, and any committees of such Governing Bodies (the person or persons so designated to serve as an observer, the "Observer"), and the Company, VICORP or the relevant subsidiary, as the case may be, will reimburse such Observer for all reasonable out-of-pocket costs incurred by such Person in connection with traveling to and from and attending such meetings: (A) So long as any Warrants, Warrant Stock or Notes remain outstanding, the Company will, and will cause its subsidiaries to, (i) permit the Warrant Security Holders (other than Gleacher Mezzanine Fund P, L.P.) to have a total of three (3) Observers, who 3 shall be designated from time to time by the holders of the Warrants or Warrant Stock (other than Gleacher Mezzanine Fund P, L.P.). (B) So long as AGE holds at least 34,262 shares (as adjusted for stock splits, stock dividends, recapitalizations and the like) of Common Stock, the Company will, and will cause its subsidiaries to, (i) permit AGE to have one (1) Observer, who shall initially be Patricia A. Dahl. (C) If WPP and its Affiliates cease to hold at least twenty (20%) of the issued and outstanding Common Stock and there are no longer any WPP Members, but WPP (or any of its Affiliates) still continue to hold Common Stock, then WPP shall have the right to designate one (1) Observer. (ii) The Observer shall be sent notice of the time and place of any such meetings in the same manner and at the same time as notice is sent to members of the applicable Governing Body and any committees thereof and shall be sent copies of all notices, reports, minutes, consents and other documents at the time and in the manner as they are provided to the other members of the relevant Governing Body and/or committee thereof. (iii) Notwithstanding the foregoing, any Observer may be temporarily excluded from meetings of any Governing Body or committee thereof and materials provided to the Observer in connection with such meetings may be redacted if: (A) the reason for such exclusion or such redaction is solely to preserve an attorney-client privilege available to the Company or any subsidiary, as applicable, that would be lost absent such exclusion or redaction; and (b) such exclusion or such redaction (as the case may be) is necessary to preserve such attorney-client privilege and otherwise is required in the good faith determination of the applicable Governing Body, and such Governing Body delivers to the excluded Observer an opinion of independent counsel to the effect that such exclusion or redaction is necessary to preserve such privilege and a certificate of an executive officer of the Company or the relevant subsidiary, as the case may be, that such exclusion or redaction, as the case may be, is material to such entity. (e) Quorum. At all meetings of any Governing Body, members entitled to cast a majority of the votes of the entire Governing Body shall constitute a quorum for the transaction of business and the act of members entitled to cast a majority of the votes present at any meeting at which there is a quorum shall be the act of the Governing Body, except as may be otherwise specifically provided by Delaware law or by the Organizational Documents of the Company. Notwithstanding the foregoing, for so long as WPP holds twenty percent (20%) or more of the outstanding Common Stock, a quorum shall not be present for the transaction of business of any Governing Body unless all of the WPP Members shall be present at a meeting of such Governing Body. If a quorum shall not be present at any meeting of the Governing Body, then the members of the Governing Body present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 2. Irrevocable Proxy; Conflicting Agreements. (a) Grant of Proxy. In order to secure each Executive's and each Additional Executive's obligation to vote his or her Common Stock and other voting securities of the 4 Company in accordance with the provisions of Section 1 and Section 7 hereof, and for other good and valuable consideration, each Executive and each Additional Executive hereby appoints Wind Point Partners V, L.P., as his or her true and lawful proxies and attorneys-in-fact, with full power of substitution, to vote all of his or her Common Stock and other voting securities of the Company on all matters that may be submitted to a vote of the holders of Common Stock. Wind Point Partners V, L.P. may exercise the irrevocable proxies granted to it hereunder at any time any Executive or any Additional Executive fails to comply with the provisions of this Agreement. The proxies and powers granted by each Executive and each Additional Executive pursuant to this Section 2 are coupled with an interest and are given to secure the performance of each Executive's and each Additional Executive's obligations to the Investors under this Agreement. Such proxies and powers will be irrevocable for the term of this Agreement and will survive the death, incompetency and disability of each Executive and each Additional Executive and the respective holders of their Securities. (b) No Conflict. Each Stockholder represents that he, she or it has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and no Holder of Securities shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement; provided that this Section 2(b) applies to the Warrant Security Holders only with respect to Section 7. 3. Legend. Each certificate evidencing Securities and each certificate issued in exchange for or upon the transfer of any Securities (if such shares remain Securities as defined herein after such transfer) shall (in addition to any other legends required by the terms of such Securities or the agreements under which such Securities were issued) be stamped or otherwise imprinted with a legend in substantially the following form: "The securities represented by this certificate were originally issued on ___________, 2003 and have not been registered under the Securities Act of 1933, as amended. The transfer of the securities represented by this certificate is subject to the conditions specified in the Stockholders Agreement dated as of ______________, 2003, among the issuer (the "Company") and certain investors, and the Company reserves the right to refuse the transfer of such securities until such conditions have been fulfilled with respect to such transfer. A copy of such conditions shall be furnished by the Company to the holder hereof upon written request and without charge." The Company shall imprint such legend on certificates evidencing Securities outstanding prior to the date hereof. The legend set forth above shall be removed from the certificates evidencing any securities that cease to be Securities. 4. Disposition of Securities. No Holder may transfer, sell, convey, exchange, pledge, hypothecate or otherwise dispose of (collectively, "Transfer") any Securities, except in compliance with Sections 5, 6, 7, 8 and 13 hereof, pursuant to Sections 1 or 2 of the Registration Rights Agreement or pursuant to Rule 144 promulgated pursuant to the Securities Act. Any attempted Transfer other than in accordance with this Agreement shall be null and void. In 5 addition to the foregoing, no Executive or Additional Executive may Transfer any Executive Shares until they become vested pursuant to such Executive's or Additional Executive's Senior Management Agreement. The provisions of this Section 4 are subject, as to each Executive or Additional Executive, to the Company's Repurchase Option (as that term is defined in such Executive's or Additional Executive's Management Agreement). 5. Right of First Refusal. Prior to making any Transfer (other than pursuant to Section 5(f) or pursuant to Sections 6, 7 or 8 hereof), any Stockholder proposing such Transfer (a "Disposing Stockholder"), the Disposing Stockholder agrees not to consummate any such Transfer until the parties to the Transfer have been finally determined pursuant to this Section 5 (the "Authorization Date"). (a) Sale Notice by Disposing Stockholder. The Disposing Stockholder will deliver a written notice (the "Sale Notice") to the Company, and each of the other Holders who are not the Disposing Stockholder (collectively, the "Other Stockholders") disclosing in reasonable detail the identity of the prospective transferees, the Securities proposed to be Transferred (the "Offered Securities") and the terms and conditions of the proposed Transfer. (b) Company Election. The Company may elect to purchase all or a portion of the Offered Securities upon the same terms and conditions as those set forth in the Sale Notice by delivering a written notice of such election to the Disposing Stockholder and Other Stockholders within fifteen (15) days after the receipt of the Sale Notice by the Company. If the Company elects to purchase less than all of the Offered Securities, it will so notify the Other Stockholders (the "Availability Notice," and the Offered Securities that the Company did not subscribe for (the "Available Securities"). (c) Purchase by Other Stockholders. Each Other Stockholder may elect to purchase all or a portion of its pro-rata portion (calculated with reference to Diluted Common Stock or Diluted Preferred Stock, as applicable) of the Available Securities upon the same terms and conditions as those set forth in the Sale Notice by delivering a written notice of such election to the Disposing Stockholder and the Company within fifteen (15) days after the receipt of the Availability Notice from the Company. In the event that any Other Stockholder elects to purchase less than its pro-rata portion of the Available Securities (the nonsubscribed portion, the "Nonsubscribed Available Securities" and the Other Stockholder so electing, the "Undersubscribing Stockholder"), the Company will notify (the "Undersubscription Notice") the Other Stockholders who have elected to fully exercise their rights hereunder (the "Subscribing Stockholders"). (d) Purchase by Subscribing Stockholders. Any Subscribing Stockholder may elect to purchase all of such Subscribing Stockholder's pro-rata portion of the Nonsubscribed Available Securities (allocated pro-rata based upon such Subscribing Stockholder's respective ownership of Diluted Common Stock or Diluted Preferred Stock, as applicable, compared to the aggregate ownership of Diluted Common Stock or Diluted Preferred Stock, as applicable, of all Subscribing Stockholders) upon the same terms and conditions as those set forth in the Sale Notice by delivering a written notice of such election to the Disposing Stockholder and the Company within fifteen (15) days after the receipt of Undersubscription Notice. 6 (e) Time for Completion. If the Other Stockholders and/or the Company have not elected to purchase all of the Offered Securities within forty-five (45) days after the delivery of the Sale Notice, or have so elected to purchase the Offered Securities but have not consummated the purchase of the Offered Securities within sixty (60) days of the delivery of the Sale Notice, the Disposing Stockholder may Transfer the Offered Securities not purchased by the Other Stockholders and/or the Company at a price and on terms no more favorable to the transferees thereof than those specified in the Sale Notice, during the thirty (30) day period immediately following the Authorization Date; provided, however, that the transferee shall not be a Competitor of the Company. Any Securities not transferred within such thirty (30) day period will again be subject to the provisions of this Section 3 upon subsequent Transfer. (f) Exception for Certain Transfers. Notwithstanding the foregoing or anything herein to the contrary, provided that the Transferees agree to be bound by the provisions of this Agreement to the same extent as their Transferors, the provisions of this Section 5 shall not apply to the following Transfers: (i) Transfers by WPP of Preferred Stock and/or Common Stock purchased by WPP under the Stock Purchase Agreement on the Closing Date to (A) any of WPP's Affiliates (other than transfers to another portfolio company) or (B) prior to the first anniversary of the Closing Date, in such amounts as, following the completion of each such Transfer, result in WPP still holding at least 49,143.50 shares of Preferred Stock and 856,500 shares of Common Stock. (ii) Transfers (A) by Mid Oaks of Preferred Stock and/or Common Stock purchased by Mid Oaks under the Stock Purchase Agreement on the Closing Date to up to five employees of Mid Oaks, in an aggregate amount not to exceed five percent (5%) of Mid Oaks' Preferred Stock and Common Stock, provided that any Transfers to Persons who are not residents of Illinois and Accredited Investors shall be subject to WPP's prior approval and provided further that in connection with any such Transfer Mid Oaks will provide evidence reasonably satisfactory to WPP that each such Person has granted to Mid Oaks an irrevocable proxy equivalent to that granted to WPP by the Executives in Section 2(a), and (B) by any such employees back to Mid Oaks. (iii) Transfers by any Warrant Security Holders of Warrants or Warrant Stock to (A) any Affiliate, or (B) any Person in connection with a transfer of the Notes; provided, however, that the Warrant Security Holders will not Transfer the Warrants or Warrant Stock to any Person who (x) is a Competitor or (y) is not an institutional investor, business development company or equity fund investor. (g) Company Repurchase Option. The provisions of this Section 5 are subject, as to each Executive or Additional Executive, to the Company's Repurchase Option. 6. Tag-Along. (a) Notice of Sale. Subject to Section 6(d), if at any time prior to an Initial Public Offering a Major Stockholder (a "Disposing Significant Stockholder") shall wish to Transfer any of the shares of Common Stock and/or Preferred Stock owned by such Disposing Significant Stockholder pursuant to an offer to or from a third party (the "Buyer"), then such Disposing 7 Significant Stockholder shall notify each of the non-disposing Investors and each of the Warrant Security Holders in writing (a "Tag-Along Sale Notice"), of such offer and its terms and conditions. (b) Right to Participate in Sale. Upon receipt of a Tag-Along Sale Notice, the non-disposing Investors and each of the Warrant Security Holders shall have the right to sell to the Buyer (the "Tag-Along Sale"), on the same terms and conditions applicable to the Disposing Significant Stockholder, in lieu of the sale to the Buyer by the Disposing Significant Stockholder, that number of shares of Common Stock and/or Preferred Stock, as applicable, equal to the product attained by multiplying (a) the number of shares of Diluted Common Stock and/or Preferred Stock, as applicable, to be sold to the Buyer times (b) the quotient derived by dividing (i) the number of shares of Diluted Common Stock and/or Preferred Stock, as applicable, held (or deemed to be held) by such non-disposing Investors by (ii) the total number of shares of Diluted Common Stock and Preferred Stock, as applicable, held (or deemed to be held) by such selling non-disposing Investors, such Warrant Security Holders and such Disposing Significant Stockholder. The non-disposing Investors' and Warrant Security Holders' rights to sell pursuant to this Section 6 can be exercised by delivery of a written notice to the Disposing Significant Stockholder within thirty (30) days following the delivery of the Tag-Along Sale Notice to the non-disposing Investors and the Warrant Security Holders of the proposed sale to the Buyer by such Disposing Significant Stockholder. In participating hereunder, the Warrant Security Holders shall be treated as if they owned the underlying Preferred Stock without exercise of the Preferred Warrants and shall be entitled to sell their Preferred Warrants in lieu of exercising such Warrants and selling the underlying Preferred Stock. (c) Failure to Provide Notice of Participation. In the event that any of the non-disposing Investors or Warrant Security Holders do not deliver to such Disposing Significant Stockholder a notice within such thirty (30) day period, such Disposing Significant Stockholder may proceed with such sale to such Buyer at the same price and on substantially the same terms and conditions set forth in such Tag-Along Sale Notice. (d) Certain Exceptions. Notwithstanding the foregoing or anything herein to the contrary: (i) The provisions of this Section 6 shall not apply to any Transfers by WPP of Preferred Stock and/or Common Stock purchased by WPP under the Stock Purchase Agreement on the Closing Date (A) to any of WPP's Affiliates (other than to any portfolio company), or (B) prior to the first anniversary of the Closing Date, in such amounts as, following the completion of each such Transfer, result in WPP still holding at least 49,143.50 shares of Preferred Stock and 856,500 shares of Common Stock. (ii) The provisions of this Section 6 shall not apply to any Transfers (A) by Mid Oaks of Preferred Stock and/or Common Stock purchased by Mid Oaks under the Stock Purchase Agreement on the Closing Date to up to five employees of Mid Oaks, in an aggregate amount not to exceed five percent (5%) of Mid Oaks' Preferred Stock and Common Stock, and (B) by any such employees back to Mid Oaks. 8 (iii) In the case of a Transfer by Mid Oaks, no other Investor shall be entitled to participate in such Transfer pursuant to this Section 6, although Mid Oaks will provide them with the notice specified in Section 6(a). (iv) In the case of a Transfer by AGE, no other Investor shall be entitled to participate in such Transfer pursuant to this Section 6, although AGE will provide them with the notice specified in Section 6(a). (e) Limitations on Warrant Security Holder Representations. Notwithstanding anything herein to the contrary, no Warrant Security Holder shall be required (A) to make representations and warranties in connection with a Tag-Along Sale, except representations and warranties with respect to such Warrant Security Holder's authority, and title and ownership of the Warrants or Warrant Stock owned by it, (B) except as provided in (C) below, to indemnify the buyer or any other person in connection with a Tag-Along Sale other than for a breach of a representation or warranty made by the Warrant Security Holder pursuant to clause (A) above or (C) to make a payment in connection with any indemnification obligation to the buyer (other than an indemnification obligation for a breach of a representation made by the Warrant Security Holder pursuant to clause (A), above) or a purchase price adjustment for an amount that exceeds the lesser of (1) such Warrant Security Holder's pro rata share of such indemnification obligation or purchase price adjustment obligation, based on such Warrant Security Holder's pro rata share of the aggregate net proceeds received by all of the participating Holders in connection with the Tag-Along Sale, or (2) the amount of the net proceeds received by such Warrant Security Holder in the Tag-Along Sale. (f) Additional Limitations. The provisions of this Section 6 shall cease to apply following completion of an Qualified Public Offering, and are further subject, as to each Executive or Additional Executive, to the Company's Repurchase Option. 7. Sale of the Company. (a) Approval of Sale. Subject to the other applicable terms of this Agreement, including, without limitation, Section 7(b) hereof, if the Company's Governing Body by a vote that includes all of the WPP Directors approves a Sale of the Company to an Independent Third Party (an "Approved Sale"), each Holder shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, each Holder shall waive any dissenters' rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock, each Holder shall agree to sell all of its, his or her Securities and rights to acquire Securities on the terms and conditions approved by the Board. Each Holder shall take, at the expense of the Company, all necessary actions in connection with the consummation of the Approved Sale as reasonably requested by the Company. (b) Conditions to Approval. The obligations of the Holders to participate in the Approved Sale of the Company are subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale, each Holder shall receive the same form and amount of consideration (in proportion to the respective amounts of each class of 9 Security that such Holder owns or has the right to acquire, but with identical rights and preferences, without giving effect to any minority or majority ownership interests or voting interests) as each other Holder of such class of Security or if any Holders are given an option as to the form and amount of consideration to be received, each such Holder shall be given the same option (in proportion to the respective amounts of each class of Security that such Holder owns or has the right to acquire, but with identical rights and preferences, without giving effect to any minority or majority ownership interests or voting interests); and (ii) each Warrant Security Holder shall have the option, in lieu of participating in the Approved Sale as provided in Section 7(b)(i), to elect to sell to the buyer(s) in such Approved Sale all (but not less than all) of the Warrants or Warrant Shares then held by such Warrant Security Holder, with the purchase price for such sale to be equal to the price being paid under Section 7(b)(i) but the consideration to be delivered being cash or cash equivalents (subject to indemnity or holdback obligations as provided in Section 7(e)) regardless of the form of consideration received by the other Holders in the Approved Sale. Any such election by a Warrant Security Holder must be made within three (3) business days following notice to the Warrant Security Holder that the Company's Governing Body has approved the Sale of the Company. (c) Purchaser Representative. If the Company or the Holders enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), then those Holders that do not qualify at the time as Accredited Investors shall, at the request of the Company, appoint a "purchaser representative" (as such term is defined in Rule 501) reasonably acceptable to the Company. If any Holder appoints a purchaser representative designated by the Company, the Company shall pay the fees of such purchaser representative. However, if any Holder declines to appoint the purchaser representative designated by the Company, such Holder shall appoint another purchaser representative (reasonably acceptable to the Company), and such Holder shall be responsible for the fees of the purchaser representative so appointed. (d) Costs. All Holders will bear their pro-rata share (based upon their pro rata share of the aggregate net proceeds of the sale of all such Securities) of any reasonable costs related to the sale of Securities pursuant to an Approved Sale to the extent such costs are not otherwise paid by the Company or the acquiring party and to the extent such costs are incurred on behalf of all Holders. Costs incurred by the Holders on their own behalf shall not be considered costs of the Approved Sale. (e) Limitations on Holder Obligations. Notwithstanding anything herein to the contrary, no Holder shall be required (A) to make representations and warranties in connection with an Approved Sale, except representations and warranties with respect to such Holder's authority, and title and ownership of the Securities owned by it, (B) except as provided in (C) below, to indemnify the buyer or any other person in connection with an Approved Sale other than for a breach of a representation or warranty made by the Holder pursuant to clause (A) above or (C) to make a payment in connection with any indemnification obligation to the buyer (other than an indemnification obligation for a breach of a representation made by the Holder pursuant to clause (A), above) or a purchase price adjustment for an amount that exceeds the 10 lesser of (1) such Holder's pro rata share of such indemnification obligation or purchase price adjustment obligation, based on such Holder's pro rata share of the aggregate net proceeds received by all of the Holders in connection with the Approved Sale, or (2) the amount of the net proceeds received by such Holder in the Approved Sale. (f) Termination of Provisions. The provisions of this Section 7 shall cease to apply following completion of an Initial Public Offering. 8. Permitted Transfers. Any Stockholder may transfer Securities (other than Securities held by an Executive or Additional Executive that have not become vested pursuant to his or her Senior Management Agreement) without complying with Sections 4, 5, and 6 hereof to Permitted Transferees who consent in writing delivered to the Company to be bound by the terms of this Agreement. With respect to any Executive or Additional Executive, a "Permitted Transferee" means the spouse or lineal descendants of such Executive or Additional Executive, any trust for the benefit of such Executive or Additional Executive, or the benefit of the spouse or lineal descendants of such Executive or Additional Executive, any corporation, partnership or limited liability company in which such Executive or Additional Executive, the spouse and the lineal descendants of such Executive or Additional Executive are the direct and beneficial owners of all of the equity interests (provided such Executive or Additional Executive, spouse and lineal descendants agree in writing to remain the direct and beneficial owners of all such equity interests), and the personal representative of such Executive's or Additional Executive's estate or upon such Executive's or Additional Executive's incompetency for purposes of the protection and management of the assets of such Executive or Additional Executive. With respect to a Holder other than an Executive or Additional Executive, a "Permitted Transferee" means any Affiliate of such Holder, other than in the case of a Transfer by an Investor to another portfolio company. 9. Preemptive Rights. Subject to the limitations set forth in Subsection 9(d) below, each time the Company or any of its Subsidiaries proposes to issue any equity securities, or other securities of any kind that are or may become convertible into any equity securities (collectively, "New Issue Securities") to any Person, the Company shall, or shall cause its Subsidiary to, first offer the New Issue Securities to the Holders in accordance with the following provisions: (a) The Company shall give a notice to each Holder hereunder (the "First Notice") stating (i) its intention to issue the New Issue Securities; (ii) the number and description of such shares or the amount of the New Issue Securities to be issued; (iii) the purchase price (calculated as of the proposed issuance date) and the other terms upon which the Company is offering the New Issue Securities; and (iv) the names of the Persons to whom the Company seeks to issue such New Issue Securities. (b) Transmittal of the First Notice to the Holders by the Company shall constitute an offer by the Company to sell each Holder his, her or its proportionate number (based upon his, her or its percentage ownership of the total number of shares of Diluted Common Stock or Diluted Preferred Stock), or any lesser number specified by the Holder, of the New Issue Securities for the price and upon the terms set forth in the First Notice. For a period of twenty (20) days after the submission of the First Notice to the Holders, each Holder shall have the option, exercisable by written notice to the Company, to accept the Company's offer as to all or 11 any part of such Holder's proportionate number or any lesser number of the New Issue Securities. If two or more types of New Issue Securities are to be issued or New Issue Securities are to be issued together with other types of securities, including, without limitation, debt securities, in a single transaction or related transactions, the rights to purchase New Issue Securities granted to the Holders under this Section 9 must be exercised to purchase all types of New Issue Securities and such other securities in the same proportion as such New Issue Securities and other securities are to be issued by the Company. If the Holders (as a group) agree to purchase less than the total number of New Issue Securities proposed to be issued and sold, any Holder may condition its agreement to purchase the New Issue Securities upon the sale of the balance to unaffiliated third parties. (c) In the event that any Holder does not exercise his, her or its option with respect to all of the New Issue Securities in accordance with Subsection 9(b), the Company, upon notice from such Holder of such Holder's decision not to accept the Company's offer as to all of his, her or its pro rata portion of the New Issue Securities (or upon expiration of the twenty-day option period referred to in Subsection 9(b) if such Holder fails to give notice as aforesaid), shall offer to sell the New Issue Securities which have not been subscribed for to those Holders who have elected to exercise their rights hereunder (allocated pro rata based upon such Holders' respective ownership of Diluted Common Stock or Diluted Preferred Stock compared to the aggregate ownership of Diluted Common Stock or Diluted Preferred Stock of all such Holders electing to purchase if it is over-subscribed). Thereafter, if all of the New Issue Securities proposed to be issued and sold have not been subscribed for within thirty (30) days, the Company shall have one hundred twenty (120) days thereafter to sell any or all of the remaining New Issue Securities (i.e., those not to be sold to any Holder) to the Person or Persons set forth in the First Notice, upon terms and conditions no less favorable to the Company, and no more favorable to such Person or Persons, than those set forth in the First Notice. In the event the Company has not sold such New Issue Securities within said one hundred twenty (120) day period, the Company will not thereafter issue or sell and New Issue Securities without first offering such New Issue Securities to the Holders in the manner provided above. (d) The preemptive rights contained in this Section 9 shall not apply to: (i) the issuance by the Company of up to an aggregate of (A) 71,000 shares of Preferred Stock (as adjusted for stock splits, stock dividends, recapitalizations and the like) and (B) 1,462,800 shares of Common Stock (as adjusted for stock splits, stock dividends, recapitalizations and the like), which shares are issued on the Closing Date or may be issued subsequently pursuant to Preferred Stock purchase options issued to certain Executives on the Closing Date for an aggregate of 1,571.102 shares of Preferred Stock and (C) 37,200 shares of Common Stock reserved for future issuance; (ii) the issuance and sale by the Company, from time to time pursuant to plans, programs or agreements approved by the Governing Body of the Company, of shares of Common Stock, or options, rights, or warrants to acquire shares of Common Stock, or of securities convertible or exchangeable for shares of Common Stock, to employees, officers, or members of the Governing Body of the Company (other than members who are Affiliates of WPP), as compensation for their services to the Company or any of its wholly-owned subsidiaries ("Incentive Common Stock"), provided that Incentive Common Stock shall not be transferred to WPP; (iii) the issuance of shares of Common Stock of the Company to the Warrant Security Holders in connection with the exercise of the Warrants; (iv) securities offered in a Qualified Public Offering; and/or (v) securities approved for issuance by the Company's 12 Governing Body in connection with the acquisition of another business entity (which is an Independent Third Party) by the Company by merger, purchase of all or substantially all of such other business entity's assets, or by other reorganization whereby the Company ends up owning, directly or indirectly, greater than 50% of the voting power of such business entity. 10. Representations and Warranties. Each of the Holders (other than the Warrant Security Holders, it being acknowledged that the Warrant Security Holders are making certain similar representations to the Company pursuant to the Investment Agreement), hereby represents and warrants to the following with respect to himself, herself or itself, as the case may be: (a) Authorization. All corporate, partnership, member or other action on the part of the Holder, its directors, holders, members or partners necessary for the authorization, execution, delivery and performance by such Holder (if a corporation, partnership, limited liability company or other entity) of this Agreement has been taken. This Agreement is a legal, valid and binding obligation of such Holder, enforceable against such Holder strictly in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditor's rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (b) No Violation. The execution and delivery of this Agreement will not (with or without notice or passage of time or both) (a) conflict with or result in a breach of any provision of the certificate of incorporation, by-laws, partnership agreement, operating agreement or other organizational documents of a Holder (if a corporation, partnership, limited liability company or other entity), (b) result in a default, give rise to any right of termination, cancellation or acceleration, or require any consent or approval, under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, loan, factoring arrangement, license, agreement, lease or other instrument or obligation to which such Holder is a party or by which it or any of its assets may be bound, other than, any default which would not have a material adverse effect on the business, operations, financial condition, assets or properties of such Holder or (c) violate any law, judgment, order, writ, injunction, decree, statute, rule or regulation of any court, administrative agency, bureau, board, commission, office, authority, department or other governmental entity applicable to such Holder or any of its assets, other than, any violation which would not have a material adverse effect on the business, operations, financial condition, assets or properties of such Holder. (c) Differential Rights. Although each Holder of Securities may hold one or more of the same classes or series of the Company's securities, WPP has requested and received certain additional rights and benefits pursuant to this Agreement, and each of the other Stockholders have consented to such rights and benefits as an inducement for WPP to purchase Securities. 11. Term. This Agreement will terminate upon the consummation of a Qualified Public Offering. 13 12. Definitions. "Accredited Investor" has the meaning set forth in Rule 501 promulgated under the Securities Act, as amended from time to time. "Additional Executive" means any member of the Company's senior management who becomes a "Stockholder" in accordance with Section 14 of this Agreement. "Affiliate" of a Holder means any general or limited partner of a Holder or any other Person, entity or investment fund controlling, controlled by or under common control with the Holder. "Allied Capital" means Allied Capital Corporation, a Maryland corporation. "Closing Date" means June 13, 2003. "Commission" means the Securities and Exchange Commission. "Competitor" means any Person which is engaged in the business of operating and managing dining restaurants and enterprises, and food commissary operations; provided that (a) the provision of investment advisory services by a Person to an ERISA plan which is owned or controlled by a Person which would otherwise be a Competitor shall not in any event cause the Person providing such services to be deemed to be a Competitor, and (b) in no event shall any bank, trust company, savings and loan association or other financial institution, investment fund, any pension plan, any investment company, any insurance company, any broker or dealer, or any other financial institution or entity, regardless of legal form, be deemed a Competitor, nothwithstanding the fact that a portfolio company of any such institution may be a Competitor. "Diluted Common Stock" means, when used in any calculation herein, the number of shares of Common Stock that would be outstanding assuming that all shares of Common Stock issuable under the Warrants were in fact issued and outstanding. "Diluted Preferred Stock" means, when used in any calculation herein, the number of shares of Preferred Stock that would be outstanding assuming that all shares of Preferred Stock issuable under the Warrants were in fact issued and outstanding. "Executive Shares" shall have the meaning given such term in the Senior Management Agreements. "Governing Body" means (i) in the case of a corporation, that corporation's Board of Directors, (ii) in the case of a limited liability company, that company's Board of Managers or Board of Members, if any. "Holder" means any holder (or deemed holder) of Securities who is a party to this Agreement or is a successor or assign or subsequent holder contemplated by Section 14 of this Agreement. 14 "Independent Third Party" means any Person who, immediately prior to the contemplated transaction, (i) does not own, directly or indirectly, in excess of 10% of the Company's Common Stock or Preferred Stock on a fully-diluted basis (a "10% Owner"), (ii) is not controlling, controlled by or under common control with any such 10% Owner, (iii) is not the spouse or descendant (by birth or adoption) of any such 10% Owner or a trust for the benefit of such 10% Owner and/or such Persons, and (iv) with respect to WPP and its Affiliates, is neither an investment of any such 10% Owner nor a subsidiary of any investment of any such 10% Owner. "Initial Public Offering" means the initial Public Offering by the Company. "Major Stockholders" means each of WPP, AGE and Mid Oaks (and any Affiliate Transferees of such Persons), for so long as such Person, together with its Affiliates, beneficially owns, in the aggregate, twenty percent (20%) of the Common Stock and Preferred Stock originally held by such Person on the date hereof. "Notes" means those certain 16% Senior Subordinated Notes due November 2009, in the original aggregate principal amount of $45,000,000 purchased by the Warrant Security Holders pursuant to the Investment Agreement. "Organizational Documents" means, (i) in the case of a corporation, that corporation's charter and by-laws, (ii) in the case of a limited liability company, that company's articles or certificate of organization and operating agreement, if any, and (iii) in the case of a partnership, the partnership agreement. "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Qualified Institutional Buyer" shall have the meaning given such term under Rule 144A of the Securities Act. "Qualified Public Offering" means any Public Offering by the Company in which the Company receives no less than $35,000,000 of net proceeds from sales to Persons other than Affiliates of the Company pursuant to a public distribution in which the Common Stock of the Company shall be listed or traded on a national or regional exchange or on the Nasdaq National Market System. "Sale of the Company" means any transaction or series of transactions pursuant to which any Independent Third Party in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power to elect a majority of the Board (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock) or (ii) all or substantially all of the Company's assets determined on a consolidated basis. "Securities" means Common Stock, Preferred Stock, and any shares of capital stock or other securities directly or indirectly exercisable for, or convertible into, such securities; provided, however, that Securities shall not include any securities which have been sold to the public (i) pursuant to a registration statement declared effective by the Commission or (ii) pursuant to Rule 144 promulgated by the Commission under the Securities Act. 15 "Securities Act" means the Securities Act of 1933, as amended from time to time. "VICORP" means VICORP Restaurants Inc., a Colorado corporation and wholly-owned subsidiary of the Company as of the date hereof. "Warrant Security Holders" means all holders of (a) Warrants and/or (b) any Warrant Stock. "Warrant Stock" means any Securities received upon exercise of the Warrants. 13. Transfer; Transfers in Violation of Agreement. Prior to transferring any Securities to any Person, the transferring Stockholder shall cause the prospective transferee to execute and deliver to the Company and the other Stockholders a counterpart of this Agreement. Any transfer or attempted transfer of any Securities in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Securities as the owner of such shares for any purpose. 14. Additional Investors and Stockholders. In connection with the issuance of any additional equity securities of the Company to any Person or the transfer of any equity securities of the Company to any Person, the Company may permit such Person to become a party to this Agreement and succeed to all of the rights and obligations of an "Investor" and/or a "Stockholder" under this Agreement by obtaining an executed counterpart signature page to this Agreement, and, upon such execution, such Person shall for all purposes be an "Investor" and/or a "Stockholder" party to this Agreement. 15. Holdback Agreement. Each Holder of outstanding Securities shall not effect any public sale or distribution (including sales pursuant to Rule 144 of the Securities Act) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of a Qualified Public Offering, unless the underwriters managing such Qualified Public Offering otherwise agree. This provision shall survive the termination of this Agreement. 16. Amendment and Waiver. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended or waived at any time only by the written agreement of (i) the Company; (ii) WPP, so long as WPP owns at least twenty percent (20%) of the outstanding Common Stock; (iii) Holders holding not less than a majority of the Common Stock issued and outstanding at the time, calculated on a fully-diluted basis and including, without limitation, Common Stock issuable upon the exercise of the Warrants; (iv) the Warrant Holders holding at least 62% of the Warrants or Warrant Stock, if such amendment or waiver would materially and adversely affect the rights of the Warrant Security Holders; or (v) Holders holding not less than a majority of the Preferred Stock issued and outstanding at the time. Notwithstanding the foregoing, no provision of this Agreement may be amended or waived if such amendment or waiver of any provision would have the effect of (x) imposing additional obligations (including the changing of existing obligations) on any of the Stockholders, or (y) adversely affecting any of the rights of any of the Stockholders, or (z) treating preferentially (including the changing of any existing right or preference) in any way any of the Investors or any other Stockholder over another Stockholder except by written agreement of such affected 16 Stockholder. Any waiver, permit, consent or approval of any kind or character on the part of any such Holder of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. 17. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 18. Entire Agreement. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 19. Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Stockholders and any subsequent holders of Securities and the respective successors and assigns of each of them, so long as they hold Securities. 20. Counterparts. This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement. 21. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered personally to the recipient, (b) one (1) business day following deposit with a reputable express courier service for next day delivery (charges prepaid), (c) three (3) business days after it is mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (d) one business (1) day after receipt is electronically confirmed, if sent by fax (provided that a hard copy shall be promptly sent by first class mail, postage prepaid). Such notices, demands and other communications shall be sent to the Purchasers and to the Company at the address indicated below or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. If to the Company VI Acquisition Corp. c/o Wind Point Partners 676 North Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel.: (312) 255-4800 17 Attn.: Michael J. Solot If to WPP, to: Wind Point Partners IV, L.P. Wind Point Partners V, L.P. Wind Point IV Executive Advisor Partners, L.P. Wind Point Associates IV, LLC 676 North Michigan Avenue, Suite 3700 Chicago, Illinois 60611 Fax: (312) 255-4820 Tel: (312) 255-4800 Attn: Michael J. Solot with a copy to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-1000 Tel: (312) 207-6400 Attn: Seth M. Hemming, Esq. If to Mid Oaks, to: Mid Oaks Investments LLC 750 Lake Cook Road, Suite 440 Buffalo Grove, Illinois 60089 Fax: (847) 215-3421 Tel: (847) 215-3420 Attn: Wayne C. Kocourek with a copy to: Altheimer & Gray 10 South Wacker Drive Chicago, Illinois 60606-7462 Fax: (312) 715-4800 Tel: (312) 715-4050 Attn: David W. Schoenberg 18 If to AGE, to: A.G. Edwards Capital, Inc. One North Jefferson St. Louis, MO 63103 Fax: (314) 955-8095 Tel: (314) 955-3971 Attn: Patricia A. Dahl If to Koenig, van Benthuysen or an Executive, to his or her address set forth on the Company's records. If to the Warrant Security Holders, to the addresses set forth on Exhibit A hereto. 22. Governing Law. The corporate law of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders, including, without limitation, those rights set forth in Sections 1 and 2 of this Agreement. All other questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or other conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. 23. Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. 24. Descriptive Heading. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 25. Preferred Stock Option Holders. To the extent a Holder owns solely options to purchase Preferred Stock and no other Securities, the provisions of Section 7 of this Agreement (and the defined terms used therein) shall be the only provisions hereof that apply to such Holder until such time as such Holder exercises such option or otherwise owns Securities, in which event the other provisions of this Agreement shall apply to such Holder. * * * * * 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE COMPANY: VI ACQUISITION CORP. By: /s/ Debra Koenig --------------------------------------------- Name: Debra Koenig Its: Executive Vice President THE INVESTORS: WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo -------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member WIND POINT ASSOCIATES IV, LLC By: Wind Point Investors IV, L.P. Its: Manager By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo --------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stockholders Agreement S-1 WIND POINT PARTNERS IV, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo -------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ James P. TenBroek -------------------------------------------- Name: James P. TenBroek Its: Managing Member WIND POINT PARTNERS V, L.P. By: Wind Point Investors V, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo -------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ James P. TenBroek -------------------------------------------- Name: James P. TenBroek Its: Managing Member [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stockholders Agreement S-2 MID OAKS INVESTMENTS LLC By: /s/ Wayne Kocourek -------------------------------------------- Name: Wayne Kocourek Its: Chairman and CEO [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stockholders Agreement S-3 A.G.EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. By: A.G. Edwards Capital, Inc. Its: General Partner By: /s/ Christopher B. Redmond -------------------------- Name: Christopher B. Redmond Its: Vice President A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P. By: A.G. Edwards Capital, Inc. Its: General Partner By: /s/ Christopher B. Redmond ------------------------- Name: Christopher B. Redmond Its: Vice President [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stockholders Agreement S-4 /s/ Debra Koenig ------------------------------------------------ DEBRA KOENIG /s/ Walter Van Benthuysen ------------------------------------------------ WALTER VAN BENTHUYSEN [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Stockholders Agreement S-5 EXECUTIVES: /s/ Joseph Trungale ------------------------------------------------ Joseph Trungale /s/ Robert E. Kaltenbach ------------------------------------------------ Robert E. Kaltenbach /s/ Timothy R. Kanaly ------------------------------------------------ Timothy R. Kanaly /s/ Mark A. Hampton ------------------------------------------------ Mark A. Hampton /s/ Daniel W. Gresham ------------------------------------------------ Daniel W. Gresham /s/ Donald R. Prismon ------------------------------------------------ Donald R. Prismon VI Acquisition Corp. Stockholders Agreement S-6 WARRANT SECURITY HOLDERS: ALLIED CAPITAL CORPORATION, a Maryland corporation By: /s/ John Fruehwirth -------------------------------------------- Name: John Fruehwirth Its: Principal GLEACHER MEZZANINE FUND I, L.P. BY: Gleacher Mezzanine LLC, its General Partner By: /s/ Mary P. Gay -------------------------------------------- Name: Mary P. Gay Its: Managing Director GLEACHER MEZZANINE FUND P, L.P. BY: Gleacher Mezzanine LLC, its General Partner By: /s/ Mary P. Gay -------------------------------------------- Name: Mary P. Gay Its: Managing Director SUNTRUST EQUITY FUNDING, LLC By: /s/ Martin Mayden -------------------------------------------- Name: Martin Mayden Its: Manager VI Acquisition Corp. Stockholders Agreement S-7 EXHIBIT A ADDRESSES FOR NOTICES TO WARRANT SECURITY HOLDERS ALLIED CAPITAL CORPORATION 401 N. Michigan Ave., Suite 2050 Chicago, IL 60611 Attn: Ed Ross, Managing Director GLEACHER MEZZANINE FUND I, L.P. GLEACHER MEZZANINE FUND P, L.P. 660 Madison Avenue, 17th Floor New York, NY 10021 Attn: Mary Gay, Managing Director SUNTRUST EQUITY FUNDING, LLC 303 Peachtree Street, N.E., 25th Floor Atlanta, GA 30308 Attn: Palmer Henson, Director With, as to any Warrant Security Holder, a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet VI Acquisition Corp. Stockholders Agreement S-8 EX-10.2 17 c86044exv10w2.txt REGISTRATION RIGHTS AGREEMENT Exhibit 10.2 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of June 13, 2003, by and among (i) VI ACQUISITION CORP., a Delaware corporation (the "Company"), (ii) WIND POINT PARTNERS IV, L.P., WIND POINT PARTNERS V, L.P. and WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P., each of which is a Delaware limited partnership, and WIND POINT ASSOCIATES IV, LLC, a Delaware limited liability company (collectively, "WPP"), (iii) MID OAKS INVESTMENTS, LLC, a Delaware limited liability company ("Mid Oaks"), (iv) A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. and A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P., each of which is a Delaware limited partnership (collectively, "AGE"), (v) DEBRA KOENIG ("Koenig"), (vi) WALTER VAN BENTHUYSEN ("van Benthuysen," and together with WPP, Mid Oaks, AGE, Koenig, and any additional Stockholder (as defined below) that WPP deems an Investor pursuant to Section 10(f) hereof, the "Investors"), (vii) the Executives identified on the signature pages to this Agreement (such persons, together with any other executive employee of the Company who, at any time, acquires securities of the Company and executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement, individually, an "Executive" and collectively the "Executives"), (viii) each of the entities set forth on Exhibit A attached hereto and each permitted transferee thereof who executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement, as the "Warrant Security Holders", and (ix) each other Person who, at any time, acquires securities of the Company and executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement (collectively, the "Other Stockholders"). The Investors, the Executives, the initial Warrant Security Holders and the Other Stockholders are collectively referred to herein as the "Stockholders" and individually as a "Stockholder." The Company, the Investors and the Executives are parties to a Stock Purchase Agreement dated as of June 13, 2003 (the "Stock Purchase Agreement"), and the Company, its subsidiary and the initial Warrant Security Holders are parties to an Investment Agreement dated as of June 13, 2003 (the "Investment Agreement" and, together with the Stock Purchase Agreement, the "Purchase Agreements"). In order to induce the Investors and the Executives to enter into the Stock Purchase Agreement and the initial Warrant Security Holders to enter into the Investment Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closings under the Purchase Agreements. Unless otherwise provided in this Agreement, capitalized terms used herein shall have the respective meanings set forth in Section 9 hereof. NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: 1. Demand Registrations. (a) Requests for Registration. Subject to the terms of this Agreement, (i) the holders of a majority of the Investor Registrable Securities may, at any time, request registration under the Securities Act of all or any portion of their Investor Registrable Securities on Form S-1 or any similar long-form registration ("Long-Form Registrations") or, if available, on Form S-2 or S-3 or any similar short-form registration ("Short-Form Registrations"), and (ii) the holders of a majority of the Warrant Registrable Securities may, 180 days after any Qualified Public Offering (provided that if such Qualified Public Offering is the Company's initial Public Offering, the following demand registration rights shall not require an underwritten offering conducted prior to the first anniversary of the closing of such initial public offering), request up to two (2) Short-Form Registrations or, if Short-Form Registration is not available, such registrations shall be Long-Form Registrations (any such registration pursuant to this Section 1, a "Demand Registration"). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten (10) days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the receipt of the Company's notice by such other holders of Registrable Securities, subject to Section 1(d) hereof. (b) Long-Form Registrations. (i) The holders of Investor Registrable Securities shall be entitled to request (A) two (2) Long-Form Registrations in which the Company shall pay all Registration Expenses ("Company-paid Long-Form Registrations") and (B) an unlimited number of Long-Form Registrations in which the holders of Investor Registrable Securities register and sell Registrable Securities with an aggregate price paid by the public of at least $500,000 and in which the holders of Registrable Securities shall pay their share of the Registration Expenses as set forth in Section 5 hereof. A registration shall not count as one of the permitted Long-Form Registrations until it has become effective and no Company-paid Long-Form Registration shall count as one of the permitted Long-Form Registrations unless the holders of Registrable Securities are able to register and sell at least ninety percent (90%) of the Registrable Securities requested to be included in such registration; provided that in any event the Company shall pay all Registration Expenses in connection with any registration initiated as a Company-paid Long-Form Registration whether or not it has become effective, and further provided that if the Company pays for such registration, it shall count as one of the permitted Company-paid Long-Form Registrations for the Investors. (ii) If the holders of Warrant Registrable Securities request a Long-Form Registration pursuant to the provisions of Section 1(a)(ii) hereof, the Company shall pay all Registration Expenses ("Company-paid Warrant Long-Form Registrations"). Such a Demand Registration shall not count as one of the permitted Company-paid Long Form Registrations for the Warrant Security Holders until it has become effective, and no Demand Registration shall count as one of the permitted Company-paid Long-Form Registrations for the Warrant Security Holders unless the holders of Warrant Registrable Securities are able to register and sell at least ninety percent (90%) of the Warrant Registrable Securities requested to be included in such registration; provided that in any event the Company shall pay all Registration Expenses in connection with any registration initiated as a Company-paid Long-Form Registration whether or not it has become effective, and further provided that if the Company pays for such registration, it shall count as one of the permitted Company-paid Long-Form Registrations for the Warrant Security Holders. 2 (c) Short-Form Registrations. (i) In addition to the Long-Form Registrations provided pursuant to Section 1(b), the holders of Investor Registrable Securities shall be entitled to request an unlimited number of Short-Form Registrations in which the Company shall pay all Registration Expenses. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form. After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company shall use its best efforts to make Short-Form Registrations on Form S-3 available for the sale of Registrable Securities. (ii) If the Warrant Security Holders request a Short-Form Registration pursuant to the provisions of Section 1(a)(ii) hereof, the Company shall pay all Registration Expenses ("Company-paid Short-Form Registrations"). Such a registration shall not count as one of the permitted Short-Form Registrations for the Warrant Security Holders until it has become effective, and no Company-paid Short-Form Registration shall count as one of the permitted Short-Form Registrations for Warrant Registrable Securities unless the holders of Warrant Registrable Securities are able to register and sell at least ninety percent (90%) of the Warrant Registrable Securities requested to be included in such registration; provided that in any event the Company shall pay all Registration Expenses in connection with any registration initiated as a Company-paid Short-Form Registration whether or not it has become effective, and further provided that if the Company pays for such registration, it shall count as one of the permitted Company-paid Short-Form Registrations for the Warrant Security Holders. (d) Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities that are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the Registrable Securities to be included in such registration, without adversely affecting the marketability or valuation of the offering, the Company shall include in such registration (i) first, the Registrable Securities of the holders exercising one of their Demand Registration Rights and the number of Investor Registrable Securities not subject to an exercised Demand Registration Right requested to be included in such registration, (ii) second, the number of Warrant Registrable Securities not subject to an exercised Demand Registration Right requested to be included in such registration which, in the opinion of such underwriters can be sold without adverse effect, pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder, (iii) third, the number of Executive Registrable Securities requested to be included in such registration which in the opinion of such underwriters can be sold without adverse effect, pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder, (iv) fourth, the number of Other Stockholder Registrable Securities requested to be included in such registration which in the opinion of such underwriters can be sold without adverse effect, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder and (v) fifth, securities other than Registrable Securities requested to be included in such registration which in the opinion of such 3 underwriters can be sold without adverse effect, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder. Any Persons other than holders of Registrable Securities who participate in Demand Registrations which are not at the Company's expense must pay their share of the Registration Expenses as provided in Section 5 hereof., unless the Company and the holders of a majority of the Registrable Securities included in such registration consent to the Company's payment of such Registration Expenses. (e) Restrictions on Long-Form Registrations. The Company shall not be obligated to effect any Long-Form Registration within one hundred eighty (180) days after the effective date of a previous Long-Form Registration or a previous registration in which the holders of Registrable Securities were given piggyback rights pursuant to Section 2 and in which there was no reduction in the number of Registrable Securities included in the number requested to be included. The Company may postpone for up to one hundred eighty (180) days the filing or the effectiveness of a registration statement for a Demand Registration if the Company agrees that such Demand Registration would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its subsidiaries to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, reorganization or similar transaction; provided, that in such event, the holders of Registrable Securities initially requesting such Demand Registration shall be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder and the Company shall pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only once in any twelve-month period. (f) Selection of Underwriters. The holders of a majority of the Registrable Securities included in any Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the approval of the Company, which approval shall not unreasonably be withheld or delayed. (g) Other Registration Rights. Except as provided in this Agreement, the Company shall not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities, options or rights convertible or exchangeable into or exercisable for such securities, without the prior written consent of the holders of a majority of the Registrable Securities; provided, however, that to the extent that such rights are granted other than pursuant to Section 10(f) and provide for priority on Demand Registrations or priority on Piggyback Registrations ahead of the rights of the Warrant Security Holders set forth in Section 1(d) and Sections 2(b) and 2(c), respectively, no such rights shall be granted without the prior written consent of the holders of a majority of the Warrant Registrable Securities, not to be unreasonably withheld. 2. Piggyback Registrations. (a) Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (other than pursuant to a Demand Registration hereunder) and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company shall give prompt written notice (in any event within three business days after its receipt of notice of any exercise of demand registration rights other 4 than under this Agreement) to all holders of Registrable Securities of its intention to effect such a registration and subject to the priorities set forth in Sections 2(b) and 2(c) below, shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) days after the receipt of the Company's notice by such holders of Registrable Securities. The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations, whether or not such registration is consummated. (b) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Investor Registrable Securities and Warrant Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder, (iii) third, the Executive Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder, (iv) fourth, Other Stockholder Registrable Securities requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder and (v) fifth, securities other than Registrable Securities requested to be included in such registration which in the opinion of such underwriters can be sold without adverse effect, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder. (c) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities (other than a Demand Registration requested by the holders of Investor Registrable Securities pursuant to Section 1 of this Agreement), and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the Registrable Securities to be included in such registration, the Company shall include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration pursuant to Demand Registrations, (ii) second, the Investor Registrable Securities and Warrant Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder, (iii) third, the Executive Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder, (iv) fourth, Other Stockholder Registrable Securities requested to be included in such registration, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder and (v) fifth, securities other than Registrable Securities requested to be included in such registration which in the opinion of such underwriters can be sold without adverse effect, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder. 5 (d) Selection of Underwriters. In connection with any underwritten Piggyback Registration the Company shall have the right to select the managing underwriters subject to the approval of the holders of a majority of the Registrable Securities included in such Piggyback Registration, which approval shall not be unreasonably withheld or delayed. (e) Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to Section 1 or pursuant to this Section 2, and if such previous registration has not been withdrawn or abandoned, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least one hundred eighty (180) days has elapsed from the effective date of such previous registration. 3. Holdback Agreements. (a) Subject to the terms of Section 3(b), each holder of Registrable Securities shall not effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the seven (7) days prior to and the subsequent one hundred eighty (180) day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included (except sales or distributions made as part of such underwritten registration), unless the underwriters managing the Public Offering otherwise agree. (b) Anything contained in this Agreement, including without limitation Section 3(a), to the contrary notwithstanding, nothing herein contained shall be deemed or construed to require any holder which owns securities of the Company acquired other than by reason of the holding of any Registrable Securities or the exercise thereof, in whole or in part, to withhold such securities from sale during any such period of time. (c) The Company (i) shall not effect any public sale or distribution of its equity securities, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during the seven (7) days prior to and during the subsequent one hundred eighty (180) day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-8 or any successor form), unless the underwriters managing the Public Offering otherwise agree, and (ii) shall cause each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a Public Offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the Public Offering otherwise agree. 4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its best efforts to effect the registration and the sale of such Registrable Securities in 6 accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible: (a) prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Registrable Securities and to a single counsel selected by the holders of a majority of the Warrant Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel); (b) notify in writing each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than one hundred eighty (180) days and comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement; (c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction); (e) promptly notify each seller in writing of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company shall promptly prepare a supplement or amendment to such prospectus and file it with the Commission so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading; 7 (f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on the NASD automated quotation system and, if listed on the NASD automated quotation system, use its best efforts to secure designation of all such Registrable Securities covered by such registration statement as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of the Commission or, failing that, to secure NASDAQ authorization for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with the NASD; (g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares); (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; (j) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (k) permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; (l) advise each seller of such Registrable Securities, promptly after it shall receive or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any common stock included in such registration statement for sale in any jurisdiction, and promptly use its best efforts to prevent the issuance of any stop order or obtain the withdrawal of such order if such stop order should be issued; 8 (m) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; (n) at least forty eight (48) hours prior to the filing of any registration statement or prospectus, or any amendment or supplement to such registration statement or prospectus, furnish a copy thereof to each seller of such Registrable Securities and refrain from filing any such registration statement, prospectus, amendment or supplement to which counsel selected by the holders of a majority of the Registrable Securities being registered shall have reasonably objected on the grounds that such document does not comply in all material respects with the requirements of the Securities Act or the rules and regulations thereunder, unless, in the case of an amendment or supplement, in the opinion of counsel for the Company the filing of such amendment or supplement is reasonably necessary to comply with any applicable federal or state law and such filing will not violate applicable laws; (o) at the request of any seller of such Registrable Securities in connection with an underwritten offering, furnish on the date or dates provided for in the underwriting agreement: (i) an opinion of counsel, addressed to the underwriters and the sellers of Registrable Securities, covering such matters as such underwriters and sellers may reasonably request, including such matters as are customarily furnished in connection with an underwritten offering; (ii) a cold comfort letter or letters from the independent certified public accountants of the Company addressed to the underwriters and the sellers of Registrable Securities, covering such matters as such underwriters and sellers may reasonably request, in which letter(s) such accountants shall state, without limiting the generality of the foregoing, that they are independent certified public accountants within the meaning of the Securities Act and that in their opinion the financial statements and other financial data of the Company included in the registration statement, the prospectus(es), or any amendment or supplement thereto, comply in all material respects with the applicable accounting requirements of the Securities Act; and (iii) officers or employees for participation in the "road shows" for such underwritten offering; 5. Registration Expenses. (a) All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), shall be borne by the Company unless otherwise specifically provided in this Agreement, except that the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system, if the Company's securities are then Nasdaq-listed. 9 (b) In connection with each (i) Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration, and (ii) Demand Registration by the holders of the Warrant Registrable Securities, the Company shall reimburse the holders of Warrant Registrable Securities included in such registration for the reasonable fees and disbursements, not exceeding $20,000 for each registration, of one counsel chosen by the holders of a majority of the Warrant Registrable Securities included in such registration, each such counsel to be subject to the approval of the Company, which approval shall not unreasonably be withheld or delayed. (c) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those Registration Expenses, including without limitation all underwriting discounts and commissions, allocable to the registration of such holder's securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered. 6. Indemnification. (a) The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, each holder's officers, directors, members, employees and partners and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses ("Losses") caused by, or in any way relating to or arising out of, any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any other document incident thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation by the Company of any rule or regulation promulgated pursuant to any federal, state or common law rule or regulation including, without limitation, the Securities Act, applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and the Company will reimburse such holder and each such director, officer, employee, partner, member and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such Losses, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers, directors, members, employees and partners and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. The payments required by this Section 6(a) will be made periodically during the course of the investigation or defense, as and when bills are received or expenses incurred. 10 (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such holder; provided that the obligation to indemnify shall be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. (c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person's right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) and which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in this Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses to which such indemnified party would be otherwise entitled under Section 6, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged 11 omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall any Stockholder be required to contribute an amount greater than the dollar amount of the net proceeds received by such Stockholder with respect to the sale of any Registrable Securities. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentations (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 contribution provided for in this Section 6(d) shall remain in full force and effect regardless of any investigation made by or on behalf of any indemnified party. (e) The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, member, employee, partner or controlling Person of such indemnified party and shall survive the transfer of securities. The Company also agrees to make such provisions, as are reasonably requested by any indemnified party, for contribution to such party in the event the Company's indemnification is unavailable for any reason. 7. Compliance with Rule 144 and Rule 145. In the event that the Company (a) registers a class of securities under Section 12 of the Exchange Act, (b) issues an offering circular meeting the requirements of Regulation A under the Securities Act or (c) commences to file reports under Section 13 or 15(d) of the Exchange Act, then at the request of any holder who proposes to sell securities in compliance with Rule 144 and 145 of the Commission, the Company will (i) forthwith furnish to such holder a written statement of compliance with the filing requirements of the Commission as set forth in Rule 144 and 145, as such rules may be amended from time to time, (ii) make available to the public and such holders such information as will enable the holders to make sales pursuant to Rule 144 and Rule 145, (iii) use commercially reasonable efforts to make and keep public information available, as those terms are understood and defined in Rule 144, as such rule may be amended from time to time, at all times, (iv) use commercially reasonable efforts to file with the Securities and Exchange Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act, and (v) take any further reasonable action reasonably requested by a Holder to enable such Holder to sell its Registrable Securities without registration under Rule 144, as such rule may be amended from time to time. 8. Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements; (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, underwriting agreements and other 12 documents required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder's ownership and title to the Registrable Securities, such holder's intended method of distribution, and such other representations and warranties are commonly given by selling shareholders in underwritten offerings) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto; except as otherwise provided in Section 6 hereof; (iii) provides all customary information reasonably requested by the Company or underwriter in connection with such registration, including copies of customary documents, instruments and agreements; and (iv) complies with all applicable federal and state securities laws in connection with such registration. 9. Definitions. (a) "Commission" means the Securities and Exchange Commission. (b) "Common Stock" means the Company's Common Stock, par value $0.0001 per share. (c) "Executive Registrable Securities" means any shares of Common Stock held as of the date hereof, or acquired hereafter from the Company, by the Executives pursuant to the Stock Purchase Agreement or otherwise. As to any particular Executive Registrable Securities, such securities shall cease to be Executive Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Acts or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force). For purposes of this Agreement, a Person shall be deemed to be a holder of Executive Registrable Securities whenever such Person has the right to acquire such Executive Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. (d) "Investor Registrable Securities" means (i) any Common Stock issued to the Investors pursuant to the Stock Purchase Agreement (whether issued before or after the date hereof) and held by the Investors or their assignees and not transferred to employees of the Company or its subsidiaries, (ii) any other Common Stock issued or issuable with respect to the securities referred to in clause (i) by way of a stock dividend or stock split or in connection with an exchange or combination of shares, recapitalization, merger, consolidation or other reorganization, and (iii) any other shares of Common Stock held by Persons holding securities described in clauses (i) and (ii), inclusive, above. As to any particular Investor Registrable Securities, such securities shall cease to be Investor Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force). For purposes of this Agreement, a Person shall be deemed to be a holder of Investor Registrable Securities whenever such Person has the right to acquire such Investor Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. 13 (e) "Other Stockholder Registrable Securities" means any shares of Common Stock held as of the date hereof, or acquired hereafter from the Company, by the Other Stockholders. As to any particular Other Stockholder Registrable Securities, such securities shall cease to be Other Stockholder Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force). For purposes of this Agreement, a Person shall be deemed to be a holder of Other Stockholder Registrable Securities whenever such Person has the right to acquire such Other Stockholder Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. (f) "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. (g) "Public Offering" means any offering by the Company of its equity securities to the public pursuant to an effective registration statement under the Securities Act or any comparable statement under any comparable federal statute then in effect. (h) "Qualified Public Offering" means the first Public Offering in which the gross proceeds received by the Company are $30,000,000 or more. (i) "Registrable Securities" means Investor Registrable Securities, Executive Registrable Securities, Warrant Registrable Securities and Other Stockholder Registrable Securities. (j) "Securities Act" means the Securities Act of 1933, as amended from time to time. (k) "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. (l) "Warrant Registrable Securities" means (i) any Common Stock issued to the Warrant Security Holders pursuant to the exercise of the Warrants issued pursuant to the Investment Agreement (whether issued before or after the date hereof) and held by the Warrant Security Holders or their assignees, (ii) any other Common Stock issued or issuable with respect to the securities referred to in clause (i) by way of a stock dividend or stock split or in connection with an exchange or combination of shares, recapitalization, merger, consolidation or other reorganization and (iii) any other shares of Common Stock held by Persons holding securities described in clauses (i) and (ii) above. As to any particular Warrant Registrable Securities, such securities shall cease to be Warrant Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force). For purposes of this Agreement, a Person shall be deemed to be a holder of Warrant Registrable Securities whenever such Person has the right to acquire such Warrant Registrable Securities (upon conversion or exercise in connection with a transfer of 14 securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. (m) "Warrant Security Holders" means all holders of (a) Warrants and/or (b) any Warrant Shares (as defined in the respective Warrants). 10. Miscellaneous. (a) No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities that is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. (b) Adjustments Affecting Registrable Securities. The Company shall not take any action, or permit any change to occur, with respect to its securities which would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability or valuation of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares). (c) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically, to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. (d) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and holders of at least a majority of the Registrable Securities; provided that (i) no such amendment or action which adversely and disproportionately affects a holder of Registrable Securities differently vis-a-vis the other holders of Registrable Securities shall be effective against such holder of Registrable Securities without the prior written consent of such holder, and (ii) no amendment which adversely affects a holder of Warrant Registrable Securities shall be made without the consent of a majority of the Warrant Registrable Securities (calculated, for this purpose, to include any Warrant Registrable Securities issuable upon exercise of outstanding Warrants) to the following sections: 1(a), 1(b)(ii), 1(c)(ii), 1(d), 2(c), 5(a), 5(b)(ii), 6 and this Section 10(d). (e) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not and the rights and obligations of the Investors under this Agreement and the agreements contemplated hereby may be assigned by the Investors at any time, in whole or in part, to any investment fund managed by Wind Point Advisors LLC, its members or any successor thereto and to any Permitted Transferee (as defined in the Stockholders Agreement of the Company dated as of the date hereof). In 15 addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of any purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities. (f) Additional Stockholders. In connection with the issuance of any additional equity securities of the Company, the Company, with the prior written of consent of WPP may permit such Person to become a party to this Agreement and succeed to all of the rights and obligations of a "Stockholder" under this Agreement by obtaining an executed counterpart signature page to this Agreement, and, upon such execution, such Person shall for all purposes be a "Stockholder" party to this Agreement. With the prior written consent of holders of a majority of the Investor Registrable Securities, such additional Stockholder may be deemed an "Investor" under this Agreement. If such additional Stockholder is an executive employee of the Company, such Stockholder shall be considered an "Executive" under this Agreement. Any other additional Stockholders shall be considered an "Other Stockholder" under this Agreement. (g) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by, invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (h) Counterparts. This Agreement may be executed in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement. (i) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. (j) Governing Law. The corporate law of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other issues and questions concerning the construction, validity and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. (k) Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient, (ii) one (1) business day following deposit with a reputable express courier service for next day delivery (charges prepaid), (iii) three (3) business days after it is mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, or (iv) one (1) business day after receipt is electronically confirmed, if sent by fax (provided that a hard copy shall be promptly sent by first class mail, postage prepaid). Such notices, demands and other communications shall be sent to the Stockholders at the addresses indicated on the Schedule of Stockholders hereto, to the 16 Warrant Security Holders at the addresses indicated on the Schedule of Warrant Security Holders hereto and to the Company at the address indicated below, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. If to the Company VI Acquisition Corp. c/o Wind Point Partners 676 N. Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel.: (312) 255-4800 Attn.: Michael J. Solot With a copy to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-1000 Tel: (312) 207-6400 Attn: Seth M. Hemming, Esq. (l) Entire Agreement. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waive any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * 17 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE COMPANY: VI ACQUISITION CORP. By: /s/ Debra Koenig ------------------------------------------- Name: Debra Koenig Its: Executive Vice President THE INVESTORS: WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member WIND POINT ASSOCIATES IV, LLC By: Wind Point Investors IV, L.P. Its: Manager By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Registration Rights Agreement S-1 WIND POINT PARTNERS IV, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------ Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ James P. TenBroek ------------------------------------------ Name: James P. TenBroek Its: Managing Member WIND POINT PARTNERS V, L.P. By: Wind Point Investors V, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------ Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ James P. TenBroek ------------------------------------------ Name: James P. TenBroek Its: Managing Member [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Registration Rights Agreement S-2 MID OAKS INVESTMENTS LLC By: /s/ Wayne Kocourek ------------------------------------------ Name: Wayne Kocourek Its: Chairman and CEO [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Registration Rights Agreement S-3 A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. By: A.G. Edwards Capital, Inc. Its: General Partner By: /s/ Christopher B. Redmond ------------------------------------------ Name: Christopher B. Redmond Its: Vice President A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P. By: A.G. Edwards Capital, Inc. Its: General Partner By: /s/ Christopher B. Redmond ------------------------------------------ Name: Christopher B. Redmond Its: Vice President [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Registration Rights Agreement S-4 /s/ Debra Koenig ---------------------------------------------- DEBRA KOENIG /s/ Walter Van Benthuysen ---------------------------------------------- WALTER VAN BENTHUYSEN [SIGNATURES CONTINUED ON FOLLOWING PAGE] VI Acquisition Corp. Registration Rights Agreement S-5 EXECUTIVES: /s/ Joseph Trungale ---------------------------------------------- Joseph Trungale /s/ Robert E. Kaltenbach ---------------------------------------------- Robert E. Kaltenbach /s/ Timothy R. Kanaly ---------------------------------------------- Timothy R. Kanaly /s/ Mark A. Hampton ---------------------------------------------- Mark A. Hampton /s/ Daniel W. Gresham ---------------------------------------------- Daniel W. Gresham /s/ Donald R. Prismon ---------------------------------------------- Donald R. Prismon VI Acquisition Corp. Registration Rights Agreement S-6 WARRANT SECURITY HOLDERS: ALLIED CAPITAL CORPORATION, a Maryland corporation By: /s/ John Fruehwirth ------------------------------------------- Name: John Fruehwirth Its: Principal GLEACHER MEZZANINE FUND I, L.P. BY: Gleacher Mezzanine LLC, its General Partner By: /s/ Mary P. Gay ------------------------------------------- Name: Mary P. Gay Its: Managing Director GLEACHER MEZZANINE FUND P, L.P. BY: Gleacher Mezzanine LLC, its General Partner By: /s/ Mary P. Gay ------------------------------------------- Name: Mary P. Gay Its: Managing Director SUNTRUST EQUITY FUNDING, LLC By: /s/ Martin Mayden ------------------------------------------- Name: Martin Mayden Its: Manager VI Acquisition Corp. Registration Rights Agreement S-7 EXHIBIT A WARRANT SECURITY HOLDERS ALLIED CAPITAL CORPORATION 401 N. Michigan Ave., Suite 2050 Chicago, IL 60611 Attn: Ed Ross, Managing Director GLEACHER MEZZANINE FUND I, L.P. GLEACHER MEZZANINE FUND P, L.P. 660 Madison Avenue, 17th Floor New York, NY 10021 Attn: Mary Gay, Managing Director SUNTRUST EQUITY FUNDING, LLC 303 Peachtree Street, N.E., 25th Floor Atlanta, GA 30308 Attn: Palmer Henson, Director VI Acquisition Corp. Registration Rights Agreement S-8 SCHEDULE OF SECURITY HOLDERS WIND POINT PARTNERS IV, L.P. WIND POINT PARTNERS V, L.P. WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. WIND POINT ASSOCIATES IV, LLC 676 N. Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel.: (312) 255-4800 Attn.: Michael J. Solot With a copy to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-1000 Tel: (312) 207-6400 Attn: Seth M. Hemming, Esq. MID OAKS INVESTMENTS LLC 750 Lake Cook Road, Suite 440 Buffalo Grove, Illinois 60089 Fax: (847) 215-3421 Tel: (847) 215-3420 Attn: Wayne C. Kocourek With a copy to: Altheimer & Gray 10 South Wacker Drive Chicago, Illinois 60606-7462 Fax: (312) 715-4800 Tel: (312) 715-4050 Attn: David W. Schoenberg VI Acquisition Corp. Registration Rights Agreement S-9 A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P. A.G. Edwards Capital, Inc. One North Jefferson St. Louis, MO 63103 Fax: (314) 955-8095 Tel: (314) 955-3971 Attn: Patricia A. Dahl DEBRA KOENIG 7 S. 710 Donwood Drive Naperville, IL 60540 WALTER VAN BENTHUYSEN 17 Tartan Lakes Ct. Westmont, IL 60559 VI Acquisition Corp. Registration Rights Agreement S-10 ALLIED CAPITAL CORPORATION 401 N. Michigan Ave., Suite 2050 Chicago, IL 60611 Attn: Ed Ross, Managing Director With a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet GLEACHER MEZZANINE FUND I, L.P. GLEACHER MEZZANINE FUND P, L.P. 660 Madison Avenue, 17th Floor New York, NY 10021 Attn: Mary Gay, Managing Director With a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet SUNTRUST BANKS, INC. C/O SUNTRUST EQUITY PARTNERS 303 Peachtree Street, N.E., 25th Floor Atlanta, GA 30308 Attn: Palmer Henson, Director With a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet VI Acquisition Corp. Registration Rights Agreement S-11 IF TO THE FOLLOWING EXECUTIVES, at the address appearing in the Company's records: Robert Kaltenbach Joseph Trungale Timothy Kanaly Daniel Gresham Mark Hampton Donald Prismon VI Acquisition Corp. Registration Rights Agreement S-12 EX-10.3 18 c86044exv10w3.txt JOINDER AGREEMENT Exhibit 10.3 JOINDER AGREEMENT This Joinder Agreement (this "Agreement") is by and between VI ACQUISITION CORP., a Delaware corporation (the "Company") and ANTHONY CARROLL ("Carroll"). RECITALS A. Pursuant to the terms of a Management Agreement between the Company and Carroll dated of even date herewith (the "Management Agreement"), Carroll is acquiring from the Company 14,295 shares of the Company's Class A Common Stock, par value $0.0001 per share ("Common Stock"). B. The Company requires execution of this Joinder Agreement as a condition to the sale of the shares under the Management Agreement. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties hereto, the parties agree as follows: 1. Registration Rights Agreement a. Carroll is hereby made a party to the Registration Rights Agreement dated as of June 13, 2003 by and among the Company and the other parties thereto (the "Registration Rights Agreement") in the capacity of an "Executive" (as such term is defined in the Registration Rights Agreement), and Carroll hereby agrees to be bound by all of the terms and conditions set forth in the Registration Rights Agreement applicable to Carroll as an Executive, as to all shares purchased under the Management Agreement. b. Carroll shall execute a signature page to the Registration Rights Agreement in the form attached hereto as Schedule 1.b., which signature page shall be attached to and made a part of the Registration Rights Agreement. c. The Schedule of Security Holders to the Registration Rights Agreement shall hereby be replaced with Schedule 1.c attached hereto. 2. Stockholders Agreement a. Carroll is hereby made a party to the Stockholders Agreement dated as of June 13, 2003 by and among the Company and the other parties thereto (the "Stockholders Agreement") in the capacity of an "Executive" and a "Stockholder" (as such terms are defined in the Stockholders Agreement), and Carroll hereby agrees to be bound by all of the terms and conditions set forth in the Stockholders Agreement applicable to him as an Executive and a Stockholder, as to all shares purchased under the Management Agreement. b. Carroll shall execute a signature page to the Stockholders Agreement in the form attached hereto as Schedule 2, which signature page shall be attached to and made a part of the Stockholders Agreement. 3. The Agreement is binding upon the parties hereto and their permitted successors and assigns. 4. This Agreement may be executed in one or more counterparts, and by facsimile signature, each of which shall be deemed an original, but all of which when taken together, shall constitute one and the same instrument. 5. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this Agreement as of the 20th day of February, 2004. COMPANY: VI ACQUISITION CORP. By: /s/ Michael J. Solot /s/ Anthony Carroll -------------------------------- --------------------------- Michael J. Solot, President Anthony Carroll 2 SCHEDULE 1.B. /s/ Anthony Carroll --------------------------------- ANTHONY CARROLL VI Acquisition Corp. Registration Rights Agreement Joinder Signature Page SCHEDULE 1.C SCHEDULE OF SECURITY HOLDERS WIND POINT PARTNERS IV, L.P. WIND POINT PARTNERS V, L.P. WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. WIND POINT ASSOCIATES IV, LLC 676 N. Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel.: (312) 255-4800 Attn.: Michael J. Solot With a copy to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-1000 Tel: (312) 207-6400 Attn: Seth M. Hemming, Esq. MID OAKS INVESTMENTS LLC 750 Lake Cook Road, Suite 440 Buffalo Grove, Illinois 60089 Fax: (847) 215-3421 Tel: (847) 215-3420 Attn: Wayne C. Kocourek With a copy to: GREENBERG TRAURIG, LLP 77 West Wacker Drive Suite 2500 Chicago, Illinois 60601 Fax: (312) 456-8435 Tel: (312) 456-8400 Attn: David W. Schoenberg A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P. A.G. Edwards Capital, Inc. One North Jefferson St. Louis, MO 63103 Fax: (314) 955-8095 Tel: (314) 955-3971 Attn: Patricia A. Dahl WALTER VAN BENTHUYSEN 17 Tartan Lakes Ct. Westmont, IL 60559 ALLIED CAPITAL CORPORATION 401 N. Michigan Ave., Suite 2050 Chicago, IL 60611 Attn: Ed Ross, Managing Director With a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet GLEACHER MEZZANINE FUND I, L.P. GLEACHER MEZZANINE FUND P, L.P. 660 Madison Avenue, 17th Floor New York, NY 10021 Attn: Mary Gay, Managing Director With a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet SUNTRUST BANKS, INC. C/O SUNTRUST EQUITY PARTNERS 303 Peachtree Street, N.E., 25th Floor Atlanta, GA 30308 Attn: Palmer Henson, Director With a copy to: Moore & Van Allen PLLC 100 North Tryon Street, Suite 4700 Charlotte, North Carolina 28202 Attn: John Chinuntdet 2 IF TO THE FOLLOWING EXECUTIVES, at the address appearing in the Company's records: Debra Koenig Robert Kaltenbach Timothy Kanaly Daniel Gresham Mark Hampton Donald Prismon VI Acquisition Corp. Stockholders Agreement Schedule of Security Holders 3 SCHEDULE 2 /s/ Anthony Carroll ---------------------------- ANTHONY CARROLL VI Acquisition Corp. Stockholders Agreement Joinder Signature Page EX-10.4 19 c86044exv10w4.txt JOINDER AGREEMENT Exhibit 10.4 JOINDER AGREEMENT This Joinder Agreement (this "Agreement") is by and between VI ACQUISITION CORP.., a Delaware corporation (the "Company") and WIND POINT V EXECUTIVE ADVISOR PARTNERS, L.P. , a Delaware limited partnership ("WPVEAP"). RECITALS A. Wind Point Partners V, L.P., a Delaware limited partnership ("Wind Point"), is a stockholder of the Company and an affiliate of WPVEAP. B. Wind Point purchased stock of the Company pursuant to that certain Stock Purchase Agreement dated as of June 13, 2003, by and among the Company, Wind Point, and the other parties thereto (the "Purchase Agreement"). Wind Point also purchased stock of the Company pursuant to that certain Subscription Agreement dated as of July 31, 2003, by and among the Company, Wind Point and the other parties thereto (the "Subscription Agreement"). C. Effective December 1, 2003, Wind Point has transferred to WPVEAP 4,100 shares of the Company's Common Stock, par value $0.0001 per share ("Common Stock") and 235.005 shares of the Company's Series A Preferred Stock, par value $0.0001 per share ("Preferred Stock," and the shares so transferred, the "Transferred Shares"), as permitted under that certain Stockholders Agreement dated June 13, 2003 by and among the Company, Wind Point, and the other parties thereto (the "Stockholders Agreement"). Of the Transferred Shares, 234.035 shares of Preferred Stock and 4,079 shares of Common Stock were originally purchased by Wind Point pursuant to the Purchase Agreement, and 0.970 shares of Preferred Stock and 21 shares of Common Stock were originally purchased by Wind Point pursuant to the Subscription Agreement. D. The Company has consented to WPVEAP becoming a party to the Purchase Agreement, the Stockholders Agreement and that certain Registration Rights Agreement dated June 13, 2003 by and among the Company, Wind Point, and the other parties thereto (the "Registration Agreement"), by execution of this Joinder Agreement. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties hereto, the parties agree as follows: 1. Purchase Agreement a. Pursuant to Section 6.05 of the Purchase Agreement, WPVEAP is hereby made a party to the Purchase Agreement in the capacity of an "Investor" (as such term is defined in the Purchase Agreement), and WPVEAP hereby agrees to be bound by all of the terms and conditions set forth in the Registration Agreement applicable to WPVEAP as an Investor, and that the Transferred Shares are "Stock" (as defined in the Purchase Agreement). b. The Company agrees that the definition of "WPP" in the Purchase Agreement shall be deemed to include WPVEAP, collectively with the other persons already included in such definition. c. WPVEAP shall execute a signature page to the Purchase Agreement in the form attached hereto as Schedule 1.c., which signature page shall be attached to and made a part of the Purchase Agreement. d. Exhibit C to the Purchase Agreement shall hereby be replaced with the form of Exhibit C set forth on Schedule 1.d. attached hereto. 2. Stockholders Agreement a. WPVEAP is hereby made a party to the Stockholders Agreement in the capacity of an "Investor" and a "Stockholder" (as such terms are defined in the Stockholders Agreement), and WPVEAP hereby agrees to be bound by all of the terms and conditions set forth in the Stockholders Agreement applicable to it as an Investor and a Stockholder, as to all shares purchased under the Senior Management Agreement. b. The Company agrees that the definition of "WPP" in the Stockholders Agreement shall be deemed to include WPVEAP and WPP, jointly. c. WPVEAP shall execute a signature page to the Stockholders Agreement in the form attached hereto as Schedule 2, which signature page shall be attached to and made a part of the Stockholders Agreement. 3. Registration Rights Agreement a. WPVEAP is hereby made a party to the Registration Agreement in the capacity of an "Investor" (as such term is defined in the Registration Agreement), and WPVEAP hereby agrees to be bound by all of the terms and conditions set forth in the Registration Agreement applicable to WPVEAP as an Investor, and that the Transferred Shares are "Investor Registrable Securities" (as defined in the Registration Agreement). b. WPVEAP shall execute a signature page to the Registration Rights Agreement in the form attached hereto as Schedule 3.b., which signature page shall be attached to and made a part of the Registration Rights Agreement. c. The Schedule of Security Holders to the Registration Rights Agreement shall hereby be replaced with Schedule 3.c attached hereto. 4. The Agreement is binding upon the parties hereto and their permitted successors and assigns. 2 5. This Agreement may be executed in one or more counterparts, and by facsimile signature, each of which shall be deemed an original, but all of which when taken together, shall constitute one and the same instrument. 6. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the 1st day of December, 2003. VI ACQUISITION CORP. WIND POINT V EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors V, L.P., By: /s/ Debra Koenig Its: General Partner ---------------------------- Debra Koenig, Executive Vice President By: Wind Point Advisors, LLC, Its: General Partner By: /s/ Jeffrey A. Gonyo ----------------------- Name: Jeffrey A. Gonyo Its: Managing Member 3 SCHEDULE 1.C. WIND POINT V EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors V, L.P., Its: General Partner By: Wind Point Advisors, LLC, Its: General Partner By: /s/ Jeffrey A. Gonyo ---------------------------------- Name: Jeffrey A. Gonyo -------------------------------- Its: Managing Member VI Acquisition Corp. Stock Purchase Agreement Investor Joinder Signature Page SCHEDULE 2 WIND POINT V EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors V, L.P., Its: General Partner By: Wind Point Advisors, LLC, Its: General Partner By: /s/ Jeffrey A. Gonyo ---------------------------------- Name: Jeffrey A. Gonyo -------------------------------- Its: Managing Member VI Acquisition Corp. Stockholders Agreement Joinder Signature Page SCHEDULE 3.B. WIND POINT V EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors V, L.P., Its: General Partner By: Wind Point Advisors, LLC, Its: General Partner By: /s/ Jeffrey A. Gonyo ---------------------------- Name: Jeffrey A. Gonyo -------------------------- Its: Managing Member VI Acquisition Corp. Stockholders Agreement Joinder Signature Page SCHEDULE 3.C SCHEDULE OF SECURITY HOLDERS WIND POINT PARTNERS IV, L.P. WIND POINT PARTNERS V, L.P. WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. WIND POINT V EXECUTIVE ADVISOR PARTNERS, L.P. WIND POINT ASSOCIATES IV, LLC 676 N. Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel.: (312) 255-4800 Attn.: Michael J. Solot With a copy to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, Illinois 60606 Fax: (312) 207-1000 Tel: (312) 207-6400 Attn: Seth M. Hemming, Esq. MID OAKS INVESTMENTS LLC 750 Lake Cook Road, Suite 440 Buffalo Grove, Illinois 60089 Fax: (847) 215-3421 Tel: (847) 215-3420 Attn: Wayne C. Kocourek With a copy to: Altheimer & Gray 10 South Wacker Drive Chicago, Illinois 60606-7462 Fax: (312) 715-4800 Tel: (312) 715-4050 Attn: David W. Schoenberg Schedule of Security Holders, cont'd -- A.G. EDWARDS PRIVATE EQUITY PARTNERS QP II, L.P. A.G. EDWARDS PRIVATE EQUITY PARTNERS II, L.P. A.G. Edwards Capital, Inc. One North Jefferson St. Louis, MO 63103 Fax: (314) 955-8095 Tel: (314) 955-3971 Attn: Patricia A. Dahl DEBRA KOENIG 7 S. 710 Donwood Drive Naperville, IL 60540 WALTER VAN BENTHUYSEN 17 Tartan Lakes Ct. Westmont, IL 60559 EX-10.5 20 c86044exv10w5.txt AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT Exhibit 10.5 *TEXT OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) AND 200.83 AND UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. ================================================================================ Execution Version AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY AND AMONG VI ACQUISITION CORP. AS PARENT, VICORP RESTAURANTS, INC. AS BORROWER, THE LENDERS THAT ARE SIGNATORIES HERETO AS THE LENDERS, AND WELLS FARGO FOOTHILL, INC. AS THE ARRANGER AND ADMINISTRATIVE AGENT DATED AS OF APRIL 14, 2004 ================================================================================ TABLE OF CONTENTS
Page ---- 1. DEFINITIONS AND CONSTRUCTION........................................................................... 2 1.1 Definitions................................................................................... 2 1.2 Accounting Terms.............................................................................. 38 1.3 Code.......................................................................................... 39 1.4 Construction.................................................................................. 39 1.5 Schedules and Exhibits........................................................................ 39 2. LOAN AND TERMS OF PAYMENT.............................................................................. 39 2.1 Revolver Advances............................................................................. 39 2.2 Term Loan..................................................................................... 40 2.3 Borrowing Procedures and Settlements.......................................................... 40 2.4 Payments...................................................................................... 47 2.5 Overadvances.................................................................................. 51 2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations................... 52 2.7 Cash Management............................................................................... 53 2.8 Crediting Payments............................................................................ 55 2.9 Designated Account............................................................................ 55 2.10 Maintenance of Loan Account; Statements of Obligations........................................ 55 2.11 Fees.......................................................................................... 56 2.12 Letters of Credit............................................................................. 56 2.13 LIBOR Option.................................................................................. 59 2.14 Capital Requirements.......................................................................... 62 3. CONDITIONS; TERM OF AGREEMENT.......................................................................... 62 3.1 Conditions Precedent to the Initial Extension of Credit....................................... 62 3.2 Conditions Subsequent to the Initial Extension of Credit...................................... 66 3.3 Conditions Precedent to all Extensions of Credit.............................................. 67 3.4 Term.......................................................................................... 67 3.5 Effect of Termination......................................................................... 67 3.6 Early Termination by Borrower................................................................. 68
-i- TABLE OF CONTENTS (continued)
Page ---- 4. CREATION OF SECURITY INTEREST.......................................................................... 69 4.1 Grant of Security Interest.................................................................... 69 4.2 Negotiable Collateral......................................................................... 69 4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral........................ 69 4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of Additional Documentation Required........................................................................ 70 4.5 Power of Attorney............................................................................. 71 4.6 Right to Inspect.............................................................................. 71 4.7 Control Agreements............................................................................ 72 5. REPRESENTATIONS AND WARRANTIES......................................................................... 72 5.1 No Encumbrances............................................................................... 72 5.2 [intentionally omitted]....................................................................... 72 5.3 [intentionally omitted]....................................................................... 72 5.4 Equipment..................................................................................... 72 5.5 Location of Inventory and Equipment........................................................... 72 5.6 Inventory Records............................................................................. 73 5.7 State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims................................................. 73 5.8 Due Organization and Qualification; Subsidiaries.............................................. 73 5.9 Due Authorization; No Conflict................................................................ 74 5.10 Litigation.................................................................................... 75 5.11 No Material Adverse Change.................................................................... 75 5.12 Fraudulent Transfer........................................................................... 76 5.13 Employee Benefits............................................................................. 76 5.14 Environmental Condition....................................................................... 76 5.15 Brokerage Fees................................................................................ 76 5.16 Intellectual Property......................................................................... 76 5.17 Leases........................................................................................ 77 5.18 Deposit Accounts and Securities Accounts...................................................... 77
-ii- TABLE OF CONTENTS (continued)
Page ---- 5.19 Complete Disclosure........................................................................... 77 5.20 Indebtedness.................................................................................. 77 6. AFFIRMATIVE COVENANTS.................................................................................. 78 6.1 Accounting System............................................................................. 78 6.2 Collateral Reporting.......................................................................... 78 6.3 Financial Statements, Reports, Certificates................................................... 79 6.4 Guarantor Reports............................................................................. 81 6.5 [intentionally omitted]....................................................................... 81 6.6 Maintenance of Properties..................................................................... 81 6.7 Taxes......................................................................................... 81 6.8 Insurance..................................................................................... 82 6.9 Location of Inventory and Equipment........................................................... 82 6.10 Compliance with Laws.......................................................................... 82 6.11 Leases........................................................................................ 83 6.12 Existence..................................................................................... 83 6.13 Environmental................................................................................. 83 6.14 Disclosure Updates............................................................................ 83 6.15 Formation of Subsidiaries..................................................................... 83 7. NEGATIVE COVENANTS..................................................................................... 84 7.1 Indebtedness.................................................................................. 84 7.2 Liens......................................................................................... 85 7.3 Restrictions on Fundamental Changes........................................................... 86 7.4 Disposal of Assets............................................................................ 86 7.5 Change Name................................................................................... 86 7.6 Nature of Business............................................................................ 86 7.7 Prepayments and Amendments.................................................................... 86 7.8 Change of Control............................................................................. 87 7.10 Distributions................................................................................. 87 7.11 Accounting Methods............................................................................ 88
-iii- TABLE OF CONTENTS (continued)
Page ---- 7.12 Investments................................................................................... 88 7.13 Transactions with Affiliates.................................................................. 89 7.14 Suspension.................................................................................... 89 7.15 [intentionally omitted]....................................................................... 89 7.16 Use of Proceeds............................................................................... 89 7.17 Inventory and Equipment with Bailees.......................................................... 89 7.18 Financial Covenants........................................................................... 89 8. EVENTS OF DEFAULT...................................................................................... 90 9. THE LENDER GROUP'S RIGHTS AND REMEDIES................................................................. 93 9.1 Rights and Remedies........................................................................... 93 9.2 Remedies Cumulative........................................................................... 95 10. TAXES AND EXPENSES..................................................................................... 95 11. WAIVERS; INDEMNIFICATION............................................................................... 96 11.1 Demand; Protest; etc.......................................................................... 96 11.2 The Lender Group's Liability for Borrower Collateral.......................................... 96 11.3 Indemnification............................................................................... 96 12. NOTICES................................................................................................ 97 13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................................. 98 14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................................................. 99 14.1 Assignments and Participations................................................................ 99 14.2 Successors................................................................................... 102 15. AMENDMENTS; WAIVERS................................................................................... 102 15.1 Amendments and Waivers....................................................................... 102 15.2 Replacement of Holdout Lender................................................................ 103 15.3 No Waivers; Cumulative Remedies.............................................................. 104 16. AGENT; THE LENDER GROUP............................................................................... 104 16.1 Appointment and Authorization of Agent....................................................... 104 16.2 Delegation of Duties......................................................................... 105 16.3 Liability of Agent........................................................................... 105
-iv- TABLE OF CONTENTS (continued)
Page ---- 16.4 Reliance by Agent............................................................................ 106 16.5 Notice of Default or Event of Default........................................................ 106 16.6 Credit Decision.............................................................................. 106 16.7 Costs and Expenses; Indemnification.......................................................... 107 16.8 Agent in Individual Capacity................................................................. 108 16.9 Successor Agent.............................................................................. 108 16.10 Lender in Individual Capacity................................................................ 108 16.11 Withholding Taxes............................................................................ 109 16.12 Collateral Matters........................................................................... 111 16.13 Restrictions on Actions by Lenders; Sharing of Payments...................................... 112 16.14 Agency for Perfection........................................................................ 112 16.15 Payments by Agent to the Lenders............................................................. 113 16.16 Concerning the Collateral and Related Loan Documents......................................... 113 16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information...................................................................... 113 16.18 Several Obligations; No Liability............................................................ 114 16.19 Bank Product Providers....................................................................... 114 16.20 Legal Representation of Agent................................................................ 115 17. GENERAL PROVISIONS.................................................................................... 115 17.1 Effectiveness................................................................................ 115 17.2 Section Headings............................................................................. 115 17.3 Interpretation............................................................................... 115 17.4 Severability of Provisions................................................................... 115 17.5 Counterparts; Electronic Execution........................................................... 115 17.6 Revival and Reinstatement of Obligations..................................................... 115 17.7 Confidentiality.............................................................................. 116 17.8 Integration.................................................................................. 116
-v- AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of April 14, 2004, by and among, on the one hand, the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders") and WELLS FARGO FOOTHILL, INC., a California corporation ("WFF"), as the arranger and administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, "Agent") and, on the other hand, VI ACQUISITION CORP., a Delaware corporation ("Parent"), and VICORP RESTAURANTS, INC., a Colorado corporation ("Borrower"). WHEREAS, Parent, Borrower, Midway Investors Holdings Inc., a Delaware corporation ("Midway"), SunTrust Bank, a Georgia banking corporation, as administrative agent ("Existing Agent") and the other persons signatory thereto in their capacity as lenders (collectively, the "Existing Lenders" and together with the Existing Agent, the "Existing Lender Group") are parties to that certain Credit Agreement (as amended, supplemented, or otherwise modified from time to time prior to the date hereof, the "Existing Loan Agreement"), dated as of June 13, 2003, pursuant to which the Existing Lender Group provided Borrower with (i) a revolving loan facility in an aggregate principal amount of $25,000,000 (the "Existing Revolving Loan"), (ii) a term A loan in an aggregate principal amount of $48,000,000 (the "Existing Term Loan A"), and (iii) a term B loan in an aggregate principal amount of $42,000,000 (the "Existing Term Loan B") (collectively, the Existing Revolving Loan, Existing Term Loan A, and Existing Term Loan B are referred to herein as the "Existing Loans"); WHEREAS, the proceeds of a $126,530,000 senior unsecured high yield offering, will be used to (i) retire Borrower's existing subordinated indebtedness and partially repay the obligations under the Existing Loan Agreement, (ii) pay certain transactional fees, costs, and expenses related to this Agreement, (iii) pay the Existing Term Loan A and the Existing Term Loan B in full, and (iv) finance the ongoing working capital, capital expenditures, and general corporate needs of Borrower; WHEREAS, WFF and each Existing Lender are parties to those certain Assignment and Acceptance Agreements, each dated as of April 14, 2004 (collectively, the "Existing Lender Group Assignments) pursuant to which each Existing Lender assigned all of its right, title and interest in and to the Existing Loans to WFF; WHEREAS, WFF, Existing Agent, and Existing Lenders are parties to that certain Resignation Letter, dated as of April 14, 2004 (the "SunTrust Resignation Letter"), pursuant to which Existing Agent resigned and Existing Lenders appointed WFF as Agent; WHEREAS, Borrower has requested that the Existing Loan Agreement be amended and restated in its entirety to, among other things (i) increase the Existing 1 Revolving Loan from $25,000,000 to $30,000,000, and (ii) consolidate Existing Term Loan A and Existing Term Loan B into one term loan after taking into effect the repayment of Existing Term Loan A and Existing Term Loan B resulting in a term loan with an outstanding principal balance of $15,000,000; WHEREAS, subject to the foregoing, Lender Group is willing to so amend and restate the Existing Loan Agreement and that certain Borrower Security Agreement dated as of June 13, 2003 (the "Existing Security Agreement") by Borrower in favor of Existing Agent in accordance with the terms and conditions hereof; it being understood that nothing contained herein shall be deemed a satisfaction or novation of the Existing Loans or the indebtedness created or evidenced by the Existing Loan Agreement as of the Closing Date and it being further understood that the parties are merely an amending and restating the Existing Loan Agreement and the Existing Security Agreement in accordance with the terms hereof. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend and restate the Existing Loan Agreement in its entirety as follows: 1. DEFINITIONS AND CONSTRUCTION. 1.1 DEFINITIONS. As used in this Agreement, the following terms shall have the following definitions: "Account" means an account (as that term is defined in the Code). "Account Debtor" means any Person who is obligated on an Account, chattel paper, or a General Intangible. "Acquisition" means (a) any Stock Acquisition, or (b) any Asset Acquisition. "ACH Transactions" means any cash management or related services (including the Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve Fedline system) provided by a Bank Product Provider for the account of Parent or its Subsidiaries. "Additional Documents" has the meaning set forth in Section 4.4(c). "Adjusted EBITDA" means, as of any date of determination, the EBITDA of Parent and its Subsidiaries adjusted by adding back to EBITDA the amounts corresponding to the items set forth on Schedule A-1(a); provided however (a) the Adjusted EBITDA for the 13 Fiscal Month period ending March 18, 2004 shall be $41,438,000 and (b) the Adjusted EBITDA for each of the 13 Fiscal Months ending March 18, 2004 shall be the amounts set forth on Schedule A-1(b). 2 "Advances" has the meaning set forth in Section 2.1(a). "Affiliate" means, as applied to any Person, any other Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however, that, for purposes of Section 7.13 hereof: (a) any Person which owns directly or indirectly 10% or more of the Stock having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed an Affiliate of such Person. "After Acquired Real Property" means Real Property acquired in fee by Borrower or its Subsidiaries after the Closing Date and having an original acquisition price in excess of $250,000. "Agent" has the meaning set forth in the preamble to this Agreement. "Agent Advances" has the meaning set forth in Section 2.3(e)(i). "Agent-Related Persons" means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents. "Agent's Account" means the Deposit Account of Agent identified on Schedule A-2. "Agent's Liens" means the Liens granted by Parent or its Subsidiaries to Agent under this Agreement or the other Loan Documents. "Agreement" has the meaning set forth in the preamble hereto. "Applicable Prepayment Premium" means, as of any date of determination, an amount equal to (a) during the period from and after the date of the execution and delivery of this Agreement up to the date that is the first anniversary of the Closing Date, 5% times the Maximum Revolver Amount, (b) during the period from and including the date that is the first anniversary of the Closing Date up to the date that is the second anniversary of the Closing Date, 4% times the Maximum Revolver Amount, (c) during the period from and including the date that is the second anniversary of the Closing Date up to date that is the third anniversary of the Closing Date, 3% times the Maximum Revolver Amount, (d) during the period from and including the date that is the third anniversary of the Closing Date up to date that is the fourth anniversary of the Closing Date, 2% times the Maximum Revolver 3 Amount, and (e) during the period from and including the date that is the fourth anniversary of the Closing Date up to Maturity Date, 1% times the Maximum Revolver Amount. "Asset Acquisition" means any purchase or other acquisition by Borrower or its Subsidiaries of all or substantially all of the assets of one or more restaurants owned or leased and operated by any other Person. "Assignee" has the meaning set forth in Section 14.1(a). "Assignment and Acceptance" means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1. "Authorized Person" means any officer or employee of Borrower. "Availability" means, as of any date of determination, the amount that Borrower is entitled to borrow as Advances hereunder (after giving effect to all then outstanding Obligations (other than Bank Product Obligations) and all sublimits and reserves then applicable hereunder). "Bank Product" means any financial accommodation extended to Parent or its Subsidiaries by a Bank Product Provider (other than pursuant to this Agreement) including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) transactions under Hedge Agreements. "Bank Product Agreements" means those agreements entered into from time to time by Parent or its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products. "Bank Product Obligations" means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by Parent or its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that Parent or its Subsidiaries are obligated to reimburse to Agent or any member of the Lender Group as a result of Agent or such member of the Lender Group purchasing participations from, or executing indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to Parent or its Subsidiaries. "Bank Product Provider" means Wells Fargo or any of its Affiliates. "Bank Product Reserve" means, as of any date of determination, the amount of reserves that Agent has established (based upon the Bank Product Providers' reasonable determination of the credit exposure of Parent and its Subsidiaries in respect of Bank Products) in respect of Bank Products then provided or outstanding. 4 "Bankruptcy Code" means title 11 of the United States Code, as in effect from time to time. "Base LIBOR Rate" means the rate per annum, determined by Agent in accordance with its customary procedures, and utilizing such electronic or other quotation sources as it considers appropriate (rounded upwards, if necessary, to the next 1/100%), to be the rate at which Dollar deposits (for delivery on the first day of the requested Interest Period) are offered to major banks in the London interbank market 2 Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance with this Agreement, which determination shall be conclusive in the absence of manifest error. "Base Rate" means, the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its "prime rate", with the understanding that the "prime rate" is one of Wells Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate. "Base Rate Loan" means the portion of the Advances or the Term Loan that bears interest at a rate determined by reference to the Base Rate. "Base Rate Margin" means, as of any date of determination, the following margin based upon Parent's most recent Leverage Ratio calculation (determined as set forth in the following paragraph); provided, however, that (a) for the period from the Closing Date through the date Agent receives the certified calculation of Parent's Leverage Ratio in respect of the testing period ended with April 15, 2004 delivered pursuant to Section 6.3, and (b) at any time that an Event of Default exists hereunder, the Base Rate Margin shall be at Level I:
Level Leverage Ratio Base Rate Margin - ----- -------------- ---------------- I equal to or greater than 4.0:1.0 1.50 percentage points II less than 4.0:1.0 and equal to or greater than 1.25 percentage points 3.5:1.0 III less than 3.5:1.0 and equal to or greater than 1.00 percentage points 3.0:1.0 IV less than 3.0:1.0 0.75 percentage points
5 Except as set forth in the foregoing proviso, the Base Rate Margin shall be based upon Parent's most recent Leverage Ratio calculation, which will be calculated on a fiscal quarter basis. Except as set forth in the initial proviso in this definition, the Base Rate Margin shall be re-determined each fiscal quarter on the first day of the month following the date of delivery to Agent of the certified calculation of Parent's Leverage Ratio pursuant to Section 6.3 hereof; provided, however, that if Parent and Borrower fail to provide such certification when such certification is due, the Base Rate Margin shall be set at the margin in the row styled "Level I" as of the first day of the month following the date on which the certification was required to be delivered until the date on which such certification is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default occasioned by the failure to timely deliver such certification, the Base Rate Margin shall be set at the margin based upon the Leverage Ratio calculation disclosed by such certification). "Baseline Lease" has the meaning set forth in the definition of Capital Lease. "Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35) of ERISA) for which Parent or any Subsidiary or ERISA Affiliate of Parent has been an "employer" (as defined in Section 3(5) of ERISA) within the past six years. "Board of Directors" means the board of directors (or comparable managers) of Parent or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers). "Books" means Parent's and its Subsidiaries' now owned or hereafter acquired books and records (including all of their Records indicating, summarizing, or evidencing their assets (including the Collateral) or liabilities, all of Parent's or its Subsidiaries' Records relating to their business operations or financial condition, and all of their goods or General Intangibles related to such information). "Borrower" has the meaning set forth in the preamble to this Agreement. "Borrower Collateral" means all of Borrower's now owned or hereafter acquired right, title, and interest in and to each of the following: (a) all of its Accounts, (b) all of its Books, (c) all of its commercial tort claims described on Schedule 5.7(d), (d) all of its Deposit Accounts, (e) all of its Equipment, (f) all of its General Intangibles, 6 (g) all of its Inventory, (h) all of its Investment Property (including all of its securities and Securities Accounts), (i) all of its Negotiable Collateral, (j) all of its Supporting Obligations, (k) money or other assets of Borrower that now or hereafter come into the possession, custody, or control of any member of the Lender Group, and (l) the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real Property, Supporting Obligations, money, or other tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof. "Borrowing" means a borrowing hereunder consisting of Advances (or term loans, in the case of the Term Loan) made on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance. "Borrowing Base" means, as of any date of determination, the result of: (a) the result of (y) 1.2 times Parent's Adjusted EBITDA for the most recently completed 13 Fiscal Month period ending as of the date of determination, minus (z) $15,000,000, less (b) the sum of the aggregate amount of reserves, if any, established by Agent under Section 2.1(b). "Business Day" means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of New York, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market. "Canadian Sub" means Village Inn Pancake House of Canada, Limited, a company organized under the laws of the province of Alberta. 7 "Capital Expenditures" means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed. "Capitalized Lease Obligation" means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP. "Capital Lease" means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; provided, however, that any lease of real property of Borrower or its Subsidiaries extant as of the Closing Date that is not required to be treated as a Capital Lease as of the Closing Date (each, a "Baseline Lease") and any lease of real property of Borrower or its Subsidiaries that is entered into after the Closing Date and that is on economic terms, taken as a whole, comparable to a Baseline Lease, shall not be deemed to be a Capital Lease. "Cash Equivalents" means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or bankers' acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the amount maintained with any such other bank is less than or equal to $100,000 and is insured by the Federal Deposit Insurance Corporation, and (f) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (e) above. "Cash Management Account" means a Concentration Account or a Collection Account. "Cash Management Agreements" means those certain cash management agreements, in form and substance satisfactory to Agent, each of which is among Borrower or one of its Subsidiaries, and one of the Cash Management Banks. "Cash Management Bank" means a Concentration Account Bank or a Collection Account Bank. 8 "CFC" means a controlled foreign corporation (as that term is defined in the IRC). "Change of Control" means (a)(i) prior to the consummation of a Qualified IPO, that (A) (x) WPP and its Affiliates cease to own, directly or indirectly, and control 33 1/3% or more, of the Stock of Parent, or (y) WPP and its Affiliates cease to have the power to elect a majority of the members of the Board of Directors, or (z) a majority of the members of the Board of Directors has not been elected by WPP and its Affiliates, or (B) that the Permitted Holders cease to own, directly or indirectly, and control 51%, or more, of the Stock of Parent, and (ii) from and after the consummation of a Qualified IPO, (A) the consummation of any transaction (including any merger or consolidation) the result of which is that any "person" (as such term is defined in Section 13(d)(3) of the Securities Exchange Act) or group of related persons, together with any Affiliates thereof (other than the Permitted Holders), (x) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 25% of the Stock of Parent having the right to vote for the election of members of the Board of Directors (as determined on a fully diluted basis and measured by voting power rather than number of shares) or (y) obtains the power (whether or not exercised) to elect a majority of the members of the Board of Directors, or (B) any group of related persons, together with any Affiliates thereof (other than WPP), becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more of the Stock of Parent having the right to vote for the election of members of the Board of Directors (as determined on a fully diluted basis and measured by voting power rather than number of shares) than is owned, directly or indirectly, by WPP, or (b) prior to the consummation of a Qualified IPO, a majority of the members of the Board of Directors do not constitute Continuing Directors, or (c) Parent ceases to own, directly or indirectly, and control 100% of the outstanding Stock of each of its Subsidiaries extant as of the Closing Date, or (d) a "change of control" (as that term is defined in the Indenture as in effect on the Closing Date) has occurred. "Closing Date" means the date of the making of the initial Advance (or other extension of credit) hereunder. "Closing Date Business Plan" means the set of Projections of Parent for the 3 year period following the Closing Date in form and substance (including as to scope and underlying assumptions) satisfactory to Agent. "Code" means the New York Uniform Commercial Code, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term "Code" shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies. 9 "Collateral" means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by Parent or its Subsidiaries in or upon which a Lien is granted under any of the Loan Documents. "Collateral Access Agreement" means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in Parent's or its Subsidiaries' Books, Equipment, or Inventory, in each case, in form and substance satisfactory to Agent. "Collection Account" has the meaning set forth in Section 2.7(b). "Collection Account Bank" has the meaning set forth in Section 2.7(b). "Collections" means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds). "Commercial Tort Claim Assignment" has the meaning set forth in Section 4.4(b). "Commitment" means, with respect to each Lender, its Revolver Commitment, its Term Loan Commitment, or its Total Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments, their Term Loan Commitments, or their Total Commitments, as the context requires, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 14.1. "Compliance Certificate" means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent. "Concentration Account" has the meaning set forth in Section 2.7(a). "Concentration Account Bank" has the meaning set forth in Section 2.7(a). "Consolidated Operating Income" means, as of any date of determination and for any period, (a) Adjusted EBITDA for such period, plus (b) to the extent deducted in the calculation of Adjusted EBITDA, Parent and its Subsidiaries' general and administrative costs and expenses for such period. "Continuing Director" means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the 10 Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Parent and whose initial assumption of office resulted from such contest or the settlement thereof. "Control Agreement" means a control agreement, in form and substance satisfactory to Agent, executed and delivered by Parent or one of its Subsidiaries, Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account). "Copyright Security Agreement" means an amended and restated copyright security agreement executed and delivered by Borrower and Agent, the form and substance of which is satisfactory to Agent. "Credit Card Agreements" means those certain credit card receipts agreements, each in form and substance reasonably satisfactory to Agent, executed and delivered by Borrower or a Guarantor, Agent and the applicable Credit Card Processor. "Credit Card Processor" means any Person (including an issuer of a credit card) that acts as a credit card clearinghouse or remits payments due to Borrower or a Guarantor with respect to credit card charges accepted by Borrower or a Guarantor. "Daily Balance" means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day. "Default" means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default. "Defaulting Lender" means any Lender that fails to make any Advance (or other extension of credit) that it is required to make hereunder on the date that it is required to do so hereunder. "Defaulting Lender Rate" means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto). "Deposit Account" means any deposit account (as that term is defined in the Code). "Designated Account" means the Deposit Account of Borrower identified on Schedule D-1. "Designated Account Bank" has the meaning ascribed thereto on Schedule D-1. "Dollars" or "$" means United States dollars. 11 "EBITDA" means, with respect to any fiscal period, net earnings (or loss), minus extraordinary gains and interest income, plus interest expense, income taxes, and depreciation and amortization for such period, in each case, as determined in accordance with GAAP; provided, however, that for purposes of calculating EBITDA for any period, the EBITDA attributable to (a) any Subsidiary whose Stock is sold or otherwise transferred to any Person other than to Borrower or to a Subsidiary of Borrower during such period, or (b) any Restaurant the assets of which (whether all or substantially all) are sold, leased or otherwise transferred to any Person other than to Borrower or to a Subsidiary of Borrower during such period, or (c) any Permanently Closed Restaurant, shall be excluded on a pro forma basis for such period (as if, for purposes of such calculation, the consummation of such sale, lease or other transfer occurred on the first day of such period). "Eligible Transferee" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $250,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States, (c) a finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and having (together with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so long as no Event of Default has occurred and is continuing, any other Person approved by Agent and Borrower (which approval of Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f) during the continuation of an Event of Default, any other Person approved by Agent. "Environmental Actions" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or businesses of Parent, its Subsidiaries, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by Parent, its Subsidiaries, or any of their predecessors in interest. "Environmental Law" means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on Parent or its Subsidiaries, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, including the Comprehensive Environmental Response Compensation and Liability Act, 42 USC Section 9601 et seq.; the Resource Conservation and Recovery Act, 42 USC Section 6901 et seq.; the Federal Water Pollution Control Act, 33 USC Section 1251 et seq.; the Toxic Substances Control Act, 15 USC 12 Section 2601 et seq.; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC Section 651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); any state and local or foreign counterparts or equivalents, in each case as amended from time to time. "Environmental Liabilities and Costs" means all liabilities, monetary obligations, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action. "Environmental Lien" means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs. "Equipment" means equipment (as that term is defined in the Code) and includes machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), computer hardware, tools, parts, and goods (other than consumer goods, farm products, or Inventory), wherever located, including all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto. "ERISA Affiliate" means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the employees of Parent or its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of Parent or its Subsidiaries under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which Parent or any of its Subsidiaries is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an arrangement with Parent or any of its Subsidiaries and whose employees are aggregated with the employees of Parent or its Subsidiaries under IRC Section 414(o). "Estoppel Agreement" means that certain estoppel agreement dated as of the Closing Date executed and delivered by Parent, Borrower and its Subsidiaries in favor of Agent. "Event of Default" has the meaning set forth in Section 8. 13 "Excess Availability" means, as of any date of determination, the amount equal to Availability minus the aggregate amount, if any, of all trade payables of Parent and its Subsidiaries aged in excess of historical levels with respect thereto and all book overdrafts of Parent and its Subsidiaries in excess of historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion. "Exchange Act" means the Securities Exchange Act of 1934, as in effect from time to time. "Excluded Assets" means (a) any Investment Property of Borrower constituting Stock of Borrower's Subsidiaries that are CFCs, solely to the extent that such Investment Property is in excess of 65% of the voting power of the Stock of such CFC, (b) any agreement, permit, or license of Borrower solely in the event and to the extent that a grant of a Lien on such license, contract, or agreement is prohibited by law or results in a breach or termination of the terms of, or constitutes a default under, or termination of any such license, contract, or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408, or 9-409 of the Code (or any successor provision or provisions), and (c) any intent-to-use trademark or service mark application of Borrower if granting a security interest therein is deemed to invalidate, void, cancel, or abandon such applications; provided, however, that Excluded Assets shall not include (and, accordingly, Collateral shall include) (i) any agreement, permit, or license described in clause (b) immediately upon the ineffectiveness, lapse, or termination of the relevant prohibition under applicable law or the terms of such agreement, permit, or license, (ii) any agreement, permit, or license described in clause (b) from and after such time as the lessor, licensor, or other party to such agreement, permit, or license consents to the grant of a Lien in favor of Agent in such agreement, permit, or license, (ii) any trademark or service mark application at such time as the same are used in commerce, and (iii) all proceeds of any of such assets. "Existing Agent" has the meaning set forth in the recitals to this Agreement. "Existing Lender Group" has the meaning set forth in the recitals to this Agreement. "Existing Lender Group Assignments" has the meaning set forth in the recitals to this Agreement. "Existing Lenders" has the meaning set forth in the recitals to this Agreement. "Existing Loan Agreement" has the meaning set forth in the recitals to this Agreement. "Existing Loans" has the meaning set forth in the recitals to this Agreement. "Existing Revolving Loan" has the meaning set forth in the recitals to this Agreement. 14 "Existing Security Agreement" has the meaning set forth in the recitals to this Agreement. "Existing Term Loan A" has the meaning set forth in the recitals to this Agreement. "Existing Term Loan B" has the meaning set forth in the recitals to this Agreement. "Extraordinary Receipts" means any Collections received by a Person or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.4(c)(i) hereof), excluding, (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance (including proceeds of key man life insurance policies and business interruption insurance), (d) proceeds of judgments, proceeds of settlements, or other consideration of any kind in connection with any cause of action, but expressly including condemnation awards (and payments in lieu thereof) in excess of amounts used to repair or restore the applicable property as permitted by this Agreement, indemnity payments, and any purchase price adjustment received in connection with any purchase agreement. "Fee Letter" means that certain fee letter, dated as of even date herewith, between Borrower and Agent, in form and substance satisfactory to Agent. "Filing Authorization Letter" means a letter duly executed by Borrower and each Guarantor authorizing Agent to file appropriate financing statements in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the security interests to be created by the Loan Documents. "Fiscal Month" means a fiscal month of Borrower and its Subsidiaries. "Fixed Charges" means with respect to Parent and its Subsidiaries for any period, the sum, without duplication, of (a) cash Interest Expense, (b) principal payments required to be paid during such period in respect of Indebtedness, (c) all federal, state, and local income taxes paid in cash during such period, (d) all management fees paid in cash during such period, and (e) the amount of the Permitted Distribution paid during such period. "Fixed Charge Coverage Ratio" means, with respect to Parent and its Subsidiaries for any period, the ratio of (a) Adjusted EBITDA for such period minus non-financed Maintenance Capital Expenditures incurred during such period, to (b) Fixed Charges for such period. "Four Wall EBITDA" means, as of any date of determination and for any period, with respect to the restaurant or restaurants that are to be the subject of a proposed Acquisition, (a) the EBITDA of such restaurant or restaurant for such period, plus (b) to the extent deducted in the calculation of EBITDA, the general and administrative costs and expenses of such restaurant or restaurants for such period. 15 "Free Cash Flow" means, as of any date of determination, with respect to Borrower and its Subsidiaries from April 15, 2004 to the date of determination, Adjusted EBITDA less non-financed Maintenance Capital Expenditures, less the amount of cash severance payments and charges incurred in connection with the redemption or repurchase of the Stock of Parent permitted under Section 7.10(e)(i), less the amount of transaction costs for Permitted Acquisitions that are incurred, paid, and expensed in such period, less the amount of transaction costs associated with the closing of the transactions contemplated by the High Yield Debt Documents, the transactions contemplated by this Agreement and the merger of Midway into Parent that are paid after the Closing Date and incurred, paid and expensed in such period, (excluding the amount of costs associated with the termination of derivative contracts paid on or after the Closing Date), less the amount that Gross Availability has been reduced from April 15, 2004 through such date of determination less Fixed Charges, plus the Net Cash Proceeds of Permitted Dispositions of the type described in clauses (i) and (j) of the definition of Permitted Dispositions. "Funded Debt" of any Person means Indebtedness of such Person that by its terms matures more than one year after the date of creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year after such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year after such date, including all amounts of Funded Debt of such Person required to be paid or prepaid within one year after the date of determination. "Funding Date" means the date on which a Borrowing occurs. "Funding Losses" has the meaning set forth in Section 2.13(b)(ii). "Funds Flow Agreement" means that certain Funds Flow Agreement, dated of even date herewith, by and among Agent, Parent, and each of its Subsidiaries. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied. "GE Fee Letter" means that certain fee letter, dated as of even date herewith, by Borrower in favor of Agent and GE Capital Franchise Finance Corporation, in form and substance satisfactory to Agent. "General Intangibles" means general intangibles (as that term is defined in the Code), including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trade secrets, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, insurance premium rebates, tax refunds, and tax refund claims, and any 16 other personal property other than Accounts, Deposit Accounts, goods, Investment Property, and Negotiable Collateral. "Governing Documents" means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person. "Governmental Authority" means any federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body. "Gross Availability" means, as any date of determination, the amount that Borrower is entitled to borrow as Advances hereunder (without giving effect to all then outstanding Obligations or reserves). "Growth Capital Expenditures" means the sum of (a) Capital Expenditures in connection with new restaurant purchases (including in connection with franchise buybacks and purchases of competitor restaurants), plus (b) the amount paid in connection with the consummation of Permitted Non-Equity Acquisitions. "Growth Capital Expenditure Amount" means, as of any date of determination, the result of (a) the amount of Excess Availability under the Revolver on the Closing Date (after giving effect to all transactions and expenses to occur on the Closing Date), less (b) $3,500,000, plus (c) the cumulative positive Free Cash Flow generated from and after April 15, 2004 to the date of determination, plus (d) the amount of Net Cash Proceeds consisting solely of cash received by Borrower or its Subsidiaries from Permitted Restaurant Dispositions so long as such Net Cash Proceeds are used to make Growth Capital Expenditures within 360 days after the date of receipt thereof, plus (e) the amount of Indebtedness permitted under Section 7.1(k) resulting from a Permitted Acquisition, plus (f) the amount of Net Cash Proceeds resulting from a Permitted Sale and Leaseback of a Restaurant that occurs within the earlier of (i) 360 days of the initial acquisition of such Restaurant and (ii) 90 days after the date of the opening of such Restaurant, plus (g) the amount of Net Cash Proceeds consisting solely of cash received by Borrower or its Subsidiaries resulting from dispositions permitted by clause (k) of the definition of Permitted Dispositions. "Guarantor Pledge Agreement" means one or more amended and restated stock pledge agreements executed and delivered by each Guarantor in favor of Agent, in each case, in form and substance reasonably satisfactory to Agent. "Guarantor Security Agreement" means one or more amended and restated security agreements executed and delivered by each Guarantor in favor of Agent, in each case, in form and substance satisfactory to Agent. "Guarantors" means (a) Parent, and (b) each Subsidiary of Parent (other than Borrower and Canadian Sub), and "Guarantor" means any one of them. 17 "Guaranty" means that certain amended and restated general continuing guaranty executed and delivered by each Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers, in form and substance satisfactory to Agent. "Hazardous Materials" means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic substances," or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million. "Hedge Agreement" means any and all agreements or documents now existing or hereafter entered into by Parent or any of its Subsidiaries that provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging Parent's or any of its Subsidiaries' exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency valuations or commodity prices. "High Yield Note Documents" means the Indenture and the Notes. "Holdout Lender" has the meaning set forth in Section 15.2(a). "Inactive Subsidiary" means Canadian Sub. "Indebtedness" means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all principal obligations under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (excluding trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices), (f) all obligations owing under Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (f) above. "Indemnified Liabilities" has the meaning set forth in Section 11.3. "Indemnified Person" has the meaning set forth in Section 11.3. 18 "Indenture" means that certain Indenture, dated as of April 14, 2004, among Borrower, each of its Restricted Subsidiaries (as that term is used therein), and Indenture Trustee. "Indenture Trustee" means (a) Wells Fargo, in its capacity as trustee under the Indenture, or (b) any successor trustee under the Indenture from time to time. "Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. "Intangible Assets" means, with respect to any Person, that portion of the book value of all of such Person's assets that would be treated as intangibles under GAAP. "Intercompany Advances" means loans or advances (in cash) (a) from Borrower to a Guarantor, (ii) from a Guarantor to Borrower, or (iii) from a Guarantor to another Guarantor. "Intercompany Subordination Agreement" means a subordination agreement executed and delivered by Parent and each of its Subsidiaries and Agent, the form and substance of which is satisfactory to Agent. "Interest Expense" means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Interest Period" means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, or 3 months after the date on which the Interest Period began, as applicable, and (e) Borrower may not elect an Interest Period which will end after the Maturity Date. "Inventory" means inventory (as that term is defined in the Code). 19 "Investment" means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business consistent with past practice), purchases or other acquisitions of Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Investment Property" means investment property (as that term is defined in the Code). "IRC" means the Internal Revenue Code of 1986, as in effect from time to time. "Issuing Lender" means WFF or any other Lender that, at the request of Borrower and with the consent of Agent, agrees, in such Lender's sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to Section 2.12. "L/C" has the meaning set forth in Section 2.12(a). "L/C Disbursement" means a payment made by the Issuing Lender pursuant to a Letter of Credit. "L/C Undertaking" has the meaning set forth in Section 2.12(a). "Lender" and "Lenders" have the respective meanings set forth in the preamble to this Agreement, and shall include any other Person made a party to this Agreement in accordance with the provisions of Section 14.1. "Lender Group" means, individually and collectively, each of the Lenders (including the Issuing Lender) and Agent. "Lender Group Expenses" means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by Parent or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) actual out-of-pocket fees or charges paid or incurred by Agent in connection with the Lender Group's transactions with Parent or its Subsidiaries, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including periodic collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement), real estate surveys, real estate title policies and endorsements, and 20 environmental audits, (c) actual out-of-pocket costs and expenses incurred by Agent in the disbursement of funds to Borrower or other members of the Lender Group (by wire transfer or otherwise), (d) actual out-of-pocket charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of Agent related to audit examinations of the Books to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group's relationship with Parent or any its Subsidiaries, (h) Agent's reasonable costs and expenses (including attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the Loan Documents, and (i) Agent's and each Lender's reasonable costs and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning Parent or its Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral. "Lender-Related Person" means, with respect to any Lender, such Lender, together with such Lender's Affiliates, officers, directors, employees, attorneys, and agents. "Letter of Credit" means an L/C or an L/C Undertaking, as the context requires. "Letter of Credit Fee" means, as of any date of determination, the following fee based upon Parent's most recent Leverage Ratio calculation (determined as set forth in the following paragraph); provided, however, that (a) for the period from the Closing Date through the date Agent receives the certified calculation of Parent's Leverage Ratio in respect of the testing period ended with April 15, 2004 delivered pursuant to Section 6.3, and (b) at any time that an Event of Default exists hereunder, the Letter of Credit Fee shall be at Level I:
Level Leverage Ratio Letter of Credit Fee - ----- ---------------------------------------------- ---------------------- I equal to or greater than 4.0:1.0 3.50 percentage points II less than 4.0:1.0 and equal to or greater than 3.25 percentage points 3.5:1.0 III less than 3.5:1.0 and equal to or greater than 3.00 percentage points 3.0:1.0 IV less than 3.0:1.0 2.75 percentage points
21 Except as set forth in the foregoing proviso, the Letter of Credit Fee shall be based upon Parent's most recent Leverage Ratio calculation, which will be calculated on a fiscal quarter basis. Except as set forth in the initial proviso in this definition, the Letter of Credit Fee shall be re-determined each fiscal quarter on the first day of the month following the date of delivery to Agent of the certified calculation of Parent's Leverage Ratio pursuant to Section 6.3 hereof; provided, however, that if Parent and Borrower fail to provide such certification when such certification is due, the Letter of Credit Fee shall be set at the margin in the row styled "Level I" as of the first day of the month following the date on which the certification was required to be delivered until the date on which such certification is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default occasioned by the failure to timely deliver such certification, the Letter of Credit Fee shall be set at the margin based upon the Leverage Ratio calculation disclosed by such certification. "Letter of Credit Usage" means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit. "Leverage Ratio" means, at any date of determination, the ratio of (a) the outstanding principal amount of Total Debt at such date, to (ii) Adjusted EBITDA for the most recently completed four fiscal quarter period ended on or prior to the date of determination. "LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i). "LIBOR Notice" means a written notice in the form of Exhibit L-1. "LIBOR Option" has the meaning set forth in Section 2.13(a). "LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage. "LIBOR Rate Loan" means each portion of an Advance or the Term Loan that bears interest at a rate determined by reference to the LIBOR Rate. "LIBOR Rate Margin" means, as of any date of determination, the following margin based upon Parent's most recent Leverage Ratio calculation (determined as set forth in the following paragraph); provided, however, that (a) for the period from the Closing Date through the date Agent receives the certified calculation of Parent's Leverage Ratio in respect of the testing period ended with April 15, 2004 delivered pursuant to Section 6.3, 22 and (b) at any time that an Event of Default exists hereunder, the LIBOR Rate Margin shall be at Level I:
Level Leverage Ratio LIBOR Rate Margin - ----- ---------------------------------------------- ----------------- I equal to or greater than 4.0:1.0 3.50 percentage points II less than 4.0:1.0 and equal to or greater than 3.25 percentage points 3.5:1.0 III less than 3.5:1.0 and equal to or greater than 3.00 percentage points 3.0:1.0 IV less than 3.0:1.0 2.75 percentage points
Except as set forth in the foregoing proviso, the LIBOR Rate Margin shall be based upon Parent's most recent Leverage Ratio calculation, which will be calculated on a fiscal quarter basis. Except as set forth in the initial proviso in this definition, the LIBOR Rate Margin shall be re-determined each fiscal quarter on the first day of the month following the date of delivery to Agent of the certified calculation of Parent's Leverage Ratio pursuant to Section 6.3 hereof; provided, however, that if Parent and Borrower fail to provide such certification when such certification is due, the LIBOR Rate Margin shall be set at the margin in the row styled "Level I" as of the first day of the month following the date on which the certification was required to be delivered until the date on which such certification is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default occasioned by the failure to timely deliver such certification, the LIBOR Rate Margin shall be set at the margin based upon the Leverage Ratio calculation disclosed by such certification). "Lien" means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term "Lien" includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property. "Loan Account" has the meaning set forth in Section 2.10. "Loan Documents" means this Agreement, the Bank Product Agreements, the Cash Management Agreements, the Control Agreements, the Copyright Security Agreement, the Credit Card Agreements, the Disbursement Letter, the Estoppel Agreement, the Fee 23 Letter, the Funds Flow Agreement, the GE Fee Letter, the Guarantor Security Agreement, the Guaranty, the Intercompany Subordination Agreement, the Letters of Credit, the Mortgages, the Stock Pledge Agreement, the Trademark Security Agreement, the Vectra Fee Letter, any note or notes executed by Borrower in connection with this Agreement and payable to a member of the Lender Group, and any other agreement entered into, now or in the future, by Borrower and the Lender Group in connection with this Agreement. "Maintenance Capital Expenditures" means all Capital Expenditures of Borrower and its Subsidiaries other than Growth Capital Expenditures. "Management Agreement" means that certain Professional Services Agreement dated as of June 12, 2003 between Parent and WPP. "Marginally Performing Restaurant" means a Restaurant (a) that has been operated by Borrower or one of its Subsidiaries for at least 12 months and whose allocable portion of TTM Consolidated Operating Income is less than $50,000 but greater than $1, (b) that has been operated by Borrower or one of its Subsidiaries for less than 12 months and whose allocable portion of Consolidated Operating Income has been less than $50,000 but greater than $1 since inception on a cumulative basis), or (c) that is a Performing Restaurant; however, the lease associated with such Restaurant will expire in 180 days and after giving effect to the terms of the new lease for such Restaurant, the allocable portion of TTM Consolidated Operating Income would be less than $50,000 but greater than $1. "Material Adverse Change" means (a) a material adverse change in the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Parent and its Subsidiaries, taken as a whole, (b) a material impairment of Parent's and its Subsidiaries ability to perform their obligations under the Loan Documents to which they are parties or of the Lender Group's ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent's Liens with respect to the Collateral as a result of an action or failure to act on the part of Parent or its Subsidiaries. "Maturity Date" has the meaning set forth in Section 3.4. "Maximum Revolver Amount" means $30,000,000. "Midway" has the meaning specified therefor in the recitals to this Agreement. "Mortgages" means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt (or assignments and amendments thereof), delivered (and where applicable, executed) by Borrower or its Subsidiaries in favor of Agent, in form and substance satisfactory to Agent, that encumber the Real Property Collateral. "Negotiable Collateral" means letters of credit, letter of credit rights, instruments, promissory notes, drafts, documents, and chattel paper (including electronic chattel paper and tangible chattel paper). 24 "Net Cash Proceeds" means, with respect to any sale or disposition by any Person or any Subsidiary thereof of property or assets, the amount of Collections received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of such Person or such Subsidiary, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under this Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such disposition, (ii) reasonable expenses related thereto incurred by such Person or such Subsidiary in connection therewith, and (iii) taxes paid or payable to any taxing authorities by such Person or such Subsidiary in connection therewith, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate and are properly attributable to such transaction. "Note" and "Notes" shall have the meanings ascribed thereto in the Indenture. "Obligations" means (a) all loans (including the Term Loan), Advances, debts, principal, interest (including any interest that, but for the commencement of an Insolvency Proceeding, would have accrued), contingent reimbursement obligations with respect to outstanding Letters of Credit, premiums, liabilities (including all amounts charged to Borrower's Loan Account pursuant hereto), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that, but for the commencement of an Insolvency Proceeding, would have accrued), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrower to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Group Expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement or in the Loan Documents to the Obligations shall include all extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding. "Originating Lender" has the meaning set forth in Section 14.1(e). "Overadvance" has the meaning set forth in Section 2.5. "Participant" has the meaning set forth in Section 14.1(e). "Performing Restaurant" means a Restaurant that is not an Unprofitable Restaurant or a Marginally Performing Restaurant. "Permanently Closed Restaurant" means a Restaurant that has been closed for 120 days or more and that has not replaced. 25 "Permitted Acquired Indebtedness" means, with respect to Borrower or any of its Subsidiaries, Purchase Money Indebtedness of any other Person whose assets are acquired by Borrower or any of its Subsidiaries in a Permitted Acquisition or other unsecured Indebtedness incurred or acquired in connection with a Permitted Acquisition, provided that such Indebtedness was existing prior to the date of such Permitted Acquisition and was not incurred in connection with, or in contemplation of, such Permitted Acquisition. "Permitted Acquisition" means a Permitted Cash Acquisition or a Permitted Non-Cash Acquisition, as the context requires. "Permitted Cash Acquisition" means any Acquisition as to which each of the following is applicable: (a) such Acquisition does not qualify as a Permitted Non-Cash Acquisition solely because the consideration payable in respect of the proposed Acquisition includes some form of consideration other than solely the common Stock of Parent, and (b) no Indebtedness that is not permitted under Section 7.1(k) will be incurred as a result of such Acquisition; provided, however, that consideration payable in respect of such proposed Acquisition shall be available to be expended as a Growth Capital Expenditure under Section 7.18(b). "Permitted Discretion" means a determination made in the exercise of reasonable (from the perspective of a senior secured lender) business judgment. "Permitted Dispositions" means (a) sales or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents, (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business, (e) Permitted Sale and Leasebacks, (f) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, and so long as the sale or other disposition is for 80% cash in an arms-length transaction for fair value, Permitted Performing Restaurant Dispositions in the ordinary course of business, (g) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, and so long as the sale or other disposition is for 80% cash in an arms-length transaction for fair value, Permitted Marginally Performing Restaurant Dispositions in the ordinary course of business, (h) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, and so long as the sale or other disposition is for 80% cash in an arms-length transaction for fair value, Permitted Unprofitable Restaurant Dispositions in the ordinary course of business, (i) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, and so long as the sale or other disposition is for cash in an arms-length transaction for fair value, the sale or other disposition of assets (other than Accounts, owned Real Property Collateral, intellectual property, or Stock in Borrower or any Guarantor) no longer useful in the conduct of Borrower's or its Subsidiaries' business, so long as the aggregate Net Cash Proceeds from such assets sold or otherwise disposed of pursuant to this clause (i) in any fiscal year does not exceed $250,000 in the aggregate; provided, however, 26 that if such Net Cash Proceeds are used within 360 days of such disposition to invest in assets used or useful in the business then the amount of such Net Cash Proceeds so invested shall not be included in the calculation of the limitation set forth in this clause (i), (j) sales of Inventory and Equipment located at leased locations to a subtenant in connection with the sublease of any such leased Real Property, (k) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, and so long as the sale or other disposition is for 100% cash in an arms-length transaction for fair value, the sale of Borrower's Real Property located at (i) 400 West 48th Avenue, Denver, Colorado, and (ii) 1512 N. Neil Street, Champaign, Illinois, (l) the dissolution of any Inactive Subsidiary, (m) the sale or discount, in each case without recourse, of Accounts arising in the ordinary course of business, but only in connection with the compromise or collection thereof, (n) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the transfer of assets from any Guarantor to Borrower or another Guarantor, (o)(i) any involuntary loss, damage, or destruction of property, or (ii) any condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property, (p) so long as no Default or Event of Default has occurred or is continuing or would result therefrom, the donation of the Borrower's vacant Real Property located in Utica, New York to the City of Utica, and (q) the sublease by Borrower of any Real Property leased by Borrower in connection with a disposition permitted hereunder. For the avoidance of doubt, it is understood that the restrictions set forth in this definition do not otherwise restrict Permitted Intercompany Advances. "Permitted Distribution" means, so long as (a) no Default or Event of Default has occurred and is continuing or would result therefrom, (b) Borrower has Excess Availability of not less than $10,000,000 after giving effect thereto, and (c) it is otherwise permitted under the Indenture (as in effect on the Closing Date), the payment of a dividend by Borrower to Parent in an aggregate amount not to exceed $10,000,000 in any fiscal year and in an aggregate amount not to exceed $30,000,000 during the term of this Agreement, and the redemption of, or payment of a dividend on account of, Parent's outstanding Stock with 100% of the proceeds of the dividend received from Borrower. "Permitted Equity Acquisition" means any Permitted Acquisition that is completed exclusively with the net cash proceeds of an equity contribution by the Permitted Holders to Parent, that is then contributed by Parent to Borrower. "Permitted Holder" means (a) WPP and its Affiliates, (b) Debra Koenig, (c) Robert Kaltenbach, (d) Anthony Carroll, (e) Thomas Rink, (f) Thomas Mejstrik, (g) Timothy Kanaly, (h) Daniel Gresham, (i) Donald Prismon, (j) Mark Hampton, (k) Jeffry Guido, (l) Pete Pascuzzi, and (m) Mid Oaks Investments, LLC, a Delaware limited liability company. "Permitted Intercompany Advances" means Intercompany Advances so long as such Intercompany Advances are made in the ordinary course of business. "Permitted Investments" means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection 27 with purchases of goods or services in the ordinary course of business, (d) Investments received in settlement of amounts due to Parent or any of its Subsidiaries effected in the ordinary course of business or owing to Parent or any of its Subsidiaries as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of Parent or its Subsidiaries, (e) Investments resulting from the making of Permitted Intercompany Advances, (f) Investments resulting from the execution and delivery of the Guaranty, (g) Investments consisting of promissory notes or other non-cash consideration received as proceeds of Permitted Dispositions, (h) Investments resulting from the entering into of Hedge Agreements permitted under Section 7.1 hereof, (i) Investments resulting from the making of the guarantees that are otherwise permitted under Section 7.1 hereof, (j) advances made in connection with loans to employees for relocation costs, provided however that the aggregate amount of all advances made under this clause (j) shall not exceed $500,000 at any time, and (k) Investments by Borrower or any of its Subsidiaries not otherwise permitted hereunder, provided, however, that the aggregate amount of all Investments made under this clause (k) shall not exceed $500,000 at any time. "Permitted Liens" means (a) Liens held by Agent, (b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors under operating leases, (e) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired, replacements thereof and the proceeds thereof, (f) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens on amounts deposited in connection with obtaining worker's compensation or other unemployment insurance, (h) Liens on amounts deposited in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money, (i) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business, (j) Liens resulting from any judgment or award that is not an Event of Default hereunder, (k) with respect to any Real Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof, (l) Liens in favor of a landlord to secure Borrower's obligations to pay rent, which Lien is (i) limited to the leasehold interest, fixtures and personal property located at such Restaurant, (ii) is senior to Agent's security interest in the leasehold and fixtures, and (iii) is subordinate to Agent's security interest in the personal property (including Equipment) located at such Restaurant; provided, however, that as a condition to the ability of any such Lien to be a Permitted Lien the landlord must execute and deliver to Agent an intercreditor agreement in form and substance satisfactory to Agent, (m) Liens on each item of Real Property Collateral to the extent permitted by the Mortgage applicable thereto, (n) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, or warranty requirements of Borrower or any of its Subsidiaries, including rights of offset, (o) Liens encumbering deposits made to secure Indebtedness under Hedge Agreements 28 permitted under Section 7.1 hereof, (p) Liens securing Permitted Acquired Indebtedness, provided that: (i) the Liens securing such Permitted Acquired Indebtedness at the time of and prior to the incurrence of such Permitted Acquired Indebtedness by Borrower or a Subsidiary of Borrower and were not granted in connection with, or in anticipation of, the consummation of the subject Acquisition by Borrower or a Subsidiary of Borrower; and (ii) such Liens do not extend to or cover any property or assets of Borrower or of any of its Subsidiaries other than the property or assets that secured the Permitted Acquired Indebtedness prior to the time such Indebtedness became Permitted Acquired Indebtedness of Borrower or a Subsidiary of Borrower, (q) banker's Liens, rights of setoff and similar Liens with respect to cash and Cash Equivalents on deposit in one or more deposit accounts in the ordinary course of business, exclusive of deposit accounts that are subject to Control Agreements or Cash Management Agreements, (r) Liens on deposits made in the ordinary course of business to secure liability to Borrower and its Subsidiaries' insurance carriers, and (s) rights of a licensor of intellectual property in and to such property. For the avoidance of doubt, the parties agree that Liens permitted under clause (l) above shall not be deemed to be Purchase Money Security Interests. "Permitted Management Fees" means consulting fees payable by Borrower to WPP (or its Affiliates) in an aggregate amount not to exceed $250,000 per fiscal quarter provided, however, that in any fiscal quarter, Borrower may pay consulting fees in such quarter that exceed the foregoing maximum amount (without giving effect to this proviso) by an amount equal to the accrued and unpaid consulting fees, plus the reimbursement of reasonable out-of-pocket expenses incurred by WPP (or its Affiliates) in connection with the performance of its management duties related to Borrower and its Subsidiaries. "Permitted Marginally Performing Restaurant Dispositions" means the sale or other dispositions of (a) an unlimited number of Marginally Performing Restaurants so long as the sale or other disposition occurs contemporaneously with the expiration of the lease related to such Restaurant and (b) not more than 2 Marginally Performing Restaurants if the sale or other disposition occurs any time prior to the expiration of the lease related to such Restaurant provided, however, that if the number of sales or other dispositions of Marginally Performing Restaurants is less than 2 in any consecutive 12 month period then such amount may be carried forward to the immediately succeeding consecutive 12 month period provided, further, that no amounts carried forward may be carried forward to any consecutive 12 month period thereafter. "Permitted Non - Cash Acquisition" means any Acquisition so long as: (a) no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition, (b) the assets being acquired are useful in or engaged in, as applicable, the business of Borrower and its Subsidiaries or a business reasonably related thereto, (c) the consideration payable in respect of the proposed Acquisition shall be composed solely of the common Stock of Parent, 29 (d) if the consideration payable in respect of the proposed Acquisition is greater than or equal to $2,000,000, Parent has provided Agent with written confirmation, supported by reasonably detailed calculations, that on a pro forma basis, created by adding the historical combined financial statements of Parent (including the combined financial statements of any other Person or assets that were the subject of a prior Permitted Acquisition during the relevant period) to the historical consolidated financial statements of the Person to be acquired (or the historical financial statements related to the assets to be acquired) pursuant to the proposed Acquisition (adjusted to eliminate expense items that would not have been incurred and include income items that would have been recognized, in each case, if the combination had been accomplished at the beginning of the relevant period; such eliminations and inclusions to be mutually agreed upon by Parent and Agent), Parent and Borrower would have been in compliance with the financial covenants in Section 7.18 hereof for the four fiscal quarters ending as of the fiscal quarter ended immediately prior to the proposed date of consummation of such proposed Acquisition for which there are available financial statements, (e) the subject assets are being acquired by Borrower or a Guarantor that is a Subsidiary of Borrower and is not an Inactive Subsidiary, (f) in the case of an Asset Acquisition, the subject assets are being acquired by Borrower or a Guarantor, (g) in the case of a Stock Acquisition, the subject Stock is being acquired in such Acquisition directly by Borrower or a Guarantor, (h) in the case of an Asset Acquisition, Borrower or the relevant Guarantor, as applicable, shall have executed and delivered or authorized, as applicable, any and all security agreements, financing statements, fixture filings, and other documentation reasonably requested by Agent in order to include the newly acquired assets within the collateral hypothecated under the Loan Documents, (i) in the case of a Stock Acquisition, Borrower or the relevant Guarantor, as applicable, shall have executed and delivered a pledge agreement respecting the Stock being acquired and shall have delivered to Agent possession of the original Stock certificates respecting all of the issued and outstanding shares of Stock of such acquired Person, together with stock powers with respect thereto endorsed in blank, (j) in the case of a Stock Acquisition, Borrower or the relevant Guarantor, as applicable, shall have caused such acquired Person to execute and deliver a joinder to either this Agreement or the Guaranty in order to make such Person a party hereto or thereto, together with any and all security agreements, financing statements, fixture filings, and other documentation reasonably requested by Agent in order to cause such acquired Person to be obligated with respect to the Obligations and to include the assets of the acquired Person within the collateral hypothecated under the Loan Documents, 30 (k) (i) in the case of an Acquisition of a restaurant or restaurants from a franchisee, the restaurant or restaurants that are the subject of the proposed Acquisition shall have positive TTM Four Wall EBITDA for the most recent four fiscal quarter period ended prior to the date of acquisition, and (ii) in the case of an Acquisition of a restaurant or restaurant from any Person other than a franchisee either (A) the restaurant or restaurants that are the subject of the proposed Acquisition shall have positive TTM Four Wall EBITDA for the most recent four fiscal quarter period ended prior to the date of acquisition or (B) if no information exists to determine TTM Four Wall EBITDA for the restaurant or restaurants that are the subject of the proposed Acquisition, then there shall be no more than 3 of such restaurants acquired in any fiscal year and no more than $2,500,000 of consideration paid or payable in respect of such restaurants in any fiscal year, and (l) the terms of such Acquisition are customary market terms, negotiated on an arm's length basis and, to the extent the seller of such assets is an Affiliate of Borrower, any of its Subsidiaries, or any Permitted Holder, Agent shall have received a resolution of the Board of Directors of Parent certifying compliance with the requirements set forth in this clause (l). "Permitted Non-Equity Acquisition" means any Permitted Acquisition that is not a Permitted Equity Acquisition. "Permitted Performing Restaurant Dispositions" means the sale or other dispositions of not more than 2 Performing Restaurants (whether the sale or other disposition occurs at the expiration of the lease related to such Restaurant or not) in any consecutive 12 month period; provided, however, that (a) any Performing Restaurant which is replaced with another Performing Restaurant within 360 days of the sale or other disposition of the original Performing Restaurant shall not be included in the determination of the limit set forth in the immediately preceding clause, and (b) if the number of Performing Restaurants sold or otherwise disposed of in any consecutive 12 month period is less than 2 then such amount may be carried forward to the immediately succeeding consecutive 12 month period provided, further, that no amounts carried forward may be carried forward to any consecutive 12 month period thereafter. "Permitted Protest" means the right of Parent or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on the Books in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by Parent or its Subsidiary, as applicable, in good faith, and (c) Agent is satisfied in its Permitted Discretion that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent's Liens. "Permitted Purchase Money Indebtedness" means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date, and Permitted 31 Acquisition Indebtedness in an aggregate principal amount outstanding at any one time not in excess of $5,000,000. "Permitted Redemption" means, so long as (a) no Default or Event of Default has occurred and is continuing, (b) the Leverage Ratio as at the end of the most recently completed fiscal quarter of Parent at the time of the proposed redemption and after giving effect to the proposed redemption is less than 3.25:1.00, and (c) Borrower has Excess Availability of not less than $10,000,000 after giving effect thereto, the repurchase, prepayment, redemption, or other retirement of the High Yield Debt. "Permitted Reorganization Transaction" means (a) the merger of a Guarantor with and into another Guarantor or into Borrower (so long as Borrower is the surviving entity in any such merger involving Borrower), (b) the dissolution and transfer of all of the assets or properties of a Guarantor to another Guarantor or to Borrower, or (ii) by a Subsidiary of Borrower that is not a Guarantor to a Guarantor or to Borrower, and (c) the dissolution of the Inactive Subsidiary. "Permitted Restaurant Dispositions" means Permitted Performing Restaurant Dispositions, Permitted Marginally Performing Restaurant Dispositions, and Permitted Unprofitable Restaurant Dispositions. "Permitted Sale and Leaseback" means a sale and leaseback transaction (a "Sale and Leaseback") that is in respect of real property and the improvements thereto that is first acquired by Borrower after the date hereof, so long as: (a) no Default or Event of Default shall have occurred or be continuing or shall result from the consummation of such Sale and Leaseback; (b) Borrower receives fair market value for the sale of the subject assets, (c) 100% of the consideration received is cash or Cash Equivalents, and (d) such Sale and Leaseback shall be fully consummated within 360 days after the date of Borrower's acquisition of the subject real property and improvements. "Permitted Unprofitable Restaurant Dispositions" means the sale or other dispositions of (a) an unlimited number of Unprofitable Restaurants so long as the sale or other disposition occurs contemporaneously with the expiration of the lease related to such Restaurant in any consecutive 12 month period and (b) not more than 5 Unprofitable Restaurants if the sale or other disposition occurs any time prior to the expiration of the lease related to such Restaurant in any consecutive 12 month period; provided, however, that if the number of sales or other dispositions of Unprofitable Restaurants is less than 5 in any consecutive 12 month period then such amount may be carried forward to the immediately succeeding consecutive 12 month period provided, further, that no amounts carried forward may be carried forward to any consecutive 12 month period thereafter. 32 "Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof. "Projections" means Parent's forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Parent's historical financial statements, together with appropriate supporting details and a statement of underlying assumptions. "Pro Rata Share" means, as of any date of determination: (a) with respect to a Lender's obligation to make Advances and receive payments of principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and after the time that the Revolver Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender's Advances by (z) the aggregate outstanding principal amount of all Advances, (b) with respect to a Lender's obligation to participate in Letters of Credit, to reimburse the Issuing Lender, and to receive payments of fees with respect thereto, (i) prior to the Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender's Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and after the time that the Revolver Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender's Advances by (z) the aggregate outstanding principal amount of all Advances, (c) with respect to a Lender's obligation to make the Term Loan and receive payments of interest, fees, and principal with respect thereto, (i) prior to the making of the Term Loan, the percentage obtained by dividing (y) such Lender's Term Loan Commitment, by (z) the aggregate amount of all Lenders' Term Loan Commitments, and (ii) from and after the making of the Term Loan, the percentage obtained by dividing (y) the principal amount of such Lender's portion of the Term Loan by (z) the principal amount of the Term Loan, and (d) with respect to all other matters as to a particular Lender (including the indemnification obligations arising under Section 16.7), the percentage obtained by dividing (i) such Lender's Revolver Commitment plus the outstanding principal amount of such Lender's portion of the Term Loan, by (ii) the aggregate amount of Revolver Commitments of all Lenders plus the outstanding principal amount of the Term Loan; provided, however, that in the event the Revolver Commitments have been terminated or reduced to zero, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the outstanding principal amount of such Lender's Advances plus such Lender's ratable portion of the Risk 33 Participation Liability with respect to outstanding Letters of Credit plus the outstanding principal amount of such Lender's portion of the Term Loan, by (B) the outstanding principal amount of all Advances plus the aggregate amount of the Risk Participation Liability with respect to outstanding Letters of Credit plus the outstanding principal amount of the Term Loan. "Purchase Money Indebtedness" means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof. "Qualified Cash" means, as of any date of determination, the amount of unrestricted cash and Cash Equivalents of Borrower and its Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any combination thereof, and which such Deposit Account or Securities Account is the subject of a Control Agreement and is maintained by a branch office of the bank or securities intermediary located within the United States. "Qualified IPO" shall mean a bona fide underwritten sale to the public of common Stock of Parent or Borrower pursuant to a registration statement (other than on Form S-8 or any other form relating to securities issuable under any benefit plan of Parent or Borrower, as the case may be) that is declared effective by the SEC and such offering results in gross cash proceeds to Borrower or Parent (exclusive of underwriter's discounts and commissions and other expenses) of at least $40,000,000. "Real Property" means any estates or interests in real property now owned or hereafter acquired by Borrower or its Subsidiaries and the improvements thereto. "Real Property Collateral" means the Real Property identified on Schedule R-1 and any After Acquired Real Property hereafter acquired by Borrower or its Subsidiaries. "Record" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form. "Remedial Action" means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws. "Replacement Lender" has the meaning set forth in Section 15.2(a). "Report" has the meaning set forth in Section 16.17. 34 "Required Availability" means that the sum of (a) Excess Availability, plus (b) Qualified Cash exceeds $15,000,000. "Required Lenders" means, at any time, at least two Lenders whose aggregate Pro Rata Shares (calculated under clause (d) of the definition of Pro Rata Shares) equal or exceed 50.1%. "Reserve Percentage" means, on any day, for any Lender, the maximum percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as "eurocurrency liabilities") of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero. "Restaurant" means a "Baker's Square" or "Village Inn" restaurant owned or leased and operated by Borrower or one of its Subsidiaries. "Revolver Commitment" means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 14.1. "Revolver Usage" means, as of any date of determination, the sum of (a) the amount of outstanding Advances, plus (b) the amount of the Letter of Credit Usage. "Risk Participation Liability" means, as to each Letter of Credit, all reimbursement obligations of Borrower to the Issuing Lender with respect to an L/C Undertaking, consisting of (a) the amount available to be drawn or which may become available to be drawn, (b) all amounts that have been paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed by Borrower, whether by the making of an Advance or otherwise, and (c) all accrued and unpaid interest, fees, and expenses payable with respect thereto. "Sale and Leaseback" has the meaning set forth in the definition "Permitted Sale and Leaseback." "SEC" means the United States Securities and Exchange Commission and any successor thereto. "Securities Account" means a securities account (as that term is defined in the Code). "Settlement" has the meaning set forth in Section 2.3(f)(i). 35 "Settlement Date" has the meaning set forth in Section 2.3(f)(i). "Solvent" means, with respect to any Person on a particular date, that, at fair valuations, the sum of such Person's assets is greater than all of such Person's debts. "Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). "Stock Acquisition" means the purchase or other acquisition by Borrower or its Subsidiaries of all of the Stock of any other Person. "Stock Pledge Agreement" means an amended and restated stock pledge agreement, in form and substance satisfactory to Agent, executed and delivered by Borrower to Agent with respect to the pledge of the Stock owned by Borrower. "Subsidiary" of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity. "SunTrust Resignation Letter" has the meaning set forth in the recitals to this Agreement. "Supporting Obligation" means a letter-of-credit right or secondary obligation that supports the payment or performance of an Account, chattel paper, document, General Intangible, instrument, or Investment Property. "Swing Lender" means WFF or any other Lender that, at the request of Borrower and with the consent of Agent agrees, in such Lender's sole discretion, to become the Swing Lender under Section 2.3(d). "Swing Loan" has the meaning set forth in Section 2.3(d)(i). "Taxes" has the meaning set forth in Section 16.11. "Term Loan" has the meaning set forth in Section 2.2. "Term Loan Amount" means (a) on the Closing Date, $15,000,000, and (b) on any date of determination after the Closing Date, the outstanding principal balance of Term Loan. "Term Loan Commitment" means, with respect to each Lender, its Term Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments, in each case 36 as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 14.1. "Total Commitment" means, with respect to each Lender, its Total Commitment, and, with respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 attached hereto or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 14.1. "Total Debt" means, as of any date of determination, without duplication, the sum of (a) the Obligations (including without limitation the Advances, the Term Loan, and the Letter of Credit Usage), (b) the outstanding principal amount of Permitted Purchase Money Indebtedness of Parent and its Subsidiaries, and (c) the outstanding principal amount of all Funded Debt of Parent and its Subsidiaries; provided, however, that solely for purposes of calculating the Leverage Ratio, liabilities under Hedge Agreements permitted to be incurred under Section 7.1 hereof and Indebtedness in respect of letters of credit pledged in connection with worker's compensation or other unemployment insurance shall not be included in the calculation of Total Debt. "Trademark Security Agreement" means an amended and restated trademark security agreement executed and delivered by Borrower and Agent, the form and substance of which is satisfactory to Agent. "TTM Consolidated Operating Income" means, as of any date of determination, the Consolidated Operating Income for the four fiscal quarters most recently ended. "TTM Four Wall EBITDA" means, as of any date of determination, the Four Wall EBITDA for the restaurant or restaurants that are proposed to be acquired and calculated for the four fiscal quarters most recently ended. "UFOC" means Borrower's Uniform Franchise Offering Circular. "Underlying Issuer" means a third Person which is the beneficiary of an L/C Undertaking and which has issued a letter of credit at the request of the Issuing Lender for the benefit of Borrower. "Underlying Letter of Credit" means a letter of credit that has been issued by an Underlying Issuer. "United States" means the United States of America. 37 "Unit Level Cash Flow" means, with respect to any Restaurant and for any fiscal period, the net revenue generated by such restaurant during such fiscal period minus the aggregate amount of the cash operating expenses of such Restaurant during such fiscal period, in each case calculated in a manner consistent with Borrower's historical calculation of Unit Level Cash Flow. "Unprofitable Restaurant" means a Restaurant (a) that has been operated by Borrower or one of its Subsidiaries for at least 12 months and whose allocable portion of TTM Consolidated Operating Income is less than or equal to $1, (b) that has been operated by Borrower or one of its Subsidiaries for less than 12 months and whose allocable portion of Consolidated Operating Income has been less than or equal to $1 since inception on a cumulative basis, or (c) that is a Performing Restaurant; however, the lease associated with such Restaurant will expire in 180 days and after giving effect to the terms of the new lease for such Restaurant, the allocable portion of TTM Consolidated Operating Income would be less than or equal to $1. "Unused Line Fee" means, as of any date of determination, the following fee based upon Parent's most recent Leverage Ratio calculation (determined as set forth in the following paragraph); provided, however, that (a) for the period from the Closing Date through the date Agent receives the certified calculation of Parent's Leverage Ratio in respect of the testing period ended with April 15, 2004 delivered pursuant to Section 6.3, and (b) at any time that an Event of Default exists hereunder, the applicable Unused Line Fee shall be at Level I:
Level Leverage Ratio Unused Line Fee - ----- -------------- --------------- I equal to or greater than 3.5:1.0 0.50 percentage points II less than 3.5:1.0 and equal to or greater than 0.375 percentage points 3.0:1.0 III less than 3.0:1.0 0.25 percentage points
Except as set forth in the foregoing proviso, the Unused Line Fee shall be based upon Parent's most recent Leverage Ratio calculation, which will be calculated on a fiscal quarter basis. Except as set forth in the initial proviso in this definition, the Unused Line Fee shall be re-determined each fiscal quarter on the first day of the month following the date of delivery to Agent of the certified calculation of Parent's Leverage Ratio pursuant to Section 6.3 hereof; provided, however, that if Parent and Borrower fail to provide such certification when such certification is due, the Unused Line Fee shall be set at the margin in the row styled "Level I" as of the first day of the month following the date on which the certification was required to be delivered until the date on which such certification is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default occasioned by the failure to timely deliver such certification, the Unused Line Fee shall be set at the margin based upon the Leverage Ratio calculation disclosed by such certification). 38 "Vectra Fee Letter" means that certain fee letter, dated as of even date herewith, by Borrower in favor of Agent and Vectra Bank Colorado, in form and substance satisfactory to Agent. "Voidable Transfer" has the meaning set forth in Section 17.6. "Wells Fargo" means Wells Fargo Bank, National Association, a national banking association. "WFF" means Wells Fargo Foothill, Inc., a California corporation. "WPP" means Wind Point Partners IV L.P., a Delaware limited partnership and Wind Point Partners, V L.P., a Delaware limited partnership, collectively. 1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Parent" is used in respect of a financial covenant or a related definition, it shall be understood to mean Parent and its Subsidiaries on a consolidated basis unless the context clearly requires otherwise. 1.3 CODE. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 shall govern. 1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms "includes" and "including" are not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than contingent indemnification Obligations and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and are not required to be repaid or cash 39 collateralized pursuant to the provisions of this Agreement. Any reference herein to any Person shall be construed to include such Person's successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein. 1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference. 1.6 INDENTURE. Any terms defined in the Indenture that are incorporated herein by reference shall be construed and defined as set forth in the Indenture as in effect on the Closing Date. 2. LOAN AND TERMS OF PAYMENT. 2.1 REVOLVER ADVANCES. (a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender with a Revolver Commitment agrees (severally, not jointly or jointly and severally) to make advances ("Advances") to Borrower in an amount at any one time outstanding not to exceed such Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum Revolver Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of Credit Usage. (b) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent in its Permitted Discretion shall deem necessary or appropriate, against the Borrowing Base, including reserves with respect to (i) sums that Borrower is required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay under any Section of this Agreement or any other Loan Document, and (ii) amounts owing by Borrower or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than any Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent's Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral; provided, however, that Agent agrees not to establish a reserve with respect to Bank Products of the type specified in clauses (e) and (f) of the definition of Bank Product and will not establish a reserve with respect to any other types of Bank Products unless Agent and Borrower otherwise agree. (c) The Lenders with Revolver Commitments shall have no obligation to make additional Advances hereunder to the extent such additional Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount. 40 (d) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. 2.2 TERM LOAN. Subject to the terms and conditions of this Agreement, on the Closing Date each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make term loans (collectively, the "Term Loan") to Borrower in an amount equal to such Lender's Pro Rata Share of the Term Loan Amount. The outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loan shall be due and payable on the date of termination of this Agreement, whether by its terms, by prepayment, or by acceleration. All amounts outstanding under the Term Loan shall constitute Obligations. 2.3 BORROWING PROCEDURES AND SETTLEMENTS. (a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an irrevocable written request by an Authorized Person delivered to Agent. Such notice must be received by Agent no later than 10:00 a.m. (California time) on the Business Day prior to the date that is the requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day; provided, however, that in the case of a request for a Swing Loan in an amount of $5,000,000, or less, such notice will be timely received if it is received by Agent no later than 10:00 a.m. (California time) on the Business Day that is the requested Funding Date. At Agent's election, in lieu of delivering the above-described written request, any Authorized Person may give Agent telephonic notice of such request by the required time. In such circumstances, Borrower agrees that any such telephonic notice will be confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to provide such written confirmation shall not affect the validity of the request. (b) AGENT'S ELECTION. Promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of the requested Borrowing; provided, however, that if Swing Lender declines in its sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the terms of Section 2.3(c) apply to such requested Borrowing. (c) MAKING OF LOANS. (i) In the event that Agent shall elect to have the terms of this Section 2.3(c) apply to a requested Borrowing as described in Section 2.3(b), then promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately preceding the Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of the requested Borrowing available to Agent in immediately 41 available funds, to Agent's Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent's receipt of the proceeds of such Advances (or the Term Loan, as applicable), Agent shall make the proceeds thereof available to Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Borrower's Designated Account; provided, however, that, subject to the provisions of Section 2.3(i), Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any Advance (or its portion of the Term Loan) if Agent shall have actual knowledge that (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date. (ii) Unless Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, prior to 9:00 a.m. (California time) on the date of such Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrower the amount of that Lender's Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrower on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrower such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender's Advance (or portion of the Term Loan, as applicable) on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Borrower of such failure to fund and, upon demand by Agent, Borrower shall pay such amount to Agent for Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Advances (or portion of the Term Loan, as applicable) composing such Borrowing. The failure of any Lender to make any Advance (or portion of the Term Loan, as applicable) on any Funding Date shall not relieve any other Lender of any obligation hereunder to make an Advance (or portion of the Term Loan, as applicable) on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance (or portion of the Term Loan, as applicable) to be made by such other Lender on any Funding Date. (iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrower to Agent for the Defaulting Lender's benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender's Advance was 42 funded by the other members of the Lender Group) or, if so directed by Borrower and if no Default or Event of Default had occurred and is continuing (and to the extent such Defaulting Lender's Advance was not funded by the Lender Group), retain same to be re-advanced to Borrower as if such Defaulting Lender had made Advances to Borrower. Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Borrower shall have waived such Defaulting Lender's default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrower of its duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (other than Bank Product Obligations, but including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever; provided, however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups' or Borrower's rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund. (d) MAKING OF SWING LOANS. (i) In the event Agent shall elect, with the consent of Swing Lender, as a Lender, to have the terms of this Section 2.3(d) apply to a requested Borrowing as described in Section 2.3(b), Swing Lender as a Lender shall make such Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being referred to as a "Swing Loan" and such Advances being referred to collectively as "Swing Loans") available to Borrower on the Funding Date applicable thereto by transferring immediately available funds to Borrower's Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that no such 43 Swing Loan shall be eligible to be a LIBOR Rate Loan and all payments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its own account (and for the account of the holder of any participation interest with respect to such Swing Loan). Subject to the provisions of Section 2.3(i), Agent shall not request Swing Lender as a Lender to make, and Swing Lender as a Lender shall not make, any Swing Loan if Agent has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making, in its sole discretion, any Swing Loan. (ii) The Swing Loans shall be secured by the Agent's Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. (e) AGENT ADVANCES. (i) Agent hereby is authorized by Borrower and the Lenders, from time to time in Agent's sole discretion, (1) after the occurrence and during the continuance of a Default or an Event of Default, or (2) at any time that any of the other applicable conditions precedent set forth in Section 3 have not been satisfied, to make Advances to Borrower on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (A) to preserve or protect the Collateral, or any portion thereof, (B) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations), or (C) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 10 (any of the Advances described in this Section 2.3(e) shall be referred to as "Agent Advances") provided, however, that notwithstanding anything to the contrary contained in this Section 2.3(e), the aggregate principal amount of Agent Advances outstanding at any time, when taken together with the aggregate principal amount of Overadvances made in accordance with Section 2.3(i) hereof outstanding at such time, shall not exceed an amount equal to the lesser of (x) 10% of the Borrowing Base then in effect and (y) $3,000,000. Each Agent Advance shall be deemed to be an Advance hereunder, except that no such Agent Advance shall be eligible to be a LIBOR Rate Loan and all payments thereon shall be payable to Agent solely for its own account. (ii) The Agent Advances shall be repayable on demand, secured by the Agent's Liens granted to Agent under the Loan Documents, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. (f) SETTLEMENT. It is agreed that each Lender's funded portion of the Advances is intended by the Lenders to equal, at all times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender, and the 44 other Lenders agree (which agreement shall not be for the benefit of or enforceable by Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Advances, the Swing Loans, and the Agent Advances shall take place on a periodic basis in accordance with the following provisions: (i) Agent shall request settlement ("Settlement") with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect to Borrower's or its Subsidiaries' Collections received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the "Settlement Date"). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Swing Loans, and Agent Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances (including Swing Loans and Agent Advances) exceeds such Lender's Pro Rata Share of the Advances (including Swing Loans and Agent Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Agent Advances), and (z) if a Lender's balance of the Advances (including Swing Loans and Agent Advances) is less than such Lender's Pro Rata Share of the Advances (including Swing Loans and Agent Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent's Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and Agent Advances). Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Agent Advances and, together with the portion of such Swing Loans or Agent Advances representing Swing Lender's Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate. (ii) In determining whether a Lender's balance of the Advances, Swing Loans, and Agent Advances is less than, equal to, or greater than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrower and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement. 45 (iii) Between Settlement Dates, Agent, to the extent no Agent Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Advances, for application to Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement Date, Collections of Borrower or its Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender's Pro Rata Share of the Advances other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Agent Advances, and each Lender (subject to the effect of agreements between Agent and individual Lenders) with respect to the Advances other than Swing Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable. (g) NOTATION. Agent shall record on its books the principal amount of the Advances (or portion of the Term Loan, as applicable) owing to each Lender, including the Swing Loans owing to Swing Lender, and Agent Advances owing to Agent, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, conclusively be presumed to be correct and accurate. In addition, each Lender is authorized, at such Lender's option, to note the date and amount of each payment or prepayment of principal of such Lender's Advances (or portion of the Term Loan, as applicable) in its books and records, including computer records. (h) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder. (i) OPTIONAL OVERADVANCES. Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to Borrower notwithstanding that an Overadvance exists or thereby would be created, so long as (i) the aggregate principal amount of Overadvances made pursuant to this Section 2.3(i) when taken together with the aggregate principal amount of Agent Advances made pursuant to Section 2.3(e) does not exceed at any time an amount equal to the lesser of (x) 10% of the Borrowing Base then in effect, and (y) $3,000,000, (ii) after giving effect to such Advances, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account 46 for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the time of the making of any such Advance, Agent does not believe, in good faith, that the Overadvance created by such Advance will be outstanding for more than 90 days. The foregoing provisions are for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit Borrower in any way. The Advances and Swing Loans, as applicable, that are made pursuant to this Section 2.3(i) shall be subject to the same terms and conditions as any other Advance or Swing Loan, as applicable, except that they shall not be eligible for the LIBOR Option and the rate of interest applicable thereto shall be the rate applicable to Advances that are Base Rate Loans under Section 2.6(c) hereof without regard to the presence or absence of a Default or Event of Default. (A) In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the preceding paragraph, regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value), and the Lenders with Revolver Commitments thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrower intended to reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrower to an amount permitted by the preceding paragraph. In the event Agent or any Lender disagrees over the terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. (B) Each Lender with a Revolver Commitment shall be obligated to settle with Agent as provided in Section 2.3(f) for the amount of such Lender's Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(i), and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses. 2.4 PAYMENTS. (a) PAYMENTS BY BORROWER. (i) Except as otherwise expressly provided herein, all payments by Borrower shall be made to Agent's Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day. (ii) Unless Agent receives notice from Borrower prior to the date on which any payment is due to the Lenders that Borrower will not make such payment in full as and when required, Agent may assume that Borrower has made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but 47 shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrower does not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid. (b) APPORTIONMENT AND APPLICATION. (i) Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and payments of fees and expenses (other than fees or expenses that are for Agent's separate account, after giving effect to any agreements between Agent and individual Lenders) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee relates. All payments shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied as follows: (A) first, to pay any Lender Group Expenses then due to Agent under the Loan Documents, until paid in full, (B) second, to pay any Lender Group Expenses then due to the Lenders under the Loan Documents, on a ratable basis, until paid in full, (C) third, to pay any fees then due to Agent (for its separate account, after giving effect to any agreements between Agent and individual Lenders) under the Loan Documents until paid in full, (D) fourth, to pay any fees then due to any or all of the Lenders (after giving effect to any agreements between Agent and individual Lenders) under the Loan Documents, on a ratable basis, until paid in full, (E) fifth, to pay interest due in respect of all Agent Advances until paid in full, (F) sixth, ratably to pay interest due in respect of the Advances (other than Agent Advances), the Swing Loans, and the Term Loan until paid in full, (G) seventh, to pay the principal of all Agent Advances until paid in full, 48 (H) eighth ratably to pay all principal amounts then due and payable (other than as a result of an acceleration thereof) with respect to the Term Loan until paid in full, (I) ninth, to pay the principal of all Swing Loans until paid in full, (J) tenth, so long as no Event of Default has occurred and is continuing, and at Agent's election (which election Agent agrees will not be made if an Overadvance would be created thereby), to pay amounts then due and owing by Borrower or its Subsidiaries in respect of Bank Products until paid in full, (K) eleventh, so long as no Event of Default has occurred and is continuing, to pay the principal of all Advances until paid in full, (L) twelfth, if an Event of Default has occurred and is continuing, ratably (i) to pay the principal of all Advances and the outstanding balance of the Term Loan until paid in full, (ii) to Agent, to be held by Agent, for the ratable benefit of Issuing Lender and those Lenders having a Revolver Commitment, as cash collateral in an amount up to 105% of the Letter of Credit Usage until paid in full, and (iii) to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount of the Bank Product Reserve established prior to the occurrence of, and not in contemplation of, the subject Event of Default until Borrower's and its Subsidiaries' obligations in respect of Bank Products have been paid in full or the cash collateral amount has been exhausted; (M) thirteenth, if an Event of Default has occurred and is continuing, to pay any other Obligations (including the provision of amounts to Agent, to be held by Agent, for the benefit of the Bank Product Providers, as cash collateral in an amount up to the amount determined by Agent in its Permitted Discretion as the amount necessary to secure Borrower's and its Subsidiaries' obligations in respect of Bank Products) until paid in full, and (N) fourteenth, to Borrower (to be wired to the Designated Account) or such other Person entitled thereto under applicable law. (ii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(f). (iii) In each instance, so long as no Event of Default has occurred and is continuing, this Section 2.4(b) shall not apply to any payment made by Borrower to Agent and specified by Borrower to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement. 49 (iv) For purposes of the foregoing, "paid in full" means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. (v) In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern. (c) MANDATORY PREPAYMENTS. (i) Immediately upon any voluntary or involuntary sale or disposition by Parent or any of its Subsidiaries of property or assets (other than sales or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (d), (e), (f), (g), (h), (k), (l), (m), (n) and (p) of the definition of Permitted Dispositions), Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such sales or dispositions to the extent that the aggregate amount of Net Cash Proceeds received by Parent and its Subsidiaries (and not paid to Agent as a prepayment of the Obligations) for all such sales or dispositions shall exceed $250,000 in any fiscal year. Nothing contained in this subclause (i) shall permit Parent or any of its Subsidiaries to sell or otherwise dispose of any property or assets other than in accordance with Section 7.4. (ii) Immediately upon the receipt by Parent or any of its Subsidiaries of any Extraordinary Receipts, Borrower shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts. (iii) Immediately upon the issuance or incurrence by Parent or any of its Subsidiaries of any Indebtedness (other than Indebtedness referred to in clauses (a) through (l), inclusive, of Section 7.1), or the sale or issuance by Parent or any of its Subsidiaries of any shares of its Stock (other than (A) the amount of equity contributed to Parent and then to Borrower by Parent to the extent used to complete a Permitted Equity Acquisition, or (B) the sale or issuance by Parent of shares of its Stock to its employees or directors having a value, at the time of issuance, of less than $500,000), Borrower shall prepay the outstanding principal of the Obligations in accordance with clause (d) in an amount equal to 100% of the Net Cash Proceeds received by Parent or its Subsidiaries in connection with such sale, issuance, or incurrence; provided, however, that (x) if the Leverage Ratio as at the end of the most recently completed fiscal quarter of Parent is less 50 than 3:25:1:00 at the time of receipt of any proceeds from the sale or issuance of any shares of Parent's or its Subsidiaries' Stock of the issuance or incurrence by Parent or any of its Subsidiaries of any Indebtedness (other than Indebtedness referred to in clauses (a) through (l), inclusive, of Section 7.1), then Borrower shall only be required to use 50% of such proceeds to prepay the Obligations. The provisions of this subsection (iii) shall not be deemed to be implied consent to any such sale, issuance, or incurrence otherwise prohibited by the terms and conditions of this Agreement. (d) APPLICATION OF PAYMENTS. (i) Each prepayment pursuant to subclause (c)(ii) above (except with respect to insurance proceeds and condemnation awards related to a casualty or loss of Collateral) or pursuant to subclause (c)(iii) above shall, (A) so long as no Event of Default shall have occurred and be continuing, be applied to the outstanding principal amount of the Term Loan, until paid in full, and (B) if an Event of Default shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(i). (ii) Each prepayment pursuant to subclause (c)(i) above or pursuant to subclause (c)(ii) above (with respect to insurance proceeds and condemnation awards related to a casualty or loss of Collateral) shall, (A) so long as no Event of Default shall have occurred and be continuing, be applied as follows: (1) if the proceeds are from any sale or disposition of any Accounts or Inventory or any insurance policy or condemnation award with respect to Inventory, such proceeds shall be applied, first, to the outstanding principal amount of the Advances, until paid in full, and second, to the outstanding principal amount of the Term Loan, until paid in full; (2) subject to clause (3) below, if the proceeds are from the sale or disposition of any other assets or any insurance policy or condemnation award not described in clause (1) above, such proceeds shall be applied, solely, to the outstanding principal amount of the Term Loan, until paid in full; provided, however, that, except during the continuance of a Default or an Event of Default, such proceeds shall not be required to be so applied to the extent that such proceeds are used to replace, repair, or restore the properties or assets in respect of which such proceeds were paid if (i) the amount of proceeds received in respect of such sales, dispositions, insurance policies, or condemnation awards are less than $1,000,000 in the aggregate at any one time, (ii) Borrower delivers a certificate to Agent within 10 days after such sale or 30 days after the date of such loss, destruction, or taking, as the case may be, stating that such proceeds shall be used to replace, repair, or restore such properties or assets within a period specified in such certificate not to exceed the earlier of (x) 180 days after the receipt of such proceeds and (y) the Maturity Date (which certificate shall set forth estimates of the proceeds to be so expended), and (iii) such proceeds are immediately deposited in a Deposit 51 Account subject to a Control Agreement in favor of Agent. If all or any portion of such proceeds not so applied to the prepayment of the Obligations in accordance with this clause (2) are not used in accordance with the preceding sentence within the period specified in the relevant certificate furnished pursuant hereto, such remaining portion shall be applied to the Obligations in accordance with this clause (2) on the last day of such specified period; and (3) if the proceeds are from a sale or disposition of all or substantially all of the assets or Stock of any Person, which sale or disposition includes both Accounts or Inventory and other assets, such proceeds shall be applied as follows: (x) an amount equal to the net book value of such Accounts and Inventory (determined at the time of such sale or disposition or event resulting in such insurance proceeds), shall be applied first, to the outstanding principal amount of the Advances, until paid in full, and (y) the remaining proceeds shall be applied, solely, to the outstanding principal amount of the Term Loan, until paid in full; and (4) if an Event of Default shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(i). 2.5 OVERADVANCES. If, at any time or for any reason, the amount of Obligations (other than Bank Product Obligations) owed by Borrower to the Lender Group pursuant to Section 2.1 or Section 2.12 is greater than any of the limitations set forth in Section 2.1 or Section 2.12, as applicable (an "Overadvance"), Borrower immediately shall pay to Agent, in cash, the amount of such excess, which amount shall be used by Agent to reduce the Obligations in accordance with the priorities set forth in Section 2.4(b). In addition, Borrower hereby promises to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full as and when due and payable under the terms of this Agreement and the other Loan Documents. 2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND CALCULATIONS. (a) INTEREST RATES. Except as provided in clause (c) below, all Obligations (except for undrawn Letters of Credit and except for Bank Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows (i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin. (b) LETTER OF CREDIT FEE. Borrower shall pay Agent (for the ratable benefit of the Lenders with a Revolver Commitment, subject to any agreements between Agent and individual Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at a rate equal to 52 the Letter of Credit Fee per annum times the Daily Balance of the undrawn amount of all outstanding Letters of Credit. (c) DEFAULT RATE. Upon the occurrence and during the continuation of an Event of Default (and at the election of Agent or the Required Lenders), (i) all Obligations (except for undrawn Letters of Credit and except for Bank Product Obligations) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to 2 percentage points above the per annum rate otherwise applicable hereunder, and (ii) the Letter of Credit Fee provided for above shall be increased to 2 percentage points above the per annum rate otherwise applicable hereunder. (d) PAYMENT. Except as provided to the contrary in Section 2.11 or Section 2.13(a), interest, Letter of Credit Fees, and all other fees payable hereunder shall be due and payable, in arrears, on the first day of each month at any time that Obligations or Commitments are outstanding. Borrower hereby authorizes Agent, from time to time without prior notice to Borrower, to charge all interest and fees (when due and payable), all Lender Group Expenses (as and when incurred), all charges, commissions, fees, and costs provided for in Section 2.12(e) (as and when accrued or incurred), all fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any Loan Document (including the amounts due and payable with respect to the Term Loan and including any amounts due and payable to the Bank Product Providers in respect of Bank Products up to the amount of the Bank Product Reserve) to Borrower's Loan Account, which amounts thereafter shall constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances hereunder. Any interest not paid when due shall be compounded by being charged to Borrower's Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances that are Base Rate Loans hereunder. (e) COMPUTATION. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate. (f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrower and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrower is and shall be liable only for the payment of such 53 maximum as allowed by law, and payment received from Borrower in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess. 2.7 CASH MANAGEMENT. (a) Borrower shall and shall cause each of its Subsidiaries to (i) establish and maintain a concentration account or accounts in the name of Agent unless such account is a concentration account maintained with Bank of America, N.A. or unless otherwise agreed to by Agent (each, a "Concentration Account") on terms reasonably satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a) (each, a "Concentration Account Bank"), (ii) cause each of the Collection Account Banks to forward payment, on a daily basis, of the amounts in the Collection Accounts directly to the Concentration Accounts, and (iii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to Borrower or one of its Subsidiaries) into a Concentration Account or Collection Account. (b) As to those deposit accounts of Borrower and its Subsidiaries that Agent, in its discretion, determines should be subject to this subsection, Borrower shall and shall cause each of its Subsidiaries to (i) establish and maintain a collection account or accounts in the name of Agent unless otherwise agreed to by Agent (each, a "Collection Account") on terms satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(b) (each, a "Collection Account Bank"), (ii) request in writing and otherwise take such reasonable steps to ensure that all of its and its Subsidiaries' Account Debtors forward payment of the amounts owed by them directly to such Collection Account, and (iii) cause each of the Collection Account Banks to forward payment, on a daily basis, of the amounts in the applicable Collection Account directly to one of the Concentration Accounts. Anything to contrary in this Section 2.7(b) notwithstanding, Agent agrees that the Collection Accounts listed on Schedule 2.7(b) as of the Closing Date need not be in the name of Agent. (c) Borrower shall, and shall cause each Subsidiary that receives Collections through credit card charges to, establish and maintain Credit Card Agreements with Agent and each Credit Card Processor. Each such Credit Card Agreement shall provide, among other things, that each such Credit Card Processor shall transfer all proceeds of credit card charges for sales by Borrower or such Subsidiary, as applicable, received by it (or other amounts payable by such Credit Card Processor) into a Concentration Account on a daily basis. Neither Borrower nor any Subsidiary may change any direction or designation set forth in the Credit Card Agreements regarding payment of charges without the prior written consent of Agent, and neither Borrower nor any Subsidiary shall cause the proceeds of credit card charges to be transferred to any Deposit Account other than the Concentration Account. (d) Within 5 Business Days of the Closing Date, each Concentration Account Bank and, within 90 days of the Closing Date, each Collection Account Bank (other 54 than for those Collection Accounts set forth on Schedule 3.2(d)) shall establish and maintain Cash Management Agreements with Agent, in form and substance acceptable to Agent. Each such Cash Management Agreement shall provide, among other things, that (i) the applicable Cash Management Bank will comply with any instructions originated by Agent directing the disposition of the funds in such Cash Management Account without further consent by Borrower or its Subsidiaries, as applicable, and (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment. (e) So long as no Default or Event of Default has occurred and is continuing, Borrower may amend Schedule 2.7(a) and Schedule 2.7(b) to add or replace a bank or account; provided, however, that (i) such prospective bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of the opening of such account, Borrower or its Subsidiary, as applicable, and such prospective bank shall have executed and delivered to Agent the kind of agreements required under clause (a), (b), (c), or (d) above, as applicable. Borrower or its Subsidiaries, as applicable shall close any of its accounts (and establish replacement accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from Agent that the creditworthiness of any bank is no longer acceptable in Agent's reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the bank with respect to accounts or Agent's liability under any Cash Management Agreement with such bank is no longer acceptable in Agent's reasonable judgment. (f) The Cash Management Accounts shall be cash collateral accounts subject to Control Agreements and the Cash Management Agreements shall provide that from and after the date that the applicable Cash Management Bank receives written notification from Agent, it immediately will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent's Account. Anything contained herein into the contrary notwithstanding, Agent agrees that it shall not provide the above-described notice to any Cash Management Bank unless and until an Event of Default has occurred and is continuing. Once an Event of Default has occurred and is continuing, Agent shall be free to exercise its right to issue such notice and the subsequent elimination of the subject Event of Default shall not eliminate the effectiveness of such notice. 2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent's Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrower shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by 55 Agent only if it is received into the Agent's Account on a Business Day on or before 11:00 a.m. (California time). If any payment item is received into the Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day. 2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and the Term Loan, and Issuing Lender is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d). Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrower and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance, Agent Advance, or Swing Loan requested by Borrower and made by Agent or the Lenders hereunder shall be made to the Designated Account. 2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall maintain an account on its books in the name of Borrower (the "Loan Account") on which Borrower will be charged with the Term Loan, all Advances (including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for Borrower's account, the Letters of Credit issued by Issuing Lender for Borrower's account, and with all other payment Obligations hereunder or under the other Loan Documents (except for Bank Product Obligations), including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrower or for Borrower's account, including all amounts received in the Agent's Account from any Cash Management Bank. Agent shall render statements regarding the Loan Account to Borrower, including principal, interest, fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrower and the Lender Group unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements. 2.11 FEES. Borrower shall pay to Agent the following fees and charges, which fees and charges shall be non-refundable when paid (irrespective of whether this Agreement is terminated thereafter): (a) UNUSED LINE FEE. On the first day of each month during the term of this Agreement, an unused line fee in an amount equal to the Unused Line Fee per annum times the result of (i) the Maximum Revolver Amount, less (ii) the sum of (A) the average Daily Balance of Advances that were outstanding during the immediately preceding month, plus (B) the average Daily Balance of the Letter of Credit Usage during the immediately preceding month, which shall be apportioned to those Lenders with a Revolver Commitment in accordance with their Pro Rata Shares, 56 (b) FEE LETTER FEES. As and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter, the GE Fee Letter and the Vectra Fee Letter, and (c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal, and valuation fees and charges as follows (i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each financial audit of Parent or its Subsidiaries performed by personnel employed by Agent, (ii) [intentionally omitted], (iii) [intentionally omitted], and (iv) the actual charges paid or incurred by Agent if it elects to employ the services of one or more third Persons to perform financial audits of Parent or its Subsidiaries. The foregoing notwithstanding, so long as no Default or Event of Default has occurred and is continuing, Borrower shall not be required to pay or reimburse for more than 4 audits per year and more than $20,000 in fees and charges per each audit. 2.12 LETTERS OF CREDIT. (a) Subject to the terms and conditions of this Agreement, the Issuing Lender agrees to issue letters of credit for the account of Borrower (each, an "L/C") or to purchase participations or execute indemnities or reimbursement obligations (each such undertaking, an "L/C Undertaking") with respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of Borrower. Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by an Authorized Person and delivered to the Issuing Lender and Agent via hand delivery, telefacsimile, or other electronic method of transmission reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance satisfactory to the Issuing Lender in its Permitted Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the expiration date of such Letter of Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as applicable), and (v) such other information (including, in the case of an amendment, renewal, or extension, identification of the outstanding Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit. If requested by the Issuing Lender, Borrower also shall be an applicant under the application with respect to any Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the issuance of such requested Letter of Credit: (i) the Letter of Credit Usage would exceed the Borrowing Base less the outstanding amount of Advances, or (ii) the Letter of Credit Usage would exceed $15,000,000, or (iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount Advances. 57 Borrower and the Lender Group acknowledge and agree that certain Underlying Letters of Credit may be issued to support letters of credit that already are outstanding as of the Closing Date. Each Letter of Credit (and corresponding Underlying Letter of Credit) shall be in form and substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under a Letter of Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if Borrower shall have received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by Borrower prior to such time on such date, then not later than 11:00 a.m., California time, on the Business Day that Borrower receives such notice, if such notice is received prior to 10:00 a.m., California time, on the date of receipt, and, in the absence of such reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be an Advance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances that are Base Rate Loans under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrower's obligation to reimburse such L/C Disbursement shall be discharged and replaced by the resulting Advance. Promptly following receipt by Agent of any payment from Borrower pursuant to this paragraph, Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as their interests may appear. (b) Promptly following receipt of a notice of L/C Disbursement pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as if Borrower had requested such Advance and Agent shall promptly pay to Issuing Lender the amounts so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Lender or the Lenders with Revolver Commitments, the Issuing Lender shall be deemed to have granted to each Lender with a Revolver Commitment, and each Lender with a Revolver Commitment shall be deemed to have purchased, a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and each such Lender agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing Lender under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender with a Revolver Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrower on the date due as provided in clause (a) of this Section, or of any reimbursement payment required to be refunded to Borrower for any reason. Each Lender with a Revolver Commitment acknowledges and agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b) 58 shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3 hereof. If any such Lender fails to make available to Agent the amount of such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender in respect of such Letter of Credit as provided in this Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full. (c) Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided, however, that Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Borrower agrees to be bound by the Underlying Issuer's regulations and interpretations of any Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or for Borrower's account, even though this interpretation may be different from Borrower's own, and Borrower understands and agrees that the Lender Group shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower's instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by Borrower against such Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group's indemnification of any Underlying Issuer; provided, however, that Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Borrower hereby acknowledges and agrees that neither the Lender Group nor the Issuing Lender shall be responsible for delays, errors, or omissions resulting from the malfunction of equipment in connection with any Letter of Credit. (d) Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property received by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender's instructions with respect to all matters arising in connection with such Underlying Letter of Credit and the related application. (e) Any and all charges, commissions, fees, and costs incurred by the Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this Agreement and immediately shall be reimbursable by Borrower to Agent for the account of the Issuing Lender; it being acknowledged and agreed by Borrower that, as of the Closing Date, the issuance charge imposed by the prospective Underlying Issuer is .825% 59 per annum times the face amount of each Underlying Letter of Credit, that such issuance charge may be changed from time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and renewals. (f) If by reason of (i) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto): (i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued hereunder, or (ii) there shall be imposed on the Underlying Issuer or the Lender Group any other condition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto, and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrower, and Borrower shall pay on demand such amounts as Agent may specify to be necessary to compensate the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. 2.13 LIBOR OPTION. (a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest charged at the rate based upon the Base Rate, Borrower shall have the option (the "LIBOR Option") to have interest on all or a portion of the Advances or the Term Loan be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto, (ii) the occurrence of an Event of Default in consequence of which the Required Lenders or Agent on behalf thereof have elected to accelerate the maturity of all or any portion of the Obligations, or (iii) termination of this Agreement pursuant to the terms hereof. On the last day of each applicable Interest Period, unless Borrower properly has exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, Borrower no longer shall have the option to request that Advances or the Term Loan bear 60 interest at a rate based upon the LIBOR Rate and Agent shall have the right to convert the interest rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder. (b) LIBOR ELECTION. (i) Borrower may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at least 3 Business Days prior to the commencement of the proposed Interest Period (the "LIBOR Deadline"). Notice of Borrower's election of the LIBOR Option for a permitted portion of the Advances or the Term Loan and an Interest Period pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic notice received by Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on the same day). Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the Lenders having a Revolver Commitment. (ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense incurred by Agent or any Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (c) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses, collectively, "Funding Losses"). Funding Losses shall, with respect to Agent or any Lender, be deemed to equal the amount determined by Agent or such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert, or continue, for the period that would have been the Interest Period therefor), minus (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which Agent or such Lender would be offered were it to be offered, at the commencement of such period, Dollar deposits of a comparable amount and period in the London interbank market. A certificate of Agent or a Lender delivered to Borrower setting forth any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive absent manifest error. (iii) Borrower shall have not more than 7 LIBOR Rate Loans in effect at any given time. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of at least $500,000 and integral multiples of $100,000 in excess thereof. 61 (c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any time; provided, however, that in the event that LIBOR Rate Loans are prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any automatic prepayment through the required application by Agent of proceeds of Borrower's and its Subsidiaries' Collections in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with clause (b)(ii) above. (d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE. (i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs, in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including changes in tax laws (except changes of general applicability in corporate income tax laws) and changes in the reserve requirements imposed by the Board of Governors of the Federal Reserve System (or any successor), excluding the Reserve Percentage, which additional or increased costs would increase the cost of funding loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Borrower and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrower may, by notice to such affected Lender (y) require such Lender to furnish to Borrower a statement setting forth the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made (together with any amounts due under clause (b)(ii) above). (ii) In the event that any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation of application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Advances or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Borrower and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender's notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrower shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so. (e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their 62 Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The provisions of this Section shall apply as if each Lender or its Participants had match funded any Obligation as to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBOR Rate Loans. 2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender determines that (i) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (ii) compliance by such Lender or its parent bank holding company with any guideline, request, or directive of any such entity regarding capital adequacy (whether or not having the force of law), has the effect of reducing the return on such Lender's or such holding company's capital as a consequence of such Lender's Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into consideration such Lender's or such holding company's then existing policies with respect to capital adequacy and assuming the full utilization of such entity's capital) by any amount deemed by such Lender to be material, then such Lender may notify Borrower and Agent thereof. Following receipt of such notice, Borrower agrees to pay such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the amount and setting forth in reasonable detail such Lender's calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods. 3. CONDITIONS; TERM OF AGREEMENT. 3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The obligation of each Lender to make its initial extension of credit provided for hereunder, is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making of such initial extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent: (a) the Closing Date shall occur on or before April 14, 2004; (b) Agent shall have received a Filing Authorization Letter, duly executed by Borrower and each Guarantor, together with appropriate financing statements duly filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent's Liens in and to the Collateral, and Agent shall have received searches reflecting the filing of all such financing statements; (c) Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect: 63 (i) the Cash Management Agreements, (ii) the Control Agreements, (iii) the Copyright Security Agreement, (iv) the Credit Card Agreements, (v) the Estoppel Agreement, (vi) the Fee Letter, (vii) the Funds Flow Agreement, (viii) the GE Fee Letter (ix) the Guarantor Security Agreement, (x) the Guaranty, (xi) the Intercompany Subordination Agreement, (xii) the Mortgages, (xiii) the Existing Lender Group Assignments, together with assignment statements and other documentation evidencing the assignment by Existing Lender Group of its Liens in and to the properties and assets of Borrower and its Subsidiaries, (xiv) the SunTrust Resignation Letter, (xv) the Stock Pledge Agreement, together with all certificates representing the shares of Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in blank, (xvi) the Trademark Security Agreement, and (xvii) the Vectra Fee Letter; (d) Agent shall have received a certificate from the Secretary of Borrower (i) attesting to the resolutions of Borrower's Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which Borrower is a party, (ii) authorizing specific officers of Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of Borrower; (e) Agent shall have received copies of Borrower's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of Borrower; 64 (f) Agent shall have received a certificate of status with respect to Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Borrower, which certificate shall indicate that Borrower is in good standing in such jurisdiction; (g) Agent shall have received certificates of status with respect to Borrower, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of Borrower) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that Borrower is in good standing in such jurisdictions; (h) Agent shall have received a certificate from the Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor's Board of Directors authorizing its execution, delivery, and performance of the Loan Documents to which such Guarantor is a party, (ii) authorizing specific officers of such Guarantor to execute the same and (iii) attesting to the incumbency and signatures of such specific officers of Guarantor; (i) Agent shall have received copies of each Guarantor's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Guarantor; (j) Agent shall have received a certificate of status with respect to each Guarantor, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Guarantor, which certificate shall indicate that such Guarantor is in good standing in such jurisdiction; (k) Agent shall have received certificates of status with respect to each Guarantor, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Guarantor) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Guarantor is in good standing in such jurisdictions; (l) Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 6.8, the form and substance of which shall be satisfactory to Agent; (m) Agent shall have received Collateral Access Agreements with respect to the following locations: 1260 Sycamore Road, Manteno, IL 60950;6100 East Sheila Street, City of Commerce, CA 90040; and 2233 Maxwell Avenue, Newport, MN 55055; (n) Agent shall have received an opinion of Borrower's and each Guarantor's counsel in form and substance satisfactory to Agent; 65 (o) Agent shall have received a certificate of the secretary of Parent, in form and substance satisfactory to Agent, that all tax returns required to be filed by Parent and its Subsidiaries have been timely filed and all taxes upon Parent and its Subsidiaries or their properties, assets, income, and franchises (including Real Property taxes, sales taxes, and payroll taxes) have been paid prior to delinquency, except such taxes that are the subject of a Permitted Protest; (p) Borrower shall have the Required Availability after giving effect to the initial extensions of credit hereunder and the payment of all fees and expenses required to be paid by Borrower on the Closing Date under this Agreement or the other Loan Documents; (q) Agent shall have completed its business, legal, and collateral due diligence, including a collateral audit and review of Borrower's and its Subsidiaries books and records and verification of Borrower's representations and warranties to the Lender Group, the results of which shall be satisfactory to Agent; (r) Agent shall have received completed reference checks with respect to Borrower's senior management, the results of which are satisfactory to Agent in its sole discretion; (s) Agent shall have received Borrower's Closing Date Business Plan; (t) Borrower shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement; (u) Agent shall have received copies of each of (a) the High Yield Note Documents, (b) the Management Agreement, together with a certificate of the Secretary of Borrower certifying each such document as being a true, correct, and complete copy thereof; (v) Agent shall have reviewed and approved the terms and conditions of the High Yield Note Documents, including the subordination provisions and terms thereof; (w) Borrower shall have provided Agent with sufficient evidence to demonstrate that the offering of the Notes described in the Indenture has closed; (x) Borrower and each of its Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Borrower or its Subsidiaries of the Loan Documents or with the consummation of the transactions contemplated thereby; (y) Borrower shall have caused Vicorp Restaurants, Inc., a Delaware corporation to be dissolved and Agent shall have received evidence of such dissolution in form and substance satisfactory to Agent; (z) Borrower shall have caused Midway to be merged into Borrower and Agent shall have received a copy of a file stamped certificate of merger or confirmation by 66 CSC or a representative thereof that a certificate of merger has been filed with respect to the merger of Midway with and into Borrower, such file stamp to have been made by the office of the jurisdiction of incorporation of Borrower; (aa) Agent shall have received confirmation of the filing of UCC termination statements, all in form and substance satisfactory to Agent, evidencing the termination of the following Liens in and to the properties and assets of Borrower, each in favor of General Electric Capital Business Asset Funding Corporation: (1) financing statement number 20022047188, filed in Colorado on May 3, 2002; (2) financing statement number 20022047189, filed in Colorado on May 3, 2002; (3) financing statement number 20022053452, filed in Colorado on May 20, 2002; (4) financing statement number 20022053453, filed in Colorado on May 20, 2002; and (5) financing statement number 20023739367, filed in Minnesota on April 16, 2002; and (bb) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent. 3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The obligation of the Lender Group (or any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below (the failure by Borrower to so perform or cause to be performed constituting an Event of Default): (a) within 30 days of the Closing Date, deliver to Agent copies of the policies of insurance, together with the endorsements thereto, as are required by Section 6.8, the form and substance of which shall be satisfactory to Agent and its counsel; (b) within 30 days of the Closing Date, deliver to Agent a duly executed Mortgage for each of the Real Properties owned by Borrower and listed on Schedule 3.2(b); (c) use commercially reasonable efforts to obtain recording information for the mortgages previously granted by Borrower in favor of the Existing Agent for each of the Real Properties listed on Schedule 3.2(c) and to cause the title company to record the assignments thereof delivered by the Existing Agent to Agent, and if Borrower is unable to obtain the recording information on or before June 30, 2004, then Borrower shall execute and deliver to Agent by no later than July 15, 2004, a Mortgage (granting a Lien in favor of Agent) upon such Real Properties which such Mortgages will expressly provide that if the Lien in favor of the Existing Agent has been recorded or is thereafter recorded then Agent shall take such actions as may be reasonably necessary to merge or consolidate the Liens; (d) use commercially reasonable efforts, to cause each Collection Account Bank to execute and deliver a Control Agreement for the Collection Accounts listed on Schedule 3.2(d); 67 (e) on or before May 15, 2004, deliver to Agent Schedule A-1(b) which such schedule shall set forth Adjusted EBITDA for Parent and its Subsidiaries on a Fiscal Month by Fiscal Month basis for the 13 Fiscal Months ended prior to the Closing Date and shall be in form and substance satisfactory to Agent; (f) within 15 days of the Closing Date, Agent shall have received a Collateral Access Agreement with respect to 12865 Ann Street, Santa Fe Springs, CA 90670; (g) within 2 days of the Closing Date, Agent shall have received evidence in form and satisfactory to Agent that the interest swap agreement with Wells Fargo shall have been terminated and that all amounts owed to Wells Fargo thereunder have been paid in full; and (h) within 90 days of the Closing Date, Parent and its Subsidiaries shall have closed their Deposit Accounts with Bank of America, N.A. and established Deposit Accounts with another bank on terms and conditions satisfactory to Agent and subject to Control Agreements in form and substance satisfactory to Agent if Bank of America, N.A. has not executed and delivered an acceptable Cash Management Agreement to Agent within 5 Business Days of the Closing Date as required by Section 2.7. 3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of the Lender Group (or any member thereof) to make any Advances hereunder at any time (or to extend any other credit hereunder) shall be subject to the following conditions precedent: (a) the representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date); (b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; (c) no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against Borrower, Agent, any Lender, or any of their Affiliates; and (d) no Material Adverse Change shall have occurred. 3.4 TERM. This Agreement shall continue in full force and effect for a term ending on April 14, 2009 (the "Maturity Date"). The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default. 3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement, all Obligations (including contingent reimbursement obligations of Borrower with respect to outstanding Letters of Credit and including all Bank Product Obligations) immediately shall 68 become due and payable without notice or demand (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, (ii) causing the original Letters of Credit to be returned to the Issuing Lender, or (iii) causing an irrevocable letter of credit (in an amount equal to 105% of the Letter of Credit Usage and in form, substance, and by an issuer satisfactory to Agent) to be issued and delivered to Agent, and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations). No termination of this Agreement, however, shall relieve or discharge Parent or its Subsidiaries of their duties, Obligations, or covenants hereunder or under any other Loan Document and the Agent's Liens in the Collateral shall remain in effect until all Obligations have been paid in full and the Lender Group's obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and the Lender Group's obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrower's sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Agent's Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations. 3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time upon 90 days prior written notice to Agent, to terminate this Agreement by paying to Agent, in cash, the Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, (ii) causing the original Letters of Credit to be returned to the Issuing Lender, or (iii) causing an irrevocable letter of credit (in an amount equal to 105% of the Letter of Credit Usage and in form, substance, and by an issuer satisfactory to Agent) to be issued and delivered to Agent, and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations), in full, together with the Applicable Prepayment Premium (to be allocated based upon the Pro Rata Shares of those Lenders with a Revolver Commitment). If Borrower has sent a notice of termination pursuant to the provisions of this Section, then the Commitments shall terminate and Borrower shall be obligated to repay the Obligations (including (a) either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the Letter of Credit Usage, (ii) causing the original Letters of Credit to be returned to the Issuing Lender, or (iii) causing an irrevocable letter of credit (in an amount equal to 105% of the Letter of Credit Usage and in form, substance, and by an issuer satisfactory to Agent) to be issued and delivered to Agent and (b) providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations), in full, together with the Applicable Prepayment Premium, on the date set forth as the date of 69 termination of this Agreement in such notice. In the event of the termination of this Agreement and repayment of the Obligations at any time prior to the Maturity Date, for any other reason, including (a) termination upon the election of the Required Lenders to terminate after the occurrence and during the continuation of an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d) restructure, reorganization, or compromise of the Obligations by the confirmation of a plan of reorganization or any other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to the Lender Group or profits lost by the Lender Group as a result of such early termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Lender Group, Borrower shall pay the Applicable Prepayment Premium to Agent (to be allocated based upon the Pro Rata Shares of those Lenders with a Revolver Commitment), measured as of the date of such termination. The foregoing to the contrary notwithstanding, in the event that Borrower repays the Obligations in full and terminates this Agreement pursuant to the first sentence of this Section 3.6 and if (a) such repayment occurs with the proceeds of a refinancing provided by Wells Fargo or WFF, or (b) such repayment occurs after the third anniversary of the Closing Date and occurs with the proceeds of (i) Parent's or Borrower's consummation of an underwritten public equity offering, or (ii) the sale of all or substantially all of the Stock of Borrower or all or substantially all of Borrower's and its Subsidiaries' assets, in one or a series of related transactions, then the Applicable Prepayment Premium shall be zero ($0). 4. CREATION OF SECURITY INTEREST. 4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Agent, for the benefit of the Lender Group and the Bank Product Providers, a continuing security interest in all of its right, title, and interest in all currently existing and hereafter acquired or arising Borrower Collateral in order to secure prompt repayment of any and all of the Obligations in accordance with the terms and conditions of the Loan Documents and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. The Agent's Liens in and to the Borrower Collateral shall attach to all Borrower Collateral without further act on the part of Agent or Borrower. Anything contained in this Agreement or any other Loan Document to the contrary notwithstanding, except for Permitted Dispositions, Parent and its Subsidiaries have no authority, express or implied, to dispose of any item or portion of the Collateral. 4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, and if and to the extent that Agent determines that perfection or priority of Agent's security interest is dependent on or enhanced by possession, Borrower, promptly upon the request of Agent, shall endorse and deliver physical possession of such Negotiable Collateral to Agent. 4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE COLLATERAL. At any time after the occurrence and during the continuation of an Event of Default, Agent or 70 Agent's designee may (a) notify Account Debtors of Borrower that Borrower's Accounts, chattel paper, or General Intangibles have been assigned to Agent or that Agent has a security interest therein, or (b) collect Borrower's Accounts, chattel paper, or General Intangibles directly and charge the collection costs and expenses to the Loan Account. Borrower agrees that it will hold in trust for the Lender Group, as the Lender Group's trustee, any of its or its Subsidiaries' Collections that it receives and immediately will deliver such Collections to Agent or a Cash Management Bank in their original form as received by Borrower or its Subsidiaries. 4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. (a) Borrower authorizes Agent to file any financing statement necessary or desirable to effectuate the transactions contemplated by the Loan Documents, and any continuation statement or amendment with respect thereto, in any appropriate filing office without the signature of Borrower where permitted by applicable law. Borrower hereby ratifies the filing of any financing statement filed without the signature of Borrower prior to the date hereof. (b) If Borrower or its Subsidiaries acquire any commercial tort claims in an amount in excess of $500,000 after the date hereof, Borrower shall promptly (but in any event within 30 Business Days of a senior or executive officer of Borrower or any of its Subsidiaries having knowledge of such claim) deliver to Agent a written description of such commercial tort claim and shall deliver a written agreement, in form and substance reasonably satisfactory to Agent in its Permitted Discretion, pursuant to which Borrower or its Subsidiary, as applicable, shall grant a perfected security interest in all of its right, title and interest in and to such commercial tort claim to Agent, as security for the Obligations (a "Commercial Tort Claim Assignment"). (c) At any time upon the request of Agent, Borrower shall execute or deliver to Agent, and shall cause its Subsidiaries to execute or deliver to Agent, any and all financing statements, original financing statements in lieu of continuation statements, amendments to financing statements, fixture filings, security agreements, pledges, assignments, Commercial Tort Claim Assignments, endorsements of certificates of title, and all other documents (collectively, the "Additional Documents") that Agent may request in its Permitted Discretion, in form and substance satisfactory to Agent, to create, perfect, and continue perfected or to better perfect the Agent's Liens in the assets of Borrower and its Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any After Acquired Real Property, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, Borrower authorizes Agent to execute any such Additional Documents in Borrower's name and authorizes Agent in the exercise of its Permitted Discretion to file such executed Additional Documents in any appropriate filing office. In addition, on such periodic basis as Agent shall require, Borrower shall (i) provide Agent with a report of all new material 71 patentable, copyrightable, or trademarkable materials acquired or generated by Borrower or its Subsidiaries during the prior period, (ii) cause all material patents, copyrights, and trademarks acquired or generated by Borrower or its Subsidiaries that are not already the subject of a registration with the appropriate filing office (or an application therefor diligently prosecuted) to be registered with such appropriate filing office in a manner sufficient to impart constructive notice of Borrower's or the applicable Subsidiary's ownership thereof, and (iii) cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Loan Documents to identify such patents, copyrights, and trademarks as being subject to the security interests created thereunder; provided, however, that neither Borrower nor any of its Subsidiaries shall register with the U.S. Copyright Office any unregistered copyrights (whether in existence on the Closing Date or thereafter acquired, arising, or developed) unless (i) Borrower provides Agent with written notice of its intent to register such copyrights not less than 30 days prior to the date of the proposed registration, and (ii) prior to such registration, the applicable Person executes and delivers to Agent a copyright security agreement in form and substance satisfactory to Agent, supplemental schedules to any existing copyright security agreement, or such other documentation as Agent reasonably deems necessary in order to perfect and continue perfected Agent's Liens on such copyrights following such registration. 4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes, and appoints Agent (and any of Agent's officers, employees, or agents designated by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower refuses to, or fails timely to execute and deliver any of the documents described in Section 4.4, sign the name of Borrower on any of the documents described in Section 4.4, (b) at any time that an Event of Default has occurred and is continuing, sign Borrower's name on any invoice or bill of lading relating to the Borrower Collateral, drafts against Account Debtors, or notices to Account Debtors, (c) send requests for verification of Borrower's or its Subsidiaries' Accounts, (d) endorse Borrower's name on any of its payment items (including all of its Collections) that may come into the Lender Group's possession, (e) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under Borrower's policies of insurance and make all determinations and decisions with respect to such policies of insurance, and (f) at any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting Borrower's or its Subsidiaries' Accounts, chattel paper, or General Intangibles directly with Account Debtors, for amounts and upon terms that Agent determines to be reasonable, and Agent may cause to be executed and delivered any documents and releases that Agent determines to be necessary. The appointment of Agent as Borrower's attorney, and each and every one of its rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and finally repaid and performed and the Lender Group's obligations to extend credit hereunder are terminated. 4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their respective officers, employees, or agents) shall have the right, from time to time hereafter during normal business hours, or at any time following a Default or Event of Default, to inspect the Books and make copies or abstracts thereof and to check, test, and appraise the Collateral, or 72 any portion thereof, in order to verify Borrower's and its Subsidiaries' financial condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral; provided, however, that unless an Event of Default has occurred and is continuing, (a) the costs of all such inspections shall be limited by the provisions of Section 2.11(c), and (b) all inspections by Lenders shall be completed in combination with Agent. Parent and its Subsidiaries acknowledge and agree that Agent and Lenders are not required to give any notice prior to any inspection, however, Agent and Lenders will endeavor to notify Borrower not less than five (5) Business Days prior to an inspection so long as a Default or Event of Default has not occurred. Parent and its Subsidiaries further agree that neither Agent nor any Lender shall be liable or responsible in any way or manner for failing to provide any such notice. 4.7 CONTROL AGREEMENTS. Borrower agrees that it will and will cause its Subsidiaries to take any or all reasonable steps in order for Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the proviso contained in Section 7.12) all of its or their Securities Accounts, Deposit Accounts, electronic chattel paper, Investment Property, and letter-of-credit rights. Upon the occurrence and during the continuance of a Default or Event of Default, Agent may notify any bank or securities intermediary to liquidate the applicable Deposit Account or Securities Account or any related Investment Property maintained or held thereby and remit the proceeds thereof to the Agent's Account. 5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender Group to enter into this Agreement, Parent and Borrower each makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement: 5.1 NO ENCUMBRANCES. Parent and its Subsidiaries have good and indefeasible title to, or a valid leasehold interest in, their personal property assets and good and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of Liens except for Permitted Liens. 5.2 [INTENTIONALLY OMITTED]. 5.3 [INTENTIONALLY OMITTED]. 5.4 EQUIPMENT. All of the Equipment of Parent and its Subsidiaries is used or held for use in their business and is fit for such purposes, reasonable wear and tear excepted. 73 5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment of Parent and its Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or in-transit between, the locations identified on Schedule 5.5 (as such Schedule may be updated pursuant to Section 6.9). 5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its and its Subsidiaries' Inventory and the book value thereof. 5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS. (a) The jurisdiction of organization of Parent and each of its Subsidiaries is set forth on Schedule 5.7(a). (b) The chief executive office of Parent and each of its Subsidiaries is located at the address indicated on Schedule 5.7(b) (as such Schedule may be updated pursuant to Section 6.9). (c) Parent's and each of its Subsidiaries' organizational identification numbers, if any, are identified on Schedule 5.7(c). (d) As of the Closing Date, Parent and its Subsidiaries do not hold any commercial tort claims, except as set forth on Schedule 5.7(d). 5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change. (b) Set forth on Schedule 5.8(b), is a complete and accurate description of the authorized capital Stock of Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 5.8(b), there are no subscriptions, options, warrants, or calls relating to any shares of Borrower's capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. Borrower is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock. (c) Set forth on Schedule 5.8(c), is a complete and accurate list of Parent's direct and indirect Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such 74 class owned directly or indirectly by Parent. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable. (d) Except as set forth on Schedule 5.8(c), there are no subscriptions, options, warrants, or calls relating to any shares of Parent's Subsidiaries' capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. Neither Parent nor any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of Parent's or Borrower's Subsidiaries' capital Stock or any security convertible into or exchangeable for any such capital Stock. 5.9 DUE AUTHORIZATION; NO CONFLICT. (a) The execution, delivery, and performance by Borrower of this Agreement and the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of Borrower. (b) The execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to Borrower, the Governing Documents of Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of Borrower, (iii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any contractual obligation of Borrower, which conflict, breach, or default could reasonably be expected to result in a Material Adverse Change, (iv) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Borrower, other than Permitted Liens, (v) require any approval of Borrower's interestholders (except as have been obtained), or (vi) require any approval or consent of any Person under any contractual obligation of Borrower, other than consents or approvals that have been obtained and are still in force and effect or which approval or consent if not obtained could not reasonably be expected to result in a Material Adverse Change. (c) Other than the filing of financing statements, the recordation of the Mortgages, and the filing of appropriate recordations in the U.S. Patent and Trademark Office and the U.S. Copyright Office with respect to copyrights and trademarks to the extent required by federal law, the execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents to which Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect. (d) This Agreement and the other Loan Documents to which Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by Borrower will be the legally valid and binding obligations of Borrower, 75 enforceable against Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. (e) The Agent's Liens are validly created, perfected, and first priority Liens, subject only to Permitted Liens. (f) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Guarantor. (g) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any contractual obligation of such Guarantor, which conflict, breach, or default could reasonably be expected to result in a Material Adverse Change, (iv) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Guarantor, other than Permitted Liens, (v) require any approval of Guarantor's interestholders (except as have been obtained), or (vi) require any approval or consent of any Person under any contractual obligation of such Guarantor, other than consents or approvals that have been obtained and are still in force and effect or which approval or consent if not obtained could not reasonably be expected to result in a Material Adverse Change. (h) Other than the filing of financing statements and the recordation of the Mortgages, the execution, delivery, and performance by each Guarantor of the Loan Documents to which such Guarantor is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect. (i) The Loan Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. 5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10 and other than matters arising after the Closing Date that reasonably could not be expected to result in a Material Adverse Change, there are no actions, suits, or proceedings pending or, to the best knowledge of Parent or Borrower, threatened against Parent or any of its Subsidiaries. 76 5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to Parent and its Subsidiaries that have been delivered by Borrower to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Parent's and its Subsidiaries' condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Parent and its Subsidiaries since the date of the latest financial statements submitted to Agent on or before the Closing Date. 5.12 FRAUDULENT TRANSFER. (a) Each of Parent and each of its Subsidiaries is Solvent. (b) No transfer of property is being made by Parent or its Subsidiaries and no obligation is being incurred by Parent or its Subsidiaries in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Parent or its Subsidiaries. 5.13 EMPLOYEE BENEFITS. None of Parent, any of its Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any Benefit Plan. 5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to Parent's and Borrower's knowledge, none of Parent's or its Subsidiaries' properties or assets has ever been used by Parent, its Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such use, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to Parent's and Borrower's knowledge, none of Parent's or its Subsidiaries' properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) neither Parent nor any of its Subsidiaries has received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by Parent or its Subsidiaries, and (d) neither Parent nor its Subsidiaries has received a summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal or state governmental agency concerning any action or omission by Parent or its Subsidiaries resulting in the releasing or disposing of Hazardous Materials into the environment. 5.15 BROKERAGE FEES. Neither Parent nor any of its Subsidiaries has utilized the services of any broker or finder in connection with Borrower's obtaining financing from the Lender Group under this Agreement and no brokerage commission or finders fee is payable by Parent or its Subsidiaries in connection herewith. 5.16 INTELLECTUAL PROPERTY. Parent and its Subsidiaries own, or hold licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted, and attached hereto as Schedule 5.16 (as updated from time to time) is a true, correct, and complete listing of all material patents, 77 patent applications, trademarks, trademark applications, copyrights, and copyright registrations as to which Parent or one of its Subsidiaries is the owner or is an exclusive licensee. 5.17 LEASES. Parent and its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating, and all of such leases are valid and subsisting and no material default by Parent or its Subsidiaries exists under any of them. 5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule 5.18 is a listing of all of Parent's and its Subsidiaries' Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person. 5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole) furnished by or on behalf of Parent or its Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Parent or its Subsidiaries in writing to Agent or any Lender will be, true and accurate, in all material respects, on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Parent's and Borrower's good faith estimate of Parent's and its Subsidiaries future performance for the periods covered thereby. 5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list of all Indebtedness of Parent and its Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately reflects the aggregate principal amount of such Indebtedness and describes the principal terms thereof. 5.21 UFOC. (a) Borrower has delivered to Agent true and correct copies of Borrower's UFOC, which is currently being used in connection with the offers to sell and the sales of its and their franchises, (b) the UFOC (i) complies in all material respects with all applicable federal, state and foregoing laws and regulations pertaining to offers to sell and the sale of franchises in jurisdictions in which they are being used, including, in the United States, the Uniform Franchise Offering Circular Guidelines adopted by the North American Securities Administrators Association in April 25, 1993 and approved by the FTC on December 30, 1993 as an alternative to the FTC disclosure statement, and (ii) does not contain any untrue statement of a material fact or omit to state a material fact required to be 78 stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; in all cases, except where any failure to comply or an untrue statement or omission could not reasonably be expected to result in a Material Adverse Change. 5.22 CREDIT CARD RECEIPTS. Schedule 5.22 sets forth all of Borrower's and each of its Subsidiary's Credit Card Processors and all arrangements to which Borrower or any Subsidiary is a party with respect to the payment to Borrower or any Subsidiary of the proceeds of all credit card charges for sales by Borrower or any of its Subsidiaries. 5.23 INACTIVE SUBSIDIARIES. The Inactive Subsidiary does not own any material assets and does not engage in any business activity whatsoever. 5.24 CFCS. None of Borrower's Subsidiaries that are CFCs could execute and deliver guaranties of the Obligations or grant Liens in their assets to secure the Obligations without creating a material tax obligation under Section 956 of the IRC. 5.25 LOAN DOCUMENTS. Borrower has delivered to Agent fully executed, true and correct copies of each Mortgage and the associate title policy previously delivered to the Existing Agent and Existing Lender Group and all such Mortgages and title policies are assignable to Agent. 6. AFFIRMATIVE COVENANTS. Parent and Borrower each, jointly and severally, covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, each shall and shall cause each of its Subsidiaries to do all of the following: 6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables Borrower to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrower also shall keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to its and its Subsidiaries' sales. 6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent, with copies for each Lender) with the following documents at the following times in form satisfactory to Agent: 79 Monthly (not later than (a) a detailed calculation of the Borrowing Base signed the 30th day of Fiscal by Borrower's chief financial officer or treasurer, Month) (b) a summary aging of Borrower's and its Subsidiaries' accounts payable and a list of book overdrafts (which need not be aged), (c) a detailed report regarding Borrower and its Subsidiaries' cash and Cash Equivalents including an indication of which amounts constitute Qualified Cash, and (d) a detailed report regarding the amount of Net Cash Proceeds resulting from Permitted Dispositions (including any amounts re-invested) pursuant to clause (i) of the definition of Permitted Dispositions. Quarterly (not later (e) a report regarding Borrower's and its Subsidiaries' than the 45 day after accrued, but unpaid, ad valorem, Real Property, sales, the end of each fiscal and payroll taxes, quarter of Borrower) (f) a report on each of the Restaurants, together with a listing of any new Restaurants or locations owned, leased, franchised or closed by Borrower or any of its Subsidiaries, and a reconciliation explaining any change (whether due to a Permitted Disposition or otherwise) in the ownership or operation of the Restaurants and locations listed in the corresponding report for the immediately preceding fiscal quarter. Upon reasonable (g) such other reports as to the Collateral or the request by Agent financial condition of Parent and its Subsidiaries as Agent requests and determines in its Permitted Discretion not to be unduly burdensome; provided, however, so long as no Default or Event of Default shall have occurred or be continuing, Agent will not request an aged book overdraft summary, copies of Parent's or any Guarantor's federal income tax reports, monthly sales reports for each Restaurant or a copy of the monthly reporting package delivered by Borrower or Parent to its respective Board of Directors. 6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with copies to each Lender: (a) as soon as available, but in any event within 30 days after the end of each Fiscal Month during each of Parent's fiscal years, an unaudited consolidated balance sheet, income statement, and statement of cash flow covering Parent's and its Subsidiaries' operations during such period, 80 (b) as soon as available, but in any event within 45 days after the end of each of Parent's fiscal quarters, (i) an unaudited consolidated balance sheet, income statement, and statement of cash flow covering Parent's and its Subsidiaries' operations during such period, (ii) a certificate detailing Parent's Leverage Ratio as of the last day of the fiscal quarter then ended, and (iii) a Compliance Certificate, (iv) a company prepared profit and loss report in form and detail reasonably acceptable to Agent in its Permitted Discretion and Unit Level Cash Flow for each of the currently operating restaurants for the immediately preceding quarter and for the then current fiscal year to date, (c) as soon as available, but in any event within 90 days after the end of each of Parent's fiscal years, (i) consolidated financial statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent and certified, without any qualifications (including any (A) "going concern" or like qualification or exception, (B) qualification or exception as to the scope of such audit, or (C) qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 7.18), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and statement of cash flow and, if prepared, such accountants' letter to management), (ii) a certificate of such accountants addressed to Agent and the Lenders stating that such accountants do not have knowledge of the existence of any Default or Event of Default under Section 7.18, and (iii) a Compliance Certificate, (d) as soon as available, but in any event within 60 days after the start of each of Parent's fiscal years, copies of Parent's Projections, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent, in its Permitted Discretion, for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by month, certified by the chief financial officer of Parent as being such officer's good faith estimate of the financial performance of Parent during the period covered thereby, (e) if and when filed by Parent, 81 (i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (ii) any other filings made by Parent with the SEC, (iii) [intentionally omitted], and (iv) after the consummation of a Qualified IPO, any other information that is provided by Parent to its shareholders generally, (f) promptly, but in any event within 5 days after Parent or Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default, notice thereof and a statement of the curative action that Parent or Borrower proposes to take with respect thereto, (g) promptly after the commencement thereof, but in any event within 5 Business Days after the service of process with respect thereto on Parent or any of its Subsidiaries, notice of all actions, suits, or proceedings brought by or against Parent or any of its Subsidiaries before any Governmental Authority which reasonably could be expected to result in a Material Adverse Change, and (h) upon the request of Agent, any other information reasonably requested relating to the financial condition of Parent or its Subsidiaries. In addition, Parent agrees that no Subsidiary of Parent will have a fiscal year different from that of Parent. Parent also agrees to cooperate with Agent to allow Agent to consult with its independent certified public accountants if Agent reasonably requests the right to do so and that, in such connection, its independent certified public accountants are authorized to communicate with Agent (so long as, prior to the occurrence and continuation of an Event of Default, a representative of Borrowers is afforded the opportunity (but need not be present) to be present) and to release to Agent whatever financial information concerning Parent or its Subsidiaries that Agent reasonably may request. 6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual financial statements at the time when Parent provides its audited financial statements to Agent, but only to the extent such Guarantor's financial statements are not consolidated with Parent's financial statements. 6.5 [INTENTIONALLY OMITTED]. 6.6 MAINTENANCE OF PROPERTIES. Except for assets disposed of pursuant to a Permitted Disposition, maintain and preserve all of its properties which are necessary or useful in the proper conduct to its business in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all material leases to which it is a party as lessee, so as to prevent any loss or forfeiture thereof or thereunder. 82 6.7 TAXES. Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against Parent, its Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Parent will and will cause its Subsidiaries to make timely payment or deposit of all tax payments and withholding taxes required of it and them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof satisfactory to Agent indicating that Parent and its Subsidiaries have made such payments or deposits. 6.8 INSURANCE. (a) At Borrower's expense, maintain insurance respecting Parent's and its Subsidiaries' assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrower also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Borrower shall deliver copies of all such policies to Agent with an endorsement naming Agent as a loss payee (under a satisfactory lender's loss payable endorsement) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever. (b) Borrower shall give Agent prompt notice of any loss exceeding $250,000 covered by such insurance. Subject to the rights of lessors and subtenants, Agent shall have the exclusive right to approve any adjustment of losses claimed under any such insurance policies in excess of $1,000,000 (or in any amount after the occurrence and during the continuation of an Event of Default), without any liability to Parent or Borrower whatsoever in respect of such adjustments. (c) Parent will not and will not suffer or permit its Subsidiaries to take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 6.8, unless Agent is included thereon as an additional insured or loss payee under a lender's loss payable endorsement. Parent promptly shall notify Agent whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as to the policies evidencing the same, and copies of such policies promptly shall be provided to Agent. 6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Parent's and its Subsidiaries' Inventory and Equipment only at the locations identified on Schedule 5.5 and their chief executive offices only at the locations identified on Schedule 5.7(b); provided, however, that Borrower may amend Schedule 5.5 and Schedule 5.7 so long as such amendment occurs by 83 written notice to Agent not less than 30 days after the date on which such Inventory or Equipment is moved to such new location or such chief executive office is relocated, so long as such new location is within the continental United States, and so long as, at the time of such written notification, Borrower provides Agent a Collateral Access Agreement with respect thereto. 6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change. 6.11 LEASES. Pay when due all rents and other amounts payable under any material leases to which Parent or any of its Subsidiaries is a party or by which Parent's or any such Subsidiaries' properties and assets are bound, unless such payments are the subject of a Permitted Protest, unless the non-compliance thereof could not reasonably be expected to result in a Material Adverse Change. 6.12 EXISTENCE. At all times preserve and keep in full force and effect Parent's and its Subsidiaries valid existence and good standing and any rights and franchises material to their businesses unless the non-compliance of such franchises could not reasonably be expected to result in a Material Adverse Change. 6.13 ENVIRONMENTAL. (a) Keep any property either owned or operated by Parent or its Subsidiaries free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by Parent or its Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of Parent or its Subsidiaries, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against Parent or its Subsidiaries, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change. 6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to the Lender Group contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not 84 cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the affect of amending or modifying this Agreement or any of the Schedules hereto. 6.15 FORMATION OF SUBSIDIARIES. At the time that Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date or any Inactive Subsidiary owns material assets and engages in any business Borrower or such Guarantor shall (a) cause such Subsidiary to provide to Agent a joinder to the Guaranty and the Guarantor Security Agreement, together with such other security documents (including Mortgages with respect to any Real Property of such Subsidiary), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Agent, and (c) provide to Agent all other documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 6.15 shall be a Loan Document. 7. NEGATIVE COVENANTS. Parent and Borrower each, jointly and severally, covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, each will not and will not permit any of its Subsidiaries to do any of the following: 7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except: (a) Indebtedness evidenced by this Agreement and the other Loan Documents, together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit, (b) Indebtedness set forth on Schedule 5.20, (c) Permitted Purchase Money Indebtedness, (d) Indebtedness of Borrower evidenced by the High Yield Note Documents in an aggregate principal amount not to exceed $126,530,000 at any one time outstanding, (e) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b), (c), and (d) of this Section 7.1 (and continuance or renewal of any Permitted 85 Liens associated therewith) so long as: (i) the terms and conditions of such refinancings, renewals, or extensions do not, in Agent's reasonable judgment, materially impair the prospects of repayment of the Obligations by Borrower or materially impair Borrower's creditworthiness, (ii) such refinancings, renewals, or extensions do not result in an increase in the principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended, (iii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are materially more burdensome or restrictive to Borrower, (iv) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended, (f) endorsement of instruments or other payment items for deposit, (g) Indebtedness resulting from Permitted Intercompany Advances, (h) so long as no Default or Event of Default has occurred and is continuing at the time of the incurrence thereof, Indebtedness under Hedge Agreements of Borrower in respect of Indebtedness of Borrower or any of its Subsidiaries; provided, however, that such Hedge Agreements are entered into for the purpose of fixing or hedging interest rates with respect to any fixed or variable rate Indebtedness that is permitted hereunder, (i) Indebtedness incurred by Borrower or its Subsidiaries in the ordinary course of business with respect to surety and appeal bonds, performance and return-of-money bonds and other similar obligations, all in the ordinary course of business in accordance with customary industry practices, in amounts and for the purposes customary in Borrower's industry; provided, however, that the principal amount of such Indebtedness outstanding at any time shall not exceed $1,000,000 in the aggregate, (j) Indebtedness of a Subsidiary of Borrower resulting from its guaranty of Indebtedness or other obligation of Borrower or any other Subsidiary, so long as such Subsidiary has guaranteed the Obligations pursuant to a Guaranty and has granted to the Agent for the benefit of the Agent and the Lenders a security interest in its assets, to the extent the incurrence of such Indebtedness is otherwise permitted hereunder, (k) so long as no Default or Event of Default has occurred and is continuing at the time of the incurrence thereof, unsecured Funded Debt and Permitted Acquired Indebtedness of Borrower in an aggregate amount not to exceed $3,000,000 outstanding at any one time, 86 (l) Indebtedness of Parent, Borrower, or any Guarantor resulting from the guaranty of any lease obligations of Borrower or any Guarantor to the extent such lease obligations are permitted hereunder, and (m) Indebtedness of the Parent or its Subsidiaries resulting from the guaranty of the obligations of Borrower, as franchisor, pursuant to the registration requirements of one or more states in which franchises are offered to franchisees. 7.2 LIENS. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 7.1(e) and so long as the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness). 7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. (a) Except for the consummation of Permitted Reorganization Transactions, enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock. (b) Except for the consummation of Permitted Reorganization Transactions, liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution). (c) Except for the consummation of Permitted Reorganization Transactions and Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its assets. 7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell, lease, sub-lease, license, assign, transfer, or otherwise dispose of any of Parent's or its Subsidiaries assets. With respect to any Permitted Disposition, Agent agrees and is authorized, on reasonable prior written request therefor from Borrower, to release its Lien on the asset (but not the proceeds) subject to such Permitted Disposition concurrent with the consummation of the disposition so long as, in connection therewith, Borrower certifies to Agent that the subject disposition is permitted hereunder. 7.5 CHANGE NAME. Change Parent's or any of its Subsidiaries' names, organizational identification number, state of organization or organizational identity; provided, however, that Parent or any of its Subsidiaries may change their names upon at least 30 days prior written notice to Agent of such change and so long as, at the time of such written notification, Parent or its Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent's Liens. 7.6 NATURE OF BUSINESS. Make any change in the principal nature of its or their business. 87 7.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a refinancing permitted by Section 7.1(e), (a) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of Parent or its Subsidiaries, other than the (i) Obligations in accordance with this Agreement, (ii) the consummation of a Permitted Redemption, and (iii) payments made in the ordinary course of business for the repayment of Permitted Intercompany Advances, or (b) directly or indirectly, amend, modify, alter, increase, or change in any way materially adverse to the Lender Group any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Section 7.1. 7.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly, any Change of Control. 7.9 [INTENTIONALLY OMITTED].. 7.10 DISTRIBUTIONS. Make or pay (a) any distribution or dividend (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of Parent's or Borrower's Stock, of any class, whether now or hereafter outstanding, or (b) any management fees or any other fees or expenses pursuant to any management, consulting, or other services agreement to any of the shareholders or other equityholders of Parent or any of its Subsidiaries or other Affiliates, or to any other Subsidiaries or Affiliates of any Restricted Party; provided, however, that the foregoing shall not prevent: (a) the making of the Permitted Distribution, (b) so long as no Default or Event of Default has occurred and is continuing after giving effect thereto and so long as Borrower has Excess Availability of not less than $1,500,000 after giving effect thereto, the payment of Permitted Management Fees, (c) distributions by any Subsidiary of Borrower to Borrower or to another Subsidiary of Borrower (other than to a Subsidiary that is a CFC), (d) payments by Borrower to Parent to permit Parent to pay federal and state income taxes, franchise taxes, and other similar expenses incurred in the ordinary course of business which are owed or payable by Parent, (e) payments by Borrower to Parent to enable Parent to (i) effect the repurchase, redemption, acquisition, cancellation, or other retirement for value of the Stock of Parent or to effect the termination of options to purchase Stock of Parent, in each case, held by former managers and employees of Parent or its Subsidiaries (or their estates or beneficiaries under their estates) upon the death, disability, retirement, or termination of employment of any such former managers or employees; and (ii) to make payments on subordinated promissory notes or other obligations representing the unpaid repurchase, 88 redemption, acquisition, or cancellation price for Stock of Parent owned by such former managers or employees of Parent or its Subsidiaries, provided, however, that the sum of all such payments shall not exceed $500,000 (the "maximum amount") in any fiscal year plus up to $500,000 of any unused amount permitted under this clause (e) for the immediately preceding fiscal year; provided further, however, that if the Leverage Ratio as at the end of the most recent fiscal quarter of Parent is less than 3:00:1:00 on a pro forma basis after giving effect to any proposed payment under this clause (e), the maximum amount may be increased to not more than $1,500,000 plus up to $500,000 of any unused amount permitted under this clause (e) for the immediately preceding fiscal year; provided further, however, that any repurchase, redemption, acquisition, cancellation, or other retirement for value of the Stock of Parent that is made solely from proceeds received (A) from key-man life insurance, or (2) by Parent from an equity issuance by Parent to WPP for the purpose of making any such repurchase, redemption, acquisition, cancellation, or other retirement of Stock from an executive officer of Parent shall not be subject to the maximum amount limitation, (f) payment on the Closing Date of a transaction fee to the Permitted Holders in an aggregate amount not to exceed $320,000 and reimburse the Permitted Holders for reasonable out-of-pocket fees, costs and expenses incurred in connection with the transactions contemplate hereby, (g) payments by Borrower to Parent to enable the Parent to pay costs and expenses incurred in the ordinary course of business and in the conduct of its business as a holding company, including payment of administrative costs and expenses, officers' salaries and reasonable out-of-pocket expenses incurred by members of the Board of Directors; provided, however, that the aggregate amount of all such payments permitted under this clause (g) shall not exceed $350,000 in any fiscal year, (h) payments by Borrower of Parent's outside directors' fees, reimbursement of reasonable out-of-pocket expenses incurred in connection with attending Board of Director meetings, and payment of indemnification claims to the extent not covered by insurance, and (i) repurchases of stock of Parent deemed to occur upon the cashless exercise of stock options and warrants. 7.11 ACCOUNTING METHODS. Modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Parent's or its Subsidiaries' accounting records without said accounting firm or service bureau agreeing to provide Agent information regarding Parent's and its Subsidiaries' financial condition. 7.12 INVESTMENTS. Except for Permitted Investments, directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment; provided, however, that Parent and its Subsidiaries shall not have Permitted Investments (other than in the Cash Management Accounts) in Deposit 89 Accounts or Securities Accounts in an aggregate amount in excess of $250,000 at any one time unless Parent or its Subsidiary, as applicable, and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments in order to perfect (and further establish) the Agent's Liens in such Permitted Investments. Subject to the foregoing proviso, Parent shall not and shall not permit its Subsidiaries to establish or maintain any Deposit Account or Securities Account unless Agent shall have received a Control Agreement in respect of such Deposit Account or Securities Account. 7.13 TRANSACTIONS WITH AFFILIATES. Except as permitted by Sections 7.1, 7.3, 7.7, 7.10, and 7.12, and except as set forth on Schedule 7.13, directly or indirectly enter into or permit to exist any transaction with any Affiliate of Parent except for transactions that (a) are in the ordinary course of business, (b) are upon fair and reasonable terms, (c) if they involve one or more payments by Parent or its Subsidiaries in excess of $1,500,000, are fully disclosed to Agent, and (d) are no less favorable to Parent or its Subsidiaries, as applicable, than would be obtained in an arm's length transaction with a non-Affiliate. 7.14 SUSPENSION. Suspend or go out of a substantial portion of its or their business. 7.15 [INTENTIONALLY OMITTED]. 7.16 USE OF PROCEEDS. Use the proceeds of the Advances and the Term Loan for any purpose other than (a) on the Closing Date, (i) to restructure a portion of the outstanding principal, accrued interest, and accrued fees and expenses owing under the Existing Loan Agreement, and (ii) to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted purposes. 7.17 INVENTORY AND EQUIPMENT WITH BAILEES. Unless a Collateral Access Agreement has been delivered to Agent, and except for storage of up to $3,500,000 of Inventory in the aggregate for temporary periods not exceeding 120 days, store the Inventory or Equipment of Parent or its Subsidiaries at any time now or hereafter with a bailee, warehouseman, or similar party. 7.18 FINANCIAL COVENANTS. (a) Fail to maintain or achieve: (i) MINIMUM ADJUSTED EBITDA. Adjusted EBITDA, measured on each fiscal quarter-end basis, for the then most recently completed thirteen Fiscal Month period, of at least $35,000,000. (ii) FIXED CHARGE COVERAGE RATIO. A Fixed Charge Coverage Ratio, measured on a fiscal quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto: 90
Applicable Ratio Applicable Period - ---------------- ------------------ 1.05:1.0 For the fiscal quarter ending July 8, 2004 1.05:1.0 For the two fiscal quarters ending October 28, 2004 1.05:1.0 For the three fiscal quarters ending January 27, 2005 1.05:1.0 For the four fiscal quarters ending April 21, 2005 1.05:1.0 For each of the four fiscal quarters ended thereafter
(b) Make: (i) GROWTH CAPITAL EXPENDITURES. Growth Capital Expenditures in any fiscal year in excess of the Growth Capital Expenditure Amount. 7.19 INACTIVE SUBSIDIARY. Permit any Inactive Subsidiary to (a) own any material assets, or (b) engage in any business activity (other than the ownership of certain intellectual property rights). 7.20 UFOC. Fail to maintain Borrower's UFOC in compliance with the representation and warranty contained in Section 5.21 hereof. 8. EVENTS OF DEFAULT. Any one or more of the following events shall constitute an event of default (each, an "Event of Default") under this Agreement: 8.1 If Borrower fails to pay when due and payable, or when declared due and payable, all or any portion of the Obligations (whether of principal, interest (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts constituting Obligations); 8.2 If Parent or any of its Subsidiaries: (a) fails to perform, keep, or observe any term, provision, covenant, or agreement contained in Sections 2.7, 3.2, 4.2, 4.4, 4.5 4.6, 6.8, 6.12, 6.14 6.15, and 7.1 through 7.19 of this Agreement; or 91 (b) fails or neglects to perform, keep, or observe any term, provision, covenant, or agreement contained in Sections 6.2 6.3, 6.6, 6.7, 6.9, 6.10, and 6.11 of this Agreement and such failure continues for a period of 5 days; or (c) fails or neglects to perform, keep, or observe any other term, provision, covenant, or agreement contained in this Agreement, or in any of the other Loan Documents (giving effect to any grace periods, cure periods, or required notices, if any, expressly provided for in such Loan Documents); in each case, other than any such term, provision, covenant, or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of 10 days; provided that, during any period of time that any such failure or neglect referred to in this paragraph exists, even if such failure or neglect is not yet an Event of Default, the Lender Group shall be relieved of its obligation to extend credit hereunder; 8.3 If any material portion of Parent's or any of its Subsidiaries' assets is attached, seized, subjected to a writ or distress warrant, levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 60 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by Parent or any of its Subsidiaries; 8.4 If an Insolvency Proceeding is commenced by Parent or any of its Subsidiaries; 8.5 If an Insolvency Proceeding is commenced against Parent, or any of its Subsidiaries (except for any Subsidiary that does not own any material assets and does not engage in any business activity whatsoever as determined at such time the Insolvency Proceeding is commenced), and any of the following events occur: (a) Parent or such Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted; provided, however, that, during the pendency of such period, each member of the Lender Group shall be relieved of its obligations to extend credit hereunder, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof; provided, however, that, during the pendency of such period, each member of the Lender Group shall be relieved of its obligations to extend credit hereunder, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, Parent or any of its Subsidiaries, or (e) an order for relief shall have been entered therein; 8.6 If Parent or any of its Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; 8.7 (a) If a notice of Lien is filed of record with respect to Parent's or any of its Subsidiaries' assets by the United States or any department, agency, or instrumentality 92 thereof (a "Federal Lien"), or by any state, county, municipal, or governmental agency and such state, county, municipal, or governmental agency Lien has priority over the Liens of Lender in and to the Collateral or any portion thereof (a "Non-Federal Priority Lien"); or (b) If a notice of Lien is filed of record with respect to Parent's assets or any of its Subsidiaries' assets by any state, county, municipal, or governmental agency that is not a Non-Federal Priority Lien (a "Non-Federal Non-Priority Lien"); provided, however, that, if the aggregate amount claimed with respect to any such Non-Federal Non-Priority Liens, or combination thereof, is less than $100,000, an Event of Default shall not occur under this subsection if the claims that are the subject of such Liens are the subject of Permitted Protests and if the Liens are released, discharged, or bonded against within 30 days of each such Lien first being filed of record or, if earlier, at least 5 days prior to the date on which assets that are subject to such Liens are subject to being sold or forfeited and, in any such case, Agent shall have the absolute right to establish and maintain a reserve against the Borrowing Base and the Maximum Revolver Amount in an amount equal to the aggregate amount of the underlying claims (determined by Agent in its Permitted Discretion, and irrespective of any Permitted Protests with respect thereto and including any penalties or interest that are estimated by Agent, in its Permitted Discretion, to arise in connection therewith); 8.8 If one or more judgments or other claims involving an aggregate amount of $500,000, or more, in excess of the amount covered by insurance, becomes a Lien or encumbrance upon any of Parent's or any of its Subsidiaries' assets and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by Parent or any of its Subsidiaries; 8.9 (a) If there is a default in one or more agreements to which Parent or any of its Subsidiaries is a party with one or more third Persons relative to Parent's or any of its Subsidiaries' Indebtedness involving an aggregate amount of $1,000,000, or more, and such default (i) occurs at the final maturity of obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of Parent's or any of its Subsidiaries' obligations thereunder; or (a) If there is a default in any other material agreement to which Parent or any of its Subsidiaries is a party with one or more third Persons and such default results in a right by such third Person(s), irrespective of whether exercised, to terminate such agreement; 8.10 If Parent or any of its Subsidiaries makes any payment on account of Indebtedness that has been contractually subordinated in right of payment to the payment of the Obligations, except to the extent such payment is permitted by the terms of the subordination provisions applicable to such Indebtedness; 8.11 If any material misstatement or misrepresentation exists now or hereafter in any warranty, representation, statement, or report made to Lender by Borrower or any 93 officer, employee, agent, or director of Borrower, or if any such warranty or representation is withdrawn; 8.12 If the obligation of any Guarantor under the Guaranty is limited or terminated by operation of law or by such Guarantor thereunder; 8.13 If this Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement; or 8.14 Any provision of any Loan Document (other than any immaterial provision) shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by Parent or its Subsidiaries, or a proceeding shall be commenced by Parent or its Subsidiaries, or by any Governmental Authority having jurisdiction over Parent or its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or Parent or its Subsidiaries shall deny that Parent or its Subsidiaries has any liability or obligation purported to be created under any Loan Document. 9. THE LENDER GROUP'S RIGHTS AND REMEDIES. 9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrower: (a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable; (b) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement, under any of the Loan Documents, or under any other agreement between Borrower and the Lender Group; (c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent's Liens in the Collateral and without affecting the Obligations; (d) Settle or adjust disputes and claims directly with Borrower's Account Debtors for amounts and upon terms which Agent considers advisable, and in such cases, Agent will credit Borrower's Loan Account with only the net amounts received by Agent in 94 payment of such disputed Accounts after deducting all Lender Group Expenses incurred or expended in connection therewith; (e) Cause Borrower to hold all of its returned Inventory in trust for the Lender Group and segregate all such Inventory from all other assets of Borrower or in Borrower's possession; (f) Without notice to or demand upon Borrower, make such payments and do such acts as Agent considers necessary or reasonable to protect its security interests in the Collateral. Borrower agrees to assemble the Collateral if Agent so requires, and to make the Collateral available to Agent at a place that Agent may designate which is reasonably convenient to both parties. Borrower authorizes Agent to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien that in Agent's determination appears to conflict with the priority of Agent's Liens in and to the Collateral and to pay all expenses incurred in connection therewith and to charge Borrower's Loan Account therefor. With respect to any of Borrower's owned or leased premises, Borrower hereby grants Agent a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of the Lender Group's rights or remedies provided herein, at law, in equity, or otherwise; (g) Without notice to Borrower (such notice being expressly waived), and without constituting an acceptance of any collateral in full or partial satisfaction of an obligation (within the meaning of the Code), set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by the Lender Group (including any amounts received in the Cash Management Accounts), or (ii) Indebtedness at any time owing to or for the credit or the account of Borrower held by the Lender Group; (h) Hold, as cash collateral, any and all balances and deposits of Borrower held by the Lender Group, and any amounts received in the Cash Management Accounts, to secure the full and final repayment of all of the Obligations; (i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Borrower Collateral. Borrower hereby grants to Agent a license or other right to use, without charge, Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Borrower Collateral, in completing production of, advertising for sale, and selling any Borrower Collateral and Borrower's rights under all licenses and all franchise agreements shall inure to the Lender Group's benefit; (j) Sell the Borrower Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Agent determines is commercially reasonable. It is not necessary that the Borrower Collateral be present at any such sale; 95 (k) Except in those circumstances where no notice is required under the Code, Agent shall give notice of the disposition of the Borrower Collateral as follows: (i) Agent shall give Borrower a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Borrower Collateral, the time on or after which the private sale or other disposition is to be made; and (ii) The notice shall be personally delivered or mailed, postage prepaid, to Borrower as provided in Section 12, at least 10 days before the earliest time of disposition set forth in the notice; no notice needs to be given prior to the disposition of any portion of the Borrower Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market; (l) Agent, on behalf of the Lender Group, may credit bid and purchase at any public sale; (m) Agent may seek the appointment of a receiver or keeper to take possession of all or any portion of the Borrower Collateral or to operate same and, to the maximum extent permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing; and (n) The Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document. The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to Borrower or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Borrower. 9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it. 10. TAXES AND EXPENSES. If Parent or its Subsidiaries fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other 96 amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to Parent or Borrower, may do any or all of the following: (a) make payment of the same or any part thereof, (b) set up such reserves against the Borrowing Base or the Maximum Revolver Amount as Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply with Section 6.8 hereof, obtain and maintain insurance policies of the type described in Section 6.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing. 11. WAIVERS; INDEMNIFICATION. 11.1 DEMAND; PROTEST; ETC. Each of Parent and Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which Parent or Borrower may in any way be liable. 11.2 THE LENDER GROUP'S LIABILITY FOR BORROWER COLLATERAL. Borrower hereby agrees that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Borrower Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Borrower Collateral shall be borne by Borrower; provided, however, that, nothing contained in this Section 11.2 shall be deemed to relieve Agent or any member of the Lender Group, as applicable, from liability arising from Agent's or such member of the Lender Group's willful misconduct, fraud or gross negligence, as finally determined by a court of competent jurisdiction. 11.3 INDEMNIFICATION. Each of Parent and Borrower, jointly and severally, shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an "Indemnified Person") harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or 97 workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Parent's and its Subsidiaries' compliance with the terms of the Loan Documents, and (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding, Parent and Borrower shall have no obligation to any Indemnified Person under this Section 11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the fraud, gross negligence, or willful misconduct of such Indemnified Person or for any consequential damages (other than consequential damages payable to a third person). This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Parent or Borrower was required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Parent or Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON. 12. NOTICES. Unless otherwise provided in this Agreement, all notices or demands by Parent, Borrower, or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Parent, Borrower, or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Parent, Borrower, or Agent, as the case may be, at its address set forth below: If to Parent or Borrower: VICORP RESTAURANTS, INC. 400 West 48th Avenue Denver, Colorado 80216 Attn: Anthony J. Carroll and Michael R. Kinnen Fax No. (303) 672-2668 with copies to: WIND POINT PARTNERS 676 North Michigan Avenue Chicago, Illinois 60611 98 Attn: Michael Solot Fax No. (312) 255-4820 with copies to: SACHNOFF & WEAVER 30 South Wacker Drive Chicago, Illinois 60606 Attn: Bradley S. Schmarak, Esq. Fax No. (312) 207-6400 If to Agent: WELLS FARGO FOOTHILL, INC. 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attn: Specialty Finance Manager Fax No.: (310) 453-7442 with copies to: PAUL, HASTINGS, JANOFSKY & WALKER LLP 515 South Flower Street, 25th Floor Los Angeles, CA 90071 Attn: John Francis Hilson, Esq. Fax No.: (213) 627-0705 Agent, Parent, and Borrower may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 12, other than notices by Agent in connection with enforcement rights against the Borrower Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Borrower Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above. 13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW 99 YORK INCLUDING, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b). (c) BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. 14.1 ASSIGNMENTS AND PARTICIPATIONS. (a) Any Lender may assign and delegate to one or more assignees (each an "Assignee") that are Eligible Transferees all, or any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000; provided, however, that Borrower and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrower and Agent by such Lender and the Assignee, (ii) 100 such Lender and its Assignee have delivered to Borrower and Agent an Assignment and Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for Agent's separate account a processing fee in the amount of $5,000. Anything contained herein to the contrary notwithstanding, (A) the payment of any fees shall not be required if such assignment is to an Affiliate of the assigning Lender and (B) the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender. (b) From and after the date that Agent notifies the assigning Lender (with a copy to Borrower) that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 11.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrower and the Assignee; provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender's obligations under Article 16 and Section 17.7 of this Agreement. (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (4) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (5) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (6) such 101 Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) Immediately upon Agent's receipt of the required processing fee payment and the fully executed Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto. (e) Any Lender may at any time, with the written consent of Agent, sell to one or more commercial banks, financial institutions, or other Persons (a "Participant") participating interests in its Obligations, the Commitment, and the other rights and interests of that Lender (the "Originating Lender") hereunder and under the other Loan Documents (provided that no written consent of Agent shall be required in connection with any sale of any such participating interests by a Lender to an Eligible Transferee); provided, however, that (i) the Originating Lender shall remain a "Lender" for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a "Lender" hereunder or under the other Loan Documents and the Originating Lender's obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender's rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all amounts payable by Borrower hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the 102 other Lenders, Agent, Borrower, the Collections of Borrower or its Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves. (f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 17.7, disclose all documents and information which it now or hereafter may have relating to Borrower and its Subsidiaries and their respective businesses. (g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. (h) Anything to the contrary contained herein notwithstanding, at all times during the term hereof, WFF agrees to maintain (i) have and retain a Revolver Commitment of no less than 44% of all of the Revolver Commitments, and (ii) have no less than a 44% interest in the Term Loan Amount; provided, however, that the foregoing shall not be applicable (A) at any time that a Default or Event of Default has occurred and is continuing, or (B) to any assignment that is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of WFF. This clause (h) is for the sole benefit of WFF and Borrower and there are no other Persons that are intended to be benefited by this clause. 14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrower may not assign this Agreement or any rights or duties hereunder without the Lenders' prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as expressly required pursuant to Section 14.1 hereof, no consent or approval by Borrower is required in connection with any such assignment. 15. AMENDMENTS; WAIVERS. 15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements), and no consent with respect to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders), Parent and Borrower and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in 103 writing and signed by all of the Lenders affected thereby and Borrower, do any of the following: (a) increase or extend any Commitment of any Lender, (b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document, (c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document, (d) change the Pro Rata Share that is required to take any action hereunder, (e) amend or modify this Section or any provision of the Agreement providing for consent or other action by all Lenders, (f) other than as permitted by Section 16.12, release Agent's Lien in and to any of the Collateral, (g) change the definition of "Required Lenders" or "Pro Rata Share", (h) except as expressly contemplated herein with respect to Permitted Purchase Money Indebtedness, contractually subordinate any of the Agent's Liens, (i) release Borrower or any Guarantor from any obligation for the payment of money, or (j) change the definition of Borrowing Base or the definitions of Maximum Revolver Amount, Term Loan Amount, or change Section 2.1(b), or (k) amend any of the provisions of Section 16. and, provided further, however, that (i) no amendment, waiver or consent shall, unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable, affect the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any other Loan Document, or (ii) no amendment, waiver or consent shall, unless in writing and signed by WFF and Borrower shall affect the rights or duties of WFF or Borrower under Section 14.1(h) and no such amendment, waiver, or consent shall require the approval or consent of any other party hereto. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrower, shall not require consent by or the agreement of Borrower. 104 15.2 REPLACEMENT OF HOLDOUT LENDER. (a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. (b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 14.1. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit. 15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent's and each Lender's rights thereafter to require strict performance by Borrower of any provision of this Agreement. Agent's and each Lender's rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have. 16. AGENT; THE LENDER GROUP. 16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates and appoints WFF as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 16. The provisions 105 of this Section 16 (other than the proviso to Section 16.11(a))are solely for the benefit of Agent, and the Lenders, and Borrower and its Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word "Agent" is for convenience only, that WFF is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrower and its Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrower, the Obligations, the Collateral, the Collections of Borrower and its Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents. 16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct. 16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any 106 of the Lenders for any recital, statement, representation or warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Books or properties of Borrower or the books or records or properties of any of Borrower's Subsidiaries or Affiliates. 16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a "notice of default." Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 16.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, however, that unless and until Agent has received any such request, Agent may (but shall not be 107 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. 16.6 CREDIT DECISION. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons. 16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Borrower and its Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the Collections of Borrower and its Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such 108 Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender's Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent. 16.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, WFF or its Affiliates may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms "Lender" and "Lenders" include WFF in its individual capacity. 16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to the Lenders and Borrower. If Agent resigns under this Agreement, the Required Lenders, and so long as no Default or Event of Default has occurred or is continuing, the Required Lenders with the consent of Borrower (which such consent shall not be unreasonably withheld or delayed) shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term "Agent" shall mean such successor Agent and the retiring Agent's appointment, powers, and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 16 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent's notice of resignation, the retiring Agent's resignation 109 shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above. 16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them. With respect to the Swing Loans and Agent Advances, Swing Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sub-agent of Agent. 16.11 WITHHOLDING TAXES. (a) All payments made by Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, Borrower shall comply with the penultimate sentence of this Section 16.11(a). "Taxes" shall mean, any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein measured by or based on the net income or net profits of any Lender) and all interest, penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 16.11(a) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided, however, that Borrower shall not be required to increase any such amounts if the increase in such amount payable results from Agent's or such Lender's own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Borrower will furnish to Agent as promptly as possible after the date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing such payment by Borrower. 110 (b) If a Lender claims an exemption from United States withholding tax, Lender agrees with and in favor of Agent and Borrower, to deliver to Agent: (i) if such Lender claims an exemption from United States withholding tax pursuant to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of perjury, that it is not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower; (ii) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower; (iii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower; or; (iv) such other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower. Lender agrees promptly to notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (c) If a Lender claims an exemption from withholding tax in a jurisdiction other than the United States, Lender agrees with and in favor of Agent and Borrower, to deliver to Agent any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower. Lender agrees promptly to notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (d) If any Lender claims exemption from, or reduction of, withholding tax and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower to such Lender, such Lender agrees to notify Agent and Borrower of the percentage amount in which it is no longer the beneficial owner of 111 Obligations of Borrower to such Lender. To the extent of such percentage amount, Agent and Borrower will treat such Lender's documentation provided pursuant to Sections 16.11(b) or 16.11(c) as no longer valid. With respect to such percentage amount, Lender may provide new documentation, pursuant to Sections 16.11 (b) or 16.11(c), if applicable. (e) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (b) or (c) of this Section 16.11 are not delivered to Agent, then Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. (f) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender due to a failure on the part of the Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section 16.11, together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent. 16.12 COLLATERAL MATTERS. (a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrower of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrower certifies to Agent that the sale or disposition is permitted under Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which Borrower or its Subsidiaries owned no interest at the time the Agent's Lien was granted nor at any time thereafter, or (iv) constituting property leased to Borrower or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any time, the Lenders will confirm in writing Agent's authority to release any such Liens on particular types or items of Collateral pursuant to this Section 16.12; provided, however, that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent's opinion, would expose Agent to liability or create any obligation or entail any consequence other than 112 the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrower in respect of) all interests retained by Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrower or is cared for, protected, or insured or has been encumbered, or that the Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent's own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein. 16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS. (a) Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrower or any deposit accounts of Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral. (b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender's ratable portion of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the 113 extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. 16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent's Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent's instructions. 16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations. 16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. 16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this Agreement, each Lender: (a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a "Report" and collectively, "Reports") prepared by Agent, and Agent shall so furnish each Lender with such Reports, (b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report, (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrower and will rely significantly upon the Books, as well as on representations of Borrower's personnel, (d) agrees to keep all Reports and other material, non-public information regarding Borrower and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 17.7, and 114 (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrower, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrower to Agent that has not been contemporaneously provided by Borrower to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrower, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender. 16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 16.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein. 115 16.19 BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be deemed a party hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it being understood and agreed that the rights and benefits of such Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider's right to share in payments and collections out of the Collateral as more fully set forth herein. In connection with any such distribution of payments and collections, Agent shall be entitled to assume no amounts are due to any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the amount of any such liability owed to it prior to such distribution. 16.20 LEGAL REPRESENTATION OF AGENT. In connection with the negotiation, drafting, and execution of this Agreement and the other Loan Documents, or in connection with future legal representation relating to loan administration, amendments, modifications, waivers, or enforcement of remedies, Paul, Hastings, Janofsky & Walker LLP ("Paul Hastings") only has represented and only shall represent WFF in its capacity as Agent and as a Lender. Each other Lender hereby acknowledges that Paul Hastings does not represent it in connection with any such matters. 17. GENERAL PROVISIONS. 17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective when executed by Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof. 17.2 SECTION HEADINGS. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement. 17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto. 17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 17.5 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart 116 of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis. 17.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment of the Obligations by Borrower or Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrower or Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. 17.7 CONFIDENTIALITY. Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Borrower and its Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (a) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 17.7, (c) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (f) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Lender's interest under this Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of this Section 17.7 shall survive for 2 years after the payment in full of the Obligations. 17.8 INTEGRATION. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated 117 hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. 17.9 AMENDMENT AND RESTATEMENT OF EXISTING LOAN AGREEMENT AND EXISTING SECURITY AGREEMENT. This Agreement constitutes an amendment and restatement of the Existing Loan Agreement effective on the Closing Date. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby are not intended by the parties to be, and shall not constitute, a novation or an accord and satisfaction of the Obligations or any other obligations owing under the Existing Loan Agreement and Existing Security Agreement. On the Closing Date, the terms and conditions thereof described in the Existing Loan Agreement and Existing Security Agreement shall be amended and replaced in their entirety by the terms and conditions described herein, and all obligations of Borrower outstanding as of such date under the Existing Loan Agreement shall be deemed to be Obligations outstanding hereunder, without further action by any Person. Each of the parties hereto hereby acknowledges and agrees that the grant of the security interests in the Collateral pursuant to Section 4.1 of this Agreement and in any other Loan Document (unless explicitly agreed to by WFF in writing) is not intended to, nor shall it be construed, as constituting a release of any prior security interests granted by Borrower in favor of the Existing Agent in or to any property of Borrower, but is intended to constitute a restatement and reconfirmation of the prior security interests granted by Borrower in favor of Existing Agent in and to the collateral and a grant of a new security interest in any Collateral that is not included in the prior security grants by Borrower and in favor of Agent to the extent such grant was not included in the prior security interest grants. Borrower further agrees that (a) all references in the Existing Loan Agreement (or related loan documents) to "Credit Agreement" shall mean and include this Agreement, (b) all references in the Existing Loan Agreement (or related documents) to "Loan Documents" shall mean and include the Loan Documents (as defined in this Agreement), and (c) all references in the Existing Loan Agreement (or related loan documents) to "Obligations" shall mean and include the Obligations (as defined in this Agreement). [Signature pages to follow.] 118 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written. VI ACQUISITION CORP., a Delaware corporation By: /s/ Debra Koenig ------------------------------ Title: Executive Vice President VICORP RESTAURANTS, INC., a Colorado corporation By: /s/ Debra Koenig ------------------------------ Title: Chief Executive Officer 119 WELLS FARGO FOOTHILL, INC., a California corporation, as Agent and as a Lender By: /s/ Rhonda Noell ------------------------------ Title: Senior Vice President 120 GE CAPITAL FRANCHISE FINANCE CORPORATION, a Delaware corporation, as a Lender By: /s/ Ryan Kress ------------------------------ Title: Vice President 121 VECTRA BANK COLORADO, as a Lender By: /s/ Steven Griffith ------------------------------ Title: Senior Vice President 122 EXHIBITS AND SCHEDULES Exhibit A-1 Form of Assignment and Acceptance Exhibit C-1 Form of Compliance Certificate Exhibit L-1 Form of LIBOR Notice Schedule A-1(a) Post-Closing Adjustments to TTM EBITDA Schedule A-1(b) Monthly Adjusted EBITDA Schedule A-2 Agent's Account Schedule C-1 Commitments Schedule D-1 Designated Account Schedule P-1 Permitted Liens Schedule R-1 Real Property Collateral Schedule 2.7(a) Concentration Account Banks Schedule 2.7(b) Collection Account Banks Schedule 3.2(b) Mortgages in Favor of Agent Schedule 3.2(c) Best Efforts Assignments Schedule 3.2(d) Post Closing Collection Accounts/Control Agreements Schedule 5.5 Locations of Inventory and Equipment Schedule 5.7(a) States of Organization Schedule 5.7(b) Chief Executive Offices Schedule 5.7(c) Organizational Identification Numbers Schedule 5.7(d) Commercial Tort Claims Schedule 5.8(b) Capitalization of Borrower Schedule 5.8(c) Capitalization of Parent's Subsidiaries Schedule 5.10 Litigation Schedule 5.14 Environmental Matters Schedule 5.16 Intellectual Property Schedule 5.18 Deposit Accounts and Securities Accounts Schedule 5.20 Permitted Indebtedness Schedule 5.22 Credit Card Processors Schedule 7.13 Affiliate Transactions

ES-1 SCHEDULE A-1(a) POST-CLOSING ADJUSTMENTS TO TTM EBITDA Without duplication and to the extent deducted in the calculation of EBITDA: (i) Management Fees paid or accruing in such period (to the extent not added back in a prior period), all as determined in accordance with GAAP; (ii) all fees, costs and expenses, including attorneys' fees and fees of other professionals in connection with the Acquisition of Midway by VI Acquisition, the negotiation and closing of the high yield bond offering and subsequent exchange offering (and SEC related costs) and the closingof the transactions contemplated by this Agreement; (iii) all cash costs incurred in connection with the extinguishment of the previous debt, including prepayment penalties, costs to terminate derivative contracts, and accelerated write off of deferred financing costs paid on the Closing Date and costs to terminate derivitative contracts paid after the Closing Date; (iv) cash severance payments and charges incurred in connection with redemption or repurchase of options or shares of former employees; (v) transaction costs incurred and paid in such period (to the extent expensed) for acquisitions permitted hereunder; (vi) expenses incurred and paid in such period to the extent the Company or its Subsidiaries has collected monies from the June 13, 2003 closing escrow as reimbursements for such expenses; and (vii) non-cash charges relating to (1) asset impairment, including impairment of intangible assets; (2) compensation and other expense in connection with the granting, vesting or exercise of stock options or warrants; (3) rental expenses for such period; (4) disposals of assets and (5) other non-cash charges subject to Agent's approval. ES-2 SCHEDULE A-1(b) MONTHLY ADJUSTED EBITDA [Post- Closing] ES-3 SCHEDULE A-2 AGENT'S ACCOUNT An account at a bank designated by Agent from time to time as the account into which Borrower shall make all payments to Agent for the benefit of the Lender Group and into which the Lender Group shall make all payments to Agent under this Agreement and the other Loan Documents; unless and until Agent notifies Borrower and the Lender Group to the contrary, Agent's Account shall be that certain deposit account bearing account number [...***...] and maintained by Agent with JPMorgan Chase Bank, 4 New York Plaza, 15th Floor, New York, New York 10004, ABA #021000021. * CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-4 SCHEDULE C-1 COMMITMENTS
REVOLVER TERM LOAN LENDER COMMITMENT COMMITMENT TOTAL COMMITMENT - ---------------------------- -------------- ----------- ---------------- WELLS FARGO FOOTHILL, INC. $20,000,000 $10,000,000 $ 30,000,000 VECTRA BANK COLORADO $ 5,000,000 $ 0 $ 5,000,000 GE CAPITAL FRANCHISE FINANCE CORPORATION $ 5,000,000 $ 5,000,000 $ 10,000,000 ----------- ----------- ---------------- ALL LENDERS $30,000,000 $15,000,000 $ 45,000,000 =========== =========== ================
ES-5 SCHEDULE D-1 DESIGNATED ACCOUNT Account number [...***...] of Borrower maintained with Borrower's Designated Account Bank, or such other deposit account of Borrower (located within the United States) that has been designed as such, in writing, by Borrower to Agent. "Designated Account Bank" means Bank of America, whose office is located at 555 S. Flower Street, 3rd Floor, CA9-706-03-11, Los Angeles, CA 90071, and whose ABA number is 111000012. * CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-6 SCHEDULE P-1 PERMITTED LIENS
SECURED DATE COLLATERAL JURISDICTION DEBTOR PARTY FILE NUMBER FILED DESCRIPTION - ------------------------------------------------------------------------------------------------------------- California, VICORP Allied Bakery 9922661012 8/2/99 Financing statement State Restaurant Equipment covering specific leased Co., Inc. equipment. Colorado, VICORP Toyota Motor 20002090520 10/16/00 Financing statement State Restaurants, Credit Corp. covering two new Toyotas; Inc. assigned by First Access on VICOM face of UCC; also reported in VICOM search Colorado, VICORP Global 20012024246 3/29/01 Financing statement State Restaurants, Financial covering specific copy Inc. Services equipment pursuant to Agreement with TotalCopy Management Agreement Illinois, State VICORP Toyota Motor 4269728 9/19/00 Two New Toyotas; Restaurants Credit Corp. assigned by First Access on Inc. initial filing Minnesota VICORP ECOLAB, Inc 2206518 3/2/00 Jackson ES 4000 and ES State Restaurants 53610 Dishmachine Colorado, VICORP Toyota Motor 20002090520 10/16/00 Financing statement State Restaurants, Credit Corp. covering two new Toyotas; Inc. assigned by First Access on VICOM face of UCC; also reported in VICORP Restaurants, ("VICOM" Inc. search searched)
ES-7 SCHEDULE R-1 REAL PROPERTY COLLATERAL
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - -------------------------------------------------------------------------------------------------------------------- L4 110138 3715 N. Kaspar Ave. Village Inn Recorded and sent To be assigned by SunTrust Flagstaff, AZ Ground to Lender Lease L5 110394 1111 S. Milton Rd Village Inn Recorded and sent To be assigned by SunTrust Flagstaff, AZ Lease to Lender L6 110329 5959 W. Thunderbird Village Inn Sent for recording To be assigned by SunTrust Glendale, AZ Lease L7 110388 1155 S. Dobson Village Inn Sent for recording To be assigned by SunTrust Mesa, AZ Lease L11 110134 2510 W. Northern Ave. Village Inn Sent for recording To be assigned by SunTrust Phoenix, AZ Lease L13 110346 17017 N. 33rd Ave. Village Inn Sent for recording To be assigned by SunTrust 4949 E. Bell Rd. Lease Phoenix, AZ L14 110058 6940 E. Indian School Rd. Village Inn Sent for recording To be assigned by SunTrust Scottsdale, AZ Lease L15 110779 17030 N. Scottsdale Rd. Village Inn Sent for recording To be assigned by SunTrust Scottsdale, AZ Lease L16 110718 10652 N. 89th Place Village Inn Sent for recording To be assigned by SunTrust Scottsdale, AZ Ground Lease L19 110732 1080 W. Elliot Rd. Village Inn Sent for recording To be assigned by SunTrust Tempe, AZ Lease L20 110117 6635 East Grant Rd. Village Inn Recorded and sent To be assigned by SunTrust Tucson, AZ Lease to Lender L21 110324 6251 N. Oracle Rd. Village Inn Sent for recording To be assigned by SunTrust Tucson, AZ Lease L25 520522 2110 S. Harbor Blvd. Bakers Square Recorded and sent To be assigned by SunTrust Anaheim, CA Lease to Lender L26 520439 13365 E. Lincoln Way Bakers Square Recorded Delivered To be assigned by SunTrust Auburn, CA Lease to Lender L27 520469 3939 Ming Ave. Bakers Square Recorded Delivered To be assigned by SunTrust Bakersfield, CA Lease to Lender
ES-8
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - -------------------------------------------------------------------------------------------------------------------- L29 520466 3360 Castro Valley Blvd. Bakers Square Recorded and sent To be assigned by SunTrust Castro Valley, CA Lease to Lender L30 520493 12193 Central Bakers Square Sent for recording To be assigned by SunTrust Chino, CA Lease L31 520524 710 S. Indian Hill Rd. Bakers Square Recorded and sent To be assigned by SunTrust Claremont, CA Lease to Lender L32 520446 1680 Willow Pass Rd. Bakers Square Sent for recording To be assigned by SunTrust Concord, CA Lease OLB16 520742 3585 W. Shaw Bakers Square Recorded and sent To be assigned by SunTrust Fresno, CA Lease to Lender L37 520485 23515 El Toro Rd. Bakers Square Recorded and sent To be assigned by SunTrust Lake Forest, CA Lease to Lender L40 520496 1401 Foothill Bakers Square Recorded and sent To be assigned by SunTrust LaVerne, CA Lease to Lender L44 520443 165 Los Gatos - Saratoga Bakers Square Recorded and sent To be assigned by SunTrust Rd. Los Gatos, CA Lease to Lender L47 520495 1322 W. Beverly Blvd. Bakers Square Recorded and sent To be assigned by SunTrust Montebello, CA Lease to Lender L50 520503 2420 Vineyard Ave. Bakers Square Recorded and sent To be assigned by SunTrust Oxnard, CA Lease to Lender L52 520526 1596 N. Palm Canyon Bakers Square Recorded and sent To be assigned by SunTrust Palm Springs, CA Lease to Lender L54 520494 473 N. Rosemead Blvd. Bakers Square Recorded and sent To be assigned by SunTrust Pasadena, CA Lease to Lender L55 520690 6770 Santa Rita Rd. Bakers Square Recorded and sent To be assigned by SunTrust Pleasanton, CA Lease to Lender L58 520480 949 Veteran's Blvd. Bakers Square Recorded and sent To be assigned by SunTrust Redwood City, CA Lease to Lender L60 520740 301 Rohnert Park Bakers Square Recorded and sent To be assigned by SunTrust Expressway Rohnert Park, Lease to Lender CA
ES-9
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - -------------------------------------------------------------------------------------------------------------------- L61 520486 2244 Fair Oaks Blvd. Bakers Square Recorded and sent To be assigned by SunTrust Sacramento, CA Lease to Lender L67 520722 1735 E. Capitol Expressway Bakers Square Recorded Delivered To be assigned by SunTrust San Jose, CA Lease to Lender L69 520479 1650 Descanso Ave. Bakers Square Recorded and sent To be assigned by SunTrust San Marcos, CA Lease to Lender L71 520444 1107 Ocean Street Bakers Square Recorded and sent To be assigned by SunTrust Santa Cruz, CA Lease to Lender L80 520487 1235 Harbor Blvd. Bakers Square Recorded and sent To be assigned by SunTrust West Sacramento, CA Lease to Lender L81 110078 15395 E. Colfax Ave. Village Inn Recording To be assigned by SunTrust Aurora, CO Lease information only 06/19/03 Doc. # C161584 L82 110777 18601 E. Hampden Village Inn Recording To be assigned by SunTrust Aurora, CO Lease Information only 06/20/03 Doc # B131975 L83 110035 921 S. Havana Street Village Inn Recording To be assigned by SunTrust Aurora, CO Lease Information only 06/20/03 Doc # B3131971 OLB3 110774 6370 Parker Rd. Village Inn Fee Recording To be assigned by SunTrust Aurora, CO Information only 06/20/03 Reception No. B3131974 L86 110785 13800 E. Mississippi Village Inn Recording To be assigned by SunTrust Aurora, CO Lease Information only 06/20/03 Doc. No. B3131973 L87 110125 1190 E. First Ave. Village Inn Sent for recording To be assigned by SunTrust Broomfield, CO Lease L94 110772 1430 Harrison Rd. Village Inn Recording To be assigned by SunTrust Colorado Springs, CO Lease Information only 06/20/03 Doc No. 203138541
ES-10
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------------------------ OLB1 110066 400 West 48th Ave. Home Office Sent for recording To be assigned by SunTrust Denver, CO Fee L98 110014 1595 S. Colorado Blvd. Village Inn Sent for recording To be assigned by SunTrust Denver, CO Lease L101 11038 9050 E. Hampden Ave. Village Inn Recording To be assigned by SunTrust Denver, CO Lease Information only 06/19/03 Doc. No. 2003123116 L102 110717 4100 E. Village Inn Recorded Delivered To be assigned by SunTrust Mexico Lease to Lender Denver, CO L104 909044 300 W. 53rd Place Warehouse Sent for recording To be assigned by SunTrust Unit D Denver, CO L105 110591 23 W. Centennial Blvd. Village Inn Sent for recording To be assigned by SunTrust Littleton, CO Lease L107 110132 3497 S. Wadsworth Blvd. Village Inn Delivered but not To be granted directly to Agent Lakewood, CO Lease recorded L109 110788 12622 W. Ken Caryl Ave. Village Inn Recorded Delivered To be assigned by SunTrust Littleton, CO Lease to Lender L113 531 Silverthorne Lane Franchise Sent for recording To be assigned by SunTrust Silverthorne, CO Sublease (Leasehold Interest) L114 110025 8370 Sherman Way Village Inn Sent for recording To be assigned by SunTrust Thornton, CO Lease L116 110238 9000 Yukon St. Village Inn Recorded Delivered To be assigned by SunTrust Broomfield (Westminster), Lease to Lender CO L118 110170 4775 Kipling Street Village Inn Recorded Delivered To be assigned by SunTrust Wheatridge, CO Lease to Lender L119 110564 825 W. Brandon Village Inn Delivered but not To be granted directly to Agent Brandon, FL Lease recorded L123 110158 10140 San Jose Blvd. Village Inn Recorded Delivered To be assigned by SunTrust Jacksonville, FL Lease to Lender L126 110382 200 S. Third St. Village Inn CTT 171 Delivered To be granted directly to Agent Neptune Beach, FL Lease but not recorded
ES-11
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L128 110385 900 Ponce de Leon Village Inn Recorded To be assigned by SunTrust Blvd. Lease Delivered to St. Augustine, FL Lender OLB2 10560 4945 Gulf Blvd. Village Inn Loan Policy To be assigned by SunTrust St. Petersburg, FL Lease Delivered L129 110153 9107 Fourth St. N. Village Inn Recorded To be assigned by SunTrust St. Petersburg, FL Lease Delivered to Lender L131 110559 3101 U.S. 27 S. Village Inn Sent for To be assigned by SunTrust Sebring, FL Lease recording L135 220211 4839 W. 111th St. Bakers Recorded To be assigned by SunTrust Alsip, IL Square Delivered to Lease Lender L136 220803 361 S. Bolingbrook Dr. Bakers Recorded To be assigned by SunTrust Bolingbrook, IL Square Delivered to Lease Lender L137 220724 1315 Armour Rd. Bakers Recorded To be assigned by SunTrust Bradley (Bourbonnais), Square Delivered to IL Lease Lender L138 220200 4849 W. 79th Street Bakers Recorded To be assigned by SunTrust Burbank, IL Square Delivered to Lease Lender OLB19 790247 1512 N. Neil Street CLOSED Recorded To be assigned by SunTrust Champaign, IL RESTAURANT Delivered to FEE Lender OLB8 220185 3649 North Harlem Ave. Bakers Recorded To be assigned by SunTrust Chicago, IL Square Fee Delivered to Lender L142 220685 5689 NW Highway Bakers Recorded To be assigned by SunTrust Crystal Lake, IL Square Delivered to Ground Lender Lease OLB10 220203 7131 N. Western Ave. Bakers Recorded To be assigned by SunTrust Chicago, IL Square Fee Delivered to Lender L143 220186 560 Waukegan Rd. Bakers Recorded To be assigned by SunTrust Deerfield, IL Square Delivered to Lease Lender OLB15 220809 131 N. Annie Glidden Bakers Recorded To be assigned by SunTrust Rd. Square Delivered to DeKalb, IL Lease Lender L144 220216 3000 Oak Grove Rd. Bakers Sent for To be assigned by SunTrust Downers Grove, IL Square recording Lease L145 220675 1800 Oakton St. Bakers Recorded To be assigned by SunTrust Elk Grove Village, IL Square Lease Delivered to Lender
ES-12
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L147 220232 2130 Bloomingdale Rd. Bakers Sent for To be assigned by SunTrust Glendale Heights, IL Square recording Lease L148 220666 6340 Grand Ave. Bakers Recorded To be assigned by SunTrust Gurnee, IL Square Delivered to Lease Lender L149 220694 7600 N. Barrington Rd. Bakers Recorded To be assigned by SunTrust Hanover Park, IL Square Delivered to Ground Lender Lease L150 220192 790 W. Higgins Rd. Bakers Square Recorded To be assigned by SunTrust Hoffman Estates, IL Lease Delivered to Lender L151 220215 18849 Dixie Highway Bakers Square Recorded To be assigned by SunTrust Homewood, IL Lease Delivered to Lender OLB11 220212 2211 W. Jefferson St. Bakers Square Recorded To be assigned by SunTrust Joliet, IL Fee Delivered to Lender L152 220206 942 S. LaGrange Rd. Bakers Square Recorded To be assigned by SunTrust LaGrange, IL Lease Delivered to Lender L153 220199 3545 Ridge Rd. Bakers Square Recorded To be assigned by SunTrust Lansing, IL Lease Delivered to Lender L154 220188 1195 S. Milwaukee Ave. Bakers Square Recorded To be assigned by SunTrust Libertyville, IL Lease Delivered to Lender L155 220226 4721 Lincoln Mall Dr. Bakers Square Recorded To be assigned by SunTrust Matteson, IL Lease Delivered to Lender L156 220673 1319 W. North Ave. Bakers Square Recorded To be assigned by SunTrust Melrose Park, IL Lease Delivered to Lender L160 220674 13 W. Rand Rd. Bakers Square Recorded To be assigned by SunTrust Mount Prospect, IL Lease Delivered to Lender L161 220190 850 Ogden Ave. Bakers Square Sent for To be assigned by SunTrust Naperville, IL Lease recording L162 220693 796 S. Route 59 Bakers Square Sent for To be assigned by SunTrust Naperville, IL Ground Lease recording L163 220180 8584 Dempster St. Bakers Square Recorded To be assigned by SunTrust Niles, IL Lease Delivered to Lender
ES-13
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L164 220730 321 S. Veteran's Pkwy Bakers Square Record To be assigned by SunTrust Normal, IL Lease Information only 06/25/03 File No. 2003-00030641 L166 220805 15711 S. Harlem Orland Insert "B" Recorded To be assigned by SunTrust Park, IL Bakers Square Delivered to Ground Lease Lender OLB23 8129724 16426 S. Kedvale Vacant Land - Recorded To be assigned by SunTrust (Kedzie), Oak Forest IL Fee - Adjacent Delivered to to Commissary Lender OLB21 800358 16425 S. Kilbourn Commissary Recorded To be assigned by SunTrust Oak Forest, IL Vicom Delivered to Production Lender Division - Fee L167 220672 14651 S. LaGrange Rd. Bakers Square Recorded To be assigned by SunTrust Orland Park, IL Lease Delivered to Lender L168 220209 270 E. Northwest Bakers Square Recorded To be assigned by SunTrust Highway Lease Delivered to Palatine, IL Lender L140 220228 7105 Cherry Vale Blvd. Bakers Square Sent for To be assigned by SunTrust Rockford, IL Lease recording L170 220205 1755 Algonquin Rd. Bakers Square Recorded To be assigned by SunTrust Rolling Meadows, IL Lease Delivered to Lender L171 220210 1510 E. Main St. Bakers Square Sent for To be assigned by SunTrust St. Charles, IL Lease recording L172 220729 3434 Freedom Dr. Bakers Square Recorded To be assigned by SunTrust Springfield, IL Lease Delivered to Lender L173 220184 298A W. Roosevelt Rd. Bakers Square Sent for To be assigned by SunTrust Villa Park, IL Lease recording L174 220181 420 E. Ogden Ave. Bakers Square Sent for To be assigned by SunTrust Westmont, IL Lease recording L176 220214 110 W. Geneva Rd. Bakers Square Sent for To be assigned by SunTrust Wheaton, IL Lease recording
ES-14
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L177 220187 7409 S. Kingery Bakers Square Recorded To be assigned by SunTrust Highway Lease Delivered to Willowbrook, IL Lender L178 220194 200 Skokie Blvd. Bakers Square Recorded To be assigned by SunTrust Wilmette, IL Lease Delivered to Lender L179 220208 8140 Mississippi St. Bakers Square Recorded To be assigned by SunTrust Merrillville, IN Lease Delivered to Lender L180 110828 5250 Franklin Street Village Inn Recorded To be assigned by SunTrust Michigan City, IN Lease Delivered to Lender L182 220700 1675 U.S. Highway 41 Bakers Square Delivered but To be granted directly to Schererville, IN Lease not recorded Agent L184 110789 1024 E. First St. Village Inn Recorded To be assigned by SunTrust Ankeny, IA Ground Lease Delivered to Lender L185 110097 1210 State St. Village Inn Recorded To be assigned by SunTrust Bettendorf, IA Lease Delivered to Lender L190 110778 2800 Commerce Dr. Village Inn Recorded To be assigned by SunTrust Coralville, IA Lease Delivered to Lender L192 110786 1906 Rue St. Village Inn Recorded To be assigned by SunTrust Council Bluffs, IA Lease Delivered to Lender L194 110775 5239 Elmore Ave. Village Inn Sent for To be assigned by SunTrust Davenport, IA Lease recording L198 220179 3121 Ingersoll Ave. Bakers Square Sent for To be assigned by SunTrust Des Moines, IA Lease recording L199 220173 4107 Merle Hay Rd. Bakers Square Recorded To be assigned by SunTrust Des Moines, IA Lease Delivered to Lender L202 110793 8510 Birchwood Ct. Village Inn Recorded To be assigned by SunTrust Johnston, IA Lease Delivered to Lender L205 220229 825 Bowers St. Bakers Square Recorded To be assigned by SunTrust Birmingham, MI Lease Delivered to Lender L206 220225 5946 Sheldon Rd. Bakers Square Recorded To be assigned by SunTrust Canton Township, MI Lease Delivered to Lender
ES-15
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L207 220726 29622 Seven Mile Rd. Bakers Square Delivered but To be granted directly to Livonia, MI Ground Lease not recorded Agent OLB13 220720 5575 Greenfield Rd. Bakers Square Recorded To be assigned by SunTrust Dearborn, MI Lease Delivered to Lender OLB14 220721 22373 Eureka Rd. Bakers Square Recorded To be assigned by SunTrust Taylor, MI Lease Delivered to Lender L209 220230 13602 14 Mile Rd. Bakers Square Recorded To be assigned by SunTrust Warren, MI Lease Delivered to Lender L210 220697 36101 Warren Rd. Bakers Square Delivered but To be granted directly to Westland, MI Ground Lease not recorded Agent L212 220221 221 Highway 10 Bakers Square Sent for To be assigned by SunTrust Blaine, MN Lease recording L213 220202 611 W. 98th St. Bakers Square Sent for To be assigned by SunTrust Bloomington, MN Lease recording L214 220652 8000 Brooklyn Blvd. Bakers Square Recording Copy of recorded Mortgage Brooklyn Park, MN Lease Information delivered; to be assigned only 06/25/03 by SunTrust Doc. No. 8299259 L215 220218 14201 Burngarten Dr. Bakers Square Recorded To be assigned by SunTrust Burnsville, MN Lease Delivered to Lender OLB22 800679 300 Lake Hazeltine Dr. Vicom Recorded To be assigned by SunTrust Chaska, MN Production Delivered to Division - Lender Frozen Pie Production Facility Fee L217 220711 12951 Riverdale Bakers Square Sent for To be assigned by SunTrust Crossing Lease recording Coon Rapids, MN L219 220650 928 Prairie Center Dr. Bakers Square Sent for Executed copy of Leasehold Eden Prairie, MN Lease recording Mortgage delivered. Recording in process - Ramsey County; to be assigned by SunTrust
ES-16
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- OLB4 220174 210 North Blake Rd. Bakers Square Recording To be assigned by SunTrust Hopkins, MN Fee Information only 06/26/03 Doc. No. 3638823 L220 220714 1861 Madison Ave. Bakers Square Sent for To be assigned by SunTrust Mankato, MN Lease recording L221 220702 13950 Grove Dr. Bakers Square Recorded To be assigned by SunTrust Maple Grove, MN Lease Delivered to Lender L223 220688 2425 University Ave. Bakers Square Delivered but To be granted directly to S.E. Ground Lease not recorded Agent Minneapolis, MN L224 220182 12608 Wayzata Blvd. Bakers Square Sent for To be assigned by SunTrust Minnetonka, MN Lease recording L227 220703 819 Apache Ln. S.W. Bakers Square Sent for To be assigned by SunTrust Rochester, MN Lease recording L228 220689 3539 - 22nd Ave. N.W. Bakers Square Sent for To be assigned by SunTrust Rochester, MN Lease recording L229 220197 1881 W. Highway 36 Bakers Square Recorded To be assigned by SunTrust Roseville, MN Lease Delivered to Lender OLB5 220175 3701 Stinson Blvd. Bakers Square Recorded To be assigned by SunTrust St. Anthony Village, Lease Information MN 22075 only 08/08/03 Doc. No. 3656836 OLB6 220177 2239 Ford Parkway Bakers Square Recorded To be assigned by SunTrust St. Paul, MN 55116 Fee D154 Delivered to Lender OLB12 220213 1751 Suburban Ave. Bakers Square Recorded To be assigned by SunTrust St. Paul, MN Lease Delivered to Lender OLB7 220183 1949 S. Robert St. Bakers Square Recorded To be assigned by SunTrust St. Paul, MN Lease Delivered to Lender L231 220701 14130 N. 60th St. Bakers Square Sent for To be assigned by SunTrust Stillwater, MN Lease recording L233 110013 309 N. Fort Crook Rd. Village Inn Sent for To be assigned by SunTrust Bellevue, NE Lease recording
ES-17
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L235 110045 6555 O Street Village Inn Sent for To be assigned by SunTrust Lincoln, NE Lease recording L236 110416 5001 Van Dorn Village Inn Sent for To be assigned by SunTrust Lincoln, NE Lease recording L238 110780 7101 S. 27th St. Village Inn Sent for To be assigned by SunTrust Lincoln, NE Lease recording L241 110008 4416 Dodge St. Village Inn Sent for To be assigned by SunTrust Omaha, NE Lease recording L242 110787 7837 Dodge St. Village Inn Sent for To be assigned by SunTrust Omaha, NE Lease recording L243 110131 5425 L St. Village Inn Sent for To be assigned by SunTrust Omaha, NE Lease recording L244 110046 10770 M St. Village Inn Sent for To be assigned by SunTrust Omaha, NE Lease recording L248 110801 3839 N. 138th St. Village Inn Sent for To be assigned by SunTrust Omaha, NE Ground Lease recording L249 110719 3304 S. 143rd Plaza Village Inn Delivered but To be granted directly to Omaha, NE Ground Lease not recorded Agent L252 110004 5505 Central Ave., NE Village Inn Sent for To be assigned by SunTrust Albuquerque, NM Lease recording L253 110743 1514 Coors Blvd., NW Village Inn Recorded To be assigned by SunTrust Albuquerque, NM Lease Delivered to Lender L254 110635 840 Juan Tabo, SE Village Inn Recorded To be assigned by SunTrust Albuquerque, NM Lease Delivered to Lender L255 110068 2017 Menaul Blvd., NE Village Inn Recorded To be assigned by SunTrust Albuquerque, NM Lease Delivered to Lender L256 110106 6300 San Mateo Blvd., Village Inn Sent for To be assigned by SunTrust NE Lease recording Albuquerque, NM L257 110080 2282 Wyoming Blvd., NE Village Inn Sent for To be assigned by SunTrust Albuquerque, NM Lease recording L258 110164 2340 Yale Blvd., SE Village Inn Sent for To be assigned by SunTrust Albuquerque, NM Lease recording OLB18 700759 1741 Rio Rancho Rd. Franchise Sent for To be assigned by SunTrust Rio Rancho, NM Sublease recording (Leasehold Interest) L261 220220 1280 Independence Ave. Bakers Square Delivered but To be granted directly to Akron, OH Lease not recorded Agent
ES-18
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- L262 220231 60 Severance Cir. Dr. Bakers Square Recorded To be assigned by SunTrust Cleveland Heights, OH Lease Delivered to Lender L263 220820 1201 N. Court St. Bakers Square Recorded To be assigned by SunTrust Medina, OH Lease Delivered to Lender L 264 220217 7800 Plaza Blvd. Bakers Square Recorded To be assigned by SunTrust Mentor, OH Lease Delivered to Lender L 265 220227 24025 Lorain Rd. Bakers Square Recorded To be assigned by SunTrust North Olmsted, OH Lease Delivered to Lender L 266 220219 4680 Northfield Rd. Bakers Square Recorded To be assigned by SunTrust North Randall, OH Lease Delivered to Lender L 267 220223 7011 - 130th St. Bakers Square Recorded To be assigned by SunTrust Parma Heights, OH Lease Delivered to Lender L 268 220222 28601 28801 Bakers Square Recorded To be assigned by SunTrust Chardon Rd. Lease Delivered to Willoughby Hills, OH Lender L272 790139 2301 N. Ben Jordan SUBLEASE Recorded To be assigned by SunTrust Victoria, TX TERMINATED Delivered to 08/28/03 Lender L274 110081 450 E. 1100 N. Village Inn Recorded To be assigned by SunTrust North Salt Lake City, Lease Delivered to UT Lender L275 110750 322 - 12th St. Village Inn Sent for To be assigned by SunTrust Ogden, UT Lease recording L276 110119 212 E. 1300 S. Village Inn Recorded To be assigned by SunTrust Orem, UT Lease Delivered to Lender L278 110784 1780 W. 5600 S. Village Inn Recorded To be assigned by SunTrust Roy, UT Lease Delivered to Lender L279 110002 2929 S. State St. Village Inn Recorded To be assigned by SunTrust Salt Lake City, UT Lease Delivered to Lender L280 110076 910 E. Fourth S. Village Inn Sent for To be assigned by SunTrust Salt Lake City, UT Lease recording L282 110085 4681 S. Redwood Rd. Village Inn To be Legal Description/PIN Taylorsville, UT Lease delivered number discrepancy; to be granted directly to Agent
ES-19
PROPERTY VICORP MORTGAGE # UNIT ADDRESS TYPE STATUS OTHER - ------------------------------------------------------------------------------------------------------- OLB17 700234 313 Independence Rd. Franchise Sent for To be assigned by SunTrust Virginia Beach, VA Sublease recording L286 220731 1190 N. Casaloma Dr. Bakers Square Recorded To be assigned by SunTrust Appleton, WI Ground Lease Delivered to Lender L288 220245 15300 E. Bluemound Bakers Square Recorded To be assigned by SunTrust Elm Grove, WI Lease Delivered to Lender L289 220198 4900 S. 76th St. Bakers Square Recorded To be assigned by SunTrust Greenfield, WI Lease Delivered to Lender OLB9 220201 7320 W. Goodhope Rd. Bakers Square Recorded To be assigned by SunTrust Milwaukee, WI Fee Lease Delivered to Lender L290 220727 1227 Crossing Bakers Square Delivered but To be granted directly to Meadow Dr. Lease not recorded Agent Onalaska, WI L 291 220195 1305 E. Capital Dr. Bakers Square Recorded To be assigned by SunTrust Shorewood, WI Lease Delivered to Lender L 292 220196 10200 W. National Ave. Bakers Square Recorded To be assigned by SunTrust West Allis, WI Lease Delivered to Lender
ES-20 SCHEDULE 2.7(a) CONCENTRATION ACCOUNT BANKS
ACCOUNT BANK NUMBER ADDRESS - --------------------------------------------------------------------- ~~Bank of America [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071~~
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-21 SCHEDULE 2.7(b) COLLECTION ACCOUNT BANKS
ACCOUNT BANK NUMBER ADDRESS - -------------------------------------------------------------------------------------------------- Wells Fargo - Corporate Depository [...***...] 1740 Broadway Denver, CO 80274 Fifth Third Bank - Corporate Depository [...***...] 38 Fountain Square Plaza MD 109046 Cincinnati, OH 45202 Bank of America - CA [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 LaSalle Bank [...***...] 135 S. LaSalle St., Suite 515 Chicago, IL 60603 National City Bank - MI/IL [...***...] 155 E. Broad Street Columbus, OH 43251-0077 National City Bank - Ohio [...***...] 155 E. Broad Street Columbus, OH 43251-0077 US Bank [...***...] 918 17th Street, 4th Floor DN-CO-BB4A Denver, CO 55402 Wells Fargo [...***...] 1740 Broadway Denver, CO 80274 First State Bank (VILLAGE INN PANCAKE [...***...] P.O. Box 3686 HOUSE OF ALBUQUERQUE, INC.) Albuquerque, NM 87190-3686 Bank of America - FL [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 Great Lakes Bank [...***...] 18106 Dixie Hwy Homewood, IL 60430 Canon National Bank [...***...] 2101 Fremont Drive P.O. Box 829 Canon City, CO 81215 Clinton National Bank [...***...] 235 6th Ave. South Clinton, IA 52733
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-22
ACCOUNT BANK NUMBER ADDRESS - ---------------------------------------------------------------------------------------------- Commerce Bank [...***...] 15305 E. Colfax Ave. Aurora, CO 80011 First Bank and Trust of Illinois [...***...] 300 E. Northwest Hwy Palatine, IL 60067 First National Bank of Illinois [...***...] 2108 W. Jefferson Joliet, IL 60435 First National Bank of Strasburg [...***...] 120 S. Wilcox Street Castle Rock, CO 80104 Harris Bank [...***...] 4 Blanchard Circle Wheaton, IL 60187 KeyBank [...***...] 1675 Broadway, 5th Floor Denver, CO 80202 Mid State Bank [...***...] 91 W. Highway 246 & Central Ave Buelton, CA 93427 National City Bank - IN [...***...] 155 E. Broad Street Columbus, OH 43251-0077 Nebraska State Bank [...***...] 3211 N. 90th Street Omaha, NE 68134 Peoples National Bank [...***...] 1899 Woodmore Dr. Monument, CO 80132
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-23 SCHEDULE 3.2(b) MORTGAGES IN FAVOR OF AGENT
PROPERTY VICORP # UNIT ADDRESS TYPE - ------------------------------------------------------------------------------------------- L107 110132 3497 S. Wadsworth Blvd. Village Inn Lease Lakewood, CO L119 110564 825 W. Brandon Village Inn Lease Brandon, FL L126 110382 200 S. Third St. Village Inn Lease Neptune Beach, FL L182 220700 1675 U.S. Highway 41 Bakers Square Lease Schererville, IN L207 220726 29622 Seven Mile Rd. Bakers Square Ground Lease Livonia, MI L210 220697 36101 Warren Rd. Bakers Square Ground Lease Westland, MI L223 220688 2425 University Ave. S.E. Bakers Square Ground Lease Minneapolis, MN L249 110719 3304 S. 143rd Plaza Village Inn Ground Lease Omaha, NE L261 220220 1280 Independence Ave. Bakers Square Lease Akron, OH L282 110085 4681 S. Redwood Rd. Village Inn Lease Taylorsville, UT L290 220727 1227 Crossing Meadow Dr. Bakers Square Lease Onalaska, WI
ES-24 SCHEDULE 3.2(c) BEST EFFORTS ASSIGNMENTS
PROPERTY VICORP # UNIT ADDRESS TYPE - ---------------------------------------------------------------------------------- L6 110329 5959 W. Thunderbird Village Inn Lease Glendale, AZ L7 110388 1155 S. Dobson Village Inn Lease Mesa, AZ L11 110134 2510 W. Northern Ave. Village Inn Lease Phoenix, AZ L13 110346 17017 N. 33rd Ave. Village Inn Lease 4949 E. Bell Rd. Phoenix, AZ L14 110058 6940 E. Indian School Rd. Village Inn Lease Scottsdale, AZ L15 110779 17030 N. Scottsdale Rd. Village Inn Lease Scottsdale, AZ L16 110718 10652 N. 89th Place Village Inn Ground Lease Scottsdale, AZ L19 110732 1080 W. Elliot Rd. Village Inn Lease Tempe, AZ L21 110324 6251 N. Oracle Rd. Village Inn Lease Tucson, AZ L30 520493 12193 Central Bakers Square Lease Chino, CA L32 520446 1680 Willow Pass Rd. Bakers Square Lease Concord, CA L50 520503 2420 Vineyard Ave. Bakers Square Lease Oxnard, CA L87 110125 1190 E. First Ave. Village Inn Lease Broomfield, CO L104 909044 300 W. 53rd Place Warehouse Unit D Denver, CO
ES-25
PROPERTY VICORP # UNIT ADDRESS TYPE - ---------------------------------------------------------------------------------- L105 110591 23 W. Centennial Blvd. Village Inn Lease Littleton, CO L114 110025 8370 Sherman Way Village Inn Lease Thornton, CO L131 110559 3101 U.S. 27 S. Village Inn Lease Sebring, FL L219 220650 928 Prairie Center Dr. Bakers Square Lease Eden Prairie, MN L233 110013 309 N. Fort Crook Rd. Village Inn Lease Bellevue, NE L235 110045 6555 O Street Village Inn Lease Lincoln, NE L236 110416 5001 Van Dorn Village Inn Lease Lincoln, NE L238 110780 7101 S. 27th St. Village Inn Lease Lincoln, NE L241 110008 4416 Dodge St. Village Inn Lease Omaha, NE L242 110787 7837 Dodge St. Village Inn Lease Omaha, NE L243 110131 5425 L St. Village Inn Lease Omaha, NE L244 110046 10770 M St. Village Inn Lease Omaha, NE L248 110801 3839 N. 138th St. Village Inn Ground Lease Omaha, NE L252 110004 5505 Central Ave., NE Village Inn Lease Albuquerque, NM L256 110106 6300 San Mateo Blvd., NE Village Inn Lease Albuquerque, NM L257 110080 2282 Wyoming Blvd., NE Village Inn Lease Albuquerque, NM
ES-26
PROPERTY VICORP # UNIT ADDRESS TYPE - ------------------------------------------------------------------------------------------------- L258 110164 2340 Yale Blvd., SE Village Inn Lease Albuquerque, NM OLB18 700759 1741 Rio Rancho Rd. Franchise Sublease (Leasehold Interest) Rio Rancho, NM OLB17 700234 313 Independence Rd. Franchise Sublease Virginia Beach, VA
ES-27 SCHEDULE 3.2(d) POST-CLOSING COLLECTION ACCOUNTS/CONTROL AGREEMENTS
ACCOUNT BANK NUMBER ADDRESS - ----------------------------------------------------------------------------------------- Great Lakes Bank [...***...] 18106 Dixie Hwy Homewood, IL 60430 Canon National Bank [...***...] 2101 Fremont Drive P.O. Box 829 Canon City, CO 81215 Clinton National Bank [...***...] 235 6th Ave. South Clinton, IA 52733 First Bank and Trust of Illinois [...***...] 300 E. Northwest Hwy Palatine, IL 60067 First National Bank of Illinois [...***...] 2108 W. Jefferson Joliet, IL 60435 First National Bank of Strasburg [...***...] 120 S. Wilcox Street Castle Rock, CO 80104 Harris Bank [...***...] 4 Blanchard Circle Wheaton, IL 60187 Mid State Bank [...***...] 91 W. Highway 246 & Central AVE Buelton, CA 93427 Nebraska State Bank [...***...] 3211 N. 90th Street Omaha, NE 68134 Peoples National Bank [...***...] 1899 Woodmore Dr. Monument, CO 80132
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-28 SCHEDULE 5.5 LOCATION OF INVENTORY AND EQUIPMENT VICORP RESTAURANTS, INC.: ON SITE INVENTORY (BAKERS SQUARE LOCATIONS)
Unit # Address - ------ ------- 520508 810 E. Valley Blvd. Alhambra, CA 91801 520522 2110 S. Harbor Blvd. Anaheim, CA 92802 520439 13365 E. Lincoln Way Auburn, CA 95603 520469 3939 Ming Av. Bakersfield, CA 93309 520447 321 McMurray Rd. Buellton, CA 93427 520466 3360 Castro Valley Blvd. Castro Valley, CA 94546 520493 12193 Central Av. Chino, CA 91710 520524 710 S. Indian Hill Blvd. Claremont, CA 91711 520446 1680 Willow Pass Rd. Concord, CA 94520 520456 255 Second St. Davis, CA 95616 520431 7954 Imperial Highway Downey, CA 90242 520742 3585 W. Shaw Fresno, CA 93721 520506 17921 Chatsworth St. Granada Hills, CA 91344 520485 23515 El Toro Rd. Lake Forest, CA 92630 520491 5520 South St. Lakewood, CA 90713 520474 5270 Baltimore Dr. LaMesa, CA 92041 520496 1401 Foothill Blvd. LaVerne, CA 91750 520829 1116 E. Stanley Blvd. Livermore, CA 94550-4156 520477 936 N. "H" St. Lompoc, CA 93436 520443 165 Los Gatos-Saratoga Av. Los Gatos, CA 95030 520481 174 W. Calaveras Blvd. Milpitas, CA 95035 520723 2200 Plaza Parkway, #D Modesto, CA 95350 520495 1322 W. Beverly Blvd. Montebello, CA 90640
ES-29
Unit # Address - ------ ------- 520463 303 Soscol Av. Napa, CA 94558 520464 5475 Thornton Av. Newark, CA 94560 520503 2420 Vineyard Av. Oxnard, CA 93030 520429 73-075 Highway 111 Palm Desert, CA 92260 520526 1596 N. Palm Canyon Dr. Palm Springs, CA 92262 520455 350 W. Palmdale Blvd. Palmdale, CA 93550 520494 473 N. Rosemead Blvd. Pasadena, CA 91107 520690 6770 Santa Rita Rd. Pleasanton, CA 94566 520475 747 W. Channel Islands Blvd. Port Hueneme, CA 93041 520488 2817 Zinfandel Dr. Rancho Cordova, CA 95670 520480 949 Veteran's Blvd. Redwood City, CA 94063 520454 3650 Tyler St. Riverside, CA 92503 520740 301 Rohnert Park Expressway Rohnert Park, CA 94928 520486 2244 Fair Oaks Blvd. Sacramento, CA 95825 520484 1190 S. Main St. Salinas, CA 93901 520450 2010 Rollingwood Dr. San Bruno, CA 94066 520519 610 Camino De Los Mares San Clemente, CA 92672 520168 3711-3713 Sports Arena Blvd. San Diego, CA 92110 520470 5055 Almaden Expressway San Jose, CA 95118 520722 1735 Capitol Expressway San Jose, CA 95121 520438 15501 Hesperian Blvd. San Leandro, CA 94579 520479 1650 Descanso Av. San Marcos, CA 92069 520441 2910 El Camino Real Santa Clara, CA 95051 520444 1107 Ocean St. Santa Cruz, CA 95060 520410 1841 S. Broadway Santa Maria, CA 93454 520442 1350 Farmers Lane Santa Rosa, CA 95405 520512 819 W. Carson Torrance, CA 90502 520472 951 Merchant St. Vacaville, CA 95688 520831 3301 S. Mooney Blvd. Visalia, CA 93277 (under development) 520487 1235 Harbor Blvd. West Sacramento, CA 95691
ES-30
Unit # Address - ------ ------- 220211 4839 W. 111th St. Alsip, IL 60803 220803 361 S. Bolingbrook Dr. Bolingbrook, IL 60440 220724 1315 Armour Rd. Bourbonnais, IL 60914 220200 4849 W. 79th St. Burbank, IL 60459 220826 1902 Center Dr. Champaign, IL 61820-7821 220185 3649 N. Harlem Av. Chicago, IL 60634 220658 5220 N. Harlem Av. Chicago, IL 60656 220203 7131 N. Western Av. Chicago, IL 60645 220685 5689 Northwest Hwy. Crystal Lake, IL 60014 220186 560 Waukegan Rd. Deerfield, IL 60015 220809 131 N. Annie Glidden Rd. DeKalb, IL 60115 220216 3000 Oak Grove Rd. Downers Grove, IL 60515 220675 1800 Oakton St. Elk Grove Village, IL 60007 220232 2130 Bloomingdale Rd. Glendale Heights, IL 60139 220666 6340 Grand Av. Gurnee, IL 60031 220694 7600 N. Barrington Rd. Hanover Park, IL 60103 220192 790 W. Higgins Rd. Hoffman Estates, IL 60195 220215 18849 Dixie Hwy. Homewood, IL 60430 220212 2211 W. Jefferson St. Joliet, IL 60435 220206 942 S. LaGrange Rd. LaGrange, IL 60525 220199 3545 Ridge Rd. Lansing, IL 60438 220188 1195 S. Milwaukee Av. Libertyville, IL 60048 220226 4721 Lincoln Mall Dr. Matteson, IL 60443 220673 1319 W. North Av. Melrose Park, IL 60160 220674 13 W. Rand Rd. Mt. Prospect, IL 60056 220190 850 E. Ogden Av. Naperville, IL 60540 220693 796 S. Route 59 Naperville, IL 60540 220180 8584 Dempster St. Niles, IL 60714 220730 321 S. Veterans Pkwy. Normal, IL 61761 220805 15711 Harlem Av. Orland Park, IL 60462
ES-31
Unit # Address - ------ ------- 220672 14651 S. LaGrange Rd. Orland Park, IL 60462 220209 270 E. Northwest Hwy. Palatine, IL 60067 220204 6431 - 127th St. Palos Heights, IL 60463 220830 24020 West 119th St. Plainfield, IL 60544 220228 7105 Cherryvale N. Blvd. Rockford, IL 61016 220205 1755 Algonquin Rd. Rolling Meadows, IL 60008 220210 1510 E. Main St. St. Charles, IL 60174 220729 3434 Freedom Dr. Springfield, IL 62704 220184 298-A W. Roosevelt Rd. Villa Park, IL 60181 220181 420 E. Ogden Av. Westmont, IL 60559 220214 110 W. Geneva Rd. Wheaton, IL 60187 220187 7409 S. Kingery Hwy. Willowbrook, IL 60521 220194 200 Skokie Blvd. Wilmette, IL 60091 220208 8140 Mississippi St. Merrillville, IN 46410 220744 5758 N. Grape Rd. Mishawaka, IN 46545 220700 1675 US Hwy 41 Schererville, IN 46375 220725 1310 NW 114th St. Clive, IA 50325 220179 3121 Ingersoll Av. Des Moines, IA 50312 220173 4107 Merle Hay Rd. Des Moines, IA 50310 220229 825 Bowers St. Birmingham, MI 48011 220225 5946 N. Sheldon Rd. Canton, MI 48187 220720 5575 Greenfield Rd. Dearborn, MI 48126 220726 29622 7-Mile Rd. Livonia, MI 48152 220721 22373 Eureka Rd. Taylor, MI 48180 220230 13602 14-Mile Rd. Warren, MI 48093 220697 36101 Warren Rd. Westland, MI 48185 220696 15200 Cedar Av. Apple Valley, MN 55124 220221 221 Highway 10 Blaine, MN 55434 220202 611 W. 98th St. Bloomington, MN 55420 220652 8000 Brooklyn Blvd. Brooklyn Park, MN 55445
ES-32
Unit # Address - ------ ------- 220218 14201 Burngarten Dr. Burnsville, MN 55337 220711 12951 Riverdale Crossing Coon Rapids, MN 55448 220669 1960 Rahncliff Ct. Eagan, MN 55122 220650 928 Prairie Center Dr. Eden Prairie, MN 55344 220174 210 North Blake Rd. Hopkins, MN 55343 220714 1861 Madison Av. Mankato, MN 56001 220702 13950 Grove Dr. Maple Grove, MN 55311 220670 3088 White Bear Av. Maplewood, MN 55109 220688 2425 University Av. SE Minneapolis, MN 55414 220182 12608 Wayzata Blvd. Minnetonka, MN 55343 220704 4100 Vinewood Lane Plymouth, MN 55442 220176 3000 W. 66th St. Richfield, MN 55423 220703 819 Apache Lane W Rochester, MN 55902 220689 3539 - 22nd Av. NW Rochester, MN 55902 220197 1881 W. Highway 36 Roseville, MN 55113 220175 3701 Stinson Blvd. St. Anthony Village, MN 55421 220705 2860 Division St. St. Cloud, MN 56302 220177 2339 Ford Pkwy. St. Paul, MN 55116 220213 1751 Suburban Av. St. Paul, MN 55106 220701 14130 N. 60th St. Stillwater, MN 55082 220183 1949 S. Robert St. West St. Paul, MN 55118 220220 1280 Independence Av. Akron, OH 44310 220231 60 Severence Circle Dr. Cleveland Heights, OH 44118 220820 1201 N. Court St. Medina, OH 44256 220217 7800 Plaza Blvd. Mentor, OH 44060 220227 24025 Lorain Rd. North Olmsted, OH 44070 220219 4680 Northfield Rd. North Randall, OH 44128 220223 7011 - 130th St. Parma Heights, OH 44130 220222 28601 Chardon Rd. Willoughby Hills, OH 44092 220731 1190 N. Casaloma Dr. Appleton, WI 54915
ES-33
Unit # Address - ------ ------- 220728 4750 Golf Rd. Eau Claire, WI 54701 220245 15300 Bluemound Rd. Elm Grove, WI 53122 220198 4900 S. 76th St. Greenfield, WI 53220 220201 7320 W. Goodhope Rd. Milwaukee, WI 53223 220727 1227 Crossing Meadow Dr. Onalaska, WI 54650 220195 1305 E. Capitol Dr. Shorewood, WI 53211 220196 10200 W. National Av. West Allis, WI 53227
ON SITE INVENTORY (VILLAGE INN LOCATIONS)
Unit # Address - ------ ------- 110390 575 W. Apache Trail Apache Junction, AZ 85220 110832 7250 W. Chandler Blvd. Chandler, AZ 85226 110138 3715 N. Kaspar Av. Flagstaff, AZ 86004 110394 1111 S. Milton Rd. Flagstaff, AZ 86001 110329 5959 W. Thunderbird Glendale, AZ 85306 110388 1155 S. Dobson Mesa, AZ 85202 110100 1663 E. Main St. Mesa, AZ 85201 110391 6813 E. Main St. Mesa, AZ 85207 110834 2034 E. Southern Mesa, AZ 85204 110833 310 E. Bell Rd. Phoenix, AZ 85022 110800 4040 E. Bell Rd. Phoenix, AZ 85032 110134 2510 W. Northern Av. Phoenix, AZ 85021 110346 17017 N. 33rd Av. Phoenix, AZ 85023 110058 6940 E. Indian School Rd. Scottsdale, AZ 85251 110779 17030 N. Scottsdale Scottsdale, AZ 85260 110718 10652 N. 89th Pl. Scottsdale, AZ 85260 110387 950 E. Baseline Tempe, AZ 85283 110732 1080 W. Elliot Rd. Tempe, AZ 85284
ES-34
Unit # Address - ------ ------- 110117 6635 E. Grant Rd. Tucson, AZ 85715 110324 6251 N. Oracle Tucson, AZ 85704 110040 4245 E. Speedway Blvd. Tucson, AZ 85712 110078 15395 E. Colfax Aurora, CO 80011 110777 18601 E. Hampden Aurora, CO 80013 110035 921 S. Havana Aurora, CO 80012 110147 15200-A E. Iliff Ave, Aurora, CO 80014 110785 13800 E. Mississippi Aurora, CO 80012 110774 6370 S. Parker Rd. Aurora, CO 80016 110804 1190 E. First Av. Broomfield, CO 80020 110238 9000 Yukon Westminster, CO 80020 110334 1837 Fremont Dr. Canon City, CO 81212 110135 207 W. Wolfensberger Rd. Castle Rock, CO 80104 110165 5290 E. Arapahoe Rd. Centennial, CO 80122 110120 4275 N. Academy Blvd. Colorado Springs, CO 80917 110649 8050 N. Academy Blvd. Colorado Springs, CO 80920 110050 535 Garden of the Gods Colorado Springs, CO 80907 110772 1430 Harrison Rd. Colorado Springs, CO 80906-4002 110123 3902 E. Palmer Park Colorado Springs, CO 80909 110014 1595 S. Colorado Blvd. Denver, CO 80222 110122 222 Columbine Denver, CO 80206 110032 4850 Federal Denver, CO 80221 110038 9050 E. Hampden Denver, CO 80231 110717 4100 E. Mexico Denver, CO 80222 110087 4490 Peoria Denver, CO 80239 110066 400 W. 48th Av. Denver, CO 80216 110047 7381 W. Alameda Lakewood, CO 80226 110132 3497 S. Wadsworth Lakewood, CO 80227 110591 23 W. Centennial Blvd. Littleton, CO 80126 110788 12622 W. Ken Caryl Av. Littleton, CO 80127
ES-35
Unit # Address - ------ ------- 110051 P.O. Box 828 315 N. Hwy 105 Monument, CO 80132 110159 19502 E. Parker Square Dr. Parker, CO 80134 110025 8370 Sherman Way Thornton, CO 80221 110578 395 W. 120th Av. Westminster, CO 80234 110170 4775 Kipling Wheat Ridge, CO 80033 110564 825 W. Brandon Brandon, FL 33511 110143 7716 Atlantic Blvd. Jacksonville, FL 32211 110158 10140 San Jose Blvd. Jacksonville, FL 32217 110546 13100 Walsingham Rd. Largo, FL 34644 110382 200 Third St. Neptune Beach, FL 32266 110385 900 Ponce deLeon Blvd. St. Augustine, FL 32084 110560 4945 Gulf Blvd. St. Petersburg, FL 33706 110153 9107 Fourth St. North St. Petersburg, FL 33702 110112 4000 S. Tamiami Trail Sarasota, FL 34231 110559 3101 U.S. 27 South Sebring, FL 33870 110549 8602 N. Dale Mabry Tampa, FL 33614 110163 2001 1st St. A Moline, IL 61265 110094 2122 - 53rd St. Moline, IL 61265 110828 5250 Franklin Michigan City, IN 46360 110235 524 Lincoln Way Ames, IA 50010 110789 1024 E. First St. Ankeny, IA 50021 110097 1210 State St. Bettendorf, IA 52722 110691 229 Collins Rd. NE Cedar Rapids, IA 52402 110328 1710 Lincoln Clinton, IA 52732 110778 2800 Commercial Dr. Coralville, IA 52241-2756 110075 2935 W. Broadway Council Bluffs, IA 51501 110786 1906 Rue St. Council Bluffs, IA 51503 110338 5925 Brady St. Davenport, IA 52806 110775 5239 Elmore Av. Davenport, IA 52807 110042 1919 Harrison St. Davenport, IA 52803
ES-36
Unit # Address - ------ ------- 110355 1140 E. Army Post Rd. Des Moines, IA 50315 110033 3600 E. 14th St. Des Moines, IA 50316 110156 #9 Sturgis Dr. Iowa City, IA 52240 110793 8510 Birchwood Ct. Johnston, IA 50131 110133 2300 University Av. West Des Moines, IA 50265 110013 309 N. Ft. Crook Rd. Bellevue, NE 68005 110171 1110 E. 23rd St. Fremont, NE 68025 110045 6555 "O" St. Lincoln, NE 68510 110416 5001 Van Dorn Lincoln, NE 68506 110107 2949 N. 27th Lincoln, NE 68521 110780 7101 S. 27th St. Lincoln, NE 68512 110028 111 S. 29th St. Lincoln, NE 68510 110027 7255 Cedar St. Omaha, NE 68124 110008 4416 Dodge St. Omaha, NE 68131 110787 7837 Dodge St. Omaha, NE 68114 110131 5425 "L" St. Omaha, NE 68117 110046 10770 "M" St. Omaha, NE 68127 110111 3333 N. 90th St. Omaha, NE 68134 110801 3839 N. 138th St. Omaha, NE 68164 110719 3304 S. 143rd Plaza Omaha, NE 68144 110806 2525 S. 180th St. Omaha, NE 68130 110010 2437 Central Av., NW Albuquerque, NM 87104-1639 110004 5505 Central Av., NE Albuquerque, NM 87108-1601 110743 1514 Coors Blvd., NW Albuquerque, NM 87121-1152 110635 840 Juan Tabo Blvd., SE Albuquerque, NM 87123-1427 110068 2017 Menaul Blvd., NE Albuquerque, NM 87107-1716 110106 6300 San Mateo Blvd., NE Albuquerque, NM 87109 110080 2282 Wyoming Blvd., NE Albuquerque, NM 87112-2620 110164 2340 Yale Blvd., SE Albuquerque, NM 87106-4273 110053 10301 SE Stark St. Portland, OR 97216
ES-37
Unit # Address - ------ ------- 110043 5941 S. State St. Murray, UT 84107 110081 450 E. 1100 North North Salt Lake, UT 84054 110750 322 - 12th St. Ogden, UT 84404 110119 212 E. 1300 S. Orem, UT 84058 110737 933 S. University Av. Provo, UT 84606 110784 1780 W 5600 S Roy, UT 80467-2955 110002 2929 S. State St. Salt Lake City, UT 84115 110076 910 East Fourth South Salt Lake City, UT 84102 110716 150 West 10600 South Sandy, UT 84070 110085 4681 S. Redwood Rd. Taylorsville, UT 84123 110807 8921 S. Redwood Rd. West Jordan, UT 84088
ES-38 ON SITE INVENTORY (HEADQUARTER/COMISSARY LOCATIONS) Home Office 400 W 48th Av Denver CO 80216 Commissary 16425 S Kilbourn Oak Forest IL 60452 Commissary Storage 16345 Frontage Rd. Oak Forest IL 60452 Commissary 300 Lake Hazeltine Dr Chaska MN 55318 Commissary Storage 312 Lake Drive Chaska MN 55318 Commissary 12865 Ann St. Santa Fe Springs CA 90670

OFF SITE INVENTORY
SITE ADDRESS ITEMS - ------------------------------------------------------------------------------------------ CERTIFIED AIR CONTRACTORS EVAP COIL FOR AC UNIT 4505 MARQUETTE AV JACKSONVILLE, FL 32210 DUVAL COUNTY MVM CORP MISC DINING ROOM EQUIP & BOOTH MAT'L, CARPET COVER 5650 WEST BUCKEYE RD PHOENIX, AZ 84053 MARICOPA COUNTY MANNINGTON CARPETS DINING ROOM CARPET 1844 US HIGHWAY 41 SE CALHOUN, GA 30703 GORDON COUNTY TREND LIGHTING LIGHT FIXTURES 2700 SIDNEY ST ST LOUIS, MO 63104 ST LOUIS COUNTY PRA FULFILLMENT MARKETING MATERIALS 15300 25TH AV NORTH PLYMOUTH, MN 55447 HENNEPIN COUNTY 1-25 PRODUCTIONS MARKETING MATERIALS 4855 EAST ASHTON AV CASTLE ROCK CO 80104 DOUGLAS COUNTY
ES-39
SITE ADDRESS ITEMS - ------------------------------------------------------------------------------------------ POWER LOGISTICS FOOD 1260 SYCAMORE RD MANTENO, IL KANKAKEE COUNTY WESTERN STAR TRANSPORT FOOD 6100 EAST SHEILA ST CITY OF COMMERCE, CA 90040-2407 LOS ANGELES COUNTY NEWPORT ST. PAUL COLD STORAGE FOOD 2233 MAXWELL AV NEWPORT, MN 55055 WASHINGTON COUNTY
VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE ES-40 SCHEDULE 5.7(a) STATES OF ORGANIZATION
ENTITY STATE OF ORGANIZATION ------ --------------------- VICORP Restaurants, Inc. Colorado VI Acquisition Corp. Delaware Village Inn Pancake House of Albuquerque, Inc. New Mexico Village Inn Pancake House of Canada Limited Canada
ES-41 SCHEDULE 5.7(b) CHIEF EXECUTIVE OFFICES
ENTITY CHIEF EXECUTIVE OFFICES ------ ----------------------- VICORP Restaurants, Inc. 400 West 48th Avenue Denver, CO 80216 VI Acquisition Corp. 676 N. Michigan Avenue Suite 3700 Chicago, IL 60611 Village Inn Pancake House of Albuquerque, Inc. 400 West 48th Avenue Denver, CO 80216 Village Inn Pancake House of Canada Limited 400 West 48th Avenue Denver, CO 80216
ES-42 SCHEDULE 5.7(c) ORGANIZATIONAL IDENTIFICATION NUMBERS
ENTITY ORGANIZATIONAL ID NUMBER ------ ------------------------ VICORP Restaurants, Inc. 19871173554 VI Acquisition Corp. 3620146 Village Inn Pancake House of Albuquerque, Inc. SCC #: 0438762 Village Inn Pancake House of Canada Limited 87320
ES-43 SCHEDULE 5.7(d) COMMERCIAL TORT CLAIMS VICORP Restaurants, Inc. : NONE VI Acquisition Corp.: NONE Village Inn Pancake House of Albuquerque, Inc.: NONE Village Inn Pancake House of Canada Limited: NONE ES-44 SCHEDULE 5.8(b) CAPITALIZATION OF BORROWER VICORP Restaurants, Inc., a Colorado corporation Authorized: 10,000 shares of common stock Issued: 100 shares to VI Acquisition Corp. Ownership: 100% VI Acquisition Corp. ES-45 SCHEDULE 5.8(c) CAPITALIZATION OF PARENT'S SUBSIDIARIES Village Inn Pancake House of Canada Limited Authorized: The authorized capital consists of common stock (unspecified number) without nominal or par value Issued: 10 shares of common stock to VICORP Restaurants, Inc. Ownership: 100% VICORP Restaurants, Inc. Village Inn Pancake House of Albuquerque, Inc. Authorized: 250,000 common stock with a par value of $1.00 per share Issued: 1,250 shares of common stock to VICORP Restaurants, Inc, Ownership: 100% VICORP Restaurants, Inc. ES-46 SCHEDULE 5.10 LITIGATION VICORP RESTAURANTS, INC.: Hollynn D'Lil v. VICORP Restaurants. Inc., United States District Court for the Eastern District of California, Case No. CV S 03-1542 GEB DAD. Marshall Loskor, et al. v. VICORP Restaurants Inc., et al., United States District Court for the Eastern District of California, Case No. CIV S 03-22337 FCD DAD. These are two separate cases filed by disabled customers who allege violations of California and federal disabilities laws at the Bakers Square in West Sacramento, California. Each complaint requests injunctive relief and damages for alleged violations. Defense counsel has been retained and discovery is proceeding. No trial date has been set for either case. VICORP will move to consolidate these two cases and retain an expert witness to confirm previous repairs to accommodate disabled customers. VICORP believes it has meritorious defenses and it intends to vigorously defend the litigation. [...***...] George Miller, Jr., v. VICORP Restaurants, Inc., United States District Court, Northern District of California, Case No. C-03-0777-RS. This is an action brought by a terminated employee of one of the Bakers Square Restaurants in California. In the Complaint the plaintiff makes claims for age, race, and disability discrimination; violation of various California labor code provisions; and, for tortious discharge in violation of public policy. The plaintiff is seeking damages (general, special, consequential, statutory, and punitive), injunctive and declaratory relief, costs, and attorneys' fees. Discovery is proceeding. Trial is set for May 17, 2004. VICORP believes it has meritorious defenses and intends to vigorously defend the litigation. [...***...] Eric and Kelley Anne Nichols v. VICORP Restaurants, Inc., Pete Pascuzzi, and Brandon Gilbert, Superior Court, Sacramento County, California, Case No. 01AS04708. This is an action brought by a former Bakers Square employee in California. In the complaint; the plaintiffs allege malicious prosecution, defamation, intentional infliction of emotional distress, negligent infliction of emotional distress, and loss of consortium. They are seeking special general and punitive damages, pre-judgment interest and the costs of suit. VICORP believes it has meritorious defenses and is vigorously defending this action. No trial date has been set. [...***...] Oak Center Real Estate. Inc., v. VICORP Restaurants. Inc., Circuit Court of the Eighteenth Judicial District, DuPage County, Illinois, Case No. 2003AR003571. This is an action brought by a real estate brokerage firm alleging damages for failure to pay all commercial property valuations and alleges breach of contract and quantum meruit claims. Plaintiff seeks monetary damages plus costs of the suit. VICORP believes it has meritorious defenses and it intends to vigorously defend the litigation. No trial date has been set. [...***...] * CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-47 Deanna O'Neill, et al., v VICORP Restaurants, Inc., Superior Court of the State of California for the County of Los Angeles - Central, Case No. BC304354. This is an action brought by an ex-general manager, an ex-associate manager, and a current server of VICORP's Bakers Square Division in California, alleging seven claims for relief. The suit alleges that VICORP has violated California law. The "server" allegations are that rest periods and meal breaks were not given as required. The "manager" allegations relate to alleged unlawful deductions in the calculation of bonuses. Both the server and the manager allege that VICORP has engaged in unfair business practices. Plaintiffs are seeking class certification, compensatory damages, penalties, interest, disgorgement of profits and accounting, declaratory judgment, attorneys' fees, and costs. VICORP has tendered defense of this litigation to the Sellers under the Stock Purchase Agreement dated April 15, 2003, pursuant to an indemnification agreement for defense of claim in an amount in excess of $1,000,000. VICORP intends to vigorously defend the litigation. [...***...] Richard Stickney v. VICORP Restaurants. Inc.. et al., United States District Court, Eastern District of California, Case No. CIV S-03-1339 FCD DAD. This is a complaint for injunctive relief and damages for alleged violations of the California and federal disabilities laws brought by a disabled customer of a Bakers Square in California. No trial date has been set. VICORP is defending the litigation. [...***...] The Bellaire Shopping Center, Inc.. v. VICORP Restaurants. Inc.. et al., District Court Shawnee County, Kansas, Case No. 02C1554. This action was brought by a former landlord of a location in Topeka, Kansas, asserting that the Company failed to maintain the premises as required by the lease. The plaintiff is seeking damages for lost rent, due to its inability to rent the location, for the cost of repairs, pre and post-judgment interest, and equitable remedies. Discovery is proceeding. No trial date has been set. VICORP believes its has meritorious defenses and intends to vigorously defend the litigation. [...***...] Samantha L. Rash v. Thomas M. Porth and VICORP Restaurants, Inc., et al., Eighteenth Judicial District, Sedgwick County, Kansas, Case No. 04 CV 0307. This action is being brought by a former waitress who was employed at a franchised Village Inn Restaurant in Wichita, Kansas. This waitress was "strip-searched" by a general and associate manager who fell victim to a bizarre hoax in which a telephone caller identified himself as a police officer and ordered the strip search of Ms. Rash. The plaintiff alleges a number of personal injury torts and also named VICORP in the litigation alleging negligent training and supervision and respondeat superior. Based upon the fact that this is a franchised location, it is my belief that VICORP will be ultimately dismissed from this litigation, as we have no causal connection to this tort action. [...***...] * CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-48 Theresa Wang v. Taher Abusaad and VICORP Restaurants, U.S. District Court, Northern District of Illinois, Case No. 020 2300. This is an action filed by a former server of a Bakers Square Restaurant in Illinois. Plaintiff alleges violation of Title VII resulting from alleged sexual harassment and the creation of a hostile work environment. Following trial to a jury, damages were awarded in the amount of $125,000.00, plus attorneys' fees. However, the Federal District Court Judge has ordered a settlement conference for April 29, 2004, as he feels the damage award is excessive. If plaintiff does not negotiate for a lesser award, the Judge will order a new trial on damages. [...***...] VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE * CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-49 SCHEDULE 5.14 ENVIRONMENTAL MATTERS VICORP RESTAURANTS, INC.: 1. 3649 North Harlem Avenue, Chicago, Illinois: Potential petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Limited Subsurface Investigation Report dated May 8, 2001 by Goldman Environmental Consultants, Inc. and Limited Subsurface Investigation letter report of LFR Levine-Fricke ("LFR") dated March 18, 2004. 2. 7131 North Western Avenue, Chicago, Illinois: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Limited Subsurface Investigation Report dated May 8, 2001 by Goldman Environmental Consultants, Inc. and LFR letter report dated March 15, 2004. 3. 131 No. Annie Glidden Road, DeKalb, Illinois: Potential petroleum, petrochemical, hazardous or toxic substances on or under or in the adjacent property, or migrating therefrom , including, but not limited to the soil and groundwater in connection with leaking underground storage tanks from the off-site Clark Filling Station, as further described in that certain Phase I Environmental Site Assessment dated May 11, 2001, by Environmental Management Group, Inc. and LFR letter report dated March 12, 2004. 4. 4849 West 79th Street, Burbank, Illinois: Potential petroleum, petrochemical, hazardous or toxic substances on or under or in the adjacent property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment by EMG, Inc. dated October 1, 1999, and LFR letter report dated March 15, 2004, in connection with potential off-site migration of contamination to the subject property. 5. 16425 South Kilbourn Avenue, Oak Forest, Illinois: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Limited Subsurface Investigation Report by GEC dated May 8, 2001, and LFR letter report dated March 12, 2004, in connection with potential on-site impacts from former USTs. 6. 321 South Veterans Parkway, Normal, Illinois: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment by EMG, Inc. dated April 26, 2001, and LFR letter report dated March 16, 2004, in connection with potential impacts from off-site filling station. ES-50 7. 22373 Eureka Road, Taylor, Michigan: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment by GEC, Inc. dated May 2, 2001, and LFR letter report dated March 15, 2004, in connection with identified petroleum impacts on-site and potential impacts from off-site. 8. 210 North Blake Road, Hopkins, Minnesota: Petroleum, petrochemical, hazardous or toxic substances on or under or in the adjacent property, or potentially migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment Update by ATC Associates, Inc. dated February 19, 2002, and LFR letter report dated March 1, 2004. 9. 400 W. 48th Avenue, Denver, Colorado: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment by GEC, Inc. dated May 1, 2001 and Site Investigations' letter report dated May 9, 2001 by GEC in connection with potential area-wide lead and arsenic contamination from former smelter operations. 10. 4100 E. Mexico Avenue, Denver, Colorado: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment by EMG, Inc. dated April 26, 2001, and LFR letter report dated March 15, 2004, in connection with former underground storage tanks (USTs) once located at the property. 11. 1430 Harrison Road, Colorado Springs, Colorado: Potential petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase II Environmental Site Assessment by EMG, Inc. dated May 8, 2001, and LFR letter report dated March 15, 2004, in connection with the site's former use as a filling station. 12. 300 Lake Hazeltine Drive, Chaska, Minnesota: Wastewater discharge to the Chaska Treatment Plant in violation of Environmental Laws. 13. 2239 Ford Parkway, St. Paul, Minnesota: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment Update by ATC Associates, Inc. dated February 15, 2002, in connection with the remediation activities of fuel oil contamination at the site and LFR letter report dated March 10, 2004. 14. 1024 East First St., Ankeny, Iowa: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not ES-51 limited to the soil and groundwater, as further described in that certain Letter Report by Seneca Environmental Services dated August 31, 1998, and LFR letter report dated March 15, 2004, in connection with an on-site leaking underground storage tank incident. 15. 6301 University Avenue, Cedar Falls, Iowa: Potential asbestos containing materials in poor condition as further described in LFR's Phase I Environmental Assessment Report dated March 11, 2004. Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater in connection with potential USTs. 16. 4850 Federal Boulevard, Denver, Colorado: Petroleum, petrochemical, hazardous or toxic substances on or under or in an adjacent property, and potentially migrating therefrom, including, but not limited to the soil and groundwater in connection with potential USTs, as further described in LFR letter report dated March 10, 2004. 17. 7320 West Good Hope, Milwaukee, Wisconsin: Asbestos containing materials in the roofing materials of the on-site structure as further described in the Phase I Environmental Site Assessment Update by ATC Associates, Inc. dated February 19, 2002. 18. 819 Apache Lane, S.W., Rochester, Minnesota: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I Environmental Site Assessment by Twin City Testing dated July 20, 1990, and LFR letter report dated March 18, 2004, in connection with refuse disposal on Lot 7 and the southwest corner of Lot 6. 19. 4750 Golf Road, Eau Claire, Wisconsin: Petroleum, petrochemical, hazardous or toxic substances on or under or in the property, or migrating therefrom, including, but not limited to the soil and groundwater, as further described in that certain Phase I and Phase II Environmental Site Assessment by Twin City Testing dated September 8, 1992, in connection with on-site hydrocarbon detections during geotechnical investigation and LFR letter report dated March 10, 2004. VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE ES-52 SCHEDULE 5.16 INTELLECTUAL PROPERTY TRADEMARK REGISTRATIONS VICORP RESTAURANTS, INC.:
Trademark Registrations -- or United States Patent and Trademark Office Service Mark Registration No. Registration Date - ------------------------------------------------ ---------------- ----------------- ALL-WORLD DOUBLE CHEESEBURGER 1883771 03/14/1995 AN AMERICAN DINER AND PROUD OF IT 1889030 04/11/1995 ANGEL'S 1930867 10/31/1995 ANGEL'S and Design 1783034 07/20/1993 [ANGEL'S LOGO] ANGEL'S DINER 1899370 06/13/1995 ANGEL'S DINER BEST AMERICAN DINER and Design 1979154 06/11/1996 [ANGEL'S DINER BEST AMERICAN DINER LOGO] BAKERS DOME 2228259 03/02/1999 BAKERS SQUARE 1394236 05/20/1986 BAKERS SQUARE 1394423 05/20/1986
ES-53
Trademark Registrations -- or United States Patent and Trademark Office Service Mark Registration No. Registration Date - ------------------------------------------------ ---------------- ----------------- BAKERS SQUARE RESTAURANT & PIES and Design 2002503 09/24/1996 [BAKERS SQUARE RESTAURANT & PIES LOGO] BAKERS SQUARE and Design 1403328 07/29/1986 [BAKERS SQUARE LOGO] BAKERS SQUARE and Design 1394428 05/20/1986 [BAKERS SQUARE LOGO] BAKERS SQUARE BEST PIE IN AMERICA and Design 2213980 12/29/1998 [BAKERS SQUARE BEST PIE IN AMERICA LOGO] BAKERS SQUARE YUKON MOUNTAIN ICE CREAM PIE 2717922 5/20/2003
ES-54
Trademark Registrations -- or United States Patent and Trademark Office Service Mark Registration No. Registration Date - ------------------------------------------------ ---------------- ----------------- BEST PIE IN AMERICA 2239993 04/13/1999 THE BREAKFAST EXPERTS 1682297 04/07/1992 BREAKFAST LIKE YOU LIKE IT. ANY TIME YOU WANT. 1517633 12/20/1998 BUCKY 1307977 12/04/1984 CANDY CANE PIE 1942036 12/19/1995 GOOD FOOD...GOOD FEELINGS 1979914 06/11/1996 GREAT FOOD. UNBELIEVABLE PIE 2237698 04/06/1999 J. HORNER'S 2317331 02/08/2000 J.HORNER'S LEGENDARY PIES & DESSERTS and Design 2463068 06/26/2001 [J.HORNER'S LEGENDARY PIES & DESSERTS LOGO] J. HORNER'S LEGENDARY PIES & DESSERTS and Design 2587251 07/02/2002 [J. HORNER'S LEGENDARY PIES & DESSERTS LOGO]
ES-55
Trademark Registrations -- or United States Patent and Trademark Office Service Mark Registration No. Registration Date - ------------------------------------------------ ---------------- ----------------- MAGNIFICENT! 2730131 06/24/2003 THE SKILLET EXPERTS 2603514 08/06/2002 SKILLET WRAPS 2233721 03/23/1999 SWEET RETURNS 2100736 09/30/1997 VILLAGE INN 1070440 07/26/1977 VILLAGE INN and Design 1118490 05/15/1979 [VILLAGE INN LOGO] VILLAGE INN (Stylized) 1197458 06/08/1982 VILLAGE INN VILLAGE INN (Stylized) 0768280 04/14/1964 VILLAGE INN VILLAGE INN PANCAKE HOUSE 1118489 05/15/1979
VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE TRADEMARK PENDING APPLICATIONS VICORP RESTAURANTS, INC.
Trademark Pending Applications -- or United States Patent and Trademark Office Service Mark Application No. Application Date - ---------------------------------- --------------- ----------------
ES-56 EARLY DINNER DEALS ON SQUARE MEALS 78276945 07/21/2003 PANTRY PERFECT and design 78380082 03/08/2004 PANTRY PERFECT

VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE STATE AND FOREIGN REGISTERED TRADEMARKS
Trademark or Registration State or Country of Service Mark Number Filing Date Registration - ------------------------- ------------- ----------- ------------------- VILLAGE INN 19851012506 05/19/1966 Colorado BAKERS SQUARE 757934 10/19/1984 Nebraska VILLAGE INN PANCAKE HOUSE 2510174 09/14/1979 Utah ANGEL'S DINER 481833 12/07/1994 Mexico BAKERS SQUARE 442737 05/12/1995 Canada VILLAGE INN 40068 01/08/1998 Korea
1. VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE ES-57 2. COPYRIGHTS REGISTERED WITH U.S. COPYRIGHT OFFICE VICORP RESTAURANTS, INC.:
COPYRIGHT REGISTRATION 3. TITLE NUMBER DATE ----- ------ ---- Village Inn VA-889-124 April 13, 1998 Suggestive Selling Incentive Program TXu-136-317 October 3, 1983 Suggestive Selling Incentive Program TXu-136-318 October 3, 1983 Special Menu for Little Villagers VA-119-323 March 3, 1983 Village Inn VA-119-324 March 3, 1983 Village Inn VA-119-325 March 3, 1983
VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE ES-58 SCHEDULE 5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS
ACCOUNT BANK NUMBER ADDRESS ---- ------ ------- CORPORATE ACCOUNTS Bank of America - A/P [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 Bank of America - Vacation Benefits [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 Bank of America - Master Funding [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 Bank of America - Investments [...***...] 2044 Franklin Street Mezzanine Oakland, CA 94612 First National Bank of Omaha - Med. Claims Funding [...***...] 1620 Dodge Street Stop 2254 Omaha, NE 68197 Wells Fargo - Payroll Greenville, NC [...***...] 1740 Broadway Denver, CO 80274 Wells Fargo - Payroll Funding [...***...] 1740 Broadway Denver, CO 80274 Wells Fargo - Corporate Depository [...***...] 1740 Broadway Denver, CO 80274 US Bank - Med. and Childcare Reimb. [...***...] 918 17th Street, 4th Floor DN-CO-BB4A Denver, CO 55402 Fifth Third Bank - Corporate Depository [...***...] 38 Fountain Square Plaza MD 109046 Cincinnati, OH 45202 Wells Fargo - Corp Debit Card [...***...] 1740 Broadway Denver, CO 80274
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-59
ACCOUNT BANK NUMBER ADDRESS - -------------------------------------------------------------------------------------------- RESTAURANT ACCOUNTS - AGENCY ACCOUNTS Bank of America - CA [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 LaSalle Bank [...***...] 135 S. LaSalle St., Suite 515 Chicago, IL 60603 National City Bank - MI/IL [...***...] 155 E. Broad Street Columbus, OH 43251-0077 National City Bank - Ohio [...***...] 155 E. Broad Street Columbus, OH 43251-0077 US Bank [...***...] 918 17th Street, 4th Floor DN-CO-BB4A Denver, CO 55402 Wells Fargo [...***...] 1740 Broadway Denver, CO 80274 First State Bank (VILLAGE INN PANCAKE [...***...] P.O. Box 3686 HOUSE OF ALBUQUERQUE, INC.) Albuquerque, NM 87190-3686 CONVENIENCE ACCOUNTS Bank of America - FL [...***...] 555 S. Flower Street, 3rd Floor CA9-706-03-11 Los Angeles, CA 90071 Great Lakes Bank [...***...] 18106 Dixie Hwy Homewood, IL 60430 Canon National Bank [...***...] 2101 Fremont Drive P.O. Box 829 Canon City, CO 81215 Clinton National Bank [...***...] 235 6th Ave. South Clinton, IA 52733 Commerce Bank [...***...] 15305 E. Colfax Ave. Aurora, CO 80011
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-60
ACCOUNT BANK NUMBER ADDRESS - ---------------------------------------------------------------------------------------- First Bank and Trust of Illinois [...***...] 300 E. Northwest Hwy Palatine, IL 60067 First National Bank of Illinois [...***...] 2108 W. Jefferson Joliet, IL 60435 First National Bank of Strasburg [...***...] 120 S. Wilcox Street Castle Rock, CO 80104 Harris Bank [...***...] 4 Blanchard Circle Wheaton, IL 60187 KeyBank [...***...] 1675 Broadway, 5th Floor Denver, CO 80202 Mid State Bank [...***...] 91 W. Highway 246 & Central Ave Buelton, CA 93427 National City Bank - IN [...***...] 155 E. Broad Street Columbus, OH 43251-0077 Nebraska State Bank [...***...] 3211 N. 90th Street Omaha, NE 68134 Peoples National Bank [...***...] 1899 Woodmore Dr. Monument, CO 80132
* CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-61 SCHEDULE 5.20 PERMITTED INDEBTEDNESS VICORP RESTAURANTS, INC.: Capital lease obligations, as follows:
TOTAL LOCATION OBLIGATION - -------------------- --------------- SALT LAKE CITY (986,821.12) DENVER-E. HAMPDEN (850,858.34) OREM (0.00) COLO SPRINGS (0.00) CASTLE ROCK (184,322.88) ST AUGUSTINE (48,302.93) TEMPE-BASELINE (17,336.70) APACHE JUNCTION (11,779.15) FLAGSTAFF (45,853.43) BRANDON (0.00) AURORA - SEVEN HILLS (1,491,195.87) SANDIEGO (133,945.63) SALINAS (0.00) EL TORO (0.00) RANCHO CORDOVA (31,311.84) LAKEWOOD (0.00) CEDAR FALLS (52,328.01) MOBILE (125,034.94) GARDEN GROVE (0.00) -------------- (3,979,090.84))
VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE ES-62 SCHEDULE 5.22 CREDIT CARD PROCESSORS VICORP RESTAURANTS, INC.
PROCESSOR CREDIT CARDS PROCESSED APPROXIMATE ANNUAL SETTLEMENTS --------- ---------------------- ------------------------------ Fifth Third Bank Visa, Mastercard, Discover [...***...] American Express American Express [...***...] Diners Club Diners Club [...***...]
VI ACQUISITION CORP.: NONE VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC.: NONE VILLAGE INN PANCAKE HOUSE OF CANADA LIMITED: NONE * CONFIDENTIAL TREATMENT REQUESTED BY VICORP RESTAURANTS, INC. ES-63 SCHEDULE 7.13 AFFILIATE TRANSACTIONS Professional Services Agreement, dated June 13, 2003, by and among Wind Point Investors, IV, L.P., Wind Point Investors V, L.P. and VICORP Restaurants, Inc. Stockholders Agreement, dated June 13, 2003, by and among VI Acquisition Corp., Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Mid Oaks Investments LLC, A.G. Edwards Private Equity Partners QP II, L.P., A.G. Edwards Private Equity Partners II, L.P., Debra Koenig, Walter van Benthuysen, Allied Capital Corporation, Gleacher Mezzanine Fund I, L.P., Gleacher Mezzanine Fund P, L.P., and SunTrust Banks, Inc. Stock Purchase Agreement, dated June 13, 2003, by and among VI Acquisition Corp., Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Mid Oaks Investments LLC, A.G. Edwards Private Equity Partners QP II, L.P., A.G. Edwards Private Equity Partners II, L.P., Debra Koenig, Walter van Benthuysen, William Hoppe, Robert Kaltenbach, Joseph Trungale, Timothy R. Kanaly, Daniel W. Gresham, Mark A. Hampton, Jeffry Guido, Peter M. Pazcuzzi, John A. Stocherro, and Thomas M. Rink. Registration Rights Agreement, dated as of June 13, 2003, by and among VI Acquisition Corp., Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Mid Oaks Investments LLC, A.G. Edwards Private Equity Partners QP II, L.P., A.G. Edwards Private Equity Partners II, L.P., Debra Koenig, Walter van Benthuysen, William Hoppe, Robert Kaltenbach, Joseph Trungale Allied Capital Corporation, Gleacher Mezzanine Fund I, L.P., Gleacher Mezzanine Fund P, L.P., and SunTrust Banks, Inc Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Timothy R. Kanaly. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Daniel W. Gresham. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Mark A. Hampton. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Jeffry Guido. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Peter M. Pascuzzi. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Thomas M. Rink. ES-64 Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Debra Koenig. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Robert Kaltenbach. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Walter van Benthuysen. Management Agreement, dated as of June 13, 2003, by and between VI Acquisition Corp. and Donald R. Prismon. Management Agreement, dated as of February 20, 2004, by and between VI Acquisition Corp. and Anthony Carroll. Management Agreement, dated as of March 3, 2004, by and between VI Acquisition Corp. and Debra Koenig. Management Agreement, dated as of March 3, 2004, by and between VI Acquisition Corp. and Thomas M. Rink. Management Agreement, dated as of March 11, 2004, by and between VI Acquisition Corp. and Walter van Benthuysen. Indemnification of officers and directors under the Bylaws of VI Acquisition Corp., Midway Investors Holdings, Inc., VICORP Restaurants, Inc. (Colorado), VICORP Restaurants, Inc. (Delaware), Village Inn Pancake House of Canada Limited, and Village Inn Pancake House of Albuquerque, Inc. ES-65 EX-10.6 21 c86044exv10w6.txt MANAGEMENT AGREEMENT Exhibit 10.6 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of June 13, 2003, between VI Acquisition Corp., a Delaware corporation (the "Company"), and Debra Koenig ("Executive"). The Company and Executive desire to enter into an agreement pursuant to which Executive will commit to purchase, and the Company will commit to sell, an aggregate of 86,250 shares of the Company's Common Stock, par value $.0001 per share (the "Common Stock"). All of such shares of Common Stock are referred to herein as "Executive Shares." Certain definitions are set forth in Section 7 of this Agreement. The execution and delivery of this Agreement by the Company and Executive is a condition to the purchase of shares of Common Stock and the commitment to purchase shares of the Company's Series A Preferred Stock, par value $.0001 per share (the "Preferred Stock"), by Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Wind Point IV Executive Advisor Partners, LP, Wind Point Associates IV, LLP, Mid Oaks Investments LLC, A.G. Edwards Private Equity Partners QP II, L.P. and A.G. Edwards Private Equity Partners II, L.P. (collectively, the "Investors" and each an "Investor"), pursuant to a stock purchase agreement between the Company, the Investors and certain executives of the Company dated as of the date hereof (the "Purchase Agreement"). Certain provisions of this Agreement are intended for the benefit of, and will be enforceable by, the Investors. Pursuant to the Purchase Agreement, Executive has also agreed to purchase 19,080 shares of Common Stock and 1,094.67 shares of Preferred Stock. Any shares of Common Stock or Preferred Stock purchased by Executive pursuant to the Purchase Agreement are referred to herein as "Coinvest Shares," and Coinvest Shares, together with Executive Shares, are referred to herein as "Shares". The parties hereto agree as follows: 1. Executive Shares. (a) Upon execution of this Agreement, Executive will purchase, and the Company will sell, 86,250 shares of Common Stock at a price of $1.00 per share, the fair market value of the Common Stock on the date hereof. The Company will deliver to Executive the certificates representing such Executive Shares, and Executive will deliver to the Company a cashier's or certified check or wire transfer of funds in the aggregate amount of $86,250. (b) Within thirty (30) days after each purchase by Executive of Executive Shares pursuant to this Agreement, Executive will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto. (c) In connection with the purchase and sale of the Executive Shares pursuant hereto, Executive represents and warrants to the Company that: (i) The Executive Shares to be acquired by Executive pursuant to this Agreement will be acquired for Executive's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Executive Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws; (ii) Executive is an executive officer of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Executive Shares; (iii) Executive is able to bear the economic risk of her investment in the Executive Shares for an indefinite period of time because the Executive Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available; (iv) Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Executive Shares and has had full access to such other information concerning the Company as he has requested; (v) This Agreement and each of the other agreements contemplated hereby and by the Purchase Agreement to which Executive is a party constitute legal, valid and binding obligations of Executive, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements by Executive does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject; (vi) Executive is not a party to or bound by any other employment agreement, noncompete agreement or confidentiality agreement which conflicts with the obligations set forth in this Agreement or in the Employment Agreement; and (vii) Executive is a resident of the State of Illinois. (d) As an inducement for the Company to commit to issue the Executive Shares to Executive, and as a condition thereto, Executive acknowledges and agrees that neither any future issuance of capital stock of the Company to Executive nor any provision contained herein or in the Purchase Agreement shall entitle Executive to remain in the employment of the Company, or any Subsidiary of the Company, or affect the right of the Company or any Subsidiary to terminate Executive's employment at any time for any reason, subject to the terms and conditions of the Employment Agreement. 2. Vesting of Shares. (a) Except as otherwise provided in Section 2(b) below, the Executive Shares purchased hereunder will become vested in accordance with the following schedule, if as of each such date Executive is still employed by the Company or any Subsidiary of the Company: 2
CUMULATIVE PERCENTAGE OF DATE EXECUTIVE SHARES TO BE VESTED ---- ----------------------------- 1st Anniversary of this Agreement 20% 2nd Anniversary of this Agreement 40% 3rd Anniversary of this Agreement 60% 4th Anniversary of this Agreement 80% 5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon the occurrence of a Sale of the Company, all Executive Shares which have not yet become vested shall become vested at the time of such Sale of the Company (such portion being referred to herein as the "Accelerated Shares"); provided, however, and subject to and unless otherwise provided for under the Stockholders Agreement by and among the Company, the Investors, the Executive and certain other parties, that Executive shall not Transfer any interest in any Accelerated Shares unless and until such time as the Investors shall have received cash dividends or other cash proceeds resulting from any distributions on or dispositions of any Preferred Stock or Common Stock in an aggregate amount equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the Investors to the Company for all Preferred Stock, Common Stock and other equity interests of the Company purchased by the Investors (but not in any event including amounts committed but not yet contributed to the capital of the Company). Executive Shares which have become vested hereunder are referred to herein as "Vested Shares," and all other Executive Shares are referred to herein as "Unvested Shares." (c) The Executive Securities shall at all times be subject to such restrictions or limitations with respect to the Transfer thereof that may be contained herein or in the Stockholders Agreement or as otherwise provided by law. 3. Repurchase Option. (a) In the event Executive ceases to be employed by the Company or any Subsidiary for any reason (a "Separation"), the Shares and all other Executive Securities (whether held by Executive or one or more of Executive's transferees, other than the Company and the Investors) will be subject to repurchase, in each case by the Company pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option"). (b) In the event of a Separation, the Executive Shares purchased hereunder shall be subject to repurchase as follows: (i) the purchase price for each Unvested Share of Common Stock will be the Executive's Original Cost for such share; provided, that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Unvested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share, and (ii) the purchase price for each Vested Share of Common Stock will be the Fair Market Value for such share; provided that if Executive's employment is terminated by the 3 Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Vested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share. (c) In the event of a Separation, the Coinvest Shares purchased pursuant to the Purchase Agreement, and any other Executive Securities not otherwise described in Section 3(b) above or this Section 3(c), shall be subject to repurchase as follows: (i) the purchase price for each share of Common Stock will be the Fair Market Value for such share and (ii) the purchase price for each share of Preferred Stock will be Executive's Original Cost for such share. (d) In the event of a Separation, the Company may elect to purchase all or any portion of the Executive Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Executive Securities within 60 days after the Separation. The Repurchase Notice will set forth the number of Unvested Shares, Vested Shares and Coinvest Shares to be acquired from each holder, the aggregate consideration to be paid for such securities and the time and place for the closing of the transaction. The number of each type of securities to be repurchased by the Company shall first be satisfied to the extent possible from the Executive Securities held by Executive at the time of delivery of the Repurchase Notice. If the number of any or all types of Executive Securities then held by Executive is less than the total number of such securities which the Company has elected to purchase, the Company shall purchase the remaining securities elected to be purchased from the other holder(s) of Executive Securities under this Agreement, pro rata according to the number of the applicable type of Executive Securities held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares, Vested Shares and Coinvest Shares to be repurchased hereunder will be allocated among Executive and the other holders of Executive Securities (if any) pro rata according to the number of the applicable type of Executive Securities to be purchased from such Person. (e) If, following a Separation due to the death of the Executive, the Company does not exercise its Repurchase Option as to the Coinvest Shares, within the period specified in Section 3(d) above, then the estate of the Executive shall have 90 days from the expiration of the Company's 60 day exercise period to compel the Company to purchase the Coinvest Shares at the lesser of (i) the Original Cost or (ii) the price determined as set forth in Section 3(c) above. The estate of the Executive shall exercise its right to compel the repurchase of the Coinvest Shares, if at all, by giving written notice to the Company within such 90 day period (the "Put Notice"). (f) The closing of the purchase of the Executive Securities pursuant to the Repurchase Option or the Put Notice shall take place on the date designated by the Company in the Repurchase Notice, or on the date designated by the estate of the Executive in the Put Notice, which date in either such event shall not be more than 2 months nor less than 5 days after the delivery of such notice. The Company will pay for the Executive Securities to be purchased by it pursuant to the Repurchase Option or Put Notice by first offsetting amounts outstanding under any bona fide debts owed by Executive to the Company, including but not limited to any promissory note payable to the Company by the Executive, and will pay the remainder of the purchase price to the extent reasonably permissible under the Company's and its Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money and 4 to the extent the Company has the financial wherewithal at the time to make such payments, by a check or wire transfer of funds and, if not, by a subordinate note or notes, each on terms acceptable to banks and other financial institutions loaning money to the Company and its Subsidiaries, payable in up to three substantially equal, semi-annual installments beginning on the six month anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate as published in The Wall Street Journal from time to time, in the aggregate amount of the purchase price for such securities. The Company will be entitled to receive customary representations and warranties from the sellers of Executive Securities (including representations and warranties regarding good title to the Executive Securities, the absence of any liens on such title or other encumbrances with respect to the Transfer of the Executive Securities and the ability of such sellers to consummate the sale). (g) Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Executive Securities by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and as may be required by other parties in the Company's or any Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money, if any. If any such restrictions prohibit the repurchase of Executive Securities hereunder which the Company is otherwise entitled or required to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. (h) Notwithstanding anything to the contrary contained in this Agreement, if Executive delivers the notice of objection described in the definition of Fair Market Value, or if the Fair Market Value of a Share is otherwise determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board, the Company shall have the right to revoke its exercise of the Repurchase Option for all or any portion of the Shares elected to be repurchased by it by delivering notice of such revocation in writing to the holders of the Shares during (i) the thirty-day period beginning on the date the Company receives Executive's written notice of objection and (ii) the thirty-day period beginning on the date the Company is given written notice that the Fair Market Value of a Share was finally determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board. 4. Restrictions on Transfer of Executive Securities. (a) Transfer of Executive Securities. Executive shall not Transfer any interest in any Executive Securities, except at such time as the restrictions herein terminate as provided in Section 4(b) below. Notwithstanding the foregoing, the restrictions contained in this Section 4 will not apply with respect to (i) Transfers of shares of Executive Securities pursuant to applicable laws of descent and distribution or (ii) Transfer of shares of Executive Securities among Executive's Family Group; provided that in each case such restrictions will continue to be applicable to the Executive Securities irrespective of any such Transfer. Any transferee of Executive Securities pursuant to a Transfer in accordance with the provisions of this Section 4(a) is herein referred to as a "Permitted Transferee." (b) Termination of Restrictions. The restrictions on the Transfer of Executive Securities set forth in this Section 4 will continue with respect to each Executive Security until the earlier of (i) a Qualified Public Offering; or (ii) a Sale of the Company. 5 5. Registration. Executive understands that the Shares are not currently being registered under the Securities Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 701 thereof. Executive further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. Executive understands that a restrictive legend consistent with the foregoing, and as set forth in Section 6, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 6. Additional Restrictions on Transfer of Executive Securities. (a) Legend. The certificates representing the Executive Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF JUNE 13, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS OF JUNE 13, 2003. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE." (b) Opinion of Counsel. No holder of Executive Securities may transfer any Executive Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such Transfer. 7. Definitions. "Affiliate" of the Investors means any direct or indirect general or limited partner or member of an Investor, as applicable, or any employee or owner thereof, or any other person, entity or investment fund controlling, controlled by or under common control with an Investor. "Due Cause" has the meaning set forth in the Employment Agreement. "Employment Agreement" means that certain Employment Agreement of even date herewith between VICORP Restaurants, Inc. and the Executive. 6 "Executive's Family Group" means Executive's spouse and descendants (whether natural or adopted), any trust solely for the benefit of Executive and/or Executive's spouse and/or descendants and any retirement plan for the Executive. "Executive Securities" means the Shares and any other securities of the Company held by Executive or any of Executive's transferees permitted hereunder. All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. Executive Securities will also include shares of the Company's capital stock or other securities of the Company issued with respect to Executive Securities by way of a stock split, dividend or other recapitalization or reclassification. "Fair Market Value" of each Share as of a relevant date means the average of the closing prices of the sales of the Common Stock on all securities exchanges on which such Common Stock may at the time be listed on that date, or, if there have been no sales or exchange on which the Common Stock is listed on any day, the average of the highest bid and lowest asked prices on all nationally-recognized exchanges at the end of such day, or, if on any day such Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such Common Stock is not quoted in the NASDAQ System, of the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time such Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value will be the fair value of such Common Stock determined in good faith by the Board of Directors of the Company (the "Board Calculation"). If the Executive disagrees with the Board Calculation, the Executive may, within 30 days after receipt of the Board Calculation, deliver a notice (an "Objection Notice") to the Company setting forth the Executive's calculation of Fair Market Value. The Board and the Executive will negotiate in good faith to agree on such Fair Market Value, but if such agreement is not reached within 30 days after the Company has received the Objection Notice, Fair Market Value shall be determined by an appraiser selected by the Board, which appraiser shall submit to the Board and the Executive a report within 30 days of its engagement setting forth such determination. The determination of such appraiser shall be final and binding upon all parties. If the Repurchase Option is exercised within 45 days after a Separation, then Fair Market Value shall be determined as of the date of such Separation; thereafter, Fair Market Value shall be determined as of the date the Repurchase Option or Put Notice, as applicable, is exercised. A comparable process will be employed to determine the Fair Market Value of Preferred Stock. "Good Reason" has the meaning set forth in the Employment Agreement. "Original Cost" means, (i) with respect to each share of Common Stock purchased hereunder or under the Purchase Agreement, $1.00 (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations) and (ii) with respect to each 7 share of Preferred Stock purchased under the Purchase Agreement, $1,000.00 plus all accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations). "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Public Sale" means any sale pursuant to a registered public offering under the Securities Act or any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker. "Qualified Public Offering" means the sale in an underwritten public offering registered under the Securities Act of shares of the Company's Common Stock approved by the Board pursuant to which the Investors have realized in cash a return of two or more times the amount of their investment in the Company. "Sale of the Company" means any transaction or series of transactions pursuant to which (A) any Person(s) other than the Investors and their respective Affiliates in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided that the term "Sale of the Company" shall not include any sale of equity or debt securities by the Company in a private offering to other investors selected by the Investors; or (B) more than 50% of the assets of the Company (treating investments in Affiliates as assets for these purposes) is spun off, split off or otherwise distributed. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Stockholders Agreement" means that certain Stockholders Agreement dated as of even date hereof among the Company, the Investors, the Executive and certain other parties. "Subsidiary" means any entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors, or the equivalent governing body, directly or through one or more subsidiaries. "Transfer" means to sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). 8. Notices. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgement of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt 8 requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Tel: (312) 255-4800 Fax: (312) 255-4820 If to the Executive Debra Koenig 7S710 Donwood Drive Naperville, Illinois 60540 with a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Section 8. 9. General Provisions. (a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Executive Securities in violation of any provision of this Agreement shall be void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Executive Securities as the owner of such securities for any purpose. (b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 9 (c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Executive hereby releases the Company and its affiliates and its and their predecessors from any obligation or liability the Company or any of its affiliates or its or their predecessors owes or owed to Executive or any of her affiliates and related persons prior to the date hereof. (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (e) Successors and Assigns. (i) All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive, including any of Executive's transferees permitted hereunder or under the Stockholders Agreement (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. (ii) Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company, the Investors and their respective successors and assigns (including subsequent holders of Executive Securities); provided that the rights and obligations of Executive under this Agreement shall not be assignable except in connection with a permitted transfer of Executive Securities hereunder. (iii) Each of the Investors is intended to be a third party beneficiary of this Agreement and may enforce any rights granted to it hereunder. (f) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Furthermore, Executive and Company agree and consent to submit to personal jurisdiction in the State of Illinois in any state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. Executive and Company agree that the sole and exclusive venue for any suit arising out of, or seeking to enforce, the terms of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. 10 (g) Remedies. Each of the parties to this Agreement (including the Investor) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney's fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. No cause of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. (i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday. (j) Indemnification and Reimbursement of Payments on Behalf of Executive. The Company and any Subsidiary shall be entitled to deduct or withhold from any amounts owing from the Company or any Subsidiary to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with respect to the Executive's compensation or other payments from the Company or any Subsidiary or the Executive's ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock. The Executive shall indemnify the Company and any Subsidiary for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto. (k) Termination. This Agreement shall survive the termination of Executive's employment with the Company or any Subsidiary and shall remain in full force and effect after such termination. (l) Generally Accepted Accounting Principles; Adjustments of Numbers. Where any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with United States generally accepted accounting principles, consistently applied. All numbers set forth herein which refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares, recapitalizations or other similar transactions affecting the subject class of stock. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a 11 court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. ***** IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of the date first written above. VI ACQUISITION CORP. By: /s/ Michael J. Solot ----------------------------------- Name: Michael J. Solot Its: President /s/ Debra Koenig ---------------------------------------- DEBRA KOENIG 12 EXHIBIT A ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME IN YEAR OF TRANSFER UNDER CODE SECTION 83(b) The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of the Internal Revenue Code to include the restricted property described below in his gross income for the tax year ending December 31, 2003 and supplies the following information in accordance with the regulations promulgated thereunder: 1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE: Debra Koenig 7S710 Donwood Drive Naperville, Illinois 60540 Social Security # _______________ 2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE: 86,250 shares (the "SHARES") of Common Stock, par value $0.01 per share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY"). 3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS JUNE __, 2003. The taxable year to which this election relates is calendar year 2003. 4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS: A. The Shares are not transferable except as permitted by a Management Agreement. Transferees are generally subject to the same restrictions as are imposed on their transferors. Certificates representing the Shares contain legends to give notice of restrictions on transfer. B. If the Taxpayer ceases to serve as an employee of the Company for a reason other than cause, prior to certain specified time periods (the last day of each such period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares subject to repurchase at the Purchase Price will lapse and such portion will then be repurchasable at its fair market value in the event the Taxpayer ceases to serve as an employee of the Company for a reason other than cause. On the June __, 2008 Vesting Date, all Shares then will be repurchasable at their fair market value in the event the Taxpayer ceases to serve as an employee of the Company for a reason other than cause. 5. FAIR MARKET VALUE: The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $1.00 per Share. 6. AMOUNT PAID FOR PROPERTY: The amount paid by Taxpayer for said property is $1.00 per Share. 7. FURNISHING STATEMENT TO EMPLOYER: A copy of this statement has been furnished to the Company. Dated: June __, 2003 _____________________________________ Debra Koenig This election must be filed with the Internal Revenue Service Center with which the Taxpayer files his or her Federal income tax returns and must be filed within thirty (30) days after the date of purchase. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two copies of the completed form for filing with his or her Federal and State tax returns for the current tax year and an additional copy for his or her records. 2 EX-10.7 22 c86044exv10w7.txt MANAGEMENT AGREEMENT Exhibit 10.7 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of June 13, 2003, between VI Acquisition Corp., a Delaware corporation (the "Company"), and Robert Kaltenbach ("Executive"). The Company and Executive desire to enter into an agreement pursuant to which Executive will commit to purchase, and the Company will commit to sell, an aggregate of 45,000 shares of the Company's Common Stock, par value $.0001 per share (the "Common Stock"). All of such shares of Common Stock are referred to herein as "Executive Shares." Certain definitions are set forth in Section 7 of this Agreement. The execution and delivery of this Agreement by the Company and Executive is a condition to the purchase of shares of Common Stock and the commitment to purchase shares of the Company's Series A Preferred Stock, par value $.0001 per share (the "Preferred Stock"), by Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Wind Point IV Executive Advisor Partners, LP, Wind Point Associates, IV, LLC, Mid Oaks Investments LLC and AG Edwards & Sons, Inc. (collectively, the "Investors" and each an "Investor"), pursuant to a stock purchase agreement between the Company, the Investors and certain executives of the Company dated as of the date hereof (the "Purchase Agreement"). Certain provisions of this Agreement are intended for the benefit of, and will be enforceable by, the Investors. Pursuant to the Purchase Agreement, Executive has also agreed to purchase 7,795 shares of Common Stock and, pursuant to a Nonstatutory Stock Option Agreement, has received an option to purchase 458.57 shares of Preferred Stock. Any shares of Common Stock or Preferred Stock purchased by Executive pursuant to the Purchase Agreement or the Nonstatutory Stock Option Agreement are referred to herein as "Coinvest Shares," and Coinvest Shares, together with Executive Shares, are referred to herein as "Shares". The parties hereto agree as follows: 1. Executive Shares. (a) Upon execution of this Agreement, Executive will purchase, and the Company will sell, 45,000 shares of Common Stock at a price of $1.00 per share, the fair market value of the Common Stock on the date hereof. The Company will deliver to Executive the certificates representing such Executive Shares, and Executive will deliver to the Company a cashier's or certified check or wire transfer of funds in the aggregate amount of $45,000. (b) Within thirty (30) days after each purchase by Executive of Executive Shares pursuant to this Agreement, Executive will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto. (c) In connection with the purchase and sale of the Executive Shares pursuant hereto, Executive represents and warrants to the Company that: (i) The Executive Shares to be acquired by Executive pursuant to this Agreement will be acquired for Executive's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Executive Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws; (ii) Executive is an executive officer of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Executive Shares; (iii) Executive is able to bear the economic risk of his investment in the Executive Shares for an indefinite period of time because the Executive Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available; (iv) Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Executive Shares and has had full access to such other information concerning the Company as he has requested; (v) This Agreement and each of the other agreements contemplated hereby and by the Purchase Agreement to which Executive is a party constitute legal, valid and binding obligations of Executive, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements by Executive does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject; (vi) Executive is not a party to or bound by any other employment agreement, noncompete agreement or confidentiality agreement which conflicts with the obligations set forth in this Agreement or in the Employment Agreement; and (vii) Executive is a resident of the State of Colorado. (d) As an inducement for the Company to commit to issue the Executive Shares to Executive, and as a condition thereto, Executive acknowledges and agrees that neither any future issuance of capital stock of the Company to Executive nor any provision contained herein or in the Purchase Agreement shall entitle Executive to remain in the employment of the Company, or any Subsidiary of the Company, or affect the right of the Company or any Subsidiary to terminate Executive's employment at any time for any reason, subject to the terms and conditions of the Employment Agreement. 2. Vesting of Shares. (a) Except as otherwise provided in Section 2(b) below, the Executive Shares purchased hereunder will become vested in accordance with the following schedule, if as of each such date Executive is still employed by the Company or any Subsidiary of the Company: 2
CUMULATIVE PERCENTAGE OF DATE EXECUTIVE SHARES TO BE VESTED ---- ----------------------------- 1st Anniversary of this Agreement 20% 2nd Anniversary of this Agreement 40% 3rd Anniversary of this Agreement 60% 4th Anniversary of this Agreement 80% 5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon the occurrence of a Sale of the Company, all Executive Shares which have not yet become vested shall become vested at the time of such Sale of the Company (such portion being referred to herein as the "Accelerated Shares"); provided, however, and subject to and unless otherwise provided for under the Stockholders Agreement by and among the Company, the Investors, the Executive and certain other parties, that Executive shall not Transfer any interest in any Accelerated Shares unless and until such time as the Investors shall have received cash dividends or other cash proceeds resulting from any distributions on or dispositions of any Preferred Stock or Common Stock in an aggregate amount equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the Investors to the Company for all Preferred Stock, Common Stock and other equity interests of the Company purchased by the Investors (but not in any event including amounts committed but not yet contributed to the capital of the Company). Executive Shares which have become vested hereunder are referred to herein as "Vested Shares," and all other Executive Shares are referred to herein as "Unvested Shares." (c) The Executive Securities shall at all times be subject to such restrictions or limitations with respect to the Transfer thereof that may be contained herein or in the Stockholders Agreement or as otherwise provided by law. 3. Repurchase Option. (a) In the event Executive ceases to be employed by the Company or any Subsidiary for any reason (a "Separation"), the Shares and all other Executive Securities (whether held by Executive or one or more of Executive's transferees, other than the Company and the Investors) will be subject to repurchase, in each case by the Company pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option"). (b) In the event of a Separation, the Executive Shares purchased hereunder shall be subject to repurchase as follows: (i) the purchase price for each Unvested Share of Common Stock will be the Executive's Original Cost for such share; provided, that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Unvested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share, and (ii) the purchase price for each Vested Share of Common Stock will be the Fair Market Value for such share; provided that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the 3 purchase price for each Vested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share. (c) In the event of a Separation, the Coinvest Shares purchased pursuant to the Purchase Agreement, and any other Executive Securities not otherwise described in Section 3(b) above or this Section 3(c), shall be subject to repurchase as follows: (i) the purchase price for each share of Common Stock will be the Fair Market Value for such share and (ii) the purchase price for each share of Preferred Stock will be Executive's Original Cost for such share. (d) In the event of a Separation, the Company may elect to purchase all or any portion of the Executive Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Executive Securities within 60 days after the Separation or, if later, within 60 days of the exercise of the option pursuant to the Nonstatutory Stock Option Agreement. The Repurchase Notice will set forth the number of Unvested Shares, Vested Shares and Coinvest Shares to be acquired from each holder, the aggregate consideration to be paid for such securities and the time and place for the closing of the transaction. The number of each type of securities to be repurchased by the Company shall first be satisfied to the extent possible from the Executive Securities held by Executive at the time of delivery of the Repurchase Notice. If the number of any or all types of Executive Securities then held by Executive is less than the total number of such securities which the Company has elected to purchase, the Company shall purchase the remaining securities elected to be purchased from the other holder(s) of Executive Securities under this Agreement, pro rata according to the number of the applicable type of Executive Securities held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares, Vested Shares and Coinvest Shares to be repurchased hereunder will be allocated among Executive and the other holders of Executive Securities (if any) pro rata according to the number of the applicable type of Executive Securities to be purchased from such Person. (e) If, following a Separation due to the death of the Executive, the Company does not exercise its Repurchase Option as to the Coinvest Shares, within the period specified in Section 3(d) above, then the estate of the Executive shall have 90 days from the expiration of the Company's exercise period to compel the Company to purchase the Coinvest Shares at the lesser of (i) the Original Cost or (ii) the price determined as set forth in Section 3(c) above. The estate of the Executive shall exercise its right to compel the repurchase of the Coinvest Shares, if at all, by giving written notice to the Company within such 90 day period (the "Put Notice"). (f) The closing of the purchase of the Executive Securities pursuant to the Repurchase Option or the Put Notice shall take place on the date designated by the Company in the Repurchase Notice, or on the date designated by the estate of the Executive in the Put Notice, which date in either such event shall not be more than 2 months nor less than 5 days after the delivery of such notice. The Company will pay for the Executive Securities to be purchased by it pursuant to the Repurchase Option or Put Notice by first offsetting amounts outstanding under any bona fide debts owed by Executive to the Company and will pay the remainder of the purchase price to the extent reasonably permissible under the Company's and its Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money and to the extent the Company has the financial wherewithal at the time to make such payments, by a check or wire transfer of funds and, if not, by a subordinate note or notes, each on terms 4 acceptable to banks and other financial institutions loaning money to the Company and its Subsidiaries, payable in up to three substantially equal, semi-annual installments beginning on the six month anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate as published in The Wall Street Journal from time to time, in the aggregate amount of the purchase price for such securities. The Company will be entitled to receive customary representations and warranties from the sellers of Executive Securities (including representations and warranties regarding good title to the Executive Securities, the absence of any liens on such title or other encumbrances with respect to the Transfer of the Executive Securities and the ability of such sellers to consummate the sale). (g) Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Executive Securities by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and as may be required by other parties in the Company's or any Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money, if any. If any such restrictions prohibit the repurchase of Executive Securities hereunder which the Company is otherwise entitled or required to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. (h) Notwithstanding anything to the contrary contained in this Agreement, if Executive delivers the notice of objection described in the definition of Fair Market Value, or if the Fair Market Value of a Share is otherwise determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board, the Company shall have the right to revoke its exercise of the Repurchase Option for all or any portion of the Shares elected to be repurchased by it by delivering notice of such revocation in writing to the holders of the Shares during (i) the thirty-day period beginning on the date the Company receives Executive's written notice of objection and (ii) the thirty-day period beginning on the date the Company is given written notice that the Fair Market Value of a Share was finally determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board. 4. Restrictions on Transfer of Executive Securities. (a) Transfer of Executive Securities. Executive shall not Transfer any interest in any Executive Securities, except at such time as the restrictions herein terminate as provided in Section 4(b) below. Notwithstanding the foregoing, the restrictions contained in this Section 4 will not apply with respect to (i) Transfers of shares of Executive Securities pursuant to applicable laws of descent and distribution or (ii) Transfer of shares of Executive Securities among Executive's Family Group; provided that in each case such restrictions will continue to be applicable to the Executive Securities irrespective of any such Transfer. Any transferee of Executive Securities pursuant to a Transfer in accordance with the provisions of this Section 4(a) is herein referred to as a "Permitted Transferee." (b) Termination of Restrictions. The restrictions on the Transfer of Executive Securities set forth in this Section 4 will continue with respect to each Executive Security until the earlier of (i) a Qualified Public Offering; or (ii) a Sale of the Company. 5 5. Registration. Executive understands that the Shares are not currently being registered under the Securities Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 701 thereof. Executive further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. Executive understands that a restrictive legend consistent with the foregoing, and as set forth in Section 6, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 6. Additional Restrictions on Transfer of Executive Securities. (a) Legend. The certificates representing the Executive Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF JUNE 13, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS OF JUNE 13, 2003. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE." (b) Opinion of Counsel. No holder of Executive Securities may transfer any Executive Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such Transfer. 7. Definitions. "Affiliate" of the Investors means any direct or indirect general or limited partner or member of an Investor, as applicable, or any employee or owner thereof, or any other person, entity or investment fund controlling, controlled by or under common control with an Investor. "Due Cause" has the meaning set forth in the Employment Agreement. "Employment Agreement" means that certain Employment Agreement of even date herewith between VICORP Restaurants, Inc. and the Executive. 6 "Executive's Family Group" means Executive's spouse and descendants (whether natural or adopted), any trust solely for the benefit of Executive and/or Executive's spouse and/or descendants and any retirement plan for the Executive. "Executive Securities" means the Shares and any other securities of the Company held by Executive or any of Executive's transferees permitted hereunder. All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. Executive Securities will also include shares of the Company's capital stock or other securities of the Company issued with respect to Executive Securities by way of a stock split, dividend or other recapitalization or reclassification. "Fair Market Value" of each Share as of a relevant date means the average of the closing prices of the sales of the Common Stock on all securities exchanges on which such Common Stock may at the time be listed on that date, or, if there have been no sales or exchange on which the Common Stock is listed on any day, the average of the highest bid and lowest asked prices on all nationally-recognized exchanges at the end of such day, or, if on any day such Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such Common Stock is not quoted in the NASDAQ System, of the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time such Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value will be the fair value of such Common Stock determined in good faith by the Board of Directors of the Company (the "Board Calculation"). If the Executive disagrees with the Board Calculation, the Executive may, within 30 days after receipt of the Board Calculation, deliver a notice (an "Objection Notice") to the Company setting forth the Executive's calculation of Fair Market Value. The Board and the Executive will negotiate in good faith to agree on such Fair Market Value, but if such agreement is not reached within 30 days after the Company has received the Objection Notice, Fair Market Value shall be determined by an appraiser selected by the Board, which appraiser shall submit to the Board and the Executive a report within 30 days of its engagement setting forth such determination. The determination of such appraiser shall be final and binding upon all parties. If the Repurchase Option is exercised within 45 days after a Separation, then Fair Market Value shall be determined as of the date of such Separation; thereafter, Fair Market Value shall be determined as of the date the Repurchase Option or Put Notice, as applicable, is exercised. A comparable process will be employed to determine the Fair Market Value of Preferred Stock. "Good Reason" has the meaning set forth in the Employment Agreement. "Original Cost" means, (i) with respect to each share of Common Stock purchased hereunder or under the Purchase Agreement, $1.00 (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations) and (ii) with respect to each 7 share of Preferred Stock purchased under the Purchase Agreement, $1,000.00 plus all accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations). "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Public Sale" means any sale pursuant to a registered public offering under the Securities Act or any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker. "Qualified Public Offering" means the sale in an underwritten public offering registered under the Securities Act of shares of the Company's Common Stock approved by the Board pursuant to which the Investors have realized in cash a return of two or more times the amount of their investment in the Company. "Sale of the Company" means any transaction or series of transactions pursuant to which (A) any Person(s) other than the Investors and their respective Affiliates in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided that the term "Sale of the Company" shall not include any sale of equity or debt securities by the Company in a private offering to other investors selected by the Investors; or (B) more than 50% of the assets of the Company (treating investments in Affiliates as assets for these purposes) is spun off, split off or otherwise distributed. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Stockholders Agreement" means that certain Stockholders Agreement dated as of even date hereof among the Company, the Investors, the Executive and certain other parties. "Subsidiary" means any entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors, or the equivalent governing body, directly or through one or more subsidiaries. "Transfer" means to sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). 8. Notices. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgement of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt 8 requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Tel: (312) 255-4800 Fax: (312) 255-4820 If to the Executive Robert Kaltenbach 5425 S. Jasper Way Aurora, Colorado 80015 with a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Section 8. 9. General Provisions. (a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Executive Securities in violation of any provision of this Agreement shall be void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Executive Securities as the owner of such securities for any purpose. (b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 9 (c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Executive hereby releases the Company and its affiliates and its and their predecessors from any obligation or liability the Company or any of its affiliates or its or their predecessors owes or owed to Executive or any of his affiliates and related persons prior to the date hereof. (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (e) Successors and Assigns. (i) All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive, including any of Executive's transferees permitted hereunder or under the Stockholders Agreement (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. (ii) Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company, the Investors and their respective successors and assigns (including subsequent holders of Executive Securities); provided that the rights and obligations of Executive under this Agreement shall not be assignable except in connection with a permitted transfer of Executive Securities hereunder. (iii) Each of the Investors is intended to be a third party beneficiary of this Agreement and may enforce any rights granted to it hereunder. (f) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Furthermore, Executive and Company agree and consent to submit to personal jurisdiction in the State of Illinois in any state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. Executive and Company agree that the sole and exclusive venue for any suit arising out of, or seeking to enforce, the terms of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. 10 (g) Remedies. Each of the parties to this Agreement (including the Investor) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney's fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. No cause of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. (i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday. (j) Indemnification and Reimbursement of Payments on Behalf of Executive. The Company and any Subsidiary shall be entitled to deduct or withhold from any amounts owing from the Company or any Subsidiary to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with respect to the Executive's compensation or other payments from the Company or any Subsidiary or the Executive's ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock. The Executive shall indemnify the Company and any Subsidiary for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto. (k) Termination. This Agreement shall survive the termination of Executive's employment with the Company or any Subsidiary and shall remain in full force and effect after such termination. (l) Generally Accepted Accounting Principles; Adjustments of Numbers. Where any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with United States generally accepted accounting principles, consistently applied. All numbers set forth herein which refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares, recapitalizations or other similar transactions affecting the subject class of stock. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a 11 court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of the date first written above. VI ACQUISITION CORP. By: /s/ Debra Koenig ---------------------------- Name: Debra Koenig Its: Executive Vice President /s/ Robert Kaltenbach -------------------------------- ROBERT KALTENBACH 12 EXHIBIT A ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME IN YEAR OF TRANSFER UNDER CODE SECTION 83(b) The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of the Internal Revenue Code to include the restricted property described below in his gross income for the tax year ending December 31, 2003 and supplies the following information in accordance with the regulations promulgated thereunder: 1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE: Robert Kaltenbach _________________ _________________ Social Security # ________ 2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE: 45,000 shares (the "SHARES") of Common Stock, par value $0.01 per share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY"). 3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS JUNE __, 2003. The taxable year to which this election relates is calendar year 2003. 4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS: A. The Shares are not transferable except as permitted by a Management Agreement. Transferees are generally subject to the same restrictions as are imposed on their transferors. Certificates representing the Shares contain legends to give notice of restrictions on transfer. B. If the Taxpayer ceases to serve as an employee of the Company for a reason other than cause, prior to certain specified time periods (the last day of each such period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares subject to repurchase at the Purchase Price will lapse and such portion will then be repurchasable at its fair market value in the event the Taxpayer ceases to serve as an employee of the Company for a reason other than cause. On the June __, 2008 Vesting Date, all Shares then will be repurchasable at their fair market value in the event the Taxpayer ceases to serve as an employee of the Company for a reason other than cause. 5. FAIR MARKET VALUE: The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $1.00 per Share. 6. AMOUNT PAID FOR PROPERTY: The amount paid by Taxpayer for said property is $1.00 per Share. 7. FURNISHING STATEMENT TO EMPLOYER: A copy of this statement has been furnished to the Company. Dated: June __, 2003 _____________________________ Robert Kaltenbach This election must be filed with the Internal Revenue Service Center with which the Taxpayer files his or her Federal income tax returns and must be filed within thirty (30) days after the date of purchase. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two copies of the completed form for filing with his or her Federal and State tax returns for the current tax year and an additional copy for his or her records. 2 EX-10.8 23 c86044exv10w8.txt MANAGEMENT AGREEMENT Exhibit 10.8 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of June 13, 2003, between VI Acquisition Corp., a Delaware corporation (the "Company"), and Walter van Benthuysen (the "Director"). The Company and Director desire to enter into an agreement pursuant to which Director will commit to purchase, and the Company will commit to sell, an aggregate of 11,250 shares of the Company's Common Stock, par value $.0001 per share (the "Common Stock"). All of such shares of Common Stock are referred to herein as "Director Shares." Certain definitions are set forth in Section 7 of this Agreement. Pursuant to the stock purchase agreement between the Company, the Investors, certain employees of the Company and others dated as of the date hereof (the "Purchase Agreement"), Director has also agreed to purchase 8,373 shares of Common Stock and 480 shares of Preferred Stock. Any shares of Common Stock or Preferred Stock purchased by Director pursuant to the Purchase Agreement are referred to herein as "Coinvest Shares," and Coinvest Shares, together with Director Shares, are referred to herein as "Shares". The parties hereto agree as follows: 1. Director Shares. (a) Upon execution of this Agreement, Director will purchase, and the Company will sell, 11,250 shares of Common Stock at a price of $1.00 per share, the fair market value of the Common Stock on the date hereof. The Company will deliver to Director the certificates representing such Director Shares, and Director will deliver to the Company a cashier's or certified check or wire transfer of funds in the aggregate amount of $11,250. (b) Within thirty (30) days after each purchase by Director of Director Shares pursuant to this Agreement, Director will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto. (c) In connection with the purchase and sale of the Director Shares pursuant hereto, Director represents and warrants to the Company that: (i) The Director Shares to be acquired by Director pursuant to this Agreement will be acquired for Director's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Director Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws; (ii) Director is an outside director of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Director Shares; (iii) Director is able to bear the economic risk of his investment in the Director Shares for an indefinite period of time because the Director Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available; (iv) Director has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Director Shares and has had full access to such other information concerning the Company as he has requested; (v) This Agreement and each of the other agreements contemplated hereby and by the Purchase Agreement to which Director is a party constitute legal, valid and binding obligations of Director, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements by Director does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which Director is a party or any judgment, order or decree to which Director is subject; (vi) Director is not a party to or bound by any employment agreement, consulting agreement, noncompete agreement or confidentiality agreement which conflicts with the obligations set forth in this Agreement; and (vii) Director is a resident of the State of Illinois. (d) As an inducement for the Company to commit to issue the Director Shares to Director, and as a condition thereto, Director acknowledges and agrees that neither any future issuance of capital stock of the Company to Director nor any provision contained herein or in the Purchase Agreement shall entitle Director to remain in the service of the Company, or any Subsidiary of the Company, or affect the right of the Company or any Subsidiary to terminate Director's services at any time for any reason. 2. Vesting of Shares. (a) Except as otherwise provided in Section 2(b) below, the Director Shares purchased hereunder will become vested in accordance with the following schedule, if as of each such date Director is still serving as a director of the Company or is otherwise engaged to perform services on behalf of the Company or any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF DATE DIRECTOR SHARES TO BE VESTED ---- ---------------------------- 1st Anniversary of this Agreement 20% 2nd Anniversary of this Agreement 40% 3rd Anniversary of this Agreement 60% 4th Anniversary of this Agreement 80% 5th Anniversary of this Agreement 100%
2 (b) Notwithstanding the foregoing or anything herein to the contrary, upon the occurrence of a Sale of the Company, all Director Shares which have not yet become vested shall become vested at the time of such Sale of the Company (such portion being referred to herein as the "Accelerated Shares"); provided, however, and subject to and unless otherwise provided for under the Stockholders Agreement by and among the Company, the Investors, the Director and certain other parties, that Director shall not Transfer any interest in any Accelerated Shares unless and until such time as the Investors shall have received cash dividends or other cash proceeds resulting from any distributions on or dispositions of any Preferred Stock or Common Stock in an aggregate amount equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the Investors to the Company for all Preferred Stock, Common Stock and other equity interests of the Company purchased by the Investors (but not in any event including amounts committed but not yet contributed to the capital of the Company). Director Shares which have become vested hereunder are referred to herein as "Vested Shares," and all other Director Shares are referred to herein as "Unvested Shares." (c) The Director Securities shall at all times be subject to such restrictions or limitations with respect to the Transfer thereof that may be contained herein or in the Stockholders Agreement or as otherwise provided by law. 3. Repurchase Option. (a) In the event Director ceases to be a director of the Company or to otherwise be engaged by the Company or any Subsidiary for any reason (a "Separation"), the Shares and all other Director Securities (whether held by Director or one or more of Director's transferees, other than the Company and the Investors) will be subject to repurchase, in each case by the Company pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option"). (b) In the event of a Separation, the Director Shares purchased hereunder shall be subject to repurchase as follows: (i) the purchase price for each Unvested Share of Common Stock will be the Director's Original Cost for such share; and (ii) the purchase price for each Vested Share of Common Stock will be the Fair Market Value for such share. (c) In the event of a Separation, the Coinvest Shares purchased pursuant to the Purchase Agreement, and any other Director Securities not otherwise described in Section 3(b) above or this Section 3(c), shall be subject to repurchase as follows: (i) the purchase price for each share of Common Stock will be the Fair Market Value for such share and (ii) the purchase price for each share of Preferred Stock will be Director's Original Cost for such share. (d) In the event of a Separation, the Company may elect to purchase all or any portion of the Director Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Director Securities within 60 days after the Separation. The Repurchase Notice will set forth the number of Unvested Shares, Vested Shares and Coinvest Shares to be acquired from each holder, the aggregate consideration to be paid for such securities and the time and place for the closing of the transaction. The number of each type of securities to be repurchased by the Company shall first be satisfied to the extent possible from the Director Securities held by Director at the time of delivery of the Repurchase Notice. If the number of any or all types of 3 Director Securities then held by Director is less than the total number of such securities which the Company has elected to purchase, the Company shall purchase the remaining securities elected to be purchased from the other holder(s) of Director Securities under this Agreement, pro rata according to the number of the applicable type of Director Securities held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares, Vested Shares and Coinvest Shares to be repurchased hereunder will be allocated among Director and the other holders of Director Securities (if any) pro rata according to the number of the applicable type of Director Securities to be purchased from such Person. (e) If, following a Separation due to the death of the Director, the Company does not exercise its Repurchase Option as to the Coinvest Shares, within the period specified in Section 3(d) above, then the estate of the Director shall have 90 days from the expiration of the Company's 60 day exercise period to compel the Company to purchase the Coinvest Shares at the lesser of (i) the Original Cost or (ii) the price determined as set forth in Section 3(c) above. The estate of the Director shall exercise its right to compel the repurchase of the Coinvest Shares, if at all, by giving written notice to the Company within such 90 day period (the "Put Notice"). (f) The closing of the purchase of the Director Securities pursuant to the Repurchase Option or the Put Notice shall take place on the date designated by the Company in the Repurchase Notice, or on the date designated by the estate of the Director in the Put Notice, which date in either such event shall not be more than 2 months nor less than 5 days after the delivery of such notice. The Company will pay for the Director Securities to be purchased by it pursuant to the Repurchase Option or Put Notice by first offsetting amounts outstanding under any bona fide debts owed by Director to the Company, and will pay the remainder of the purchase price to the extent reasonably permissible under the Company's and its Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money and to the extent the Company has the financial wherewithal at the time to make such payments, by a check or wire transfer of funds and, if not, by a subordinate note or notes, each on terms acceptable to banks and other financial institutions loaning money to the Company and its Subsidiaries, payable in up to three substantially equal, semi-annual installments beginning on the six month anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate as published in The Wall Street Journal from time to time, in the aggregate amount of the purchase price for such securities. The Company will be entitled to receive customary representations and warranties from the sellers of Director Securities (including representations and warranties regarding good title to the Director Securities, the absence of any liens on such title or other encumbrances with respect to the Transfer of the Director Securities and the ability of such sellers to consummate the sale). (g) Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Director Securities by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and as may be required by other parties in the Company's or any Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money, if any. If any such restrictions prohibit the repurchase of Director Securities hereunder which the Company is otherwise entitled or required to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. 4 (h) Notwithstanding anything to the contrary contained in this Agreement, if Director delivers the notice of objection described in the definition of Fair Market Value, or if the Fair Market Value of a Share is otherwise determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board, the Company shall have the right to revoke its exercise of the Repurchase Option for all or any portion of the Shares elected to be repurchased by it by delivering notice of such revocation in writing to the holders of the Shares during (i) the thirty-day period beginning on the date the Company receives Director's written notice of objection and (ii) the thirty-day period beginning on the date the Company is given written notice that the Fair Market Value of a Share was finally determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board. 4. Restrictions on Transfer of Director Securities. (a) Transfer of Director Securities. Director shall not Transfer any interest in any Director Securities, except at such time as the restrictions herein terminate as provided in Section 4(b) below. Notwithstanding the foregoing, the restrictions contained in this Section 4 will not apply with respect to (i) Transfers of shares of Director Securities pursuant to applicable laws of descent and distribution or (ii) Transfer of shares of Director Securities among Director's Family Group; provided that in each case such restrictions will continue to be applicable to the Director Securities irrespective of any such Transfer. Any transferee of Director Securities pursuant to a Transfer in accordance with the provisions of this Section 4(a) is herein referred to as a "Permitted Transferee." (b) Termination of Restrictions. The restrictions on the Transfer of Director Securities set forth in this Section 4 will continue with respect to each Director Security until the earlier of (i) a Qualified Public Offering; or (ii) a Sale of the Company. 5. Registration. Director understands that the Shares are not currently being registered under the Securities Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 701 thereof. Director further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. Director understands that a restrictive legend consistent with the foregoing, and as set forth in Section 6, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 6. Additional Restrictions on Transfer of Director Securities. (a) Legend. The certificates representing the Director Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF JUNE 13, 2003, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED 5 (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND A DIRECTOR OF THE COMPANY DATED AS OF JUNE 13, 2003. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE." (b) Opinion of Counsel. No holder of Director Securities may transfer any Director Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such Transfer. 7. Definitions. "Affiliate" of the Investors means any direct or indirect general or limited partner or member of an Investor, as applicable, or any employee or owner thereof, or any other person, entity or investment fund controlling, controlled by or under common control with an Investor. "Director's Family Group" means Director's spouse and descendants (whether natural or adopted), any trust solely for the benefit of Director and/or Director's spouse and/or descendants and any retirement plan for the Director. "Director Securities" means the Shares and any other securities of the Company held by Director or any of Director's transferees permitted hereunder. All Director Securities will continue to be Director Securities in the hands of any holder other than Director (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Director Securities will succeed to all rights and obligations attributable to Director as a holder of Director Securities hereunder. Director Securities will also include shares of the Company's capital stock or other securities of the Company issued with respect to Director Securities by way of a stock split, dividend or other recapitalization or reclassification. "Fair Market Value" of each Share as of a relevant date means the average of the closing prices of the sales of the Common Stock on all securities exchanges on which such Common Stock may at the time be listed on that date, or, if there have been no sales or exchange on which the Common Stock is listed on any day, the average of the highest bid and lowest asked prices on all nationally-recognized exchanges at the end of such day, or, if on any day such Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such Common Stock is not quoted in the NASDAQ System, of the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau 6 Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time such Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value will be the fair value of such Common Stock determined in good faith by the Board of Directors of the Company (the "Board Calculation"). If the Director disagrees with the Board Calculation, the Director may, within 30 days after receipt of the Board Calculation, deliver a notice (an "Objection Notice") to the Company setting forth the Director's calculation of Fair Market Value. The Board and the Director will negotiate in good faith to agree on such Fair Market Value, but if such agreement is not reached within 30 days after the Company has received the Objection Notice, Fair Market Value shall be determined by an appraiser selected by the Board, which appraiser shall submit to the Board and the Director a report within 30 days of its engagement setting forth such determination. The determination of such appraiser shall be final and binding upon all parties. If the Repurchase Option is exercised within 45 days after a Separation, then Fair Market Value shall be determined as of the date of such Separation; thereafter, Fair Market Value shall be determined as of the date the Repurchase Option or Put Notice, as applicable, is exercised. A comparable process will be employed to determine the Fair Market Value of Preferred Stock. "Investors" means Wind Point Partners IV, L.P., Wind Point Partners V, L.P., Mid Oaks Investments LLC and AG Edwards & Sons, Inc. and such other parties as may be designated as "Investors" in the Purchase Agreement. "Original Cost" means, (i) with respect to each share of Common Stock purchased hereunder or under the Purchase Agreement, $1.00 (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations) and (ii) with respect to each share of Preferred Stock purchased under the Purchase Agreement, $1,000.00 plus all accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations). "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Preferred Stock" means the Company's Series A Preferred Stock, par value $.0001 per share. "Public Sale" means any sale pursuant to a registered public offering under the Securities Act or any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker. "Qualified Public Offering" means the sale in an underwritten public offering registered under the Securities Act of shares of the Company's Common Stock approved by the Board pursuant to which the Investors have realized in cash a return of two or more times the amount of their investment in the Company. 7 "Sale of the Company" means any transaction or series of transactions pursuant to which (A) any Person(s) other than the Investors and their respective Affiliates in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided that the term "Sale of the Company" shall not include any sale of equity or debt securities by the Company in a private offering to other investors selected by the Investors; or (B) more than 50% of the assets of the Company (treating investments in Affiliates as assets for these purposes) is spun off, split off or otherwise distributed. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Stockholders Agreement" means that certain Stockholders Agreement dated as of even date hereof among the Company, the Investors, the Director and certain other parties. "Subsidiary" means any entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors, or the equivalent governing body, directly or through one or more subsidiaries. "Transfer" means to sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). 8. Notices. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgement of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Tel: (312) 255-4800 Fax: (312) 255-4820 8 If to the Director Walter van Benthuysen 17 Tartan Lakes Court Westmont, Illinois 60559 with a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Section 8. 9. General Provisions. (a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Director Securities in violation of any provision of this Agreement shall be void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Director Securities as the owner of such securities for any purpose. (b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Director hereby releases the Company and its affiliates and its and their predecessors from any obligation or liability the Company or any of its affiliates or its or their predecessors owes or owed to Director or any of his affiliates and related persons prior to the date hereof. (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. 9 (e) Successors and Assigns. (i) All Director Securities will continue to be Director Securities in the hands of any holder other than Director, including any of Director's transferees permitted hereunder or under the Stockholders Agreement (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Director Securities will succeed to all rights and obligations attributable to Director as a holder of Director Securities hereunder. (ii) Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Director, the Company, the Investors and their respective successors and assigns (including subsequent holders of Director Securities); provided that the rights and obligations of Director under this Agreement shall not be assignable except in connection with a permitted transfer of Director Securities hereunder. (iii) Each of the Investors is intended to be a third party beneficiary of this Agreement and may enforce any rights granted to it hereunder. (f) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Furthermore, Director and Company agree and consent to submit to personal jurisdiction in the State of Illinois in any state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. Director and Company agree that the sole and exclusive venue for any suit arising out of, or seeking to enforce, the terms of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. (g) Remedies. Each of the parties to this Agreement (including the Investor) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney's fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Director. No cause of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. 10 (i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday. (j) Indemnification and Reimbursement of Payments on Behalf of Director. The Company and any Subsidiary shall be entitled to deduct or withhold from any amounts owing from the Company or any Subsidiary to the Director any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with respect to the Director's compensation or other payments from the Company or any Subsidiary or the Director's ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock. The Director shall indemnify the Company and any Subsidiary for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto. (k) Termination. This Agreement shall survive the termination of Director's services with the Company or any Subsidiary and shall remain in full force and effect after such termination. (l) Generally Accepted Accounting Principles; Adjustments of Numbers. Where any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with United States generally accepted accounting principles, consistently applied. All numbers set forth herein which refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares, recapitalizations or other similar transactions affecting the subject class of stock. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * 11 IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of the date first written above. VI ACQUISITION CORP. By: /s/ Debra Koenig ------------------------------------- Name: Debra Koenig Its: Executive Vice President /s/ Walter Van Benthuysen ------------------------------------- WALTER VAN BENTHUYSEN 12 EXHIBIT A ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME IN YEAR OF TRANSFER UNDER CODE SECTION 83(b) The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of the Internal Revenue Code to include the restricted property described below in his gross income for the tax year ending December 31, 2003 and supplies the following information in accordance with the regulations promulgated thereunder: 1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE: Walter van Benthuysen 17 Tartan Lakes Court Westmont, Illinois 60559 Social Security # _______________ 2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE: 11,250 shares (the "SHARES") of Common Stock, par value $0.01 per share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY"). 3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS JUNE __, 2003. The taxable year to which this election relates is calendar year 2003. 4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS: A. The Shares are not transferable except as permitted by a Management Agreement. Transferees are generally subject to the same restrictions as are imposed on their transferors. Certificates representing the Shares contain legends to give notice of restrictions on transfer. B. If the Taxpayer ceases to serve as a director or other service provider of the Company prior to certain specified time periods (the last day of each such period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares subject to repurchase at the Purchase Price will lapse and such portion will then be repurchasable at its fair market value in the event the Taxpayer ceases to serve as a director or other service provided of the Company. On the June __, 2008 Vesting Date, all Shares then will be repurchasable at their fair market value in the event the Taxpayer ceases to serve as a director or other service provider of the Company. 5. FAIR MARKET VALUE: The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $1.00 per Share. 13 6. AMOUNT PAID FOR PROPERTY: The amount paid by Taxpayer for said property is $1.00 per Share. 7. FURNISHING STATEMENT TO EMPLOYER: A copy of this statement has been furnished to the Company. Dated: June __, 2003 --------------------------- Walter van Benthuysen This election must be filed with the Internal Revenue Service Center with which the Taxpayer files his or her Federal income tax returns and must be filed within thirty (30) days after the date of purchase. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two copies of the completed form for filing with his or her Federal and State tax returns for the current tax year and an additional copy for his or her records. 2 EX-10.9 24 c86044exv10w9.txt NONSTATUTORY STOCK OPTION AGREEMENT Exhibit 10.9 NONSTATUTORY STOCK OPTION AGREEMENT THIS AGREEMENT is made effective June 13, 2003 ("EFFECTIVE DATE") by and between VI Acquisition Corp., a Delaware corporation (the "COMPANY"), and Robert Kaltenbach (the "OPTIONEE"). WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement dated as of the 15th day of April, 2003 (the "PURCHASE AGREEMENT"), by and among the Company, Midway Investors Holdings, Inc. ("MIDWAY"), the shareholders of Midway and certain other parties, the Company is acquiring all of the outstanding equity of Midway (the "TRANSACTION"); WHEREAS, the Optionee will be retained as an employee of the Company or one of its subsidiaries upon the consummation of the Transaction; WHEREAS, pursuant to the terms of the Purchase Agreement, the Optionee has elected to exchange options to purchase shares of Midway's Class A Preferred Stock, Class C Preferred Stock and Class B Common Stock (as such terms are defined in the Purchase Agreement) having an aggregate Option Spread (as such term is defined in the Purchase Agreement) of $447,205, for an option to purchase shares of the Company's Preferred Stock, and the Company, to create an incentive for the Optionee, has agreed to grant him an option upon certain terms and conditions; and WHEREAS, the grant hereunder shall be independent of any formal stock option plan to be maintained by the Company. NOW, THEREFORE, in consideration of the following mutual covenants and for other good and valuable consideration, the parties agree as follows: 1. GRANT OF OPTION The Company grants to the Optionee the right and option (the "OPTION") to purchase all or any part of an aggregate of 458.57 shares of the Company's Preferred Stock (the "SHARES") on the terms and conditions and subject to all the limitations set forth herein. The Optionee acknowledges that the definitive records pertaining to the grant of this Option, and exercises of rights hereunder, shall be retained by the Company. The Option granted herein is intended to be a nonstatutory option. 2. PURCHASE PRICE The purchase price of the Shares subject to the Option shall be Twenty Four and 80/100 Dollars ($24.80) per Share. 3. EXERCISE OF OPTION Subject to this Agreement, the Option shall be fully vested and exercisable on the Effective Date. The Option shall expire on, and shall be exercised (if at all) prior to the first to occur of: (a) June 12, 2013; (b) Ninety (90) days after the date on which the Optionee shall cease, for any reason or cause whatsoever, and without regard to such reason or cause (except as set forth in (c) and (d) below) to be an employee of, or consultant to, the Company or any affiliate or subsidiary thereof; (c) The date the Optionee's services are terminated, whether as an employee or otherwise, if such services are terminated for Due Cause (as such term is defined in that certain Employment Agreement executed by and between the Employee and the Company of even date herewith (the "EMPLOYMENT AGREEMENT")); or (d) Twelve months from the date the Optionee's services are terminated, whether as an employee or otherwise, if such services are terminated as a result of the Optionee's death or Permanent Disability (as such term is defined in the Employment Agreement), in which case the Option may be exercised by the Optionee or his legal representative or estate within such twelve month period. 4. ISSUANCE OF SHARES The Option may be exercised in whole or in part (to the extent that it is exercisable in accordance with its terms) by giving written notice (or any other approved form of notice) to the Company. Such written notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall specify a date (other than a Saturday, Sunday or legal holiday) not less than five (5) nor more than ten (10) days after the date of such written notice, as the date on which the Shares will be purchased, at the principal office of the Company during ordinary business hours, or at such other hour and place agreed upon by the Company and the person or persons exercising the Option, and shall otherwise comply with the terms and conditions of this Agreement. On the date specified in such written notice (which date may be extended by the Company if any law or regulation requires the Company to take any action with respect to the Shares prior to the issuance thereof), the Company shall accept payment for the Shares and shall deliver to the Optionee an appropriate certificate or certificates for the Shares as to which the Option was exercised. The Optionee acknowledges and agrees that the Shares to be acquired upon exercise of the Option shall be subject to the Company's Stockholders' Agreement as in effect from time to time and the Management Agreement, and the issuance of Shares pursuant to the exercise of this Option shall be expressly conditioned upon the Optionee's execution of such agreements. The Option price of any Shares shall be payable at the time of exercise and shall only be payable through the Optionee's delivery to the Company of Shares that would otherwise be acquired upon the exercise of the Option (the "WITHHELD SHARES"). The fair market value of the number of Shares to be acquired by the Optionee upon exercise of the Option, net of the Withheld Shares, shall be equal to $447,205 (the "ACQUIRED SHARES") 2 plus the value of Dividends (as provided for in Article 4 of the Amended and Restated Certificate of Incorporation of VI Acquisition Corp.) accrued on the Acquired Shares from the Effective Date. The Company shall pay all original issue taxes with respect to the issuance of Shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith. The holder of this Option shall have the rights of a stockholder only with respect to those Shares covered by the Option which have been registered in the holder's name in the share register of the Company upon the due exercise of the Option. 5. REPRESENTATIONS AND COVENANTS OF THE OPTIONEE In connection with the grant of the Option hereunder, the Optionee represents and warrants to the Company that: (a) The Shares subject to the Option under this Agreement shall be acquired for the Optionee's own account and not with a view to, or present intention of, distribution in violation of the Securities Act of 1933 (the "1933 ACT") or any applicable state securities laws, and the Shares will not be disposed of in contravention of the 1933 Act or any applicable state securities laws. (b) The Optionee is sophisticated in financial matters and has been given the opportunity prior to exercise to evaluate the risks and benefits of the Option and the Shares. (c) The Optionee acknowledges that he is able to bear the economic risk of the exercise of the Option for an indefinite period of time, because the Shares have not been registered under the 1933 Act and, therefore, cannot be resold unless subsequently registered under the 1933 Act or an exemption from such registration is available. (d) The Optionee has had an opportunity to ask questions and receive answers concerning the terms and conditions of the grant of the Option and has had full access to such information concerning the Company as he has requested. (e) The Optionee has the full right, power and authority to execute and deliver this Agreement and to perform his obligations hereunder. This Agreement constitutes the valid and legally binding obligations of the Optionee enforceable against him in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect and subject to the application of equitable principles and the availability of equitable remedies. (f) The Optionee is not a party to, subject to or bound by any agreement or any judgment, order, writ, prohibition, injunction or decree of any court or other governmental body which would prevent the execution or delivery of this Agreement by him or the consummation of the transactions contemplated hereby. 3 (g) The Optionee understands that neither the issuance of the Option nor any provision contained herein shall entitle the Optionee to remain in the service of the Company or affect the Company's right to terminate the Optionee's employment at any time for any or no reason. 6. REGISTRATION The Optionee understands that the Shares are not currently being registered under the 1933 Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the 1933 Act pursuant to Section 4(2) thereof. The Optionee further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the 1933 Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. The Optionee understands that a restrictive legend consistent with the foregoing, and as set forth in Paragraph 8, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 7. WITHHOLDING The Company shall have the power and right to deduct or withhold, or require the Optionee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes required by law to be withheld with respect to any grant made under or as a result of this Agreement. In the alternative, upon any taxable event hereunder, the Optionee may elect, subject to Company approval, to satisfy the withholding requirement in whole or in part, by having the Company withhold Shares that would otherwise be transferred to the Optionee having a fair market value, on the date the tax is to be determined, equal to the minimum marginal tax that could be imposed on the transaction. All elections shall be made in writing and signed by the Optionee. 8. LEGEND The Optionee shall be bound by the provisions of the following legend (or similar legend) which shall be endorsed upon the certificate(s) evidencing the Shares issued pursuant to the grant of the Option hereunder. "The shares of stock represented by this certificate have been acquired for investment and they may not be sold or otherwise transferred by any person in the absence of an effective registration statement for the shares under the 1933 Act or an opinion of counsel satisfactory to the Company that an exemption is then available." "The shares of stock represented by this certificate are subject to the terms and conditions of a certain Stockholders' Agreement dated as of June 13, 2003, among the Company and certain of its stockholders, and the terms of the Management Agreement dated as of June 13, 2003, between the 4 Company and the Optionee. Copies of the Agreements are on file in the office of the Secretary of the Company. The Agreements provide, among other things, for restrictions upon the holder's right to transfer the shares represented hereby, and for certain prior rights to purchase and certain obligations to sell the shares of stock evidenced by this certificate at a designated purchase price determined in accordance with certain procedures. Any attempted transfer of these shares other than in compliance with the Agreements shall be void and of no effect. By accepting the shares of stock evidenced by this certificate, any permitted transferee agrees to be bound by all of the terms and conditions of said Agreements." 9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the outstanding Shares of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger or consolidation, or if a change is made to the stock of the Company by reason of any recapitalization, reclassification, change in par value, stock split, combination of shares or dividends payable in capital stock, or the like, the Company shall make adjustments to the Shares granted to, or available for, the Optionee as it may determine to be appropriate under the circumstances. 10. NON-ASSIGNABILITY This Option shall not be transferable by the Optionee and shall be exercisable only by the Optionee, except as this Agreement may otherwise provide. 11. NOTICES Any notices required or permitted by the terms of this Agreement shall be given by registered or certified mail, return receipt requested, addressed as follows: To the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attention: Michael Solot To the Optionee: Robert Kaltenbach 5425 S. Jasper Way Aurora, Colorado 80015 or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given when mailed in accordance with the foregoing provisions. 5 12. GOVERNING LAW This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware. 13. BINDING EFFECT This Agreement shall (subject to the provisions of Section 10 hereof) be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto. IN WITNESS WHEREOF, the Company and the Optionee have caused this Agreement to be executed on their behalf, by their duly authorized representatives, effective on the day and year first above written. VI ACQUISITION CORP. OPTIONEE By: /s/ Debra Koenig /s/ Robert Kaltenbach ------------------------- ---------------------------- Its: Executive Vice President Robert Kaltenbach 6 EX-10.10 25 c86044exv10w10.txt SUBSCRIPTION AGREEMENT Exhibit 10.10 INSTRUCTIONS: PLEASE READ THE ACCOMPANYING LETTER FROM THE COMPANY CAREFULLY. IF YOU WISH TO EXERCISE YOUR PREEMPTIVE RIGHTS, YOU MUST COMPLETE AND SIGN THIS SUBSCRIPTION AGREEMENT AND RETURN IT TO: EVELYN C. ARKEBAUER AT SACHNOFF & WEAVER, LTD., 30 S. WACKER DRIVE, 29TH FLOOR, CHICAGO, IL 60611. (FAX: (312) 207-1000) NO LATER THAN OCTOBER 13, 2003. SUBSCRIPTION AGREEMENT The undersigned has preemptive rights to purchase shares of Series A Preferred Stock and shares of Common Stock of VI Acquisition Corp., a Delaware corporation (the "COMPANY"), as described in a letter to the undersigned from the Company dated September 22, 2003. The undersigned hereby subscribes for: (CHOOSE ONE OF THE FOLLOWING OPTIONS:) X The full amount of the undersigned's preemptive rights: 29.028 shares of Series Preferred Stock and 629 shares of Common Stock of the Company, for an aggregate purchase price of $29,657 ($1000.00 per share of Series A Preferred Stock and $1.00 per share of Common Stock). [ ] Such lesser amount of Series A Preferred Stock and Common Stock of the Company as would be represented by an aggregate purchase price of $_______________. ($1000.00 per share of Series A Preferred Stock and $1.00 per share of Common Stock, and required ratio that 98.287 cents of every dollar invested be allocated toward the purchase of preferred shares and the balance to the purchase of common shares, with all issued shares rounded to the third decimal place.) (If no box is checked but this form is signed and returned to company counsel, the undersigned will be deemed to have subscribed for the full amount of his, her or its preemptive rights.) The undersigned hereby represents and warrants to the Company that (i) he/she/it is purchasing these securities for his/her/its own account, for investment and not with a view towards their resale; (ii) he/she/it understands that these securities have not been registered under the Securities Act of 1933 or any state securities laws, based on exemptions from such laws, and that these securities may not be sold or otherwise transferred without registration under or exemption from the provisions of applicable securities laws, and that a legend to such effect may be placed on the certificate evidencing these securities referring to these restrictions on transferability and sale of the securities; and (iii) he/she/it is qualified by previous experience to evaluate the risks and merits on this investment. The undersigned agrees to indemnify and hold harmless the Company, its affiliates, successors, and anyone acting on its behalf from and against all damages, losses, costs, and expenses (including reasonable attorneys' fees) which they may incur by reason of the inaccuracy or falsity of any representation or breach of any warranty made herein or in any document provided by the undersigned to the Company. IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as of the date indicated below and agrees to execute such reasonable further documentation as may be necessary to effect the foregoing subscription. MID OAKS INVESTMENTS, LLC Dated: September 28, 2003 /s/ Wayne Kocourek --------------------------- By: Wayne Kocourek Its: Chairman and CEO (NOTE: Subscription Agreements dated and/or delivered after October 13, 2003 will not be accepted by the Company.) Accepted: VI ACQUISITION CORP. By: /s/ Debra Koenig --------------------------------- Debra Koenig, Executive Vice President Dated: November 19, 2003 EX-10.11 26 c86044exv10w11.txt SUBSCRIPTION AGREEMENT Exhibit 10.11 INSTRUCTIONS: PLEASE READ THE ACCOMPANYING LETTER FROM THE COMPANY CAREFULLY. IF YOU WISH TO EXERCISE YOUR PREEMPTIVE RIGHTS, YOU MUST COMPLETE AND SIGN THIS SUBSCRIPTION AGREEMENT AND RETURN IT TO: EVELYN C. ARKEBAUER AT SACHNOFF & WEAVER, LTD., 30 S. WACKER DRIVE, 29TH FLOOR, CHICAGO, IL 60611. (FAX: (312) 207-1000) NO LATER THAN OCTOBER 13, 2003. SUBSCRIPTION AGREEMENT The undersigned has preemptive rights to purchase shares of Series A Preferred Stock and shares of Common Stock of VI Acquisition Corp., a Delaware corporation (the "COMPANY"), as described in a letter to the undersigned from the Company dated September 22, 2003. The undersigned hereby subscribes for: (CHOOSE ONE OF THE FOLLOWING OPTIONS:) X The full amount of the undersigned's preemptive rights: 3.325 shares of Series Preferred Stock and 72 shares of Common Stock of the Company, for an aggregate purchase price of $3,397 ($1000.00 per share of Series A Preferred Stock and $1.00 per share of Common Stock). [ ] Such lesser amount of Series A Preferred Stock and Common Stock of the Company as would be represented by an aggregate purchase price of $_______________. ($1000.00 per share of Series A Preferred Stock and $1.00 per share of Common Stock, and required ratio that 98.287 cents of every dollar invested be allocated toward the purchase of preferred shares and the balance to the purchase of common shares, with all issued shares rounded to the third decimal place.) (If no box is checked but this form is signed and returned to company counsel, the undersigned will be deemed to have subscribed for the full amount of his, her or its preemptive rights.) The undersigned hereby represents and warrants to the Company that (i) he/she/it is purchasing these securities for his/her/its own account, for investment and not with a view towards their resale; (ii) he/she/it understands that these securities have not been registered under the Securities Act of 1933 or any state securities laws, based on exemptions from such laws, and that these securities may not be sold or otherwise transferred without registration under or exemption from the provisions of applicable securities laws, and that a legend to such effect may be placed on the certificate evidencing these securities referring to these restrictions on transferability and sale of the securities; and (iii) he/she/it is qualified by previous experience to evaluate the risks and merits on this investment. The undersigned agrees to indemnify and hold harmless the Company, its affiliates, successors, and anyone acting on its behalf from and against all damages, losses, costs, and expenses (including reasonable attorneys' fees) which they may incur by reason of the inaccuracy or falsity of any representation or breach of any warranty made herein or in any document provided by the undersigned to the Company. IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as of the date indicated below and agrees to execute such reasonable further documentation as may be necessary to effect the foregoing subscription. Dated: September 23, 2003 /s/ Walter Van Benthuysen ------------------------------ Name: Walter Van Benthuysen (NOTE: Subscription Agreements dated and/or delivered after October 13, 2003 will not be accepted by the Company.) Accepted: VI ACQUISITION CORP. By: /s/ Debra Koenig --------------------------- Debra Koenig, Executive Vice President Dated: November 19, 2003 EX-10.12 27 c86044exv10w12.txt AMENDED AND RESTATED SUBSCRIPTION AGREEMENT Exhibit 10.12 VI ACQUISITION CORP. AMENDED AND RESTATED SUBSCRIPTION AGREEMENT This Amended and Restated Subscription Agreement, dated as of November 19, 2003 is made by and among WIND POINT PARTNERS IV, L.P., WIND POINT PARTNERS V, L.P. and WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P., each of which is a Delaware limited partnership, WIND POINT ASSOCIATES IV, LLC, a Delaware limited liability company (collectively, the "Purchasers"), and VI ACQUISITION CORP., a Delaware corporation (the "Corporation") and amends, restates and replaces in its entirety that certain Subscription Agreement, dated as of July 31, 2003 among the Purchasers and the Corporation. Each of the Purchasers hereby subscribes for that number of shares of Common Stock and shares of the Series A Preferred Stock (collectively, the "Shares") of the Corporation set forth opposite its name on the attached Exhibit A and each of them hereby agrees to pay to the Corporation the subscription price of $1.00 per share of Common Stock and $1,000.00 per share of Series A Preferred Stock representing the aggregate investment purchase price reflected on Exhibit A. Each of the Purchasers hereby represents and warrants to the Corporation that (i) it is purchasing these Shares for its own account, for investment only and not with a view towards their resale; (ii) it understands that these Shares have not been registered under the Securities Act of 1933, as amended or any state securities laws, based on exemptions from such laws, and that these Shares may not be sold or otherwise transferred without registration under or exemption from the provisions of applicable securities laws, and that a legend to such effect may be placed on the certificates evidencing these Shares referring to these restrictions on transferability and sale of the Shares, and (iii) it is qualified by previous experience to evaluate the risks and merits of this investment. Each of the undersigned hereby agrees to indemnify and hold harmless the Corporation, its affiliates, successors, and anyone acting on its behalf from and against all damages, losses, costs, and expenses (including reasonable attorneys' fees) which they may incur by reason of the inaccuracy or falsity of any representation or breach of any warranty or covenant made herein or in any document provided by the undersigned to the Corporation in connection herewith. Dated: November 19, 2003 Subscribing Parties: WIND POINT PARTNERS IV, L.P., WIND POINT PARTNERS V, L.P., WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. WIND POINT ASSOCIATES IV, LLC [SIGNATURES BEGIN ON FOLLOWING PAGE] WIND POINT IV EXECUTIVE ADVISOR PARTNERS, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------ Name: Jeffrey A. Gonyo Its: Managing Member WIND POINT ASSOCIATES IV, LLC By: Wind Point Investors IV, L.P. Its: Manager By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------ Name: Jeffrey A. Gonyo Its: Managing Member WIND POINT PARTNERS IV, L.P. By: Wind Point Investors IV, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ------------------------------------------ Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ Robert L. Cummings ------------------------------------------ Name: Robert L. Cummings Its: Managing Member WIND POINT PARTNERS V, L.P. By: Wind Point Investors V, L.P. Its: General Partner By: Wind Point Advisors LLC Its: General Partner By: /s/ Jeffrey A. Gonyo ----------------------------------------- Name: Jeffrey A. Gonyo Its: Managing Member By: /s/ Robert L. Cummings ----------------------------------------- Name: Robert L. Cummings Its: Managing Member Accepted and agreed as of this 19th day of November, 2003: VI ACQUISITION CORP. By: /s/ Debra Koenig -------------------------- Name: Debra Koenig Its: Executive Vice President EXHIBIT A SHARES SUBSCRIBED; AGGREGATE PURCHASE PRICE
SHARES OF SERIES A AGGREGATE PURCHASE INVESTOR SHARES OF COMMON PREFERRED PRICE - ------------------------------- ----------------------------- -------------------------- -------------------- WIND POINT PARTNERS IV, L.P. 1,324 61.075 $ 62,399.00 WIND POINT PARTNERS V, L.P. 3,520 162.331 $165,851.00 WIND POINT IV EXECUTIVE 10 0.459 $ 469.00 ADVISOR PARTNERS, L.P. WIND POINT ASSOCIATES IV, LLC 5 0.226 $ 231.00
EX-10.13 28 c86044exv10w13.txt MANAGEMENT AGREEMENT Exhibit 10.13 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of February 12, 2004, between VI Acquisition Corp., a Delaware corporation (the "Company"), and Anthony Carroll ("Executive"). The Company and Executive desire to enter into an agreement pursuant to which Executive will commit to purchase, and the Company will commit to sell, an aggregate of 14,295 shares of the Company's Common Stock, par value $.0001 per share (the "Common Stock"). All of such shares of Common Stock are referred to herein as "Executive Shares or the "Shares." Certain definitions are set forth in Section 7 of this Agreement. The parties hereto agree as follows: 1. Executive Shares. (a) Upon execution of this Agreement, Executive will purchase, and the Company will sell, 14,295 shares of Common Stock at a price of $1.00 per share, the fair market value of the Common Stock on the date hereof. The Company will deliver to Executive the certificates representing such Executive Shares, and Executive will deliver to the Company a cashier's or certified check or wire transfer of funds in the aggregate amount of $14,295.00. (b) Within thirty (30) days after the purchase by Executive of Executive Shares pursuant to this Agreement, Executive will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto. (c) In connection with the purchase and sale of the Executive Shares pursuant hereto, Executive represents and warrants to the Company that: (i) The Executive Shares to be acquired by Executive pursuant to this Agreement will be acquired for Executive's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Executive Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws; (ii) Executive is an executive officer of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Executive Shares; (iii) Executive is able to bear the economic risk of his investment in the Executive Shares for an indefinite period of time because the Executive Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available; (iv) Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Executive Shares and has had full access to such other information concerning the Company as he has requested; (v) This Agreement and each of the other agreements contemplated hereby to which Executive is a party constitute legal, valid and binding obligations of Executive, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements by Executive does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject; (vi) Executive is not a party to or bound by any other employment agreement, noncompete agreement or confidentiality agreement which conflicts with the obligations set forth in this Agreement or in the Employment Agreement; and (vii) Executive is a resident of the State of Colorado. (d) As an inducement for the Company to commit to issue the Executive Shares to Executive, and as a condition thereto, Executive acknowledges and agrees that neither any future issuance of capital stock of the Company to Executive nor any provision contained herein shall entitle Executive to remain in the employment of the Company, or any Subsidiary of the Company, or affect the right of the Company or any Subsidiary to terminate Executive's employment at any time for any reason, subject to the terms and conditions of the Employment Agreement. 2. Vesting of Shares. (a) Except as otherwise provided in Section 2(b) below, the Executive Shares purchased hereunder will become vested in accordance with the following schedule, if as of each such date Executive is still employed by the Company or any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF DATE EXECUTIVE SHARES TO BE VESTED ---- ----------------------------- 1st Anniversary of this Agreement 20% 2nd Anniversary of this Agreement 40% 3rd Anniversary of this Agreement 60% 4th Anniversary of this Agreement 80% 5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon the occurrence of a Sale of the Company, all Executive Shares which have not yet become vested shall become vested at the time of such Sale of the Company (such portion being referred to herein as the "Accelerated Shares"); provided, however, and subject to and unless otherwise provided for under the Stockholders Agreement by and among the Company, the Investors, the Executive and certain other parties, that Executive shall not Transfer any interest in any Accelerated Shares unless and until such time as the Investors shall have received cash dividends 2 or other cash proceeds resulting from any distributions on or dispositions of any Preferred Stock or Common Stock in an aggregate amount equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the Investors to the Company for all Preferred Stock, Common Stock and other equity interests of the Company purchased by the Investors (but not in any event including amounts committed but not yet contributed to the capital of the Company). Executive Shares which have become vested hereunder are referred to herein as "Vested Shares," and all other Executive Shares are referred to herein as "Unvested Shares." (c) The Executive Securities shall at all times be subject to such restrictions or limitations with respect to the Transfer thereof that may be contained herein or in the Stockholders Agreement or as otherwise provided by law. 3. Repurchase Option. (a) In the event Executive ceases to be employed by the Company or any Subsidiary for any reason (a "Separation"), the Shares and all other Executive Securities (whether held by Executive or one or more of Executive's transferees, other than the Company and the Investors) will be subject to repurchase, in each case by the Company pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option"). (b) In the event of a Separation, the Executive Shares purchased hereunder shall be subject to repurchase as follows: (i) the purchase price for each Unvested Share of Common Stock will be the Executive's Original Cost for such share; provided, that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Unvested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share, and (ii) the purchase price for each Vested Share of Common Stock will be the Fair Market Value for such share; provided that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Vested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share. (c) In the event of a Separation, any other Executive Securities not otherwise described in Section 3(b) above shall be subject to repurchase as follows: (i) the purchase price for each share of Common Stock will be the Fair Market Value for such share and (ii) the purchase price for each share of Preferred Stock will be Executive's Original Cost for such share. (d) In the event of a Separation, the Company may elect to purchase all or any portion of the Executive Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Executive Securities within 60 days after the Separation. The Repurchase Notice will set forth the number of Unvested Shares and Vested Shares to be acquired from each holder, the aggregate consideration to be paid for such securities and the time and place for the closing of the transaction. The number of each type of securities to be repurchased by the Company shall first be satisfied to the extent possible from the Executive Securities held by Executive at the time of delivery of the Repurchase Notice. If the number of any or all types of Executive Securities then held by Executive is less than the total number of such securities which the Company has elected to purchase, the Company shall purchase the remaining securities 3 elected to be purchased from the other holder(s) of Executive Securities under this Agreement, pro rata according to the number of the applicable type of Executive Securities held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares and Vested Shares to be repurchased hereunder will be allocated among Executive and the other holders of Executive Securities (if any) pro rata according to the number of the applicable type of Executive Securities to be purchased from such Person. (e) The closing of the purchase of the Executive Securities pursuant to the Repurchase Option shall take place on the date designated by the Company in the Repurchase Notice, which date shall not be more than 2 months nor less than 5 days after the delivery of such notice. The Company will pay for the Executive Securities to be purchased by it pursuant to the Repurchase Option by first offsetting amounts outstanding under any bona fide debts owed by Executive to the Company and will pay the remainder of the purchase price to the extent reasonably permissible under the Company's and its Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money and to the extent the Company has the financial wherewithal at the time to make such payments, by a check or wire transfer of funds and, if not, by a subordinate note or notes, each on terms acceptable to banks and other financial institutions loaning money to the Company and its Subsidiaries, payable in up to three substantially equal, semi-annual installments beginning on the six month anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate as published in The Wall Street Journal from time to time, in the aggregate amount of the purchase price for such securities. The Company will be entitled to receive customary representations and warranties from the sellers of Executive Securities (including representations and warranties regarding good title to the Executive Securities, the absence of any liens on such title or other encumbrances with respect to the Transfer of the Executive Securities and the ability of such sellers to consummate the sale). (f) Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Executive Securities by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and as may be required by other parties in the Company's or any Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money, if any. If any such restrictions prohibit the repurchase of Executive Securities hereunder which the Company is otherwise entitled or required to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. (g) Notwithstanding anything to the contrary contained in this Agreement, if Executive delivers the notice of objection described in the definition of Fair Market Value, or if the Fair Market Value of a Share is otherwise determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board, the Company shall have the right to revoke its exercise of the Repurchase Option for all or any portion of the Shares elected to be repurchased by it by delivering notice of such revocation in writing to the holders of the Shares during (i) the thirty-day period beginning on the date the Company receives Executive's written notice of objection and (ii) the thirty-day period beginning on the date the Company is given written notice that the Fair Market Value of a Share was finally determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board. 4 4. Restrictions on Transfer of Executive Securities. (a) Transfer of Executive Securities. Executive shall not Transfer any interest in any Executive Securities, except at such time as the restrictions herein terminate as provided in Section 4(b) below. Notwithstanding the foregoing, the restrictions contained in this Section 4 will not apply with respect to (i) Transfers of shares of Executive Securities pursuant to applicable laws of descent and distribution or (ii) Transfer of shares of Executive Securities among Executive's Family Group; provided that in each case such restrictions will continue to be applicable to the Executive Securities irrespective of any such Transfer. Any transferee of Executive Securities pursuant to a Transfer in accordance with the provisions of this Section 4(a) is herein referred to as a "Permitted Transferee." In addition to and without limitation on the operation of this Section 4, Executive acknowledges that the Stockholders Agreement separately imposes restrictions on the Transfer of the Shares. (b) Termination of Restrictions. The restrictions on the Transfer of Executive Securities set forth in this Section 4 will continue with respect to each Executive Security until the earlier of (i) a Qualified Public Offering; or (ii) a Sale of the Company. 5. Registration. Executive understands that the Shares are not currently being registered under the Securities Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 701 thereof. Executive further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. Executive understands that a restrictive legend consistent with the foregoing, and as set forth in Section 6, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 6. Additional Restrictions on Transfer of Executive Securities. (a) Legend. The certificates representing the Executive Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF FEBRUARY 20, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS OF FEBRUARY 20, 2004. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE 5 HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE." (b) Opinion of Counsel. No holder of Executive Securities may transfer any Executive Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such Transfer. 7. Definitions. "Affiliate" of the Investors means any direct or indirect general or limited partner or member of an Investor, as applicable, or any employee or owner thereof, or any other person, entity or investment fund controlling, controlled by or under common control with an Investor. "Due Cause" has the meaning set forth in the Employment Agreement. "Employment Agreement" means that certain Employment Agreement of even date herewith between VICORP Restaurants, Inc. and the Executive. "Executive's Family Group" means Executive's spouse and descendants (whether natural or adopted), any trust solely for the benefit of Executive and/or Executive's spouse and/or descendants and any retirement plan for the Executive. "Executive Securities" means the Shares and any other securities of the Company held by Executive or any of Executive's transferees permitted hereunder. All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. Executive Securities will also include shares of the Company's capital stock or other securities of the Company issued with respect to Executive Securities by way of a stock split, dividend or other recapitalization or reclassification. "Fair Market Value" of each Share as of a relevant date means the average of the closing prices of the sales of the Common Stock on all securities exchanges on which such Common Stock may at the time be listed on that date, or, if there have been no sales or exchange on which the Common Stock is listed on any day, the average of the highest bid and lowest asked prices on all nationally-recognized exchanges at the end of such day, or, if on any day such Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such Common Stock is not quoted in the NASDAQ System, of the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time such Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value will be the fair value of such Common Stock determined in good faith by the 6 Board of Directors of the Company (the "Board Calculation"). If the Executive disagrees with the Board Calculation, the Executive may, within 30 days after receipt of the Board Calculation, deliver a notice (an "Objection Notice") to the Company setting forth the Executive's calculation of Fair Market Value. The Board and the Executive will negotiate in good faith to agree on such Fair Market Value, but if such agreement is not reached within 30 days after the Company has received the Objection Notice, Fair Market Value shall be determined by an appraiser selected by the Board, which appraiser shall submit to the Board and the Executive a report within 30 days of its engagement setting forth such determination. The determination of such appraiser shall be final and binding upon all parties. The expenses of such appraiser shall be borne by the Executive unless the appraiser's valuation is more than 10% greater than the amount determined by the Board of Directors, in which case, the costs of the appraiser shall be borne by the Company. If the Repurchase Option is exercised within 45 days after a Separation, then Fair Market Value shall be determined as of the date of such Separation; thereafter, Fair Market Value shall be determined as of the date the Repurchase Option is exercised. A comparable process will be employed to determine the Fair Market Value of Preferred Stock. "Good Reason" has the meaning set forth in the Employment Agreement. "Investors" has the meaning set forth in the Stockholders Agreement. "Original Cost" means, (i) with respect to each share of Common Stock purchased hereunder, $1.00 (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations) and (ii) with respect to each share of Preferred Stock, the price paid for such Preferred Stock, plus all accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations). "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Preferred Stock" means preferred stock issued by the Company. "Public Sale" means any sale pursuant to a registered public offering under the Securities Act or any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker. "Qualified Public Offering" means the sale in an underwritten public offering registered under the Securities Act of shares of the Company's Common Stock approved by the Board of Directors pursuant to which the Investors have realized in cash a return of two or more times the amount of their investment in the Company. "Sale of the Company" means any transaction or series of transactions pursuant to which (A) any Person(s) other than the Investors and their respective Affiliates in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, 7 proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided that the term "Sale of the Company" shall not include any sale of equity or debt securities by the Company in a private offering to other investors selected by the Investors; or (B) more than 50% of the assets of the Company (treating investments in Affiliates as assets for these purposes) is spun off, split off or otherwise distributed. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Stockholders Agreement" means that certain Stockholders Agreement dated June 13, 2003 among the Company, the Investors, and certain other parties, and joined by the Executive of even date herewith. "Subsidiary" means any entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors, or the equivalent governing body, directly or through one or more subsidiaries. "Transfer" means to sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). 8. Notices. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgement of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Tel: (312) 255-4800 Fax: (312) 255-4820 If to the Executive: Anthony Carroll ------------------------- ------------------------- 8 with a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Section 8. 9. General Provisions. (a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Executive Securities in violation of any provision of this Agreement shall be null and void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Executive Securities as the owner of such securities for any purpose. (b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Executive hereby releases the Company and its affiliates and its and their predecessors from any obligation or liability the Company or any of its affiliates or its or their predecessors owes or owed to Executive or any of his affiliates and related persons prior to the date hereof. (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (e) Successors and Assigns. (i) All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive, including any of Executive's transferees permitted hereunder or under the Stockholders Agreement (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will 9 succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. (ii) Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company, the Investors and their respective successors and assigns (including subsequent holders of Executive Securities); provided that the rights and obligations of Executive under this Agreement shall not be assignable except in connection with a permitted transfer of Executive Securities hereunder. (iii) Each of the Investors is intended to be a third party beneficiary of this Agreement and may enforce any rights granted to it hereunder. (f) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Furthermore, Executive and Company agree and consent to submit to personal jurisdiction in the State of Illinois in any state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. Executive and Company agree that the sole and exclusive venue for any suit arising out of, or seeking to enforce, the terms of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. (g) Remedies. Each of the parties to this Agreement (including the Investor) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney's fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. No cause of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. (i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday. 10 (j) Indemnification and Reimbursement of Payments on Behalf of Executive. The Company and any Subsidiary shall be entitled to deduct or withhold from any amounts owing from the Company or any Subsidiary to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with respect to the Executive's compensation or other payments from the Company or any Subsidiary or the Executive's ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock. The Executive shall indemnify the Company and any Subsidiary for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto. (k) Termination. This Agreement shall survive the termination of Executive's employment with the Company or any Subsidiary and shall remain in full force and effect after such termination. (l) Generally Accepted Accounting Principles; Adjustments of Numbers. Where any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with United States generally accepted accounting principles, consistently applied. All numbers set forth herein which refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares, recapitalizations or other similar transactions affecting the subject class of stock. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * 11 IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of the date first written above. VI ACQUISITION CORP. By: /s/ Debra Koenig ------------------------ Name: Debra Koenig Its: Executive Vice President /s/ Anthony Carroll ---------------------------- ANTHONY CARROLL 12 EXHIBIT A ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME IN YEAR OF TRANSFER UNDER CODE SECTION 83(b) The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of the Internal Revenue Code to include the restricted property described below in his gross income for the tax year ending December 31, 2004 and supplies the following information in accordance with the regulations promulgated thereunder: 1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE: Anthony Carroll -------------------- -------------------- Social Security # _______________ 2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE: 14,295 shares (the "SHARES") of Common Stock, par value $0.0001 per share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY"). 3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS FEBRUARY 20, 2004. The taxable year to which this election relates is calendar year 2004. 4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS: A. The Shares are not transferable except as permitted by a Management Agreement. Transferees are generally subject to the same restrictions as are imposed on their transferors. Certificates representing the Shares contain legends to give notice of restrictions on transfer. B. If the Taxpayer ceases to serve as an employee of the Company or a subsidiary, prior to certain specified time periods (the last day of each such period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE PRICE"). In certain circumstances (termination for cause, or resignation without good reason), the Purchase Price may be lowered to fair market value if that is less than the amount the Taxpayer paid for the Shares. On each specified Vesting Date, a portion of the Shares subject to repurchase at the Purchase Price will lapse and such portion will then be repurchasable at its fair market value in the event the Taxpayer ceases to serve as an employee of the Company (for a reason other than cause or resignation without good reason, in either case in which the Purchase Price may be lowered to the amount the Taxpayer paid for the Shares). On February 20, 2009, which is the last Vesting Date, all Shares then will be repurchasable at their fair market value in the event the Taxpayer ceases to serve as an employee of the Company (for a reason other than cause or resignation without good reason, in either case in which the Purchase Price may be lowered to the amount the Taxpayer paid for the Shares). 5. FAIR MARKET VALUE: The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $1.00 per Share. 6. AMOUNT PAID FOR PROPERTY: The amount paid by Taxpayer for said property is $1.00 per Share. 7. FURNISHING STATEMENT TO EMPLOYER: A copy of this statement has been furnished to the Company. Dated: February 20, 2004 --------------------------- Anthony Carroll This election must be filed with the Internal Revenue Service Center with which the Taxpayer files his or her Federal income tax returns and must be filed within thirty (30) days after the date of purchase. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two copies of the completed form for filing with his or her Federal and State tax returns for the current tax year and an additional copy for his or her records. 2 EX-10.14 29 c86044exv10w14.txt MANAGEMENT AGREEMENT Exhibit 10.14 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of February 20, 2004, between VI Acquisition Corp., a Delaware corporation (the "Company"), and Debra Koenig ("Executive"). The Company and Executive desire to enter into an agreement pursuant to which Executive will commit to purchase, and the Company will commit to sell, an aggregate of 3,575 shares of the Company's Common Stock, par value $.0001 per share (the "Common Stock"). All of such shares of Common Stock are referred to herein as "Executive Shares or the "Shares." Certain definitions are set forth in Section 7 of this Agreement. The parties hereto agree as follows: 1. Executive Shares. (a) Upon execution of this Agreement, Executive will purchase, and the Company will sell, 3,575 shares of Common Stock at a price of $1.00 per share, the fair market value of the Common Stock on the date hereof. The Company will deliver to Executive the certificates representing such Executive Shares, and Executive will deliver to the Company a cashier's or certified check or wire transfer of funds in the aggregate amount of $3,575.00. (b) Within thirty (30) days after the purchase by Executive of Executive Shares pursuant to this Agreement, Executive will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto. (c) In connection with the purchase and sale of the Executive Shares pursuant hereto, Executive represents and warrants to the Company that: (i) The Executive Shares to be acquired by Executive pursuant to this Agreement will be acquired for Executive's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Executive Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws; (ii) Executive is an executive officer of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Executive Shares; (iii) Executive is able to bear the economic risk of his investment in the Executive Shares for an indefinite period of time because the Executive Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available; (iv) Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Executive Shares and has had full access to such other information concerning the Company as he has requested; (v) This Agreement and each of the other agreements contemplated hereby to which Executive is a party constitute legal, valid and binding obligations of Executive, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements by Executive does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject; (vi) Executive is not a party to or bound by any other employment agreement, noncompete agreement or confidentiality agreement which conflicts with the obligations set forth in this Agreement or in the Employment Agreement; and (vii) Executive is a resident of the State of Colorado. (d) As an inducement for the Company to commit to issue the Executive Shares to Executive, and as a condition thereto, Executive acknowledges and agrees that neither any future issuance of capital stock of the Company to Executive nor any provision contained herein shall entitle Executive to remain in the employment of the Company, or any Subsidiary of the Company, or affect the right of the Company or any Subsidiary to terminate Executive's employment at any time for any reason, subject to the terms and conditions of the Employment Agreement. 2. Vesting of Shares. (a) Except as otherwise provided in Section 2(b) below, the Executive Shares purchased hereunder will become vested in accordance with the following schedule, if as of each such date Executive is still employed by the Company or any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF DATE EXECUTIVE SHARES TO BE VESTED ---- ----------------------------- 1st Anniversary of this Agreement 20% 2nd Anniversary of this Agreement 40% 3rd Anniversary of this Agreement 60% 4th Anniversary of this Agreement 80% 5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon the occurrence of a Sale of the Company, all Executive Shares which have not yet become vested shall become vested at the time of such Sale of the Company (such portion being referred to herein as the "Accelerated Shares"); provided, however, and subject to and unless otherwise provided for under the Stockholders Agreement by and among the Company, the Investors, the Executive and certain other parties, that Executive shall not Transfer any interest in any Accelerated Shares unless and until such time as the Investors shall have received cash dividends 2 or other cash proceeds resulting from any distributions on or dispositions of any Preferred Stock or Common Stock in an aggregate amount equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the Investors to the Company for all Preferred Stock, Common Stock and other equity interests of the Company purchased by the Investors (but not in any event including amounts committed but not yet contributed to the capital of the Company). Executive Shares which have become vested hereunder are referred to herein as "Vested Shares," and all other Executive Shares are referred to herein as "Unvested Shares." (c) The Executive Securities shall at all times be subject to such restrictions or limitations with respect to the Transfer thereof that may be contained herein or in the Stockholders Agreement or as otherwise provided by law. 3. Repurchase Option. (a) In the event Executive ceases to be employed by the Company or any Subsidiary for any reason (a "Separation"), the Shares and all other Executive Securities (whether held by Executive or one or more of Executive's transferees, other than the Company and the Investors) will be subject to repurchase, in each case by the Company pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option"). (b) In the event of a Separation, the Executive Shares purchased hereunder shall be subject to repurchase as follows: (i) the purchase price for each Unvested Share of Common Stock will be the Executive's Original Cost for such share; provided, that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Unvested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share, and (ii) the purchase price for each Vested Share of Common Stock will be the Fair Market Value for such share; provided that if Executive's employment is terminated by the Company or a Subsidiary with Due Cause or by the Executive without Good Reason, then the purchase price for each Vested Share of Common Stock will be the lesser of (a) Executive's Original Cost for such share and (b) the Fair Market Value for such share. (c) In the event of a Separation, any other Executive Securities not otherwise described in Section 3(b) above shall be subject to repurchase as follows: (i) the purchase price for each share of Common Stock will be the Fair Market Value for such share and (ii) the purchase price for each share of Preferred Stock will be Executive's Original Cost for such share. (d) In the event of a Separation, the Company may elect to purchase all or any portion of the Executive Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Executive Securities within 60 days after the Separation. The Repurchase Notice will set forth the number of Unvested Shares and Vested Shares to be acquired from each holder, the aggregate consideration to be paid for such securities and the time and place for the closing of the transaction. The number of each type of securities to be repurchased by the Company shall first be satisfied to the extent possible from the Executive Securities held by Executive at the time of delivery of the Repurchase Notice. If the number of any or all types of Executive Securities then held by Executive is less than the total number of such securities which the Company has elected to purchase, the Company shall purchase the remaining securities 3 elected to be purchased from the other holder(s) of Executive Securities under this Agreement, pro rata according to the number of the applicable type of Executive Securities held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares and Vested Shares to be repurchased hereunder will be allocated among Executive and the other holders of Executive Securities (if any) pro rata according to the number of the applicable type of Executive Securities to be purchased from such Person. (e) The closing of the purchase of the Executive Securities pursuant to the Repurchase Option shall take place on the date designated by the Company in the Repurchase Notice, which date shall not be more than 2 months nor less than 5 days after the delivery of such notice. The Company will pay for the Executive Securities to be purchased by it pursuant to the Repurchase Option by first offsetting amounts outstanding under any bona fide debts owed by Executive to the Company and will pay the remainder of the purchase price to the extent reasonably permissible under the Company's and its Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money and to the extent the Company has the financial wherewithal at the time to make such payments, by a check or wire transfer of funds and, if not, by a subordinate note or notes, each on terms acceptable to banks and other financial institutions loaning money to the Company and its Subsidiaries, payable in up to three substantially equal, semi-annual installments beginning on the six month anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate as published in The Wall Street Journal from time to time, in the aggregate amount of the purchase price for such securities. The Company will be entitled to receive customary representations and warranties from the sellers of Executive Securities (including representations and warranties regarding good title to the Executive Securities, the absence of any liens on such title or other encumbrances with respect to the Transfer of the Executive Securities and the ability of such sellers to consummate the sale). (f) Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Executive Securities by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and as may be required by other parties in the Company's or any Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money, if any. If any such restrictions prohibit the repurchase of Executive Securities hereunder which the Company is otherwise entitled or required to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. (g) Notwithstanding anything to the contrary contained in this Agreement, if Executive delivers the notice of objection described in the definition of Fair Market Value, or if the Fair Market Value of a Share is otherwise determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board, the Company shall have the right to revoke its exercise of the Repurchase Option for all or any portion of the Shares elected to be repurchased by it by delivering notice of such revocation in writing to the holders of the Shares during (i) the thirty-day period beginning on the date the Company receives Executive's written notice of objection and (ii) the thirty-day period beginning on the date the Company is given written notice that the Fair Market Value of a Share was finally determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board. 4 4. Restrictions on Transfer of Executive Securities. (a) Transfer of Executive Securities. Executive shall not Transfer any interest in any Executive Securities, except at such time as the restrictions herein terminate as provided in Section 4(b) below. Notwithstanding the foregoing, the restrictions contained in this Section 4 will not apply with respect to (i) Transfers of shares of Executive Securities pursuant to applicable laws of descent and distribution or (ii) Transfer of shares of Executive Securities among Executive's Family Group; provided that in each case such restrictions will continue to be applicable to the Executive Securities irrespective of any such Transfer. Any transferee of Executive Securities pursuant to a Transfer in accordance with the provisions of this Section 4(a) is herein referred to as a "Permitted Transferee." In addition to and without limitation on the operation of this Section 4, Executive acknowledges that the Stockholders Agreement separately imposes restrictions on the Transfer of the Shares. (b) Termination of Restrictions. The restrictions on the Transfer of Executive Securities set forth in this Section 4 will continue with respect to each Executive Security until the earlier of (i) a Qualified Public Offering; or (ii) a Sale of the Company. 5. Registration. Executive understands that the Shares are not currently being registered under the Securities Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 701 thereof. Executive further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. Executive understands that a restrictive legend consistent with the foregoing, and as set forth in Section 6, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 6. Additional Restrictions on Transfer of Executive Securities. (a) Legend. The certificates representing the Executive Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF FEBRUARY 20, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS OF FEBRUARY 20, 2004. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE 5 HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE." (b) Opinion of Counsel. No holder of Executive Securities may transfer any Executive Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such Transfer. 7. Definitions. "Affiliate" of the Investors means any direct or indirect general or limited partner or member of an Investor, as applicable, or any employee or owner thereof, or any other person, entity or investment fund controlling, controlled by or under common control with an Investor. "Due Cause" has the meaning set forth in the Employment Agreement. "Employment Agreement" means that certain Employment Agreement of even date herewith between VICORP Restaurants, Inc. and the Executive. "Executive's Family Group" means Executive's spouse and descendants (whether natural or adopted), any trust solely for the benefit of Executive and/or Executive's spouse and/or descendants and any retirement plan for the Executive. "Executive Securities" means the Shares and any other securities of the Company held by Executive or any of Executive's transferees permitted hereunder. All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. Executive Securities will also include shares of the Company's capital stock or other securities of the Company issued with respect to Executive Securities by way of a stock split, dividend or other recapitalization or reclassification. "Fair Market Value" of each Share as of a relevant date means the average of the closing prices of the sales of the Common Stock on all securities exchanges on which such Common Stock may at the time be listed on that date, or, if there have been no sales or exchange on which the Common Stock is listed on any day, the average of the highest bid and lowest asked prices on all nationally-recognized exchanges at the end of such day, or, if on any day such Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such Common Stock is not quoted in the NASDAQ System, of the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time such Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value will be the fair value of such Common Stock determined in good faith by the 6 Board of Directors of the Company (the "Board Calculation"). If the Executive disagrees with the Board Calculation, the Executive may, within 30 days after receipt of the Board Calculation, deliver a notice (an "Objection Notice") to the Company setting forth the Executive's calculation of Fair Market Value. The Board and the Executive will negotiate in good faith to agree on such Fair Market Value, but if such agreement is not reached within 30 days after the Company has received the Objection Notice, Fair Market Value shall be determined by an appraiser selected by the Board, which appraiser shall submit to the Board and the Executive a report within 30 days of its engagement setting forth such determination. The determination of such appraiser shall be final and binding upon all parties. The expenses of such appraiser shall be borne by the Executive unless the appraiser's valuation is more than 10% greater than the amount determined by the Board of Directors, in which case, the costs of the appraiser shall be borne by the Company. If the Repurchase Option is exercised within 45 days after a Separation, then Fair Market Value shall be determined as of the date of such Separation; thereafter, Fair Market Value shall be determined as of the date the Repurchase Option is exercised. A comparable process will be employed to determine the Fair Market Value of Preferred Stock. "Good Reason" has the meaning set forth in the Employment Agreement. "Investors" has the meaning set forth in the Stockholders Agreement. "Original Cost" means, (i) with respect to each share of Common Stock purchased hereunder, $1.00 (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations) and (ii) with respect to each share of Preferred Stock, the price paid for such Preferred Stock, plus all accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations). "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Preferred Stock" means preferred stock issued by the Company. "Public Sale" means any sale pursuant to a registered public offering under the Securities Act or any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker. "Qualified Public Offering" means the sale in an underwritten public offering registered under the Securities Act of shares of the Company's Common Stock approved by the Board of Directors pursuant to which the Investors have realized in cash a return of two or more times the amount of their investment in the Company. "Sale of the Company" means any transaction or series of transactions pursuant to which (A) any Person(s) other than the Investors and their respective Affiliates in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, 7 proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided that the term "Sale of the Company" shall not include any sale of equity or debt securities by the Company in a private offering to other investors selected by the Investors; or (B) more than 50% of the assets of the Company (treating investments in Affiliates as assets for these purposes) is spun off, split off or otherwise distributed. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Stockholders Agreement" means that certain Stockholders Agreement dated June 13, 2003 among the Company, the Investors, and certain other parties, and joined by the Executive of even date herewith. "Subsidiary" means any entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors, or the equivalent governing body, directly or through one or more subsidiaries. "Transfer" means to sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). 8. Notices. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgement of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Tel: (312) 255-4800 Fax: (312) 255-4820 If to the Executive: Debra Koenig __________________________ __________________________ 8 with a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Section 8. 9. General Provisions. (a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Executive Securities in violation of any provision of this Agreement shall be null and void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Executive Securities as the owner of such securities for any purpose. (b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Executive hereby releases the Company and its affiliates and its and their predecessors from any obligation or liability the Company or any of its affiliates or its or their predecessors owes or owed to Executive or any of his affiliates and related persons prior to the date hereof. (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (e) Successors and Assigns. (i) All Executive Securities will continue to be Executive Securities in the hands of any holder other than Executive, including any of Executive's transferees permitted hereunder or under the Stockholders Agreement (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Executive Securities will 9 succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder. (ii) Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company, the Investors and their respective successors and assigns (including subsequent holders of Executive Securities); provided that the rights and obligations of Executive under this Agreement shall not be assignable except in connection with a permitted transfer of Executive Securities hereunder. (iii) Each of the Investors is intended to be a third party beneficiary of this Agreement and may enforce any rights granted to it hereunder. (f) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Furthermore, Executive and Company agree and consent to submit to personal jurisdiction in the State of Illinois in any state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. Executive and Company agree that the sole and exclusive venue for any suit arising out of, or seeking to enforce, the terms of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. (g) Remedies. Each of the parties to this Agreement (including the Investor) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney's fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Executive. No cause of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. (i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday. 10 (j) Indemnification and Reimbursement of Payments on Behalf of Executive. The Company and any Subsidiary shall be entitled to deduct or withhold from any amounts owing from the Company or any Subsidiary to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with respect to the Executive's compensation or other payments from the Company or any Subsidiary or the Executive's ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock. The Executive shall indemnify the Company and any Subsidiary for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto. (k) Termination. This Agreement shall survive the termination of Executive's employment with the Company or any Subsidiary and shall remain in full force and effect after such termination. (l) Generally Accepted Accounting Principles; Adjustments of Numbers. Where any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with United States generally accepted accounting principles, consistently applied. All numbers set forth herein which refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares, recapitalizations or other similar transactions affecting the subject class of stock. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * 11 IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of the date first written above. VI ACQUISITION CORP. By: /s/ Walter Van Benthuysen ---------------------------- Name: Walter Van Benthuysen Its: Chairman /s/ Debra Koenig ---------------------------------- DEBRA KOENIG 12 EXHIBIT A ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME IN YEAR OF TRANSFER UNDER CODE SECTION 83(b) The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of the Internal Revenue Code to include the restricted property described below in his gross income for the tax year ending December 31, 2004 and supplies the following information in accordance with the regulations promulgated thereunder: 1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE: Debra Koenig _________________ _________________ Social Security # __________________ 2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE: 3,575 shares (the "SHARES") of Common Stock, par value $0.0001 per share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY"). 3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS FEBRUARY 20, 2004. The taxable year to which this election relates is calendar year 2004. 4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS: A. The Shares are not transferable except as permitted by a Management Agreement. Transferees are generally subject to the same restrictions as are imposed on their transferors. Certificates representing the Shares contain legends to give notice of restrictions on transfer. B. If the Taxpayer ceases to serve as an employee of the Company or a subsidiary, prior to certain specified time periods (the last day of each such period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE PRICE"). In certain circumstances (termination for cause, or resignation without good reason), the Purchase Price may be lowered to fair market value if that is less than the amount the Taxpayer paid for the Shares. On each specified Vesting Date, a portion of the Shares subject to repurchase at the Purchase Price will lapse and such portion will then be repurchasable at its fair market value in the event the Taxpayer ceases to serve as an employee of the Company (for a reason other than cause or resignation without good reason, in either case in which the Purchase Price may be lowered to the amount the Taxpayer paid for the Shares). On February 20, 2009, which is the last Vesting Date, all Shares then will be repurchasable at their fair market value in the event the Taxpayer ceases to serve as an employee of the Company (for a reason other than cause or resignation without good reason, in either case in which the Purchase Price may be lowered to the amount the Taxpayer paid for the Shares). 5. FAIR MARKET VALUE: The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $1.00 per Share. 6. AMOUNT PAID FOR PROPERTY: The amount paid by Taxpayer for said property is $1.00 per Share. 7. FURNISHING STATEMENT TO EMPLOYER: A copy of this statement has been furnished to the Company. Dated: February 20, 2004 ________________________________________ Debra Koenig This election must be filed with the Internal Revenue Service Center with which the Taxpayer files his or her Federal income tax returns and must be filed within thirty (30) days after the date of purchase. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two copies of the completed form for filing with his or her Federal and State tax returns for the current tax year and an additional copy for his or her records. 2 EX-10.15 30 c86044exv10w15.txt MANAGEMENT AGREEMENT Exhibit 10.15 MANAGEMENT AGREEMENT THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of March 11, 2004, between VI Acquisition Corp., a Delaware corporation (the "Company"), and Walter van Benthuysen (the "Director"). The Company and Director desire to enter into an agreement pursuant to which Director will commit to purchase, and the Company will commit to sell, an aggregate of 10,000 shares of the Company's Common Stock, par value $.0001 per share (the "Common Stock"). All of such shares of Common Stock are referred to herein as "Director Shares." Certain definitions are set forth in Section 7 of this Agreement. The parties hereto agree as follows: 1. Director Shares. (a) Upon execution of this Agreement, Director will purchase, and the Company will sell, 10,000 shares of Common Stock at a price of $1.00 per share, the fair market value of the Common Stock on the date hereof. The Company will deliver to Director the certificates representing such Director Shares, and Director will deliver to the Company a cashier's or certified check or wire transfer of funds in the aggregate amount of $10,000. (b) Within thirty (30) days after each purchase by Director of Director Shares pursuant to this Agreement, Director will make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Exhibit A attached hereto. (c) In connection with the purchase and sale of the Director Shares pursuant hereto, Director represents and warrants to the Company that: (i) The Director Shares to be acquired by Director pursuant to this Agreement will be acquired for Director's own account and not with a view to, or intention of, distribution thereof in violation of the Securities Act, or any applicable state securities laws, and the Director Shares will not be disposed of in contravention of the Securities Act or any applicable state securities laws; (ii) Director is an outside director of the Company, is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Director Shares; (iii) Director is able to bear the economic risk of his investment in the Director Shares for an indefinite period of time because the Director Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available; (iv) Director has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Director Shares and has had full access to such other information concerning the Company as he has requested; (v) This Agreement and each of the other agreements contemplated hereby to which Director is a party constitute legal, valid and binding obligations of Director, enforceable in accordance with their terms, and the execution, delivery and performance of this Agreement and such other agreements by Director does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which Director is a party or any judgment, order or decree to which Director is subject; (vi) Director is not a party to or bound by any employment agreement, consulting agreement, noncompete agreement or confidentiality agreement which conflicts with the obligations set forth in this Agreement; and (vii) Director is a resident of the State of Illinois. (d) As an inducement for the Company to commit to issue the Director Shares to Director, and as a condition thereto, Director acknowledges and agrees that neither any future issuance of capital stock of the Company to Director nor any provision contained herein shall entitle Director to remain in the service of the Company, or any Subsidiary of the Company, or affect the right of the Company or any Subsidiary to terminate Director's services at any time for any reason. 2. Vesting of Shares. (a) Except as otherwise provided in Section 2(b) below, the Director Shares purchased hereunder will become vested in accordance with the following schedule, if as of each such date Director is still serving as a director of the Company or is otherwise engaged to perform services on behalf of the Company or any Subsidiary of the Company:
CUMULATIVE PERCENTAGE OF DATE DIRECTOR SHARES TO BE VESTED ---- ---------------------------- 1st Anniversary of this Agreement 20% 2nd Anniversary of this Agreement 40% 3rd Anniversary of this Agreement 60% 4th Anniversary of this Agreement 80% 5th Anniversary of this Agreement 100%
(b) Notwithstanding the foregoing or anything herein to the contrary, upon the occurrence of a Sale of the Company, all Director Shares which have not yet become vested shall become vested at the time of such Sale of the Company (such portion being referred to herein as the "Accelerated Shares"); provided, however, and subject to and unless otherwise provided for under the Stockholders Agreement by and among the Company, the Investors, the Director and certain other parties, that Director shall not Transfer any interest in any Accelerated Shares unless and until such time as the Investors shall have received cash dividends or other cash 2 proceeds resulting from any distributions on or dispositions of any Preferred Stock or Common Stock in an aggregate amount equal to the product of (i) two (2), multiplied by (ii) the aggregate purchase price paid by the Investors to the Company for all Preferred Stock, Common Stock and other equity interests of the Company purchased by the Investors (but not in any event including amounts committed but not yet contributed to the capital of the Company). Director Shares which have become vested hereunder are referred to herein as "Vested Shares," and all other Director Shares are referred to herein as "Unvested Shares." (c) The Director Securities shall at all times be subject to such restrictions or limitations with respect to the Transfer thereof that may be contained herein or in the Stockholders Agreement or as otherwise provided by law. 3. Repurchase Option. (a) In the event Director ceases to be a director of the Company or to otherwise be engaged by the Company or any Subsidiary for any reason (a "Separation"), the Shares and all other Director Securities (whether held by Director or one or more of Director's transferees, other than the Company and the Investors) will be subject to repurchase, in each case by the Company pursuant to the terms and conditions set forth in this Section 3 (the "Repurchase Option"). (b) In the event of a Separation, the Director Shares purchased hereunder shall be subject to repurchase as follows: (i) the purchase price for each Unvested Share of Common Stock will be the Director's Original Cost for such share; and (ii) the purchase price for each Vested Share of Common Stock will be the Fair Market Value for such share. (c) In the event of a Separation, any other Director Securities not otherwise described in Section 3(b) above, shall be subject to repurchase as follows: (i) the purchase price for each share of Common Stock will be the Fair Market Value for such share and (ii) the purchase price for each share of Preferred Stock will be Director's Original Cost for such share. (d) In the event of a Separation, the Company may elect to purchase all or any portion of the Director Securities by delivering written notice (the "Repurchase Notice") to the holder or holders of the Director Securities within 60 days after the Separation. The Repurchase Notice will set forth the number of Unvested Shares and Vested Shares to be acquired from each holder, the aggregate consideration to be paid for such securities and the time and place for the closing of the transaction. The number of each type of securities to be repurchased by the Company shall first be satisfied to the extent possible from the Director Securities held by Director at the time of delivery of the Repurchase Notice. If the number of any or all types of Director Securities then held by Director is less than the total number of such securities which the Company has elected to purchase, the Company shall purchase the remaining securities elected to be purchased from the other holder(s) of Director Securities under this Agreement, pro rata according to the number of the applicable type of Director Securities held by such other holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). The number of Unvested Shares and Vested Shares to be repurchased hereunder will be allocated among Director and the other holders of Director Securities (if any) pro rata 3 according to the number of the applicable type of Director Securities to be purchased from such Person. (e) The closing of the purchase of the Director Securities pursuant to the Repurchase Option shall take place on the date designated by the Company in the Repurchase Notice, which date shall not be more than 2 months nor less than 5 days after the delivery of such notice. The Company will pay for the Director Securities to be purchased by it pursuant to the Repurchase Option by first offsetting amounts outstanding under any bona fide debts owed by Director to the Company, and will pay the remainder of the purchase price to the extent reasonably permissible under the Company's and its Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money and to the extent the Company has the financial wherewithal at the time to make such payments, by a check or wire transfer of funds and, if not, by a subordinate note or notes, each on terms acceptable to banks and other financial institutions loaning money to the Company and its Subsidiaries, payable in up to three substantially equal, semi-annual installments beginning on the six month anniversary of the closing of such purchase and bearing interest (payable quarterly) at a rate per annum equal to the prime rate as published in The Wall Street Journal from time to time, in the aggregate amount of the purchase price for such securities. The Company will be entitled to receive customary representations and warranties from the sellers of Director Securities (including representations and warranties regarding good title to the Director Securities, the absence of any liens on such title or other encumbrances with respect to the Transfer of the Director Securities and the ability of such sellers to consummate the sale). (f) Notwithstanding anything to the contrary contained in this Agreement, all repurchases of Director Securities by the Company shall be subject to applicable restrictions contained in the Delaware General Corporation Law and as may be required by other parties in the Company's or any Subsidiaries' equity financing agreements and agreements evidencing indebtedness for borrowed money, if any. If any such restrictions prohibit the repurchase of Director Securities hereunder which the Company is otherwise entitled or required to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. (g) Notwithstanding anything to the contrary contained in this Agreement, if Director delivers the notice of objection described in the definition of Fair Market Value, or if the Fair Market Value of a Share is otherwise determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board, the Company shall have the right to revoke its exercise of the Repurchase Option for all or any portion of the Shares elected to be repurchased by it by delivering notice of such revocation in writing to the holders of the Shares during (i) the thirty-day period beginning on the date the Company receives Director's written notice of objection and (ii) the thirty-day period beginning on the date the Company is given written notice that the Fair Market Value of a Share was finally determined to be an amount more than 10% greater than the per share repurchase price for such Shares originally determined by the Board. 4. Restrictions on Transfer of Director Securities. (a) Transfer of Director Securities. Director shall not Transfer any interest in any Director Securities, except at such time as the restrictions herein terminate as provided in Section 4 4(b) below. Notwithstanding the foregoing, the restrictions contained in this Section 4 will not apply with respect to (i) Transfers of shares of Director Securities pursuant to applicable laws of descent and distribution or (ii) Transfer of shares of Director Securities among Director's Family Group; provided that in each case such restrictions will continue to be applicable to the Director Securities irrespective of any such Transfer. Any transferee of Director Securities pursuant to a Transfer in accordance with the provisions of this Section 4(a) is herein referred to as a "Permitted Transferee." (b) Termination of Restrictions. The restrictions on the Transfer of Director Securities set forth in this Section 4 will continue with respect to each Director Security until the earlier of (i) a Qualified Public Offering; or (ii) a Sale of the Company. 5. Registration. Director understands that the Shares are not currently being registered under the Securities Act by reason of their contemplated issuance in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act pursuant to Rule 701 thereof. Director further agrees that he will not sell or otherwise dispose of the Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act and has been registered or qualified or is exempt from registration or qualification under applicable securities laws of any state. Director understands that a restrictive legend consistent with the foregoing, and as set forth in Section 6, will be placed on the certificates evidencing the Shares, and related stop transfer instructions will be noted in the stock transfer records of the Company and/or its stock transfer agent for the Shares. 6. Additional Restrictions on Transfer of Director Securities. (a) Legend. The certificates representing the Director Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF MARCH 11, 2004, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND A DIRECTOR OF THE COMPANY DATED AS OF MARCH 11, 2004. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE." (b) Opinion of Counsel. No holder of Director Securities may transfer any Director Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel (reasonably acceptable in form 5 and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such Transfer. 7. Definitions. "Affiliate" of the Investors means any direct or indirect general or limited partner or member of an Investor, as applicable, or any employee or owner thereof, or any other person, entity or investment fund controlling, controlled by or under common control with an Investor. "Director's Family Group" means Director's spouse and descendants (whether natural or adopted), any trust solely for the benefit of Director and/or Director's spouse and/or descendants and any retirement plan for the Director. "Director Securities" means the Shares and any other securities of the Company held by Director or any of Director's transferees permitted hereunder. All Director Securities will continue to be Director Securities in the hands of any holder other than Director (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Director Securities will succeed to all rights and obligations attributable to Director as a holder of Director Securities hereunder. Director Securities will also include shares of the Company's capital stock or other securities of the Company issued with respect to Director Securities by way of a stock split, dividend or other recapitalization or reclassification. "Fair Market Value" of each Share as of a relevant date means the average of the closing prices of the sales of the Common Stock on all securities exchanges on which such Common Stock may at the time be listed on that date, or, if there have been no sales or exchange on which the Common Stock is listed on any day, the average of the highest bid and lowest asked prices on all nationally-recognized exchanges at the end of such day, or, if on any day such Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such Common Stock is not quoted in the NASDAQ System, of the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time such Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value will be the fair value of such Common Stock determined in good faith by the Board of Directors of the Company (the "Board Calculation"). If the Director disagrees with the Board Calculation, the Director may, within 30 days after receipt of the Board Calculation, deliver a notice (an "Objection Notice") to the Company setting forth the Director's calculation of Fair Market Value. The Board and the Director will negotiate in good faith to agree on such Fair Market Value, but if such agreement is not reached within 30 days after the Company has received the Objection Notice, Fair Market Value shall be determined by an appraiser selected by the Board, which appraiser shall submit to the Board and the Director a report within 30 days of its engagement setting forth such determination. The determination of such appraiser shall be final and binding upon all parties. If the Repurchase Option is exercised within 45 days after a Separation, then Fair Market Value shall be determined as of the date of such Separation; 6 thereafter, Fair Market Value shall be determined as of the date the Repurchase Option is exercised. A comparable process will be employed to determine the Fair Market Value of Preferred Stock. "Investors" has the meaning set forth in the Stockholders Agreement. "Original Cost" means, (i) with respect to each share of Common Stock purchased hereunder, $1.00 (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations) and (ii) with respect to each share of Preferred Stock purchased under the Purchase Agreement, $1,000.00 plus all accrued and unpaid dividends of the Preferred Stock (as proportionately adjusted for all subsequent stock splits, stock dividends and other recapitalizations). "Person" means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Preferred Stock" means preferred stock issued by the Company. "Public Sale" means any sale pursuant to a registered public offering under the Securities Act or any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker. "Qualified Public Offering" means the sale in an underwritten public offering registered under the Securities Act of shares of the Company's Common Stock approved by the Board of Directors pursuant to which the Investors have realized in cash a return of two or more times the amount of their investment in the Company. "Sale of the Company" means any transaction or series of transactions pursuant to which (A) any Person(s) other than the Investors and their respective Affiliates in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided that the term "Sale of the Company" shall not include any sale of equity or debt securities by the Company in a private offering to other investors selected by the Investors; or (B) more than 50% of the assets of the Company (treating investments in Affiliates as assets for these purposes) is spun off, split off or otherwise distributed. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Stockholders Agreement" means that certain Stockholders Agreement dated June 13, 2003 among the Company, the Investors, the Director and certain other parties. 7 "Subsidiary" means any entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors, or the equivalent governing body, directly or through one or more subsidiaries. "Transfer" means to sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law). 8. Notices. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgement of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VI Acquisition Corp. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Tel: (312) 255-4800 Fax: (312) 255-4820 If to the Director Walter van Benthuysen 17 Tartan Lakes Court Westmont, Illinois 60559 with a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Section 8. 9. General Provisions. (a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Director Securities in violation of any provision of this Agreement shall be void, and the 8 Company shall not record such Transfer on its books or treat any purported transferee of such Director Securities as the owner of such securities for any purpose. (b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. (c) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Director hereby releases the Company and its affiliates and its and their predecessors from any obligation or liability the Company or any of its affiliates or its or their predecessors owes or owed to Director or any of his affiliates and related persons prior to the date hereof. (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. (e) Successors and Assigns. (i) All Director Securities will continue to be Director Securities in the hands of any holder other than Director, including any of Director's transferees permitted hereunder or under the Stockholders Agreement (except for the Company, the Investors and the Investors' Affiliates and except for transferees in a Public Sale). Except as otherwise provided herein, each such other holder of Director Securities will succeed to all rights and obligations attributable to Director as a holder of Director Securities hereunder. (ii) Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Director, the Company, the Investors and their respective successors and assigns (including subsequent holders of Director Securities); provided that the rights and obligations of Director under this Agreement shall not be assignable except in connection with a permitted transfer of Director Securities hereunder. (iii) Each of the Investors is intended to be a third party beneficiary of this Agreement and may enforce any rights granted to it hereunder. (f) Choice of Law. The corporate law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Illinois, 9 without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. Furthermore, Director and Company agree and consent to submit to personal jurisdiction in the State of Illinois in any state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. Director and Company agree that the sole and exclusive venue for any suit arising out of, or seeking to enforce, the terms of this Agreement shall be in a state or federal court of competent subject matter jurisdiction situated in Cook County, Illinois. (g) Remedies. Each of the parties to this Agreement (including the Investor) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney's fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company and Director. No cause of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. (i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday. (j) Indemnification and Reimbursement of Payments on Behalf of Director. The Company and any Subsidiary shall be entitled to deduct or withhold from any amounts owing from the Company or any Subsidiary to the Director any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with respect to the Director's compensation or other payments from the Company or any Subsidiary or the Director's ownership interest in the Company, including, but not limited to, wages, bonuses, dividends, the receipt or exercise of stock options and/or the receipt or vesting of restricted stock. The Director shall indemnify the Company and any Subsidiary for any amounts paid with respect to any such Taxes, together with any interest, penalties and related expenses thereto. (k) Termination. This Agreement shall survive the termination of Director's services with the Company or any Subsidiary and shall remain in full force and effect after such termination. (l) Generally Accepted Accounting Principles; Adjustments of Numbers. Where any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with United States generally accepted accounting principles, consistently applied. 10 All numbers set forth herein which refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares, recapitalizations or other similar transactions affecting the subject class of stock. (m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement as of the date first written above. VI ACQUISITION CORP. By: /s/ Debra Koenig ---------------------- Name: Debra Koenig Its: Executive Vice President /s/ Walter Van Benthuysen ----------------------------- WALTER VAN BENTHUYSEN 11 ELECTION TO INCLUDE VALUE OF RESTRICTED PROPERTY IN GROSS INCOME IN YEAR OF TRANSFER UNDER CODE SECTION 83(b) The undersigned (the "TAXPAYER") hereby elects pursuant to Section 83(b) of the Internal Revenue Code to include the restricted property described below in his gross income for the tax year ending December 31, 2004 and supplies the following information in accordance with the regulations promulgated thereunder: 1. THE NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF THE TAXPAYER ARE: Walter van Benthuysen 17 Tartan Lakes Court Westmont, Illinois 60559 Social Security # _______________ 2. DESCRIPTION OF PROPERTY WITH RESPECT TO WHICH THE ELECTION IS BEING MADE: 10,000 shares (the "SHARES") of Common Stock, par value $0.0001 per share, of VI Acquisition Corp., a Delaware corporation (the "COMPANY"). 3. THE DATE ON WHICH PROPERTY WAS TRANSFERRED IS MARCH 11, 2004. The taxable year to which this election relates is calendar year 2004. 4. THE NATURE OF THE RESTRICTION(S) TO WHICH THE PROPERTY IS SUBJECT IS: A. The Shares are not transferable except as permitted by a Management Agreement. Transferees are generally subject to the same restrictions as are imposed on their transferors. Certificates representing the Shares contain legends to give notice of restrictions on transfer. B. If the Taxpayer ceases to serve as a director or other service provider of the Company prior to certain specified time periods (the last day of each such period, a "VESTING DATE"), a portion of the Shares will be subject to repurchase by the Company at the amount the Taxpayer paid for the Shares (the "PURCHASE PRICE"). On each specified Vesting Date, a portion of the Shares subject to repurchase at the Purchase Price will lapse and such portion will then be repurchasable at its fair market value in the event the Taxpayer ceases to serve as a director or other service provided of the Company. On the February 20, 2009 Vesting Date, all Shares then will be repurchasable at their fair market value in the event the Taxpayer ceases to serve as a director or other service provider of the Company. 5. FAIR MARKET VALUE: The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made is $1.00 per Share. 6. AMOUNT PAID FOR PROPERTY: The amount paid by Taxpayer for said property is $1.00 per Share. 7. FURNISHING STATEMENT TO EMPLOYER: A copy of this statement has been furnished to the Company. Dated: March 11, 2004 ____________________________________ Walter van Benthuysen This election must be filed with the Internal Revenue Service Center with which the Taxpayer files his or her Federal income tax returns and must be filed within thirty (30) days after the date of purchase. This filing should be made by registered or certified mail, return receipt requested. The taxpayer must retain two copies of the completed form for filing with his or her Federal and State tax returns for the current tax year and an additional copy for his or her records. 2 EX-10.16 31 c86044exv10w16.txt EMPLOYMENT AGREEMENT Exhibit 10.16 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this "EMPLOYMENT AGREEMENT") is made this 13th day of June, 2003 by and between VICORP RESTAURANTS, INC., a Colorado corporation (the "COMPANY"), and DEBRA KOENIG ("EXECUTIVE"). WHEREAS, the Company and its subsidiaries are engaged in the business of (i) operating and managing family dining restaurants and enterprises and (ii) conducting such other activities as are undertaken from time to time by the Company, VI Acquisition Corp., a Delaware corporation (the "PARENT"), and each of their subsidiaries as a result of future acquisitions, or otherwise (collectively, the "BUSINESS"); WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, as the Chief Executive Officer of the Company; and WHEREAS, the Company and Executive desire to enter into this Employment Agreement to evidence the terms and conditions of such employment. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises in this Employment Agreement, the parties agree as follows: 1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief Executive Officer of the Company, and Executive hereby agrees to accept such employment and agrees to act as Chief Executive Officer of the Company, all in accordance with the terms and conditions of this Employment Agreement. In addition to the foregoing, the Company agrees that, as soon as practicable on or after the execution of this Employment Agreement, the Executive will be elected as a Director of the Company. Executive hereby represents and warrants that neither Executive's entry into this Employment Agreement nor Executive's performance of Executive's obligations hereunder will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or obligation of any nature to which Executive is a party or by which Executive is bound, including, without limitation, any development agreement, non-competition agreement or confidentiality agreement entered into by Executive. 2. TERM OF EMPLOYMENT AND AUTOMATIC RENEWAL. The term of Executive's employment under this Employment Agreement will commence on the date of this Employment Agreement and will continue until the third (3rd) anniversary of the date of this Employment Agreement (the "INITIAL EMPLOYMENT PERIOD"). THE INITIAL EMPLOYMENT PERIOD AND ANY RENEWAL EMPLOYMENT PERIOD (AS DEFINED HEREIN) SHALL AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (EACH, A "RENEWAL EMPLOYMENT PERIOD"), UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT PERIOD OR ANY RENEWAL EMPLOYMENT PERIOD, AS THE CASE MAY BE, EITHER PARTY SHALL GIVE WRITTEN NOTICE TO THE OTHER PARTY OF ITS ELECTION TO TERMINATE THIS EMPLOYMENT AGREEMENT. The Initial Employment Period and the Renewal Employment Periods are hereinafter referred to as the "EMPLOYMENT PERIOD." Notwithstanding anything to the contrary contained herein, the Employment Period is subject to earlier termination pursuant to SECTION 11 below. 3. POSITION AND RESPONSIBILITIES. Executive shall report to and be subject to the direction of the Board of Directors of the Company (the "BOARD"). Executive shall perform and discharge such duties and responsibilities for the Company as the Board may from time to time reasonably assign Executive, provided such duties and responsibilities are consistent with the position of a Chief Executive Officer. Subject to the foregoing, Executive understands and acknowledges that such duties shall be subject to revision and modification by the Company's Board upon reasonable notice to Executive. During the Employment Period, Executive shall devote Executive's full business time, attention, skill and efforts to the performance of Executive's duties herein, and shall perform the duties and carry out the responsibilities assigned to Executive, to the best of Executive's ability, in a diligent, trustworthy and businesslike manner for the purpose of advancing the Company. Executive acknowledges that Executive's duties and responsibilities will require Executive's full-time business efforts and agrees that during the Employment Period, Executive will not engage in any outside business activities that conflict with her obligations under this Employment Agreement. 4. COMPENSATION. (a) BASE SALARY. During the Employment Period, the Company shall pay to Executive a base salary at the rate of $484,380 per year (the "BASE SALARY"), less applicable tax withholding, subject to increase from time to time, solely at the Company's discretion, payable at the Company's regular employee payroll intervals. Executive's performance shall be reviewed annually and the Base Salary may be increased at the Company's sole discretion. (b) DISCRETIONARY BONUS. During the Employment Period, Executive shall be eligible to earn an annual bonus targeted at fifty percent (50%) of her Base Salary upon the achievement of the annual budget, which budget shall be determined by the Board in its sole discretion. Bonus amounts in excess of fifty percent (50%) of Executive's Base Salary may be paid to the Executive if the annual performance goals for a particular year are exceeded, as determined in the sole discretion of the Board. (c) STOCK. Pursuant to a stock purchase agreement (the "STOCK PURCHASE AGREEMENT") to be entered into among Parent, the Executive, the Investors (as defined therein) and certain other executives of the Company, Executive will purchase certain shares of common stock and preferred stock of Parent (collectively, the "EXECUTIVE STOCK"), which shares of Executive Stock shall be subject to certain vesting, repurchase and other obligations and restrictions set forth in that certain senior management agreement to be entered into between Parent and the Executive (the "MANAGEMENT AGREEMENT") and that certain stockholders agreement to be entered into among Parent, Executive, the Investors and certain other shareholders of Parent (the "STOCKHOLDERS AGREEMENT"). 5. BENEFIT PLANS. During the Employment Period, Executive will be entitled to receive traditional employment benefits comparable to those provided to other senior executive officers of the Company (subject to any applicable waiting periods, eligibility requirements, or 2 other restrictions), which benefits may include insurance (medical, dental, life, disability), retirement plans and profit sharing plans. 6. EXPENSES. The Company, in accordance with policies and practices established by the Board from time to time, will pay or reimburse Executive for all expenses (including travel and cell phone expenses) reasonably incurred by Executive during the Employment Period in connection with the performance of Executive's duties under this Employment Agreement, provided that Executive shall provide to the Company documentation or evidence of expenses for which Executive seeks reimbursement. In addition, upon the delivery by Executive to the Company of a detailed description of such expenses, the Company agrees to reimburse Executive for the following reasonable relocation expenses actually incurred in connection with the Executive's relocation to the Denver, Colorado metropolitan area: (i) all transfer fees and sales commissions incurred in connection with the sale of Executive's current home in Illinois; (ii) reasonable legal fees incurred in connection with the sale of Executive's current home in Illinois, and purchase of Executive's new home in Colorado; (iii) all closing fees (including points on Executive's mortgage) incurred in connection with the purchase of Executive's new home in Colorado; (iv) reasonable travel, lodging and dining expenses incurred by Executive and her spouse in connection with a reasonable number of house-hunting trips to Colorado; (v) reasonable moving expenses for the belongings of Executive and her family incurred in connection with the purchase of Executive's new home in Colorado; and (vi) reasonable temporary housing in Colorado, if needed, up to a maximum of five (5) months. 7. VACATION. Executive shall be entitled to vacation at the rate of four (4) weeks per year to be accrued and taken in accordance with the Company's vacation policy from time to time in effect. Vacation which is accrued but not used in a given year will be forfeited as of the end of that year. 8. CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT. On the date hereof, Executive shall execute a confidentiality, inventions and non-solicitation agreement, in the form of EXHIBIT A attached hereto and made a part hereof (the "CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT"). 9. RESTRICTIVE COVENANTS. (a) EXECUTIVE'S ACKNOWLEDGMENT. Executive acknowledges that: (i) Parent and the Company are and will be engaged in the Business during the Employment Period and 3 thereafter; (ii) Parent and the Company are and will be actively engaged in the Business throughout the world; (iii) Executive is one of a limited number of persons who will be developing the Business; (iv) Executive will continue to occupy a position of trust and confidence with the Company after the date of this Employment Agreement and during the Employment Period Executive will continue to become familiar with Parent's and the Company's and each of their subsidiaries' and portfolio companies (collectively, the "GROUP") trade secrets and with other proprietary and confidential information concerning the Group and the Business (and the other businesses of the Group); (v) the agreements and covenants contained in this SECTION 9 are essential to protect the Group and the goodwill of the Business and are a condition precedent to the Company entering into this Employment Agreement; (vi) Executive's employment with the Company has special, unique and extraordinary value to the Company and Parent and the Company would be irreparably damaged if Executive were to provide services to any person or entity in violation of the provisions of this Employment Agreement; and (vii) Executive has means to support Executive and Executive's dependents other than by engaging in the Business, and the provisions of this SECTION 9 will not impair such ability. (b) RESTRICTIONS. Executive will not, during the Restricted Period (as defined below), anywhere in North America (the "RESTRICTED TERRITORY"), directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) own, operate, manage, control, invest in, perform services for, or engage or participate in any manner in, or render services to (alone or in association with any person or entity) or otherwise assist any person or entity in, the following entities, or in any entity or entities directly or indirectly related to the following entities: Bob Evans'; IHOP; Denny's; Perkin's; Marie Calendar; Mimi's; and Cracker Barrel. The term "RESTRICTED PERIOD" means the period of time from the date of this Employment Agreement until one (1) year after the termination for any reason of Executive's employment relationship with the Group or any successor thereto (whether pursuant to a written agreement or otherwise, including any Renewal Employment Period under this Employment Agreement). The Restricted Period shall be extended for a period equal to any time period that Executive is in violation of SECTION 9. Nothing contained in SECTION 9(B) above shall be construed to prevent Executive from investing in the stock of any competing corporation listed on a national securities exchange or traded in the over-the-counter market, but only if Executive is not involved in the business of said corporation and if Executive and Executive's associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof), collectively, do not own more than an aggregate of one percent (1%) of the stock of such corporation. (c) SCOPE/SEVERABILITY. The parties acknowledge that the business of Parent and the Company is and will be national in scope and thus the covenants in this SECTION 9 would be ineffective if the covenants were to be limited to a particular geographic area. If any court of competent jurisdiction at any time deems the Restricted Period unreasonably lengthy, or the Restricted Territory unreasonably extensive, or any of the covenants set forth in this SECTION 9 not fully enforceable, the other provisions of this SECTION 9, and this Employment Agreement in general, will nevertheless stand and to the full extent consistent with law continue in full force and effect, and it is the intention and desire of the parties that the court treat any provisions of this Employment Agreement which are not fully enforceable as having been modified to the 4 extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent (for example, that the Restricted Period be deemed to be the longest period permissible by law, but not in excess of the length provided for in SECTION 9(B), and the Restricted Territory be deemed to comprise the largest territory permissible by law under the circumstances but not in excess of the territory provided for in SECTION 9(b)). 10. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements and covenants set forth in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement are reasonable and necessary for the protection of Parent's and the Company's business interests, that irreparable injury will result to Parent and the Company if Executive breaches any of the terms of said covenants, and that in the event of Executive's breach of any such covenants, Parent and the Company will have no adequate remedy at law. Executive accordingly agrees that, in the event of any breach by Executive of any of said covenants, Parent and the Company will be entitled to immediate injunctive and other equitable relief, without the necessity of showing actual monetary damages. Nothing in this SECTION 10 will be construed as prohibiting Parent or the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of any damages that they are able to prove. 11. TERMINATION. Notwithstanding anything in SECTION 2 of this Agreement to the contrary, Executive's services shall terminate upon the first to occur of the following events: (a) DEATH. The Employment Period will terminate immediately upon the death of Executive. If the Employment Period is terminated pursuant to this SECTION 11(A), the Company shall have no further obligation to Executive (or her estate) except for salary and benefits accrued through the date of termination. (b) DUE CAUSE. The Company may terminate the Employment Period immediately upon written notice to Executive for Due Cause. The following events will be deemed to constitute "DUE CAUSE": (i) Executive's breach of any of Executive's obligations under the Confidentiality, Inventions and Non-Solicitation Agreement, the Stock Purchase Agreement, the Management Agreement or the Stockholders Agreement; or (ii) Executive's neglect of, willful misconduct in connection with the performance of, or refusal to perform Executive's duties in accordance with SECTION 3 of this Employment Agreement, which, in the case of neglect or refusal to perform, has not been cured to the Company's good faith satisfaction within thirty (30) days after Executive has been provided written notice of the same and the corrective action required by the Company; or (iii) Executive's engagement in any conduct which injures in a material respect the integrity or reputation of the Company or which impugns Executive's 5 own integrity or reputation so as to cause Executive to be unfit to act in the capacity of Chief Executive Officer of the Company; or (iv) the Board's good faith determination that Executive has committed an act or acts constituting a felony, or has committed any other intentional act involving dishonesty or fraud against the Company. If the Employment Period is terminated pursuant to this SECTION 11(b), the Company shall have no further obligation to Executive except for salary and benefits accrued through the date of termination. (c) PERMANENT DISABILITY. The Company may terminate the Employment Period upon the Permanent Disability (as defined below) of the Executive. For purposes of this Employment Agreement, the term "PERMANENT DISABILITY" shall mean that Executive is entitled to benefits under the Company's long-term disability plan, or if no such plan exists, if the Executive is unable to perform, by reason of physical or mental incapacity, the essential functions of her position for ninety (90) or more days in any one hundred twenty (120) day period. The Board shall determine, according to the facts then available, whether and when a Permanent Disability has occurred. Such determination shall not be arbitrary or unreasonable. (d) TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. The Company may terminate the Employment Period without Due Cause upon thirty (30) days' prior written notice. If the Employment Period is terminated pursuant to this SECTION 11(d), then Executive will be entitled to receive as severance pay, the continuation of her Base Salary at the annual rate then in effect for a period of twelve (12) months following the termination of her employment (the "SEVERANCE PERIOD"), payable in accordance with the Company's payroll policy from time to time in effect. Upon a termination under this SECTION 11(d), the Company may elect, within thirty (30) days of the termination of the Employment Period, to extend the duration of the Restricted Period for up to an additional twelve (12) month period by so notifying Executive. If the Company elects to extend the Restricted Period, the amount of severance pay shall be increased by one-twelfth (1/12) of her Base Salary, at the annual rate then in effect, for each month by which the Restricted Period is extended. In addition, if the Executive elects COBRA continuation coverage, the Company shall pay for such coverage through the Severance Period at the same rate as it pays for health insurance coverage for its active employees (with the Executive required to pay for any employee paid portion of such coverage). Nothing herein provided, however, shall be construed to extend the period of time over which such COBRA continuation coverage otherwise may be provided to the Executive and/or her dependents. Notwithstanding the above, Executive shall receive such amounts only if Executive is not in material breach of any of the provisions of the Confidentiality, Inventions and Non-Solicitation Agreement and SECTION 9 of this Employment Agreement and has complied with SECTION 11(f) of this Employment Agreement. (e) VOLUNTARY RESIGNATION BY EXECUTIVE. Executive may terminate the Employment Period at any time for any reason upon thirty (30) days' prior written notice. If the Employment Period is terminated pursuant to this SECTION 11(e), the Company shall have no further obligation to Executive except for salary and benefits accrued through the date of termination; provided, however, that if Executive is terminating the Employment Period for 6 Good Reason (as defined below), then Executive will be entitled to receive the severance benefits on the terms and subject to all of the conditions and rights as described in SECTION 11(d). The following events will be deemed "GOOD REASON" for which Executive may terminate the Employment Period and receive the severance payments set forth in SECTION 11(d): (i) a material diminution of the Executive's duties, responsibilities, position or title after notice to the Company and a thirty (30) day opportunity to cure; or (ii) any material breach of this Employment Agreement on the part of the Company (including, but not limited to, any decrease in the Base Salary without the consent of the Executive, or relocation of Executive's place of employment to a location that is greater than fifty (50) miles from the Denver, Colorado metropolitan area), after notice to the Board, and a thirty (30) day opportunity to cure; provided, however, that Executive is not in material breach of any of the terms of this Employment Agreement. (f) GENERAL RELEASE. The receipt of any payment as set forth in SECTIONS 11(d)-(e) above shall be contingent upon Executive's execution of an agreement acceptable to the Company that (i) waives any rights the Executive may otherwise have against the Company and its Affiliates, (ii) releases the Company and its Affiliates from actions, suits, claims, proceedings and demands related to the period of employment and/or the termination of employment, and (iii) contains certain other standard obligations which shall be set forth at the time of the termination. For purposes of this Employment Agreement, the term "AFFILIATES" means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Company including, without limitation, any member of an affiliated group of which the Company is a common parent corporation as provided in Section 1404 of the Code. (g) SURVIVAL. Termination of the Employment Period in accordance with this SECTION 11, or expiration of the Employment Period, will not affect the provisions of this Employment Agreement that survive such termination, including, without limitation, the provisions in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement, and will not limit either party's ability to pursue remedies at law or equity. 12. ATTORNEY'S FEES. If either party prevails in a legal or arbitration action to enforce or protect its rights under this Employment Agreement, then that party shall be entitled to recover reasonable attorneys' fees, costs, and expenses, in addition to all other relief, including but not limited to damages and injunctive relief. 13. EXECUTIVE ASSISTANCE. Both during and after Executive's employment with the Company, Executive shall, upon reasonable notice, furnish the Company with such information as may be in Executive's possession or control, and cooperate with the Company, as the Company may reasonably request (with due consideration to Executive's business activities and obligations after the Employment Period), in connection with any litigation, claim, or other dispute in which the Company or any of its Affiliates is or may become a party. The Company 7 shall reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in fulfilling Executive's obligations under this SECTION 13 and shall provide Executive, if the obligation occurs after the Employment Period, with a reasonable per diem allowance. 14. EFFECT OF PRIOR AGREEMENTS. This Employment Agreement, the Management Agreement, the Stockholders Agreement, the Stock Purchase Agreement and the Confidentiality, Inventions and Non-Solicitation Agreement contain the entire understanding between Parent, the Company and Executive relating to the subject matter hereof and supersede any prior employment agreement between Executive, Parent and the Company or other agreement relating to the subject matter hereof between Parent, the Company and Executive. Executive agrees and acknowledges that she is entitled to no benefits or compensation and has no other rights against the Company, the Parent, and their Affiliates, except as otherwise set forth in this Employment Agreement and, to the extent any such benefits, compensation or rights are owed to him, expressly waives such benefits, compensation and rights. 15. MODIFICATION AND WAIVER. This Employment Agreement may not be modified or amended, nor may any provisions of this Employment Agreement be waived, except by an instrument in writing signed by the parties. No written waiver will be deemed to be a continuing waiver unless specifically stated therein, and each such waiver will operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 16. SEVERABILITY. If, for any reason, any provision of this Employment Agreement is held invalid, such invalidity will not affect any other provision of this Employment Agreement, and each provision will to the full extent consistent with law continue in full force and effect. If any provision of this Employment Agreement is held invalid in part, such invalidity will in no way affect the rest of such provision, and the rest of such provision, together with all other provisions of this Employment Agreement, will, to the full extent consistent with law, continue in full force and effect. 17. NOTICES. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Employment Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VICORP Restaurants, Inc. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Fax: (312) 255-4820 8 With a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Attn: Seth M. Hemming, Esq. Fax: (312) 207-6400 If to Executive: Debra Koenig 7S710 Donwood Drive Naperville, Illinois 60540 Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this SECTION 17. 18. THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the parties to this Employment Agreement and their respective permitted successors and assigns, any rights or remedies under or by reason of this Employment Agreement. 19. HEADINGS. The headings and other captions in this Employment Agreement are included solely for convenience of reference and will not control the meaning and interpretation of any provision of this Employment Agreement. 20. GOVERNING LAW; ARBITRATION. This Employment Agreement has been executed in the State of Illinois, and its validity, interpretation, performance, and enforcement will be governed by the laws of such state, except with respect to conflicts of laws principles. Except for disputes arising out of an alleged violation of the Restrictive Covenants set forth in the Confidentiality, Inventions and Non-Solicitation AGREEMENT and in SECTION 9 of this Employment Agreement, any controversy or claim arising out of or relating to any provision of this Employment Agreement or any other document or agreement referred to herein shall be resolved by arbitration. The arbitration process shall be instigated by either party giving written notice to the other of the desire for arbitration and the factual allegations underlying the basis for the dispute. The arbitration shall be conducted by such alternative dispute resolution service as is agreed to by the parties, or, failing such agreement within thirty (30) days after such dispute arises, by arbitrators selected as described below in accordance with the rules and procedures established by the American Arbitration Association. Only a person who is a practicing lawyer admitted to a state bar may serve as an arbitrator. Each party shall select one arbitrator, and those arbitrators shall choose a third arbitrator; these arbitrators shall constitute the panel. The American Arbitration Association rules for employment arbitration shall control any discovery conducted in connection with the arbitration. The expenses of arbitration (other than attorneys' fees) shall be shared as determined by arbitration. Each side to the claim or controversy shall pay their own attorneys' fees. Any result reached by the panel shall be binding on all parties to the arbitration, and no appeal may be taken. It is agreed that any party to any award rendered in such 9 arbitration proceeding may seek a judgment upon the award and that judgment may be entered thereon by any court having jurisdiction. The arbitration shall be conducted in the State of Colorado. 21. NON-ASSIGNABILITY/BINDING EFFECT. The Executive acknowledges that the services to be rendered by him are unique and personal. Accordingly, the Executive may not assign any of her rights or delegate any of her duties or obligations under this Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. 22. NO STRICT CONSTRUCTION. The language used in this Employment Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any person. [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW] 10 IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be executed by its duly authorized officer and Executive has signed this Employment Agreement, as of the date first above written. VICORP RESTAURANTS, INC. By: /s/ Walter Van Benthuysen ------------------------------- Its: Chairman EXECUTIVE /s/ Debra Koenig ------------------------------------ DEBRA KOENIG 11 EXHIBIT A CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT In consideration of employment by VICORP Restaurants, Inc., a Colorado corporation, its successors or assigns (the "COMPANY") of Debra Koenig ("EXECUTIVE"), it is understood and agreed as follows: 1. CONFIDENTIAL INFORMATION. (a) Executive acknowledges that the Confidential Information (as defined below) constitutes a protectible business interest of the Company and its parent [VI ACQUISITION CORP.], a Delaware corporation ("PARENT") and covenants and agrees that at all times during the period of Executive's employment, and at all times after termination of such employment, Executive will not, directly or indirectly, disclose, furnish, make available or utilize any Confidential Information other than in the course of performing duties as an employee of the Company. Executive will abide by Company policies and rules as may be established from time to time by it for the protection of its Confidential Information. Executive agrees that in the course of employment with the Company Executive will not bring to the Company's offices nor use, disclose to the Company, or induce the Company to use, any confidential information or documents belonging to others. Executive's obligations under this SECTION 1.a. with respect to particular Confidential Information will survive expiration or termination of this Confidentiality, Inventions and Non-Solicitation Agreement (this "AGREEMENT"), and Executive's employment with the Company, and will terminate only at such time (if any) as the Confidential Information in question becomes generally known to the public other than through a breach of Executive's obligations under this Agreement. (b) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" means any and all confidential, proprietary or trade secret information, whether disclosed, directly or indirectly, verbally, in writing or by any other means in tangible or intangible form, including that which is conceived or developed by Executive, applicable to or in any way related to: (i) the present or future business of Parent, the Company or any of their Affiliates (as defined below); (ii) the research and development of Parent, the Company or any of their Affiliates; or (iii) the business of any client or vendor of Parent, the Company or any of their Affiliates. Such Confidential Information includes the following property or information of Parent, the Company and their Affiliates, by way of example and without limitation, trade secrets, processes, formulas, data, program documentation, customer lists, designs, drawings, algorithms, source code, object code, know-how, improvements, inventions, licenses, techniques, all plans or strategies for marketing, development and pricing, business plans, financial statements, profit margins and all information concerning existing or potential clients, suppliers or vendors. Confidential Information of Parent and the Company also means all similar information disclosed to Parent or the Company by third parties which is subject to confidentiality obligations. The term "AFFILIATES" means (i) all persons or entities controlling, controlled by or under common control with, Parent and/or the Company, (ii) all companies or entities in which Parent or the Company own an equity interest and (iii) all predecessors, successors and assigns of the those Affiliates identified in (i) and (ii). 2. RETURN OF MATERIALS. Upon termination of employment with the Company, and regardless of the reason for such termination, Executive will leave with, or promptly return to, the Company all documents, records, notebooks, magnetic tapes, disks or other materials, including all copies, in Executive's possession or control which contain Confidential Information or any other information concerning Parent, the Company, any of their Affiliates or any of their respective products, services or clients, whether prepared by the Executive or others. 3. INVENTIONS AS SOLE PROPERTY OF THE COMPANY. (a) Executive covenants and agrees that all Inventions (as defined below) shall be the sole and exclusive property of the Company. (b) As used in this Agreement, the term "INVENTIONS" means any and all inventions, developments, discoveries, improvements, works of authorship, concepts or ideas, or expressions thereof, whether or not subject to patents, copyright, trademark, trade secret protection or other intellectual property right protection (in the United States or elsewhere), and whether or not reduced to practice, conceived or developed by Executive while employed with the Company or within one (1) year following termination of such employment which relate to or result from the actual or anticipated business, work, research or investigation of Parent, the Company or any of their Affiliates or which are suggested by or result from any task assigned to or performed by Executive for Parent, the Company or any of their Affiliates. (c) Executive acknowledges that all original works of authorship which are made by her (solely or jointly) are works made for hire under the United States Copyright Act (17 U.S.C., et seq.). (d) Executive agrees to promptly disclose to the Company all Inventions, all original works of authorship and all work product relating thereto. This disclosure will include complete and accurate copies of all source code, object code or machine-readable copies, documentation, work notes, flow-charts, diagrams, test data, reports, samples and other tangible evidence or results (collectively, "TANGIBLE EMBODIMENTS") of such Inventions, works of authorship and work product. All Tangible Embodiments of any Invention, work of authorship or work product related thereto will be deemed to have been assigned to the Company as a result of the act of expressing any Invention or work of authorship therein. (e) Executive hereby assigns to the Company (together with the right to prosecute or sue for infringements or other violations of the same) the entire worldwide right, title and interest to any such Inventions or works made for hire, and Executive 2 agrees to perform, during and after employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company's expense, in registering, recording, obtaining, maintaining, defending, enforcing and assigning Inventions or works made for hire in any and all countries. Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive's agents and attorneys-in-fact to act for and in Executive's behalf and instead of Executive, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Executive; this designation and appointment constitutes an irrevocable power of attorney and is coupled with an interest. (f) Without limiting the generality of any other provision of this SECTION 3, Executive hereby authorizes the Company and each of its Affiliates (and their respective successors) to make any desired changes to any part of any Invention, to combine it with other materials in any manner desired, and to withhold Executive's identity in connection with any distribution or use thereof alone or in combination with other materials. (g) Pursuant to the Illinois Employee Patent Act, Public Act 83-493, this Agreement does not apply to any invention for which no equipment, supplies, facility or trade secret information of Parent or the Company was used and which was developed entirely on Executive's own time, unless (1) the invention relates (a) to the business of Parent or the Company or (b) to Parent's or the Company's actual demonstrably anticipated research or development; or (2) the invention results from any work performed by Executive for Parent or the Company. (h) The obligations of Executive set forth in this SECTION 3 (including, but not limited to, the assignment obligations) will continue beyond the termination of Executive's employment with respect to Inventions conceived or made by Executive alone or in concert with others during Executive's employment with the Company and during the one (1) year thereafter, whether pursuant to this Agreement or otherwise. These obligations will be binding upon Executive and Executive's executors, administrators and other representatives. 4. LIST OF PRIOR INVENTIONS. All Inventions which Executive has made prior to employment by the Company are excluded from the scope of this Agreement. As a matter of record, Executive has set forth on ANNEX I hereto a complete list of those Inventions which might relate to Parent's or the Company's business and which have been made by Executive prior to employment with the Company. Executive represents that such list is complete. If no list is attached, Executive represents that there are no prior Inventions. 3 5. NON-SOLICITATION. (a) Executive will not, during the term of Executive's employment with the Company and for two (2) years thereafter (the "RESTRICTED PERIOD") (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) with or through any individual or entity: i. employ, engage or explicitly solicit for employment any individual who is, or was at any time during the twelve-month period immediately prior to the termination of Executive's employment with the Company for any reason, an employee of Parent, the Company or any of their Affiliates or otherwise seek to adversely influence or alter such individual's relationship with Parent, the Company or any of their Affiliates; or ii. explicitly solicit or encourage any individual or entity that is, or was during the twelve-month period immediately prior to the termination of Executive's employment with the Company for any reason, a customer or vendor of Parent or the Company to terminate or otherwise alter her, her or its relationship with Parent or the Company. (b) The Restricted Period shall be extended for a period equal to any time period that Executive is in violation of this SECTION 5. 6. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements and covenants set forth in this Agreement are reasonable and necessary for the protection of Parent's and the Company's business interests, that irreparable injury will result to Parent and the Company if Executive breaches any of the terms of said covenants, and that in the event of Executive's actual or threatened breach of any such covenants, Parent and the Company will have no adequate remedy at law. Executive accordingly agrees that, in the event of any actual or threatened breach by Executive of any of said covenants, Parent and the Company will be entitled to immediate injunctive and other equitable relief, without posting bond or other security and without the necessity of showing actual monetary damages. Nothing in this SECTION 6 will be construed as prohibiting Parent or the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of any damages that they are able to prove. 7. NO RIGHT TO EMPLOYMENT. No provision of this Agreement shall give Executive any right to continue in the employ of the Company or any of its Affiliates, create any inference as to the length of employment of Executive, affect the right of the Company or its Affiliates to terminate the employment of Executive, with or without cause, or give Executive any right to participate in any Executive welfare or benefit plan or other program of the Company or any of its Affiliates. 8. MODIFICATION AND WAIVER. This Agreement may not be modified or amended except by an instrument in writing signed by the parties. No term or condition of this Agreement will be deemed to have been waived, except by written instrument of the party charged with such waiver. No such written waiver will be deemed to be a continuing waiver 4 unless specifically stated therein, and each such waiver will operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 9. SEVERABILITY. Executive acknowledges that the agreements and covenants contained in this Agreement are essential to protect Parent, the Company and their goodwill. Each of the covenants in this Agreement will be construed as independent of any other covenants or other provisions of this Agreement. It is the intention and desire of the parties that the court treat any provisions of this Agreement which are not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent. 10. NOTICES. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VICORP Restaurants, Inc. c/o Wind Point Partners Suite 3700 676 N. Michigan Avenue Chicago, IL 60611 Attn: Michael Solot Fax: (312) 255-4820 With a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Attn.: Seth M. Hemming, Esq. Fax: (312) 207-6400 If to Executive: Debra Koenig 7S710 Donwood Drive Naperville, Illinois 60540 5 Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this SECTION 10. 11. HEADINGS. The headings and other captions in this Agreement are included solely for convenience of reference and will not control the meaning and interpretation of any provision of this Agreement. 12. GOVERNING LAW. This Agreement has been executed in the State of Illinois, and its validity, interpretation, performance, and enforcement will be governed by the laws of such state, except with respect to conflicts of laws principles. 13. BINDING EFFECT. This Agreement will be binding upon and inure to the benefit of Executive, the Company, and their respective successors and permitted assigns. The Company will be entitled to assign its rights and duties under this Agreement provided that the Company will remain liable to Executive should such assignee fail to perform its obligations under this Agreement. 14. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any person. 6 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has signed this Agreement, as of the date written below. EXECUTIVE: Date: June 13 , 2003 /s/ Debra Koenig -------------------- DEBRA KOENIG VICORP RESTAURANTS, INC. By: /s/ Walter Van Benthuysen --------------------------------------- Its: Chairman 7 EX-10.17 32 c86044exv10w17.txt AMENDMENT TO EMPLOYMENT AGREEMENT Exhibit 10.17 [LETTERHEAD OF VICORP] Ms. Debra Koenig VICORP Restaurants, Inc. 400 West 48th Avenue Denver, Colorado 80216 Re: AMENDMENT TO EMPLOYMENT AGREEMENT Dear Debra: This letter confirms our agreement to decrease the "Base Salary" set forth under Section 4(a) of your Employment Agreement dated June 13, 2003 (the "EMPLOYMENT AGREEMENT"), from $484,380 to $400,000 in exchange for your right to purchase an additional 3,575 shares of the common stock of VI Acquisition Corp. The change described herein shall be effective January 1, 2004. All other terms of your Employment Agreement shall be unaffected by this letter and shall remain in full force and effect. Please ratify and confirm your agreement to the change described above by signing on the space provided below and returning this letter to me. /s/ Walter Van Benthuysen -------------------------------------- Walter Van Benthuysen As Chairman Ratified and confirmed this 15th day of March, 2004. /s/ Debra Koenig - --------------------------------- Debra Koenig EX-10.18 33 c86044exv10w18.txt EMPLOYMENT AGREEMENT Exhibit 10.18 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this "EMPLOYMENT AGREEMENT") is made this 13th day of June, 2003 by and between VICORP RESTAURANTS, INC., a Colorado corporation (the "COMPANY"), and ROBERT KALTENBACH ("EXECUTIVE"). WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement, dated as of the 15th day of April, 2003, by and among VI Acquisition Corp., a Delaware corporation (the "PARENT"), Midway Investors Holdings, Inc., a Delaware corporation ("MIDWAY"), the shareholders of Midway (including the Executive) and certain other parties (the "SALES AGREEMENT"), the Parent is acquiring all of the outstanding equity of Midway (the "TRANSACTION"); WHEREAS, the Company is a wholly owned subsidiary of Midway and the Executive is currently employed by the Company; WHEREAS, the Company and its subsidiaries are engaged in the business of (i) operating and managing family dining restaurants and enterprises and (ii) conducting such other activities as are undertaken from time to time by the Company, its Parent, and each of their subsidiaries as a result of future acquisitions, or otherwise (collectively, the "BUSINESS"); WHEREAS, the Company desires to continue to employ Executive, and Executive desires to continue to be employed by the Company, as the Chief Operating Officer of the Company; and WHEREAS, the Company and Executive desire to enter into this Employment Agreement to evidence the terms and conditions of such employment. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises in this Employment Agreement, the parties agree as follows: 1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief Operating Officer of the Company, and Executive hereby agrees to accept such employment and agrees to act as Chief Operating Officer of the Company, all in accordance with the terms and conditions of this Employment Agreement. Executive hereby represents and warrants that neither Executive's entry into this Employment Agreement nor Executive's performance of Executive's obligations hereunder will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or obligation of any nature to which Executive is a party or by which Executive is bound, including, without limitation, any development agreement, non-competition agreement or confidentiality agreement entered into by Executive. 2. TERM OF EMPLOYMENT AND AUTOMATIC RENEWAL. The term of Executive's employment under this Employment Agreement will commence on the date of this Employment Agreement and will continue until the third (3rd) anniversary of the date of this Employment Agreement (the "INITIAL EMPLOYMENT PERIOD"). THE INITIAL EMPLOYMENT PERIOD AND ANY RENEWAL EMPLOYMENT PERIOD (AS DEFINED HEREIN) SHALL AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (EACH, A "RENEWAL EMPLOYMENT PERIOD"), UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT PERIOD OR ANY RENEWAL EMPLOYMENT PERIOD, AS THE CASE MAY BE, EITHER PARTY SHALL GIVE WRITTEN NOTICE TO THE OTHER PARTY OF ITS ELECTION TO TERMINATE THIS EMPLOYMENT AGREEMENT. The Initial Employment Period and the Renewal Employment Periods are hereinafter referred to as the "EMPLOYMENT PERIOD." Notwithstanding anything to the contrary contained herein, the Employment Period is subject to earlier termination pursuant to SECTION 11 below. 3. POSITION AND RESPONSIBILITIES. Executive shall report to and be subject to the direction of the Chief Executive Officer of the Company. Executive shall perform and discharge such duties and responsibilities for the Company as the Chief Executive Officer may from time to time reasonably assign Executive. Executive understands and acknowledges that such duties and responsibilities shall be subject to revision and modification by the Company's Board of Directors (the "BOARD") upon reasonable notice to Executive. The Company understands and acknowledges that any material diminution in such duties and responsibilities, or in Executive's position or title, shall constitute "Good Reason," as used in SECTION 11 below. During the Employment Period, Executive shall devote Executive's full business time, attention, skill and efforts to the performance of Executive's duties herein. Executive acknowledges that Executive's duties and responsibilities will require Executive's full-time business efforts and agrees that during the Employment Period, Executive will not engage in any outside business activities that conflict with his obligations under this Employment Agreement. 4. COMPENSATION. (a) BASE SALARY. During the Employment Period, the Company shall pay to Executive a base salary at the rate of $430,560 per year (the "BASE SALARY"), less applicable tax withholding, subject to increase from time to time, payable at the Company's regular employee payroll intervals. Executive's performance shall be reviewed annually and the Base Salary may be increased at the Board's sole discretion, based upon Executive's performance. (b) DISCRETIONARY BONUS. During the Employment Period, Executive shall be eligible to earn an annual bonus targeted at fifty percent (50%) of his Base Salary upon the achievement of the annual budget, such budget to be determined by the Board in its sole discretion. A bonus program shall be implemented which shall set forth eligibility to earn bonuses in amounts greater than, or less than, fifty percent (50%) of Executive's Base Salary, if the annual performance goals for a particular year are either exceeded or not met in full. (c) STOCK. Pursuant to a stock purchase agreement (the "STOCK PURCHASE AGREEMENT") to be entered into among Parent, the Executive, the Investors (as defined therein) and certain other executives of the Company, Executive will purchase certain shares of common stock and preferred stock of Parent (collectively, the "EXECUTIVE STOCK"), and/or receive an option to purchase certain of such shares, which shares of Executive Stock shall be subject to certain vesting, repurchase and other obligations and restrictions set forth in that certain senior 2 management agreement to be entered into between Parent and the Executive (the "MANAGEMENT AGREEMENT"), that certain stockholders agreement to be entered into among Parent, Executive, the Investors and certain other shareholders of Parent (the "STOCKHOLDERS AGREEMENT"), and that certain Nonstatutory Stock Option Agreement (the "OPTION AGREEMENT"). 5. BENEFIT PLANS. During the Employment Period, Executive will be entitled to receive the same employment benefits provided to other senior executive officers of the Company (subject to any applicable waiting periods, eligibility requirements, or other restrictions), which benefits, in the aggregate, shall be substantially similar in value to the benefits currently being provided to the Executive. 6. EXPENSES. The Company, in accordance with its policies and practices established from time to time, will pay or reimburse Executive for all expenses (including travel and cell phone expenses) reasonably incurred by Executive during the Employment Period in connection with the performance of Executive's duties under this Employment Agreement, provided that Executive shall provide to the Company documentation or evidence of expenses for which Executive seeks reimbursement. 7. VACATION. Executive shall be entitled to vacation at the rate of four (4) weeks per year to be accrued and taken in accordance with the Company's vacation policy from time to time in effect. Vacation which is accrued but not used in a given year will be forfeited as of the end of that year. 8. CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT. On the date hereof, Executive shall execute a confidentiality, inventions and non-solicitation agreement, in the form of EXHIBIT A attached hereto and made a part hereof (the "CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT"). 9. RESTRICTIVE COVENANTS. Executive agrees and acknowledges that he is and shall be bound by certain covenants and restrictions set forth in the Sales Agreement, which relate to his ability to engage in competitive activities against the Parent and/or the Company both during the Employment Period and for a period thereafter (the "NON-COMPETITION COVENANTS"). The terms of the Non-Competition Covenants are expressly incorporated herein by reference. 10. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements and covenants set forth in the Confidentiality, Inventions and Non-Solicitation Agreement and referenced in SECTION 9 of this Employment Agreement are reasonable and necessary for the protection of Parent's and the Company's business interests, that irreparable injury may result to Parent and the Company if Executive breaches any of the terms of said covenants, and that in the event of Executive's breach of any such covenants, Parent and the Company will have no adequate remedy at law. Executive accordingly agrees that, in the event of any breach by Executive of any of said covenants, Parent and the Company will be entitled to immediate injunctive and other equitable relief, and without the necessity of showing actual monetary damages. Nothing in this SECTION 10 will be construed as prohibiting Parent or the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of any damages that they are able to prove. 3 11. TERMINATION. Notwithstanding anything in SECTION 2 of this Agreement to the contrary, Executive's services shall terminate, and the Employment Period shall end, upon the first to occur of the following events: (a) DEATH. The Employment Period will terminate immediately upon the death of Executive. If the Employment Period is terminated pursuant to this SECTION 11(a), the Company shall have no further obligation to Executive (or his estate) except for salary and benefits accrued through the date of termination. (b) DUE CAUSE. The Company may terminate the Employment Period immediately upon written notice to Executive for Due Cause. The following events will be deemed to constitute "DUE CAUSE": (i) Executive's breach of any of the material terms of Executive's Confidentiality, Inventions and Non-Solicitation Agreement, the Sales Agreement, the Stock Purchase Agreement, the Management Agreement or the Stockholders Agreement; or (ii) Executive's neglect of, willful misconduct in connection with the performance of, or refusal to perform Executive's duties in accordance with SECTION 3 of this Employment Agreement, which, in the case of neglect or refusal to perform, has not been cured to the Company's good faith satisfaction within thirty (30) days after Executive has been provided notice of the same; or (iii) Executive's engagement in any conduct which injures in a material respect the integrity or reputation of the Company or which impugns Executive's own integrity or reputation so as to cause Executive to be unfit to act in the capacity of Chief Operating Officer of the Company; or (iv) the Executive's commission of any act or acts constituting a felony, or other act or acts involving dishonesty or fraud against the Company. If the Employment Period is terminated pursuant to this SECTION 11(b), the Company shall have no further obligation to Executive under this Agreement except for salary and benefits accrued through the date of termination. (c) PERMANENT DISABILITY. The Company may terminate the Employment Period upon the Permanent Disability (as defined below) of the Executive. For purposes of this Employment Agreement, the term "PERMANENT DISABILITY" shall mean that Executive is unable to perform, by reason of physical or mental incapacity, his or her duties and responsibilities for ninety (90) or more days in any one hundred twenty (120) day period. (d) TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. The Company may terminate the Employment Period without Due Cause upon thirty (30) days' prior written notice. If the Employment Period is terminated pursuant to this SECTION 11(d), then Executive will be 4 entitled to receive as severance pay, an amount equal to Five Hundred Thousand Dollars ($500,000) as reduced by applicable withholding tax, payable in equal monthly installments for a period of twelve (12) months following his employment termination (the "SEVERANCE PERIOD"); provided, however, the Company may elect, within thirty (30) days of the termination of the Employment Period, to extend the duration of the Non-Competition Covenants for up to an additional twelve (12) month period by so notifying Executive. If the Company elects to extend the Non-Competition Covenants, the amount of severance pay shall be increased by $41,666.67 for each month by which the Non-Competition Covenants are extended. In addition, if the Executive elects COBRA continuation coverage, the Company shall pay for such coverage through the Severance Period at the same rate as it pays for health insurance coverage for its active employees (with the Executive required to pay for any employee paid portion of such coverage). Nothing herein provided, however, shall be construed to extend the period of time over which such COBRA continuation coverage otherwise may be provided to the Executive and/or his dependents. Notwithstanding the above, Executive shall receive such amounts only if Executive is not in material breach of any of the provisions of the Confidentiality, Inventions and Non-Solicitation Agreement and SECTION 9 of this Employment Agreement and has complied with SECTION 11(f) of this Employment Agreement. (e) VOLUNTARY RESIGNATION BY EXECUTIVE. Executive may terminate the Employment Period at any time for any reason upon thirty (30) days' prior written notice. If the Employment Period is terminated pursuant to this SECTION 11(e), the Company shall have no further obligation to Executive except for salary and benefits accrued through the date of termination; provided, however, that if Executive is terminating the Employment Period for Good Reason (as defined below), then Executive will be entitled to receive the severance benefits on the terms and subject to all of the conditions and rights as described in SECTION 11(d). The following events will be deemed "GOOD REASON" for which Executive may terminate the Employment Period and receive the severance payments set forth in SECTION 11(d): (i) a material diminution of the Executive's duties, responsibilities, position or title after notice to the Company and a thirty (30) day opportunity to cure; or (ii) any material breach of this Employment Agreement on the part of the Company (including, but not limited to, any decrease in the Base Salary without the consent of the Executive, or relocation of Executive's place of employment to a location that is greater than fifty (50) miles from the Denver, Colorado metropolitan area), after notice to the Board, and a thirty (30) day opportunity to cure; provided, however, that Executive is not in material breach of any of the terms of this Employment Agreement. (f) GENERAL RELEASE. The receipt of any payment as set forth in SECTIONS 11(d)-(e) above shall be contingent upon Executive's execution of an agreement acceptable to the Company that (i) waives any rights the Executive may otherwise have against the Company and its Affiliates, and (ii) releases the Company and its Affiliates from actions, suits, claims, proceedings and demands related to the period of employment and/or the termination of employment. For purposes of this Employment Agreement, the term "AFFILIATES" means any 5 individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Company including, without limitation, any member of an affiliated group of which the Company is a common parent corporation as provided in Section 1404 of the Code. (g) SURVIVAL. Termination of the Employment Period in accordance with this SECTION 11, or expiration of the Employment Period, will not affect the provisions of this Employment Agreement that survive such termination, including, without limitation, the provisions in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement, and will not limit either party's ability to pursue remedies at law or equity. 12. EXECUTIVE ASSISTANCE. Both during and after Executive's employment with the Company, Executive shall, upon reasonable notice, furnish the Company with such information as may be in Executive's possession or control, and cooperate with the Company, as the Company may reasonably request (with due consideration to Executive's business activities and obligations after the Employment Period), in connection with any litigation, claim, or other dispute in which the Company or any of its Affiliates is or may become a party. The Company shall reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in fulfilling Executive's obligations under this SECTION 12. 13. EFFECT OF PRIOR AGREEMENTS. This Employment Agreement, the Management Agreement, the Sales Agreement, the Stockholders Agreement, the Stock Purchase Agreement, the Option Agreement and the Confidentiality, Inventions and Non-Solicitation Agreement contain the entire understanding between Parent, the Company and Executive relating to the subject matter hereof and supersede any prior employment agreement between Executive, Parent and the Company or other agreement relating to the subject matter hereof between Parent, the Company and Executive. Executive agrees and acknowledges that he is entitled to no benefits or compensation and has no other rights against the Company, the Parent, and their Affiliates, except as otherwise set forth in this Employment Agreement and, to the extent any such benefits, compensation or rights are owed to him, expressly waives such benefits, compensation and rights. 14. MODIFICATION AND WAIVER. This Employment Agreement may not be modified or amended, nor may any provisions of this Employment Agreement be waived, except by an instrument in writing signed by the parties. No written waiver will be deemed to be a continuing waiver unless specifically stated therein, and each such waiver will operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 15. SEVERABILITY. If, for any reason, any provision of this Employment Agreement is held invalid, such invalidity will not affect any other provision of this Employment Agreement, and each provision will to the full extent consistent with law continue in full force and effect. If any provision of this Employment Agreement is held invalid in part, such invalidity will in no way affect the rest of such provision, and the rest of such provision, together with all other 6 provisions of this Employment Agreement, will, to the full extent consistent with law, continue in full force and effect. 16. NOTICES. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Employment Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VICORP Restaurants, Inc. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Fax: (312) 255-4820 With a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Attn: Seth M. Hemming, Esq. Fax: (312) 207-6400 If to Executive: Robert Kaltenbach 5425 S. Jasper Way Aurora, Colorado 80015 Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this SECTION 17. 17. THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the parties to this Employment Agreement and their respective permitted successors and assigns, any rights or remedies under or by reason of this Employment Agreement. 18. HEADINGS. The headings and other captions in this Employment Agreement are included solely for convenience of reference and will not control the meaning and interpretation of any provision of this Employment Agreement. 7 19. GOVERNING LAW; ARBITRATION. This Employment Agreement has been executed in the State of Illinois, and its validity, interpretation, performance, and enforcement will be governed by the laws of such state, except with respect to conflicts of laws principles. Except for disputes arising out of an alleged violation of the Restrictive Covenants set forth in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement, any controversy or claim arising out of or relating to any provision of this Employment Agreement or any other document or agreement referred to herein shall be resolved by arbitration. The arbitration process shall be instigated by either party giving written notice to the other of the desire for arbitration and the factual allegations underlying the basis for the dispute. The arbitration shall be conducted by such alternative dispute resolution service as is agreed to by the parties, or, failing such agreement within thirty (30) days after such dispute arises, by arbitrators selected as described below in accordance with the rules and procedures established by the American Arbitration Association. Only a person who is a practicing lawyer admitted to a state bar may serve as an arbitrator. Each party shall select one arbitrator, and those arbitrators shall choose a third arbitrator; these arbitrators shall constitute the panel. The American Arbitration Association rules for employment arbitration shall control any discovery conducted in connection with the arbitration. The expenses of arbitration (other than attorneys' fees) shall be shared as determined by arbitration. Each side to the claim or controversy shall pay their own attorneys' fees. Any result reached by the panel shall be binding on all parties to the arbitration, and no appeal may be taken. It is agreed that any party to any award rendered in such arbitration proceeding may seek a judgment upon the award and that judgment may be entered thereon by any court having jurisdiction. The arbitration shall be conducted in the State of Colorado. 20. NON-ASSIGNABILITY/BINDING EFFECT. The Executive acknowledges that the services to be rendered by him are unique and personal. Accordingly, the Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. 21. NO STRICT CONSTRUCTION. The language used in this Employment Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any person. [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW] 8 IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be executed by its duly authorized officer and Executive has signed this Employment Agreement, as of the date first above written. VICORP RESTAURANTS, INC. By: /s/ Debra Koenig ----------------------------------------- Its: Chief Executive Officer EXECUTIVE /s/ Robert Kaltenbach -------------------------------------------- Robert Kaltenbach 9 EXHIBIT A CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT In consideration of employment by VICORP Restaurants, Inc., a Colorado corporation, its successors or assigns (the "COMPANY") of Robert Kaltenbach ("EXECUTIVE"), it is understood and agreed as follows: 1. CONFIDENTIAL INFORMATION. (a) Executive acknowledges that the Confidential Information (as defined below) constitutes a protectible business interest of the Company and its parent VI Acquisition Corp., a Delaware corporation ("PARENT") and covenants and agrees that at all times during the period of Executive's employment, and at all times after termination of such employment, Executive will not, directly or indirectly, disclose, furnish, make available or utilize any Confidential Information other than in the course of performing duties as an employee of the Company. Executive will abide by Company policies and rules as may be established from time to time by it for the protection of its Confidential Information. Executive agrees that in the course of employment with the Company Executive will not bring to the Company's offices nor use, disclose to the Company, or induce the Company to use, any confidential information or documents belonging to others. Executive's obligations under this SECTION 1.a. with respect to particular Confidential Information will survive expiration or termination of this Confidentiality, Inventions and Non-Solicitation Agreement (this "Agreement"), and Executive's employment with the Company, and will terminate only at such time (if any) as the Confidential Information in question becomes generally known to the public other than through a breach of Executive's obligations under this Agreement. (b) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" means any and all confidential, proprietary or trade secret information, whether disclosed, directly or indirectly, verbally, in writing or by any other means in tangible or intangible form, including that which is conceived or developed by Executive, applicable to or in any way related to: (i) the present or future business of Parent, the Company or any of their Affiliates (as defined below); (ii) the research and development of Parent, the Company or any of their Affiliates; or (iii) the business of any client or vendor of Parent, the Company or any of their Affiliates. Such Confidential Information includes the following property or information of Parent, the Company and their Affiliates, by way of example and without limitation, trade secrets, processes, formulas, data, program documentation, customer lists, designs, drawings, algorithms, source code, object code, know-how, improvements, inventions, licenses, techniques, all plans or strategies for marketing, development and pricing, business plans, financial statements, profit margins and all information concerning existing or potential clients, suppliers or vendors. Confidential Information of Parent and the Company also means all similar information disclosed to Parent or the Company by third parties which is subject to confidentiality obligations. The term "AFFILIATES" means (i) all persons or entities controlling, controlled by or under common control with, Parent and/or the Company, (ii) all companies or entities in which Parent or the Company own an equity interest and (iii) all predecessors, successors and assigns of the those Affiliates identified in (i) and (ii). 2. RETURN OF MATERIALS. Upon termination of employment with the Company, and regardless of the reason for such termination, Executive will leave with, or promptly return to, the Company all documents, records, notebooks, magnetic tapes, disks or other materials, including all copies, in Executive's possession or control which contain Confidential Information or any other information concerning Parent, the Company, any of their Affiliates or any of their respective products, services or clients, whether prepared by the Executive or others. 3. INVENTIONS AS SOLE PROPERTY OF THE COMPANY. (a) Executive covenants and agrees that all Inventions (as defined below) shall be the sole and exclusive property of the Company. (b) As used in this Agreement, the term "INVENTIONS" means any and all inventions, developments, discoveries, improvements, works of authorship, concepts or ideas, or expressions thereof, whether or not subject to patents, copyright, trademark, trade secret protection or other intellectual property right protection (in the United States or elsewhere), and whether or not reduced to practice, conceived or developed by Executive while employed with the Company or within one (1) year following termination of such employment which relate to or result from the actual or anticipated business, work, research or investigation of Parent, the Company or any of their Affiliates or which are suggested by or result from any task assigned to or performed by Executive for Parent, the Company or any of their Affiliates. (c) Executive acknowledges that all original works of authorship which are made by him or her (solely or jointly) are works made for hire under the United States Copyright Act (17 U.S.C., et seq.). (d) Executive agrees to promptly disclose to the Company all Inventions, all original works of authorship and all work product relating thereto. This disclosure will include complete and accurate copies of all source code, object code or machine-readable copies, documentation, work notes, flow-charts, diagrams, test data, reports, samples and other tangible evidence or results (collectively, "TANGIBLE EMBODIMENTS") of such Inventions, works of authorship and work product. All Tangible Embodiments of any Invention, work of authorship or work product related thereto will be deemed to have been assigned to the Company as a result of the act of expressing any Invention or work of authorship therein. (e) Executive hereby assigns to the Company (together with the right to prosecute or sue for infringements or other violations of the same) the entire worldwide right, title and interest to any such Inventions or works made for hire, and Executive 2 agrees to perform, during and after employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company's expense, in registering, recording, obtaining, maintaining, defending, enforcing and assigning Inventions or works made for hire in any and all countries. Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive's agents and attorneys-in-fact to act for and in Executive's behalf and instead of Executive, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Executive; this designation and appointment constitutes an irrevocable power of attorney and is coupled with an interest. (f) Without limiting the generality of any other provision of this SECTION 3, Executive hereby authorizes the Company and each of its Affiliates (and their respective successors) to make any desired changes to any part of any Invention, to combine it with other materials in any manner desired, and to withhold Executive's identity in connection with any distribution or use thereof alone or in combination with other materials. (g) Pursuant to the Illinois Employee Patent Act, Public Act 83-493, this Agreement does not apply to any invention for which no equipment, supplies, facility or trade secret information of Parent or the Company was used and which was developed entirely on Executive's own time, unless (1) the invention relates (a) to the business of Parent or the Company or (b) to Parent's or the Company's actual demonstrably anticipated research or development; or (2) the invention results from any work performed by Executive for Parent or the Company. (h) The obligations of Executive set forth in this SECTION 3 (including, but not limited to, the assignment obligations) will continue beyond the termination of Executive's employment with respect to Inventions conceived or made by Executive alone or in concert with others during Executive's employment with the Company and during the one (1) year thereafter, whether pursuant to this Agreement or otherwise. These obligations will be binding upon Executive and Executive's executors, administrators and other representatives. 4. LIST OF PRIOR INVENTIONS. All Inventions which Executive has made prior to employment by the Company are excluded from the scope of this Agreement. As a matter of record, Executive has set forth on ANNEX I hereto a complete list of those Inventions which might relate to Parent's or the Company's business and which have been made by Executive prior to employment with the Company. Executive represents that such list is complete. If no list is attached, Executive represents that there are no prior Inventions. 5. NON-SOLICITATION. (a) Executive will not, during the term of Executive's employment with the Company and for two (2) years thereafter (the "RESTRICTED PERIOD") (whether as an owner, 3 partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) with or through any individual or entity: i. employ, engage or explicitly solicit for employment any individual who is, or was at any time during the twelve-month period immediately prior to the termination of Executive's employment with the Company for any reason, an employee of Parent, the Company or any of their Affiliates or otherwise seek to adversely influence or alter such individual's relationship with Parent, the Company or any of their Affiliates; or ii. explicitly solicit or encourage any individual or entity that is, or was during the twelve-month period immediately prior to the termination of Executive's employment with the Company for any reason, a customer or vendor of Parent or the Company to terminate or otherwise alter his, her or its relationship with Parent or the Company. (b) The Restricted Period shall be extended for a period equal to any time period that Executive is in violation of this SECTION 5. 6. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements and covenants set forth in this Agreement are reasonable and necessary for the protection of Parent's and the Company's business interests, that irreparable injury will result to Parent and the Company if Executive breaches any of the terms of said covenants, and that in the event of Executive's actual or threatened breach of any such covenants, Parent and the Company will have no adequate remedy at law. Executive accordingly agrees that, in the event of any actual or threatened breach by Executive of any of said covenants, Parent and the Company will be entitled to immediate injunctive and other equitable relief, without posting bond or other security and without the necessity of showing actual monetary damages. Nothing in this SECTION 6 will be construed as prohibiting Parent or the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of any damages that they are able to prove. 7. NO RIGHT TO EMPLOYMENT. No provision of this Agreement shall give Executive any right to continue in the employ of the Company or any of its Affiliates, create any inference as to the length of employment of Executive, affect the right of the Company or its Affiliates to terminate the employment of Executive, with or without cause, or give Executive any right to participate in any Executive welfare or benefit plan or other program of the Company or any of its Affiliates. 8. MODIFICATION AND WAIVER. This Agreement may not be modified or amended except by an instrument in writing signed by the parties. No term or condition of this Agreement will be deemed to have been waived, except by written instrument of the party charged with such waiver. No such written waiver will be deemed to be a continuing waiver unless specifically stated therein, and each such waiver will operate only as to the specific 4 term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 9. SEVERABILITY. Executive acknowledges that the agreements and covenants contained in this Agreement are essential to protect Parent, the Company and their goodwill. Each of the covenants in this Agreement will be construed as independent of any other covenants or other provisions of this Agreement. It is the intention and desire of the parties that the court treat any provisions of this Agreement which are not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent. 10. NOTICES. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VICORP Restaurants, Inc. c/o Wind Point Partners Suite 3700 676 North Michigan Avenue Chicago, Illinois 60611 Attn: Michael Solot Fax: (312) 255-4820 With a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Attn: Seth M. Hemming, Esq. Fax: (312) 207-6400 If to Executive: Robert Kaltenbach ----------------- ----------------- 5 Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this SECTION 10. 11. HEADINGS. The headings and other captions in this Agreement are included solely for convenience of reference and will not control the meaning and interpretation of any provision of this Agreement. 12. GOVERNING LAW. This Agreement has been executed in the State of Illinois, and its validity, interpretation, performance, and enforcement will be governed by the laws of such state, except with respect to conflicts of laws principles. 13. BINDING EFFECT. This Agreement will be binding upon and inure to the benefit of Executive, the Company, and their respective successors and permitted assigns. The Company will be entitled to assign its rights and duties under this Agreement provided that the Company will remain liable to Executive should such assignee fail to perform its obligations under this Agreement. 14. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any person. 6 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has signed this Agreement, as of the date written below. EXECUTIVE: Date: June 13, 2003 /s/ Robert Kaltenbach ----------------------------------------- Robert Kaltenbach VICORP RESTAURANTS, INC. By: /s/ Debra Koenig ----------------------------------------- Its: Chief Executive Officer 7 EX-10.19 34 c86044exv10w19.txt EMPLOYMENT AGREEMENT Exhibit 10.19 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this "EMPLOYMENT AGREEMENT") is made this 12th day of February, 2004 by and between VICORP RESTAURANTS, INC., a Colorado corporation (the "COMPANY"), and ANTHONY CARROLL ("EXECUTIVE"). WHEREAS, the Company and its subsidiaries are engaged in the business of (i) operating and managing family dining restaurants and enterprises and (ii) conducting such other activities as are undertaken from time to time by the Company, VI Acquisition Corp., a Delaware corporation (the "PARENT"), and each of their subsidiaries as a result of future acquisitions, or otherwise (collectively, the "BUSINESS"); WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, as the Chief Financial Officer of the Company; and WHEREAS, the Company and Executive desire to enter into this Employment Agreement to evidence the terms and conditions of such employment. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises in this Employment Agreement, the parties agree as follows: 1. EMPLOYMENT. The Company hereby agrees to employ Executive as Chief Financial Officer of the Company, and Executive hereby agrees to accept such employment and agrees to act as Chief Financial Officer of the Company, all in accordance with the terms and conditions of this Employment Agreement. Executive hereby represents and warrants that neither Executive's entry into this Employment Agreement nor Executive's performance of Executive's obligations hereunder will conflict with or result in a breach of the terms, conditions or provisions of any other agreement or obligation of any nature to which Executive is a party or by which Executive is bound, including, without limitation, any development agreement, non-competition agreement or confidentiality agreement entered into by Executive. 2. TERM OF EMPLOYMENT AND AUTOMATIC RENEWAL. The term of Executive's employment under this Employment Agreement will commence on the date of this Employment Agreement and will continue until the third (3rd) anniversary of the date of this Employment Agreement (the "INITIAL EMPLOYMENT PERIOD"). THE INITIAL EMPLOYMENT PERIOD AND ANY RENEWAL EMPLOYMENT PERIOD (AS DEFINED HEREIN) SHALL AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (EACH, A "RENEWAL EMPLOYMENT PERIOD"), UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT PERIOD OR ANY RENEWAL EMPLOYMENT PERIOD, AS THE CASE MAY BE, EITHER PARTY SHALL GIVE WRITTEN NOTICE TO THE OTHER PARTY OF ITS ELECTION TO TERMINATE THIS EMPLOYMENT AGREEMENT. The Initial Employment Period and the Renewal Employment Periods are hereinafter referred to as the "EMPLOYMENT PERIOD." Notwithstanding anything to the contrary contained herein, the Employment Period is subject to earlier termination pursuant to SECTION 11 below. 3. POSITION AND RESPONSIBILITIES. Executive shall report to and be subject to the direction of the Chief Executive Officer of the Company. Executive shall perform and discharge such duties and responsibilities for the Company as the Chief Executive Officer may from time to time reasonably assign Executive. Executive understands and acknowledges that such duties shall be subject to revision and modification by the Chief Executive Officer upon reasonable notice to Executive. During the Employment Period, Executive shall devote Executive's full business time, attention, skill and efforts to the performance of Executive's duties herein, and shall perform the duties and carry out the responsibilities assigned to Executive, to the best of Executive's ability, in a diligent, trustworthy and businesslike manner for the purpose of advancing the Company. Executive acknowledges that Executive's duties and responsibilities will require Executive's full-time business efforts and agrees that during the Employment Period, Executive will not engage in any outside business activities that conflict with his obligations under this Employment Agreement. 4. COMPENSATION. (a) BASE SALARY. During the Employment Period, the Company shall pay to Executive a base salary at the rate of $200,000 per year (the "BASE SALARY"), less applicable tax withholding, payable at the Company's regular employee payroll intervals. Executive's performance shall be reviewed annually and the Base Salary may be increased at the Company's sole discretion. (b) DISCRETIONARY BONUS. During the Employment Period, Executive shall be eligible to earn an annual bonus targeted at forty percent (40%) of his Base Salary upon the achievement of the annual budget and certain personal goals, which budget and goals shall be determined by the Board in its sole discretion. (c) STOCK. Pursuant to that certain senior management agreement to be entered into between Parent and the Executive (the "MANAGEMENT AGREEMENT"), the Executive will purchase certain shares of common stock of Parent (the "EXECUTIVE STOCK"), which shares of Executive Stock shall be subject to certain vesting, repurchase and other obligations and restrictions set forth in the Management Agreement, the Registration Rights Agreement and that certain stockholders agreement entered into among Parent, Executive, the Investors (as defined in a stock purchase agreement among Parent, Investors and certain executives of the Company) and certain other shareholders of Parent (the "STOCKHOLDERS AGREEMENT"). 5. BENEFIT PLANS. During the Employment Period, Executive will be entitled to receive the same employment benefits provided to other senior executive officers of the Company (subject to any applicable waiting periods, eligibility requirements, or other restrictions), which benefits may include insurance (medical, dental, life, disability), retirement plans and profit sharing plans. 6. EXPENSES. The Company, in accordance with policies and practices established from time to time, will pay or reimburse Executive for all expenses (including travel and cell phone expenses) reasonably incurred by Executive during the Employment Period in connection with the performance of Executive's duties under this Employment Agreement, provided that Executive shall provide to the Company documentation or evidence of expenses for which Executive seeks reimbursement. In addition, upon the delivery by Executive to the Company of 2 a detailed description of such expenses, the Company agrees to reimburse Executive for the following reasonable relocation expenses actually incurred in connection with the Executive's relocation to the Denver, Colorado metropolitan area: (i) all transfer fees and broker fees incurred in connection with the sale of Executive's current home; (ii) reasonable moving expenses (including transportation of automobiles to Colorado) for the belongings of Executive and his family incurred in connection with the purchase of Executive's new home in Colorado; (iii) reasonable travel, lodging and dining expenses incurred by Executive and his spouse in connection with two (2) house hunting trips to Colorado; and (iv) temporary housing in Colorado, if needed, up to a maximum of three (3) months. In addition to the foregoing, the Company shall pay the Executive a relocation bonus of Five Thousand Dollars ($5,000.00) to cover any incidental relocation expenses not otherwise covered herein, to be paid in a single sum on or about the Executive's first day of employment. 7. VACATION. Executive shall be entitled to vacation at the rate of four (4) weeks per year to be accrued and taken in accordance with the Company's vacation policy from time to time in effect. Vacation which is accrued but not used in a given year will be forfeited as of the end of that year. 8. CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT. On the date hereof, Executive shall execute a confidentiality, inventions and non-solicitation agreement, in the form of EXHIBIT A attached hereto and made a part hereof (the "CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT"). 9. RESTRICTIVE COVENANTS. (a) EXECUTIVE'S ACKNOWLEDGMENT. Executive acknowledges that: (i) Parent and the Company are and will be engaged in the Business during the Employment Period and thereafter; (ii) Parent and the Company are and will be actively engaged in the Business throughout the world; (iii) Executive is one of a limited number of persons who will be developing the Business; (iv) Executive will occupy a position of trust and confidence with the Company after the date of this Employment Agreement and during the Employment Period Executive will become familiar with Parent's and the Company's and each of their subsidiaries' and portfolio companies (collectively, the "GROUP") trade secrets and with other proprietary and confidential information concerning the Group and the Business (and the other businesses of the Group); (v) the agreements and covenants contained in this SECTION 9 are essential to protect the Group and the goodwill of the Business and are a condition precedent to the Company entering into this Employment Agreement; (vi) Executive's employment with the Company has special, unique and extraordinary value to the Company and Parent and the Company would be 3 irreparably damaged if Executive were to provide services to any person or entity in violation of the provisions of this Employment Agreement; and (vii) Executive has means to support Executive and Executive's dependents other than by engaging in the Business, and the provisions of this SECTION 9 will not impair such ability. (b) RESTRICTIONS. Executive will not, during the Restricted Period (as defined below), anywhere in North America (the "RESTRICTED TERRITORY"), directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) own, operate, manage, control, invest in, perform services for, or engage or participate in any manner in, or render services to (alone or in association with any person or entity) or otherwise assist any person or entity in, the following entities, or in any entity or entities directly or indirectly related to the following entities: Bob Evans'; IHOP; Denny's; Perkin's; Marie Calendar; Mimi's; and Cracker Barrel. The term "RESTRICTED PERIOD" means the period of time from the date of this Employment Agreement until one (1) year after the termination for any reason of Executive's employment relationship with the Group or any successor thereto (whether pursuant to a written agreement or otherwise, including any Renewal Employment Period under this Employment Agreement). The Restricted Period shall be extended for a period equal to any time period that Executive is in violation of SECTION 9. Nothing contained in SECTION 9(b) above shall be construed to prevent Executive from investing in the stock of any competing corporation listed on a national securities exchange or traded in the over-the-counter market, but only if Executive is not involved in the business of said corporation and if Executive and Executive's associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof), collectively, do not own more than an aggregate of one percent (1%) of the stock of such corporation. (c) SCOPE/SEVERABILITY. The parties acknowledge that the business of Parent and the Company is and will be national in scope and thus the covenants in this SECTION 9 would be ineffective if the covenants were to be limited to a particular geographic area. If any court of competent jurisdiction at any time deems the Restricted Period unreasonably lengthy, or the Restricted Territory unreasonably extensive, or any of the covenants set forth in this SECTION 9 not fully enforceable, the other provisions of this SECTION 9, and this Employment Agreement in general, will nevertheless stand and to the full extent consistent with law continue in full force and effect, and it is the intention and desire of the parties that the court treat any provisions of this Employment Agreement which are not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent (for example, that the Restricted Period be deemed to be the longest period permissible by law, but not in excess of the length provided for in SECTION 9(B), and the Restricted Territory be deemed to comprise the largest territory permissible by law under the circumstances but not in excess of the territory provided for in SECTION 9(b)). 10. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements and covenants set forth in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement are reasonable and necessary for the protection of Parent's and the Company's business interests, that irreparable injury will result to Parent and the Company if Executive breaches any of the terms of said covenants, and that in the event of 4 Executive's actual or threatened breach of any such covenants, Parent and the Company will have no adequate remedy at law. Executive accordingly agrees that, in the event of any actual or threatened breach by Executive of any of said covenants, Parent and the Company will be entitled to immediate injunctive and other equitable relief, without bond and without the necessity of showing actual monetary damages. Nothing in this SECTION 10 will be construed as prohibiting Parent or the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of any damages that they are able to prove. 11. TERMINATION. Notwithstanding anything in SECTION 2 of this Employment Agreement to the contrary, Executive's services shall terminate upon the first to occur of the following events: (a) DEATH. The Employment Period will terminate immediately upon the death of Executive. If the Employment Period is terminated pursuant to this SECTION 11(a), the Company shall have no further obligation to Executive (or his estate) except for Base Salary and benefits accrued through the date of termination. (b) DUE CAUSE. The Company may terminate the Employment Period immediately upon written notice to Executive for Due Cause. The following events will be deemed to constitute "DUE CAUSE": (i) Executive's breach of any of Executive's obligations under the Confidentiality, Inventions and Non-Solicitation Agreement, this Employment Agreement, the Management Agreement, the Registration Rights Agreement or the Stockholders Agreement; or (ii) Executive's neglect of, willful misconduct in connection with the performance of, or refusal to perform Executive's duties in accordance with SECTION 3 of this Employment Agreement, which, in the case of neglect or refusal to perform, has not been cured to the Company's good faith satisfaction within thirty (30) days after Executive has been provided written notice of the same and the corrective action required by the Company; or (iii) Executive's engagement in any conduct which injures the integrity or reputation of the Company or which impugns Executive's own integrity or reputation so as to cause Executive to be unfit to act in the capacity of Chief Financial Officer of the Company; or (iv) the Executive's commission of an act or acts constituting a felony, or any other act or acts involving dishonesty, disloyalty or fraud against the Company. If the Employment Period is terminated pursuant to this SECTION 11(b), the Company shall have no further obligation to Executive except for Base Salary and benefits accrued through the date of termination. 5 (c) PERMANENT DISABILITY. The Company may terminate the Employment Period upon the Permanent Disability (as defined below) of the Executive. For purposes of this Employment Agreement, the term "PERMANENT DISABILITY" shall mean that Executive is entitled to benefits under the Company's long-term disability plan, or if no such plan exists, if the Executive is unable to perform, by reason of physical or mental incapacity, the essential functions of his position for ninety (90) or more days in any one hundred twenty (120) day period. If the Employment Period is terminated pursuant to this SECTION 11(c), the Company shall have no further obligations to Executive except for Base Salary and benefits accrued through the date of termination. (d) TERMINATION BY THE COMPANY WITHOUT DUE CAUSE. The Company may terminate the Employment Period without Due Cause upon thirty (30) days' prior written notice. If the Employment Period is terminated pursuant to this SECTION 11(d), then Executive will be entitled to receive as severance pay the continuation of his Base Salary at the annual rate then in effect for a period of one month for each month in which the Executive was employed by the Company (up to a maximum of twelve (12) months) following the termination of his employment (the "SEVERANCE PERIOD"), payable in accordance with the Company's payroll policy from time to time in effect. Upon a termination under this SECTION 11(d), the Company may elect, within thirty (30) days of the termination of the Employment Period, to extend the duration of the Restricted Period for up to an additional twelve (12) month period by so notifying Executive. If the Company elects to extend the Restricted Period, the amount of severance pay shall be increased by one-twelfth (1/12) of his Base Salary, at the annual rate then in effect, for each month by which the Restricted Period is extended. In addition, if the Executive elects COBRA continuation coverage, the Company shall pay for such coverage through the Severance Period at the same rate as it pays for health insurance coverage for its active employees (with the Executive required to pay for any employee paid portion of such coverage). Nothing herein provided, however, shall be construed to extend the period of time over which such COBRA continuation coverage otherwise may be provided to the Executive and/or her dependents. Notwithstanding the above, Executive shall receive such amounts only if Executive is not in material breach of any of the provisions of the Confidentiality, Inventions and Non-Solicitation Agreement and SECTION 9 of this Employment Agreement and has complied with SECTION 11(f) of this Employment Agreement. (e) VOLUNTARY RESIGNATION BY EXECUTIVE. Executive may terminate the Employment Period at any time for any reason upon thirty (30) days' prior written notice. If the Employment Period is terminated pursuant to this SECTION 11(e), the Company shall have no further obligation to Executive except for Base Salary and benefits accrued through the date of termination; provided, however, that if Executive is terminating the Employment Period for Good Reason (as defined below), then Executive will be entitled to receive the severance benefits on the terms and subject to all of the conditions and rights as described in SECTION 11(d). The following events will be deemed "GOOD REASON" for which Executive may terminate the Employment Period and receive the severance payments set forth in SECTION 11(d): (i) a material diminution of the Executive's duties, responsibilities, position or title after notice to the Company and a thirty (30) day opportunity to cure; or 6 (ii) any material breach of this Employment Agreement on the part of the Company (including, but not limited to, any decrease in the Base Salary without the consent of the Executive), after notice to the Chief Executive Officer, and a thirty (30) day opportunity to cure; provided, however, that Executive is not in material breach of any of the terms of this Employment Agreement. (f) GENERAL RELEASE. The receipt of any payment as set forth in SECTIONS 11(d)-(e) above shall be contingent upon Executive's execution of an agreement acceptable to the Company that (i) waives any rights the Executive may otherwise have against the Company and its Affiliates, (ii) releases the Company and its Affiliates from actions, suits, claims, proceedings and demands related to the period of employment and/or the termination of employment, and (iii) contains certain other standard obligations which shall be set forth at the time of the termination. For purposes of this Employment Agreement, the term "AFFILIATES" means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Company including, without limitation, any member of an affiliated group of which the Company is a common parent corporation as provided in Section 1404 of the Code. (g) SURVIVAL. Termination of the Employment Period in accordance with this SECTION 11, or expiration of the Employment Period, will not affect the provisions of this Employment Agreement that survive such termination, including, without limitation, the provisions in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement, and will not limit either party's ability to pursue remedies at law or equity. 12. EXECUTIVE ASSISTANCE. Both during and after Executive's employment with the Company, Executive shall, upon reasonable notice, furnish the Company with such information as may be in Executive's possession or control, and cooperate with the Company, as the Company may reasonably request (with due consideration to Executive's business activities and obligations after the Employment Period), in connection with any litigation, claim, or other dispute in which the Company or any of its Affiliates is or may become a party. The Company shall reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in fulfilling Executive's obligations under this SECTION 12. 13. EFFECT OF PRIOR AGREEMENTS. This Employment Agreement, the Management Agreement, the Stockholders Agreement, the Registration Rights Agreement and the Confidentiality, Inventions and Non-Solicitation Agreement contain the entire understanding among Parent, the Company and Executive relating to the subject matter hereof and supersede any prior employment agreement among Executive, Parent and the Company or other agreement relating to the subject matter hereof between Parent, the Company and Executive. Executive agrees and acknowledges that he is entitled to no benefits or compensation and has no other rights against the Company, the Parent, and their Affiliates, except as otherwise set forth in this Employment Agreement and, to the extent any such benefits, compensation or rights are owed to him, expressly waives such benefits, compensation and rights. 7 14. MODIFICATION AND WAIVER. This Employment Agreement may not be modified or amended, nor may any provisions of this Employment Agreement be waived, except by an instrument in writing signed by the parties. No written waiver will be deemed to be a continuing waiver unless specifically stated therein, and each such waiver will operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 15. SEVERABILITY. If, for any reason, any provision of this Employment Agreement is held invalid, such invalidity will not affect any other provision of this Employment Agreement, and each provision will to the full extent consistent with law continue in full force and effect. If any provision of this Employment Agreement is held invalid in part, such invalidity will in no way affect the rest of such provision, and the rest of such provision, together with all other provisions of this Employment Agreement, will, to the full extent consistent with law, continue in full force and effect. 16. NOTICES. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Employment Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VICORP Restaurants, Inc. VICORP Restaurants, Inc. c/o Wind Point Partners 400 West 48th Avenue Suite 3700 Denver, Colorado 80216 676 North Michigan Avenue Attn: Debra Koenig Chicago, Illinois 60611 Fax: (303) 672-2606 Attn: Michael Solot Fax: (312) 255-4820 With a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Attn: Seth M. Hemming, Esq. Fax: (312) 207-6400 If to Executive: Anthony Carroll 88 Fearing Road Hingham, MA 02043 8 Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this SECTION 16. 17. THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the parties to this Employment Agreement and their respective permitted successors and assigns, any rights or remedies under or by reason of this Employment Agreement. 18. HEADINGS. The headings and other captions in this Employment Agreement are included solely for convenience of reference and will not control the meaning and interpretation of any provision of this Employment Agreement. 19. GOVERNING LAW; ARBITRATION. This Employment Agreement has been executed in the State of Illinois, and its validity, interpretation, performance, and enforcement will be governed by the laws of such state, except with respect to conflicts of laws principles. Except for disputes arising out of an alleged violation of the Restrictive Covenants set forth in the Confidentiality, Inventions and Non-Solicitation Agreement and in SECTION 9 of this Employment Agreement, any controversy or claim arising out of or relating to any provision of this Employment Agreement or any other document or agreement referred to herein shall be resolved by arbitration. The arbitration process shall be instigated by either party giving written notice to the other of the desire for arbitration and the factual allegations underlying the basis for the dispute. The arbitration shall be conducted by such alternative dispute resolution service as is agreed to by the parties, or, failing such agreement within thirty (30) days after such dispute arises, by arbitrators selected as described below in accordance with the rules and procedures established by the American Arbitration Association. Only a person who is a practicing lawyer admitted to a state bar may serve as an arbitrator. Each party shall select one arbitrator, and those arbitrators shall choose a third arbitrator; these arbitrators shall constitute the panel. The American Arbitration Association rules for employment arbitration shall control any discovery conducted in connection with the arbitration. The expenses of arbitration (other than attorneys' fees) shall be shared as determined by arbitration. Each side to the claim or controversy shall pay their own attorneys' fees. Any result reached by the panel shall be binding on all parties to the arbitration, and no appeal may be taken. It is agreed that any party to any award rendered in such arbitration proceeding may seek a judgment upon the award and that judgment may be entered thereon by any court having jurisdiction. The arbitration shall be conducted in the State of Colorado. 20. NON-ASSIGNABILITY/BINDING EFFECT. The Executive acknowledges that the services to be rendered by him are unique and personal. Accordingly, the Executive may not assign any of her rights or delegate any of his duties or obligations under this Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. 21. NO STRICT CONSTRUCTION. The language used in this Employment Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any person. [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE TO FOLLOW] 9 IN WITNESS WHEREOF, the Company has caused this Employment Agreement to be executed by its duly authorized officer and Executive has signed this Employment Agreement, as of the date first above written. VICORP RESTAURANTS, INC. By: /s/ Debra Koenig ------------------------------------- Its: Chief Executive Officer EXECUTIVE /s/ Anthony Carroll --------------------------------------- ANTHONY CARROLL 10 EXHIBIT A CONFIDENTIALITY, INVENTIONS AND NON-SOLICITATION AGREEMENT In consideration of employment by VICORP Restaurants, Inc., a Colorado corporation, its successors or assigns (the "COMPANY") of Anthony Carroll ("EXECUTIVE"), it is understood and agreed as follows: 1. CONFIDENTIAL INFORMATION. (a) Executive acknowledges that the Confidential Information (as defined below) constitutes a protectible business interest of the Company and its parent VI Acquisition Corp., a Delaware corporation ("PARENT") and covenants and agrees that at all times during the period of Executive's employment, and at all times after termination of such employment, Executive will not, directly or indirectly, disclose, furnish, make available or utilize any Confidential Information other than in the course of performing duties as an employee of the Company. Executive will abide by Company policies and rules as may be established from time to time by it for the protection of its Confidential Information. Executive agrees that in the course of employment with the Company Executive will not bring to the Company's offices nor use, disclose to the Company, or induce the Company to use, any confidential information or documents belonging to others. Executive's obligations under this SECTION 1.a. with respect to particular Confidential Information will survive expiration or termination of this Confidentiality, Inventions and Non-Solicitation Agreement (this "AGREEMENT"), and Executive's employment with the Company, and will terminate only at such time (if any) as the Confidential Information in question becomes generally known to the public other than through a breach of Executive's obligations under this Agreement. (b) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" means any and all confidential, proprietary or trade secret information, whether disclosed, directly or indirectly, verbally, in writing or by any other means in tangible or intangible form, including that which is conceived or developed by Executive, applicable to or in any way related to: (i) the present or future business of Parent, the Company or any of their Affiliates (as defined below); (ii) the research and development of Parent, the Company or any of their Affiliates; or (iii) the business of any client or vendor of Parent, the Company or any of their Affiliates. Such Confidential Information includes the following property or information of Parent, the Company and their Affiliates, by way of example and without limitation: trade secrets, processes, formulas, data, program documentation, customer lists, designs, drawings, algorithms, source code, object code, know-how, improvements, inventions, licenses, techniques, all plans or strategies for marketing, development and pricing, business plans, financial statements, profit margins and all information concerning existing or potential clients, suppliers or vendors. Confidential Information of Parent and the Company also means all similar information disclosed to Parent or the Company by third parties which is subject to confidentiality obligations. The term "AFFILIATES" means (i) all persons or entities controlling, controlled by or under common control with, Parent and/or the Company, (ii) all companies or entities in which Parent or the Company own an equity interest and (iii) all predecessors, successors and assigns of the those Affiliates identified in (i) and (ii). 2. RETURN OF MATERIALS. Upon termination of employment with the Company, and regardless of the reason for such termination, Executive will leave with, or promptly return to, the Company all documents, records, notebooks, magnetic tapes, disks or other materials, including all copies, in Executive's possession or control which contain Confidential Information or any other information concerning Parent, the Company, any of their Affiliates or any of their respective products, services or clients, whether prepared by the Executive or others. 3. INVENTIONS AS SOLE PROPERTY OF THE COMPANY. (a) Executive covenants and agrees that all Inventions (as defined below) shall be the sole and exclusive property of the Company. (b) As used in this Agreement, the term "INVENTIONS" means any and all inventions, developments, discoveries, improvements, works of authorship, concepts or ideas, or expressions thereof, whether or not subject to patents, copyright, trademark, trade secret protection or other intellectual property right protection (in the United States or elsewhere), and whether or not reduced to practice, conceived or developed by Executive while employed with the Company or within one (1) year following termination of such employment which relate to or result from the actual or anticipated business, work, research or investigation of Parent, the Company or any of their Affiliates or which are suggested by or result from any task assigned to or performed by Executive for Parent, the Company or any of their Affiliates. (c) Executive acknowledges that all original works of authorship which are made by her (solely or jointly) are works made for hire under the United States Copyright Act (17 U.S.C., et seq.). (d) Executive agrees to promptly disclose to the Company all Inventions, all original works of authorship and all work product relating thereto. This disclosure will include complete and accurate copies of all source code, object code or machine-readable copies, documentation, work notes, flow-charts, diagrams, test data, reports, samples and other tangible evidence or results (collectively, "TANGIBLE EMBODIMENTS") of such Inventions, works of authorship and work product. All Tangible Embodiments of any Invention, work of authorship or work product related thereto will be deemed to have been assigned to the Company as a result of the act of expressing any Invention or work of authorship therein. (e) Executive hereby assigns to the Company (together with the right to prosecute or sue for infringements or other violations of the same) the entire worldwide right, title and interest to any such Inventions or works made for hire, and Executive 2 agrees to perform, during and after employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company's expense, in registering, recording, obtaining, maintaining, defending, enforcing and assigning Inventions or works made for hire in any and all countries. Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive's agents and attorneys-in-fact to act for and in Executive's behalf and instead of Executive, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Executive; this designation and appointment constitutes an irrevocable power of attorney and is coupled with an interest. (f) Without limiting the generality of any other provision of this SECTION 3, Executive hereby authorizes the Company and each of its Affiliates (and their respective successors) to make any desired changes to any part of any Invention, to combine it with other materials in any manner desired, and to withhold Executive's identity in connection with any distribution or use thereof alone or in combination with other materials. (g) Pursuant to the Illinois Employee Patent Act, Public Act 83-493, this Agreement does not apply to any invention for which no equipment, supplies, facility or trade secret information of Parent or the Company was used and which was developed entirely on Executive's own time, unless (1) the invention relates (a) to the business of Parent or the Company or (b) to Parent's or the Company's actual demonstrably anticipated research or development; or (2) the invention results from any work performed by Executive for Parent or the Company. (h) The obligations of Executive set forth in this SECTION 3 (including, but not limited to, the assignment obligations) will continue beyond the termination of Executive's employment with respect to Inventions conceived or made by Executive alone or in concert with others during Executive's employment with the Company and during the one (1) year thereafter, whether pursuant to this Agreement or otherwise. These obligations will be binding upon Executive and Executive's executors, administrators and other representatives. 4. LIST OF PRIOR INVENTIONS. All Inventions which Executive has made prior to employment by the Company are excluded from the scope of this Agreement. As a matter of record, Executive has set forth on ANNEX I hereto a complete list of those Inventions which might relate to Parent's or the Company's business and which have been made by Executive prior to employment with the Company. Executive represents that such list is complete. If no list is attached, Executive represents that there are no prior Inventions. 5. NON-SOLICITATION. (a) Executive will not, during the term of Executive's employment with the Company and for two (2) years thereafter (the "RESTRICTED PERIOD") (whether as an owner, 3 partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) with or through any individual or entity: i. employ, engage or explicitly solicit for employment any individual who is, or was at any time during the twelve-month period immediately prior to the termination of Executive's employment with the Company for any reason, an employee of Parent, the Company or any of their Affiliates or otherwise seek to adversely influence or alter such individual's relationship with Parent, the Company or any of their Affiliates; or ii. explicitly solicit or encourage any individual or entity that is, or was during the twelve-month period immediately prior to the termination of Executive's employment with the Company for any reason, a customer or vendor of Parent or the Company to terminate or otherwise alter his, her or its relationship with Parent or the Company. (b) The Restricted Period shall be extended for a period equal to any time period that Executive is in violation of this SECTION 5. 6. EQUITABLE REMEDIES. Executive acknowledges and agrees that the agreements and covenants set forth in this Agreement are reasonable and necessary for the protection of Parent's and the Company's business interests, that irreparable injury will result to Parent and the Company if Executive breaches any of the terms of said covenants, and that in the event of Executive's actual or threatened breach of any such covenants, Parent and the Company will have no adequate remedy at law. Executive accordingly agrees that, in the event of any actual or threatened breach by Executive of any of said covenants, Parent and the Company will be entitled to immediate injunctive and other equitable relief, without posting bond or other security and without the necessity of showing actual monetary damages. Nothing in this SECTION 6 will be construed as prohibiting Parent or the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of any damages that they are able to prove. 7. NO RIGHT TO EMPLOYMENT. No provision of this Agreement shall give Executive any right to continue in the employ of the Company or any of its Affiliates, create any inference as to the length of employment of Executive, affect the right of the Company or its Affiliates to terminate the employment of Executive, with or without cause, or give Executive any right to participate in any Executive welfare or benefit plan or other program of the Company or any of its Affiliates. 8. MODIFICATION AND WAIVER. This Agreement may not be modified or amended except by an instrument in writing signed by the parties. No term or condition of this Agreement will be deemed to have been waived, except by written instrument of the party charged with such waiver. No such written waiver will be deemed to be a continuing waiver unless specifically stated therein, and each such waiver will operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. 4 9. SEVERABILITY. Executive acknowledges that the agreements and covenants contained in this Agreement are essential to protect Parent, the Company and their goodwill. Each of the covenants in this Agreement will be construed as independent of any other covenants or other provisions of this Agreement. It is the intention and desire of the parties that the court treat any provisions of this Agreement which are not fully enforceable as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable and that the court enforce them to such extent. 10. NOTICES. Any notice, consent, waiver and other communications required or permitted pursuant to the provisions of this Agreement must be in writing and will be deemed to have been properly given (a) when delivered by hand; (b) when sent by telecopier (with acknowledgment of complete transmission), provided that a copy is mailed by U.S. certified mail, return receipt requested; (c) three (3) days after sent by certified mail, return receipt requested; or (d) one (1) day after deposit with a nationally recognized overnight delivery service, in each case to the appropriate addresses and telecopier numbers set forth below: If to the Company: VICORP Restaurants, Inc. VICORP Restaurants, Inc. c/o Wind Point Partners 400 West 48th Avenue Suite 3700 Denver, Colorado 80216 676 North Michigan Avenue Attn: Debra Koenig Chicago, Illinois 60611 Fax: (303) 672-2606 Attn: Michael Solot Fax: (312) 255-4820 With a copy to: Sachnoff & Weaver, Ltd. 30 South Wacker Drive Suite 2900 Chicago, Illinois 60606 Attn: Seth M. Hemming, Esq. Fax: (312) 207-6400 If to Executive: Anthony Carroll 88 Fearing Road Hingham, MA 02043 Each party will be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this SECTION 10. 5 11. HEADINGS. The headings and other captions in this Agreement are included solely for convenience of reference and will not control the meaning and interpretation of any provision of this Agreement. 12. GOVERNING LAW. This Agreement has been executed in the State of Illinois, and its validity, interpretation, performance, and enforcement will be governed by the laws of such state, except with respect to conflicts of laws principles. 13. BINDING EFFECT. This Agreement will be binding upon and inure to the benefit of Executive, the Company, and their respective successors and permitted assigns. The Company will be entitled to assign its rights and duties under this Agreement provided that the Company will remain liable to Executive should such assignee fail to perform its obligations under this Agreement. 14. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any person. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has signed this Agreement, as of the date written below. EXECUTIVE: Date: February 12, 2004 /s/ Anthony Carroll ----------------------------------------- ANTHONY CARROLL VICORP RESTAURANTS, INC. By: /s/ Debra Koenig -------------------------------------- Its: Chief Executive Officer 6 EX-10.20 35 c86044exv10w20.txt FORM OF INDEMNIFICATION AGREEMENT Exhibit 10.20 INDEMNIFICATION AGREEMENT This INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into as of March 19, 2004 by and between VICORP Restaurants Inc., a Colorado corporation (the "Company"), and ___________ (the "Indemnitee"). WHEREAS, the Indemnitee is currently serving or wishes to serve as a member of the Company's Board of Directors, and/or as an officer of the Company, and/or as a member of the Board of Directors and/or an officer of certain subsidiaries of the Company, in which capacity or capacities the Indemnitee will perform valuable services for the Company (the "D&O Services"); and WHEREAS, in order to induce the Indemnitee to serve in such capacity or capacities, the Company is willing to indemnify the Indemnitee against certain liabilities incurred or to be incurred by the Indemnitee in the performance of D&O Services; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Definitions. For purposes of this Agreement the following terms shall have the following meanings: "Losses" means all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, including any such expenses to enforce the provisions of this Agreement, if the Indemnitee is ultimately found to be entitled to indemnification hereunder. "Proceeding" means any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative). 2. Indemnification. (a) The Company shall indemnify, to the fullest extent permitted by the Colorado Business Corporation Act or, in the case of any Company subsidiary not organized in Colorado, to the fullest extent permitted by the applicable statute authorizing such indemnification, (the "Applicable Statute"), the Indemnitee to the extent that the Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that the Indemnitee is or was a director or an officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of any Company subsidiary or another corporation, partnership, joint venture, trust or other enterprise, against Losses actually and reasonably incurred by the Indemnitee in connection with such action, suit or proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interest of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's conduct was unlawful. (b) The Company shall indemnify, to the fullest extent permitted by the Applicable Statute, the Indemnitee to the extent that the Indemnitee who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director or an officer, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, joint venture, trust or other enterprise against Losses actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of such action or suit if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. (c) The Company shall indemnify, to the fullest extent permitted by the Applicable Statute, the Indemnitee against Losses actually and reasonably incurred by the Indemnitee in connection therewith, to the extent that such director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 2(a) and 2(b) herein, or in defense of any claim, issue or matter therein. (d) The Company shall make any indemnification under this Section 2 (unless ordered by a court) only as authorized in the specific case upon a determination that indemnification of the Indemnitee is proper in the circumstances because such Indemnitee has met the applicable standard of conduct set forth in this Section 2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders of the Company. (e) The Company shall pay expenses incurred by the Indemnitee in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company in this Section 2. Notwithstanding the foregoing, the Company shall not be obligated to pay expenses incurred by the Indemnitee with respect to any Proceedings initiated or brought voluntarily by the Indemnitee and not by way of defense (other than Proceedings brought to establish or enforce a right to indemnification under the provisions of this Section 2) unless a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding were made in good faith or were not frivolous. 2 3. Notification and Defense of Proceeding. After receipt by the Indemnitee of notice of the commencement of any Proceeding, if a claim is to be made against the Company under this Agreement, the Indemnitee shall promptly notify the Company of the commencement of such Proceeding. The failure of the Indemnitee to so notify the Company shall not relieve the Company from any liability which it may have to the Indemnitee other than under this Agreement. With respect to any such Proceeding of which the Indemnitee so notifies the Company: (a) The Company shall be entitled to participate therein at its own expense. (b) The Company shall be entitled to assume the defense thereof at any time with counsel selected by the Company. After notice from the Company to the Indemnitee of the Company's election to assume such defense, the Company shall not be liable to the Indemnitee under this Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof. The Indemnitee shall have the right to employ his or her own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of such defense shall be the expense of the Indemnitee. 4. Settlement. Neither the Company nor the Indemnitee will unreasonably withhold consent to any proposed settlement of any Proceeding. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on the Indemnitee, or require any admission of liability by the Indemnitee, without the Indemnitee's written consent. The Company shall not be required to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim without the Company's written consent. 5. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, the Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. 6. Continuation of Obligations. All obligations of the Company under this Agreement shall continue during the period that the Indemnitee is a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter as long as the Indemnitee may be subject to any possible Proceeding as a result of being such a director, officer, employee or agent. 7. Repayment of Expenses. The Indemnitee shall reimburse the Company for all reasonable expenses paid by the Company in defending any Proceeding against the Indemnitee if and to the extent that the Indemnitee shall ultimately be determined not to be entitled to indemnification by the Company for such expenses under the Applicable Statute, the Certificate of Incorporation or Bylaws of the Company, this Agreement or otherwise. 8. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, 3 including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 9. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, the Certificate of Incorporation, the Bylaws, or otherwise) of the amounts otherwise indemnifiable hereunder. 10. Notices. Any notice provided for or permitted under this Agreement will be treated as having been given (a) when delivered personally or sent by confirmed fax, on the next business day after the day on which it is sent, (b) when sent by commercial overnight courier with written verification of receipt, on the next business day after its delivery to the courier during normal business hours, or (c) when mailed postage prepaid by certified or registered mail, return receipt requested, on the fifth business day after its date of posting. Notices shall be sent to the addresses set forth below, or at such other place of which the other party has been notified in accordance with the provisions of this Section 10: if to the Company, addressed as follows: VICORP Restaurants, Inc. 400 W. 48th Avenue Denver, CO 80216 Attn: Debra Koenig with a copy (which shall not constitute notice hereunder) to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, Suite 2900 Chicago, IL 60606 Fax: 312-207-6400 Attn: Seth M. Hemming if to the Indemnitee, addressed as follows: -------------------------- 11. Language. The parties agree that each of them has been represented by counsel in connection with the negotiation, execution and delivery of this Agreement, and that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that no rule of strict construction is to be applied against either party. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Colorado, without regard to the conflicts of law principles thereof. 13. Consent to Jurisdiction. The parties hereby submit to the exclusive jurisdiction of, and waive any venue objections against, the federal and state courts located in Cook County, 4 Illinois, in any litigation arising out of the Agreement. The parties agree that they shall not assert any claim that (i) they are not subject to the jurisdiction of such courts, (ii) the venue is improper, (iii) the forum is inconvenient, or (iv) any similar objection, claim or argument. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 14. Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. 15. Rights Cumulative. The rights and remedies provided in this Agreement shall be cumulative and shall not be deemed exclusive of any other rights or remedies provided by law, contract or otherwise. 16. Amendments and Waivers. All amendments and waivers to this Agreement must be in writing and signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder 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. 17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, that neither this Agreement, nor any of the rights or obligations thereunder, may be assigned, delegated or otherwise transferred by either party without the prior written consent of the other party. 18. No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, reimbursement, cause of action or other right. 19. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. VICORP RESTAURANTS, INC. By:____________________________________________ Name: Title: INDEMNITEE: _______________________________________________ Name: The Indemnification Agreements entered into by VICORP Restaurants, Inc., are substantially identical to the Form of Indemnification Agreement shown here, except for the Indemnitee. These documents are not filed as separate documents in accordance with Rule 12b-31 under the Securities Exchange Act of 1934. 6 EX-10.21 36 c86044exv10w21.txt FORM OF INDEMNIFICATION AGREEMENT Exhibit 10.21 INDEMNIFICATION AGREEMENT This INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into as of June 13, 2003 by and between VI Acquisition Corp., a Delaware corporation (the "Company"), and _____________ (the "Indemnitee"). WHEREAS, the Indemnitee is currently serving or wishes to serve as a member of the Company's Board of Directors, and/or as an officer of the Company, and/or as a member of the Board of Directors and/or an officer of certain subsidiaries of the Company, in which capacity or capacities the Indemnitee will perform valuable services for the Company (the "D&O Services"); and WHEREAS, in order to induce the Indemnitee to serve in such capacity or capacities, the Company is willing to indemnify the Indemnitee against certain liabilities incurred or to be incurred by the Indemnitee in the performance of D&O Services; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Definitions. For purposes of this Agreement the following terms shall have the following meanings: "Losses" means all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, including any such expenses to enforce the provisions of this Agreement, if the Indemnitee is ultimately found to be entitled to indemnification hereunder. "Proceeding" means any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative). 2. Indemnification. (a) The Company shall indemnify, to the fullest extent permitted by the Delaware General Corporation Law or, in the case of any Company subsidiary not organized in Delaware, to the fullest extent permitted by the applicable statute authorizing such indemnification, (the "Applicable Statute"), the Indemnitee to the extent that the Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that the Indemnitee is or was a director or an officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of any Company subsidiary or another corporation, partnership, joint venture, trust or other enterprise, against Losses actually and reasonably incurred by the Indemnitee in connection with such action, suit or proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interest of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's conduct was unlawful. (b) The Company shall indemnify, to the fullest extent permitted by the Applicable Statute, the Indemnitee to the extent that the Indemnitee who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director or an officer, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, joint venture, trust or other enterprise against Losses actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of such action or suit if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) The Company shall indemnify, to the fullest extent permitted by the Applicable Statute, the Indemnitee against Losses actually and reasonably incurred by the Indemnitee in connection therewith, to the extent that such director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 2(a) and 2(b) herein, or in defense of any claim, issue or matter therein. (d) The Company shall make any indemnification under this Section 2 (unless ordered by a court) only as authorized in the specific case upon a determination that indemnification of the Indemnitee is proper in the circumstances because such Indemnitee has met the applicable standard of conduct set forth in this Section 2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders of the Company. (e) The Company shall pay expenses incurred by the Indemnitee in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company in this Section 2. Notwithstanding the foregoing, the Company shall not be obligated to pay expenses incurred by the Indemnitee with respect to any Proceedings initiated or brought voluntarily by the Indemnitee and not by way of defense (other than Proceedings brought to establish or enforce a right to indemnification under the provisions of this Section 2) unless a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding were made in good faith or were not frivolous. 2 3. Notification and Defense of Proceeding. After receipt by the Indemnitee of notice of the commencement of any Proceeding, if a claim is to be made against the Company under this Agreement, the Indemnitee shall promptly notify the Company of the commencement of such Proceeding. The failure of the Indemnitee to so notify the Company shall not relieve the Company from any liability which it may have to the Indemnitee other than under this Agreement. With respect to any such Proceeding of which the Indemnitee so notifies the Company: (a) The Company shall be entitled to participate therein at its own expense. (b) The Company shall be entitled to assume the defense thereof at any time with counsel selected by the Company. After notice from the Company to the Indemnitee of the Company's election to assume such defense, the Company shall not be liable to the Indemnitee under this Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof. The Indemnitee shall have the right to employ his or her own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of such defense shall be the expense of the Indemnitee. 4. Settlement. Neither the Company nor the Indemnitee will unreasonably withhold consent to any proposed settlement of any Proceeding. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on the Indemnitee, or require any admission of liability by the Indemnitee, without the Indemnitee's written consent. The Company shall not be required to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim without the Company's written consent. 5. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, the Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. 6. Continuation of Obligations. All obligations of the Company under this Agreement shall continue during the period that the Indemnitee is a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter as long as the Indemnitee may be subject to any possible Proceeding as a result of being such a director, officer, employee or agent. 7. Repayment of Expenses. The Indemnitee shall reimburse the Company for all reasonable expenses paid by the Company in defending any Proceeding against the Indemnitee if and to the extent that the Indemnitee shall ultimately be determined not to be entitled to indemnification by the Company for such expenses under the Applicable Statute, the Certificate of Incorporation or Bylaws of the Company, this Agreement or otherwise. 8. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, 3 including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 9. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, the Certificate of Incorporation, the Bylaws, or otherwise) of the amounts otherwise indemnifiable hereunder. 10. Notices. Any notice provided for or permitted under this Agreement will be treated as having been given (a) when delivered personally or sent by confirmed fax, on the next business day after the day on which it is sent, (b) when sent by commercial overnight courier with written verification of receipt, on the next business day after its delivery to the courier during normal business hours, or (c) when mailed postage prepaid by certified or registered mail, return receipt requested, on the fifth business day after its date of posting. Notices shall be sent to the addresses set forth below, or at such other place of which the other party has been notified in accordance with the provisions of this Section 10: if to the Company, addressed as follows: VI Acquisition Corp. c/o Wind Point Partners 676 N. Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: 312-255-4820 Attn: Michael J. Solot with a copy (which shall not constitute notice hereunder) to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, Suite 2900 Chicago, IL 60606 Fax: 312-207-6400 Attn: Seth M. Hemming if to the Indemnitee, addressed as follows: -------------------------- 11. Language. The parties agree that each of them has been represented by counsel in connection with the negotiation, execution and delivery of this Agreement, and that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that no rule of strict construction is to be applied against either party. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the conflicts of law principles thereof. 4 13. Consent to Jurisdiction. The parties hereby submit to the exclusive jurisdiction of, and waive any venue objections against, the federal and state courts located in Cook County, Illinois, in any litigation arising out of the Agreement. The parties agree that they shall not assert any claim that (i) they are not subject to the jurisdiction of such courts, (ii) the venue is improper, (iii) the forum is inconvenient, or (iv) any similar objection, claim or argument. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 14. Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. 15. Rights Cumulative. The rights and remedies provided in this Agreement shall be cumulative and shall not be deemed exclusive of any other rights or remedies provided by law, contract or otherwise. 16. Amendments and Waivers. All amendments and waivers to this Agreement must be in writing and signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder 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. 17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, that neither this Agreement, nor any of the rights or obligations thereunder, may be assigned, delegated or otherwise transferred by either party without the prior written consent of the other party. 18. No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, reimbursement, cause of action or other right. 19. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. 5 VI ACQUISITION CORP. By:__________________________________________ Name: _______________________________________ Title: ______________________________________ INDEMNITEE: _____________________________________________ Name:________________________________________ The Indemnification Agreements entered into by VI Acquisition Corp., are substantially identical to the Form of Indemnification Agreement shown here, except for the Indemnitee. These documents are not filed as separate documents in accordance with Rule 12b-31 under the Securities Exchange Act of 1934. 6 EX-10.22 37 c86044exv10w22.txt FORM OF INDEMNIFICATION AGREEMENT Exhibit 10.22 INDEMNIFICATION AGREEMENT This INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into as of March 19, 2004, by and between Village Inn Pancake House of Albuquerque, Inc., a New Mexico corporation (the "Company"), and __________ (the "Indemnitee"). WHEREAS, the Indemnitee is currently serving or wishes to serve as a member of the Company's Board of Directors, and/or as an officer of the Company, and/or as a member of the Board of Directors and/or an officer of certain subsidiaries of the Company, in which capacity or capacities the Indemnitee will perform valuable services for the Company (the "D&O Services"); and WHEREAS, in order to induce the Indemnitee to serve in such capacity or capacities, the Company is willing to indemnify the Indemnitee against certain liabilities incurred or to be incurred by the Indemnitee in the performance of D&O Services; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Definitions. For purposes of this Agreement the following terms shall have the following meanings: "Losses" means all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, including any such expenses to enforce the provisions of this Agreement, if the Indemnitee is ultimately found to be entitled to indemnification hereunder. "Proceeding" means any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative). 2. Indemnification. (a) The Company shall indemnify, to the fullest extent permitted by the New Mexico Business Corporation Act or, in the case of any Company subsidiary not organized in New Mexico, to the fullest extent permitted by the applicable statute authorizing such indemnification, (the "Applicable Statute"), the Indemnitee to the extent that the Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that the Indemnitee is or was a director or an officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of any Company subsidiary or another corporation, partnership, joint venture, trust or other enterprise, against Losses actually and reasonably incurred by the Indemnitee in connection with such action, suit or proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interest of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's conduct was unlawful. (b) The Company shall indemnify, to the fullest extent permitted by the Applicable Statute, the Indemnitee to the extent that the Indemnitee who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director or an officer, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, joint venture, trust or other enterprise against Losses actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of such action or suit if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. (c) The Company shall indemnify, to the fullest extent permitted by the Applicable Statute, the Indemnitee against Losses actually and reasonably incurred by the Indemnitee in connection therewith, to the extent that such director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 2(a) and 2(b) herein, or in defense of any claim, issue or matter therein. (d) The Company shall make any indemnification under this Section 2 (unless ordered by a court) only as authorized in the specific case upon a determination that indemnification of the Indemnitee is proper in the circumstances because such Indemnitee has met the applicable standard of conduct set forth in this Section 2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders of the Company. (e) The Company shall pay expenses incurred by the Indemnitee in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company in this Section 2. Notwithstanding the foregoing, the Company shall not be obligated to pay expenses incurred by the Indemnitee with respect to any Proceedings initiated or brought voluntarily by the Indemnitee and not by way of defense (other than Proceedings brought to establish or enforce a right to indemnification under the provisions of this Section 2) unless a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding were made in good faith or were not frivolous. 2 3. Notification and Defense of Proceeding. After receipt by the Indemnitee of notice of the commencement of any Proceeding, if a claim is to be made against the Company under this Agreement, the Indemnitee shall promptly notify the Company of the commencement of such Proceeding. The failure of the Indemnitee to so notify the Company shall not relieve the Company from any liability which it may have to the Indemnitee other than under this Agreement. With respect to any such Proceeding of which the Indemnitee so notifies the Company: (a) The Company shall be entitled to participate therein at its own expense. (b) The Company shall be entitled to assume the defense thereof at any time with counsel selected by the Company. After notice from the Company to the Indemnitee of the Company's election to assume such defense, the Company shall not be liable to the Indemnitee under this Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof. The Indemnitee shall have the right to employ his or her own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of such defense shall be the expense of the Indemnitee. 4. Settlement. Neither the Company nor the Indemnitee will unreasonably withhold consent to any proposed settlement of any Proceeding. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on the Indemnitee, or require any admission of liability by the Indemnitee, without the Indemnitee's written consent. The Company shall not be required to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim without the Company's written consent. 5. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, the Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. 6. Continuation of Obligations. All obligations of the Company under this Agreement shall continue during the period that the Indemnitee is a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter as long as the Indemnitee may be subject to any possible Proceeding as a result of being such a director, officer, employee or agent. 7. Repayment of Expenses. The Indemnitee shall reimburse the Company for all reasonable expenses paid by the Company in defending any Proceeding against the Indemnitee if and to the extent that the Indemnitee shall ultimately be determined not to be entitled to indemnification by the Company for such expenses under the Applicable Statute, the Certificate of Incorporation or Bylaws of the Company, this Agreement or otherwise. 8. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, 3 including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 9. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, the Certificate of Incorporation, the Bylaws, or otherwise) of the amounts otherwise indemnifiable hereunder. 10. Notices. Any notice provided for or permitted under this Agreement will be treated as having been given (a) when delivered personally or sent by confirmed fax, on the next business day after the day on which it is sent, (b) when sent by commercial overnight courier with written verification of receipt, on the next business day after its delivery to the courier during normal business hours, or (c) when mailed postage prepaid by certified or registered mail, return receipt requested, on the fifth business day after its date of posting. Notices shall be sent to the addresses set forth below, or at such other place of which the other party has been notified in accordance with the provisions of this Section 10: if to the Company, addressed as follows: Village Inn Pancake House of Albuquerque, Inc. c/o VICORP Restaurants, Inc. 400 W. 48th Avenue Denver, CO 80216 Attn: Debra Koenig with a copy (which shall not constitute notice hereunder) to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, Suite 2900 Chicago, IL 60606 Fax: 312-207-6400 Attn: Seth M. Hemming if to the Indemnitee, addressed as follows: ___________________________________________ 11. Language. The parties agree that each of them has been represented by counsel in connection with the negotiation, execution and delivery of this Agreement, and that the language used in this Agreement is the language chosen by the parties to express their mutual intent, and that no rule of strict construction is to be applied against either party. 12. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New Mexico, without regard to the conflicts of law principles thereof. 4 13. Consent to Jurisdiction. The parties hereby submit to the exclusive jurisdiction of, and waive any venue objections against, the federal and state courts located in Cook County, Illinois, in any litigation arising out of the Agreement. The parties agree that they shall not assert any claim that (i) they are not subject to the jurisdiction of such courts, (ii) the venue is improper, (iii) the forum is inconvenient, or (iv) any similar objection, claim or argument. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 14. Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. 15. Rights Cumulative. The rights and remedies provided in this Agreement shall be cumulative and shall not be deemed exclusive of any other rights or remedies provided by law, contract or otherwise. 16. Amendments and Waivers. All amendments and waivers to this Agreement must be in writing and signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder 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. 17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, that neither this Agreement, nor any of the rights or obligations thereunder, may be assigned, delegated or otherwise transferred by either party without the prior written consent of the other party. 18. No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, reimbursement, cause of action or other right. 19. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. VILLAGE INN PANCAKE HOUSE OF ALBUQUERQUE, INC. By:_______________________________________ Name: ____________________________________ Title: ___________________________________ INDEMNITEE: __________________________________________ Name: ____________________________________ The Indemnification Agreements entered into by Village Inn Pancake House Of Albuquerque, Inc., are substantially identical to the Form of Indemnification Agreement shown here, except for the Indemnitee. These documents are not filed as separate documents in accordance with Rule 12b-31 under the Securities Exchange Act of 1934. 6 EX-10.23 38 c86044exv10w23.txt PROFESSIONAL SERVICES AGREEMENT Exhibit 10.23 PROFESSIONAL SERVICES AGREEMENT THIS PROFESSIONAL SERVICES AGREEMENT (this "Agreement") is made as of June 13, 2003, by and among WIND POINT INVESTORS IV, L.P., a Delaware limited partnership ("WPI4"), WIND POINT INVESTORS V, L.P., a Delaware limited partnership ("WPI5" and collectively with WPI4, "Wind Point") and VI ACQUISITION Corp., a Delaware corporation (the "Company"). WHEREAS, Wind Point Partners IV, L.P. and Wind Point Partners V, L.P., each of which is a Delaware limited partnership, of which Wind Point is the general partner, and certain other individuals (collectively the "Purchasers") will purchase (the "Investment") pursuant to that certain Stock Purchase Agreement (as amended or supplemented from time to time, the "Purchase Agreement") dated as of June 13, 2003 among the Company, and the Purchasers, a portion of the Company's Common Stock, par value $.0001 per share, and Series A Preferred Stock, par value $.0001 per share; WHEREAS, the Company desires to receive financial and management consulting services from Wind Point, and obtain the benefit of the experience of Wind Point in business and financial management generally and its knowledge of the Company and the Company's financial affairs in particular; and WHEREAS, in connection with the Investment, Wind Point is willing to provide financial and management consulting services to the Company and the compensation arrangements set forth in this Agreement are designed to compensate Wind Point for such services. NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived herefrom, Wind Point and the Company hereby agree as follows: 1. Engagement. The Company hereby engages Wind Point as financial and management consultant, and Wind Point hereby agrees to provide financial and management consulting services to the Company, all on the terms and subject to the conditions set forth below. 2. Services of Wind Point. Wind Point hereby agrees during the term of this engagement to consult with the Company's board of directors (the "Board") and the management of the Company and its subsidiaries in such manner and on such business and financial matters as may be reasonably requested from time to time by the Board, including but not limited to: (i) corporate strategy; (ii) budgeting of future corporate investments; (iii) acquisition and divestiture strategies; and (iv) debt and equity financings. 3. Personnel. Wind Point shall provide and devote to the performance of this Agreement such partners, employees and agents of Wind Point as Wind Point shall deem appropriate for the furnishing of the services required hereby, subject to the oversight of the Board. 4. Management Fee. In consideration of Wind Point's services hereunder, in addition to the Special Fee payable pursuant to Section 6 below, the Company shall pay to Wind Point a quarterly management fee of $212,500 (the "Management Fee"), to be allocated 27.255% ($57,917 per quarter) to WPI4 and 72.745% ($154,583 per quarter) to WPI5. Such Management Fee shall be payable in cash only on February 1, May 1, August 1, and November 1 (or the next succeeding Business Day) of each year; provided, however, Wind Point hereby acknowledges and agrees that notwithstanding anything to the contrary contained in this Agreement, it will not accept payment of any Management Fee due and owing under this Agreement, and the Company will not, and will not permit any of its subsidiaries to, pay or cause to be paid any Management Fees, if a "Default" or "Event of Default" exists and is continuing under any of the Credit Documents or if such payments would result in a Default or Event of Default either of the Credit Documents (after giving pro forma effect to any such Management Fee payment). (i) Wind Point understands that the Company may, and Company agrees that it shall, resume payment of any Management Fee due and owing under this Agreement upon a cure or waiver of the Default or Event of Default, as the case may be; provided, however, that no such Default or Event of Default shall be deemed to have been waived for purposes of this paragraph unless and until the Company shall have received a written waiver from the Required Credit Parties. Upon the occurrence of such cure or receipt of such waiver, the Company shall also then promptly pay any Management Fee missed in whole or in part due to the application of the foregoing paragraph, except to the extent that the making of any such missed payment is restricted, prevented or deferred pursuant to the terms of either of the Credit Documents, in which case such missed payments will remain outstanding but shall be in abeyance until the restrictions under the Credit Documents no longer apply. (ii) Wind Point further acknowledges and agrees that during the time that the Company is restricted from paying the Management Fee by reason of the operation of this Section 4, Wind Point shall not, without the prior written consent of the Required Credit Parties, take any enforcement action with respect to the Management Fee or the Special Fee otherwise due under this Agreement. Notwithstanding the foregoing, Wind Point may file proofs of claim against the Company in any bankruptcy or other proceeding for the liquidation, dissolution or other winding up of the Company. Wind Point further acknowledges and agrees that any Management Fee or Special Fee obtained by Wind Point in violation of the terms of this Agreement or the Credit Documents shall be held in trust by Wind Point for the benefit of the Credit Parties (as their respective interests and priorities may appear in accordance with the Credit Documents) and promptly paid or delivered to the Credit Parties (as their respective interests and priorities 2 may appear in accordance with the Credit Documents) in the form received until all obligations arising under the Investment Agreement are indefeasibly paid in full in cash and the Investment Agreement shall have been terminated. (iii) Wind Point and the Company acknowledge and agree that the provisions of this Agreement that relate to the Credit Parties and/or the Credit Documents are made and delivered for the benefit of the Credit Parties in accordance with the Credit Documents (and each of their successors and permitted assigns) and therefore as third party beneficiaries any of the in accordance with the Credit Documents may enforce the terms hereof. (iv) "Credit Documents" means, collectively, (i) the Investment Agreement dated as of June 13, 2003 by and among VI Acquisition Corp., the Company, Allied Capital Corporation, Gleacher Mezzanine Fund I, L.P., Gleacher Mezzanine Fund P, L.P. and SunTrust Equity Funding, LLC., as hereafter amended, restated or supplemented in accordance with its terms (the "Investment Agreement"), and (ii) the Credit Agreement, dated as of June 13, 2003, among the Company, certain of its subsidiaries, Suntrust Bank, as Issuing Bank and Administrative Agent, and the other lenders party thereto, as hereafter amended, restated or supplemented in accordance with its terms (the "Credit Agreement"). (v) "Credit Parties" means, collectively, the Holders (as such term is defined in the Investment Agreement and the Lenders (as such term is defined in the Credit Agreement), and their successors and permitted assigns. (vi) "Required Credit Parties" means, as to any action or payment hereunder as of any date, the requisite agents, lenders, noteholders and other parties whose consent is required with respect to such action or payment under each of the Credit Documents to the extent in effect on such date. 5. Expenses. The Company shall promptly reimburse Wind Point for such reasonable travel expenses and other documented out-of-pocket fees and expenses as have been or may be incurred by Wind Point and its directors, officers and employees in connection with the Closing (as defined in the Purchase Agreement) and in connection with the rendering of services hereunder (including, but not limited to, fees and expenses incurred in attending Company-related meetings) solely to the Company, except to the extent that the making of any such reimbursements are restricted, prevented or deferred pursuant to the terms of either of the Credit Documents, in which case such reimbursements will remain outstanding but shall be in abeyance until the restrictions under the Credit Documents no longer apply. 6. Special Fee. In consideration for Wind Point's services in connection with arranging the Transactions (as defined in the Credit Documents), and as additional consideration for Wind Point's services provided hereunder, upon the repayment in full of all of the Obligations (as defined in the Credit Agreement) and all of the Subdebt Obligations (as defined in the Investment Agreement), other than in respect of the Warrants (as defined in the Investment Agreement) (the "Repayment"), the Company shall pay Wind Point a fee (the "Special Fee") equal to the sum of (i) $250,000, plus (ii) the product of (x) $70,000 multiplied by (y) the result 3 of a fraction, the numerator of which is the number of days between the date of this Agreement and the consummation of the Repayment, and the denominator of which is 365. 7. Term. This Agreement will continue from the date hereof until the occurrence of a Change in Control (as defined in the Credit Documents); provided that if the Repayment has occurred at the time of such Change in Control, or if the Repayment has occurred in connection with such Change in Control, then this Agreement will continue in force until Purchasers cease to collectively own at least 10% of the Series A Preferred Stock (as defined in the Purchase Agreement) or at least 10% of the Common Stock (as defined in the Purchase Agreement), at which time either party shall be free to terminate this Agreement without additional liability. No termination of this Agreement, whether pursuant to this paragraph or otherwise, shall affect the Company's obligations with respect to the fees, costs and expenses incurred by Wind Point in rendering services hereunder and not reimbursed by the Company as of the effective date of such termination. Notwithstanding the above, if Wind Point is in material breach of its obligations under this Agreement, and if, upon sixty (60) days' written notice, Wind Point has not cured such breach in all material respects, this Agreement shall be immediately terminable by the Company. Sections 6 and 8 through 18 shall survive termination of this Agreement. 8. Liability. Neither Wind Point nor any of its affiliates, members, employees or agents shall be liable to the Company or its subsidiaries or affiliates for any loss, liability, damage or expense arising out of or in connection with the performance of services contemplated by this Agreement, unless such loss, liability, damage or expense shall be proven to result directly from the gross negligence or willful misconduct of Wind Point or its affiliates, members, employees or agents. 9. Indemnification. The Company agrees to indemnify and hold harmless Wind Point, its members, managers, partners, affiliates, officers, agents and employees against and from any and all loss, liability, suits, claims, costs, damages and expenses (including attorneys' fees) arising from its performance hereunder, except as a result of its gross negligence or willful misconduct. 10. Wind Point an Independent Contractor. Wind Point and the Company agree that Wind Point shall perform services hereunder as an independent contractor, retaining control over and responsibility for its own operations and personnel, and that such compensation payable hereunder shall be reported to the Wind Point on IRS Form 1099. Neither Wind Point nor its members, principals, officers or employees shall be considered employees or agents of the Company as a result of this Agreement or the services performed hereunder nor shall any of them have authority to contract in the name of or bind the Company, except as expressly agreed to in writing by the Company. In the event that any such individual service provider is recharacterized as an employee of the Company, such individual shall have no right to participate in the Company's benefits or compensation plans unless and until such plans are explicitly amended to allow such participation. 11. Notices. Any notice, report or payment required or permitted to be given or made under this Agreement by any party shall be deemed to have been duly given or made if personally delivered, transmitted via facsimile, or, if mailed, when mailed by registered or certified mail, postage prepaid, to the other party at the following addresses or facsimile numbers 4 (or at such other address or facsimile number as shall be given in writing by one party to the other): If to Wind Point: Wind Point Investors IV, L.P. Wind Point Investors V, L.P. 676 North Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel: (312) 255-4800 Attn: Michael J. Solot with a copy to: Sachnoff & Weaver, Ltd. 30 S. Wacker Drive, 29th Floor Chicago, IL 60606 Fax: (312) 207-6400 Tel: (312) 207-1000 Attn: Seth M. Hemming, Esq. If to the Company: VI Acquisition Corp. c/o Wind Point Partners 676 North Michigan Avenue, Suite 3700 Chicago, IL 60611 Fax: (312) 255-4820 Tel: (312) 255-4800 Attn: Michael J. Solot 12. Entire Agreement; Modification. This Agreement (a) contains the complete and entire understanding and agreement of Wind Point and the Company with respect to the subject matter hereof; and (b) supersedes all prior and contemporaneous understandings, conditions and agreements, oral or written, express or implied, respecting the engagement of Wind Point in connection with the subject matter hereof. Until the Repayment has occurred, this Agreement may not be amended or modified without the prior written consent of the Required Credit Parties. 13. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach of that provision or any other provision hereof. 14. Assignment. Neither Wind Point nor the Company may assign its rights or obligations under this Agreement without the express written consent of the other party; 5 provided that Wind Point, without the consent of the Company, may assign its rights and obligations hereunder to any successor entity. Notwithstanding the foregoing, until the Repayment has occurred, Wind Point may not assign this Agreement (except to another member of the Sponsor Group (as defined in the Credit Documents) without the prior written consent of the Required Credit Parties. 15. Successors. This Agreement and all the obligations and benefits hereunder shall inure to the successors and permitted assigns of the parties. 16. Counterparts. This Agreement may be executed and delivered by each party hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original and both of which taken together shall constitute one and the same agreement. 17. Choice of Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. 18. Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury of any claim or cause of action in any legal proceeding arising out of or related to this Agreement or the transactions or events contemplated hereby or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. The parties hereto each agree that any and all such claims and causes of action shall be tried by a court trial without a jury. Each of the parties hereto further waives any right to seek to consolidate any such legal proceeding in which a jury trial has been waived with any other legal proceeding in which a jury trial cannot or has not been waived. * * * * * 6 IN WITNESS WHEREOF, Wind Point and the Company have caused this Professional Services Agreement to be duly executed and delivered as of the date and year first above written. WIND POINT INVESTORS IV, L.P. By: Wind Point Advisors LLC Its: General Partner By: /s/ James P. TenBroek ---------------------------------------------- Name: James P. TenBroek Its: Managing Member By: /s/ Robert L. Cummings ---------------------------------------------- Name: Robert L. Cummings Its: Managing Member WIND POINT INVESTORS V, L.P. By: Wind Point Advisors LLC Its: General Partner By: /s/ James P. TenBroek ---------------------------------------------- Name: James P. TenBroek Its: Managing Member By: /s/ Robert L. Cummings ---------------------------------------------- Name: Robert L. Cummings Its: Managing Member VI ACQUISITION CORP. By. /s/ Michael J. Solot ---------------------------------------------- Name: Michael J. Solot Its: President 7 EX-12.1 39 c86044exv12w1.txt STATEMENT REGARDING COMPUTATION OF RATIOS . . . EXHIBIT 12.1 STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
- ------------------------------------------------------------------------------------------------------------------------------------ VI MIDWAY VI ACQUISI- INVESTORS ACQUISI- TION HOLDINGS TION VICORP RESTAURANTS, INC. MIDWAY INVESTORS HOLDINGS INC. CORP. INC. CORP. ------------------------------------ ----------------------------------- ------------ --------- --------- Period | Period Period | Period | Twenty- | Twenty- Fiscal Fiscal from | from Fiscal from | from | four | four year year October 30, | May 14, year October 28, | June 14, | weeks | weeks ended ended 2000 to | 2001 to ended 2002 to | 2003 to | ended | ended October 31, October 29, May 13, |October 28, October 27, June 13, |October 26, | April 13,|April 15, (In Thousands) 1999 2000 2001 | 2001 2002 2003 | 2003 | 2003| 2004 - ----------------------------------------------------------------------------------------------------------------------------------- | | | | Fixed Charges: | | | | Add: | | | | Interest capitalized | | | | and expensed........... $ 1,011 $ 832 $ 318 | $ 4,544 $ 9,635 $ 9,262 | $ 6,278 |$ 4,074 |$ 9,057 Amortized premiums, | | | | discounts and | | | | capitalized expenses | | | | related to | | | | indebtedness........... -- -- 68 | 361 1,097 4,012 | 332 | 491 | 4,815 Estimate of interest | | | | within rental expense.. 5,449 6,124 3,247 | 3,346 8,315 5,408 | 4,999 | 3,986 | 4,527 ---------------------------------------------------------------------------------------------------------- Total fixed charges..... $ 6,460 $ 6,956 $ 3,633 | $ 8,251 $ 19,047 $ 18,682 | $ 11,609 |$ 8,551 |$18,399 ---------------------------------------------------------------------------------------------------------- | | | | Earnings: | | | | Add: | | | | Pretax income (loss) | | | | from continuing | | | | operations............. $18,541 $ 23,325 $ (2,998) | $ 3,115 $ 16,308 $ (4,181) | 289 | 7,262 |$ (440) Fixed charges........... 6,460 6,956 3,633 | 8,251 19,047 18,683 | $ 11,609 |$ 8,551 | 18,399 Subtract: | | | | Interest capitalized.... -- 103 23 | 15 -- 92 | 23 | 56 | 55 ---------------------------------------------------------------------------------------------------------- Total earnings.......... $25,001 $ 30,178 $ 612 | $ 11,351 $ 35,355 $ 14,410 | $ 11,875 |$ 15,757 |$17,904 ---------------------------------------------------------------------------------------------------------- | | | | Ratio of earnings to | | | | fixed charges.......... 3.9 4.3 --(1)| 1.4 1.9 --(1)| 1.0 | 1.8 | --(1) Amount by which | | | | earnings were | | | | insufficient to cover | | | | fixed charges.......... -- -- $ 3,021 | -- -- $ 4,272 | -- | -- |$ 495 - -----------------------------------------------------------------------------------------------------------------------------------
(1) For the fiscal periods from October 30, 2000 to May 13, 2001 and from October 28, 2002 to June 13, 2003, and for the twenty-four weeks ended April 15, 2004, the ratio of earnings to fixed charges was less than 1.0. As a result, we have disclosed a calculation of the coverage deficiency. EX-21.1 40 c86044exv21w1.txt SUBSIDIARIES OF THE REGISTRANT . . . Exhibit 21.1 LIST OF SUBSIDIARIES
Name of Subsidiary State of Incorporation - ------------------ ---------------------- ~~Village Inn Pancake House of Albuquerque, Inc. New Mexico Village Inn Pancake House of Canada Limited Canada~~
EX-23.1 41 c86044exv23w1.txt CONSENT OF ERNST & YOUNG LLP Exhibit 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our firm under the caption "Experts" and to the use of our reports dated December 22, 2003, in the Registration Statement (Form S-4) and related Prospectus of VICORP Restaurants, Inc. dated July 9, 2004. /s/ Ernst & Young LLP Denver, Colorado July 7, 2004 EX-25.1 42 c86044exv25w1.txt FORM T-1 STATEMENT OF ELIGIBILITY Exhibit 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------- ____CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b) (2) WELLS FARGO BANK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A NATIONAL BANKING ASSOCIATION 94-1347393 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national Identification No.) bank) 101 NORTH PHILLIPS AVENUE SIOUX FALLS, SOUTH DAKOTA 57104 (Address of principal executive offices) (Zip code) WELLS FARGO & COMPANY LAW DEPARTMENT, TRUST SECTION MAC N9305-175 SIXTH STREET AND MARQUETTE AVENUE, 17TH FLOOR MINNEAPOLIS, MINNESOTA 55479 (612) 667-4608 (Name, address and telephone number of agent for service) ---------- VICORP RESTAURANTS, INC.(1) (Exact name of obligor as specified in its charter) COLORADO 84-0511072 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 WEST 48TH AVENUE DENVER, COLORADO 80216 (Address of principal executive offices) (Zip code) ---------- 10 1/2% SENIOR NOTES DUE 2011 (Title of the indenture securities) ================================================================================ (1) See Table 1 - List of additional obligors Table 1 Address of each of the Guarantors listed below is C/O VICORP RESTAURANTS, INC., 400 WEST 48TH AVENUE, DENVER, COLORADO, 80216.
Guarantor State of Incorporation Federal EIN --------- ---------------------- ----------- ~~1. VI Acquisition Corp. Delaware 41-2097540 2. Village Inn Pancake House of Albuquerque, Inc. New Mexico 85-0157170~~
Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Treasury Department Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. Federal Reserve Bank of San Francisco San Francisco, California 94120 (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None with respect to the trustee. No responses are included for Items 3-14 of this Form T-1 because the obligor is not in default as provided under Item 13. Item 15. Foreign Trustee. Not applicable. Item 16. List of Exhibits. List below all exhibits filed as a part of this Statement of Eligibility. Exhibit 1. A copy of the Articles of Association of the trustee now in effect.* Exhibit 2. A copy of the Comptroller of the Currency Certificate of Corporate Existence and Fiduciary Powers for Wells Fargo Bank, National Association, dated February 4, 2004.** Exhibit 3. See Exhibit 2 Exhibit 4. Copy of By-laws of the trustee as now in effect.*** Exhibit 5. Not applicable. Exhibit 6. The consent of the trustee required by Section 321(b) of the Act. Exhibit 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. Exhibit 8. Not applicable. Exhibit 9. Not applicable. * Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721. ** Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721. *** Incorporated by reference to the exhibit of the same number to the trustee's Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wells Fargo Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Minneapolis and State of Minnesota on the 3rd day of June 2004. WELLS FARGO BANK, NATIONAL ASSOCIATION /s/ Michael T. Lechner -------------------------------------- Michael T. Lechner Assistant Vice President EXHIBIT 6 June 3, 2004 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION /s/ Michael T. Lechner -------------------------------------- Michael T. Lechner Assistant Vice President Exhibit 7 Consolidated Report of Condition of Wells Fargo Bank National Association of 101 North Phillips Avenue, Sioux Falls, SD 57104 And Foreign and Domestic Subsidiaries, at the close of business March 31, 2004, filed in accordance with 12 U.S.C. Section 161 for National Banks.
Dollar Amounts In Millions -------------- ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin $ 13,890 Interest-bearing balances 6,251 Securities: Held-to-maturity securities 0 Available-for-sale securities 27,661 Federal funds sold and securities purchased under agreements to resell: Federal funds sold in domestic offices 1,436 Securities purchased under agreements to resell 170 Loans and lease financing receivables: Loans and leases held for sale 29,359 Loans and leases, net of unearned income 233,785 LESS: Allowance for loan and lease losses 2,629 Loans and leases, net of unearned income and allowance 231,156 Trading Assets 8,314 Premises and fixed assets (including capitalized leases) 2,787 Other real estate owned 180 Investments in unconsolidated subsidiaries and associated companies 284 Customers' liability to this bank on acceptances outstanding 69 Intangible assets Goodwill 7,915 Other intangible assets 6,871 Other assets 11,217 -------- Total assets $347,560 ======== LIABILITIES Deposits: In domestic offices $240,660 Noninterest-bearing 78,496 Interest-bearing 162,164 In foreign offices, Edge and Agreement subsidiaries, and IBFs 15,087 Noninterest-bearing 3 Interest-bearing 15,084 Federal funds purchased and securities sold under agreements to repurchase: Federal funds purchased in domestic offices 18,617 Securities sold under agreements to repurchase 3,028

Dollar Amounts In Millions -------------- Trading liabilities 4,973 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) 18,180 Bank's liability on acceptances executed and outstanding 69 Subordinated notes and debentures 4,824 Other liabilities 9,494 -------- Total liabilities $314,932 Minority interest in consolidated subsidiaries 70 EQUITY CAPITAL Perpetual preferred stock and related surplus 0 Common stock 520 Surplus (exclude all surplus related to preferred stock) 23,424 Retained earnings 7,812 Accumulated other comprehensive income 802 Other equity capital components 0 -------- Total equity capital 32,558 -------- Total liabilities, minority interest, and equity capital $347,560 ========
I, James E. Hanson, Vice President of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. James E. Hanson Vice President We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. Howard Atkins Dave Hoyt Directors John Stumpf EX-99.1 43 c86044exv99w1.txt FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL VICORP RESTAURANTS, INC. OFFER TO EXCHANGE 10 1/2% SENIOR NOTES DUE 2011, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO THE PROSPECTUS, DATED , 2004, FOR ALL ISSUED AND OUTSTANDING 10 1/2% SENIOR NOTES DUE 2011 (CUSIP NOS. 925817AB4, U92227AA2 AND 925817AC2) THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________, 2004, UNLESS THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON _______________, 2004. The Exchange Agent for the Exchange Offer is: WELLS FARGO BANK, NATIONAL ASSOCIATION By facsimile (for eligible guarantor institutions only): 612-667-4927 Confirm by telephone: 800-344-5128 By registered & certified mail: By regular mail or overnight couriers: In person by hand only: Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. MAC # N9303-121 MAC # N9303-121 608 Second Avenue South Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations, 12th Floor P.O. Box 1517 6th & Marquette Avenue Minneapolis, MN 55402 Minneapolis, MN 55480-1517 Minneapolis, MN 55479

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THOSE LISTED ABOVE, OR TRANSMISSION OF AN AGENT'S MESSAGE (AS DEFINED BELOW) OR INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY OF YOUR ORIGINAL NOTES. By signing this Letter of Transmittal, you hereby acknowledge that you have received and reviewed the Prospectus, dated _________________, 2004, of VICORP Restaurants, Inc. and this Letter of Transmittal. The Prospectus, together with this Letter of Transmittal, constitutes VICORP Restaurants, Inc.'s offer to exchange an aggregate principal amount of up to $126,530,000 of its 10 1/2% Senior Notes due 2011 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of our issued and outstanding 10 1/2% Senior Notes due 2011 (the "Original Notes"). The Original Notes were issued in an offering under Rule 144A of the Securities Act that was not registered under the Securities Act. This Exchange Offer is being extended to all holders of the Original Notes. If you decide to tender your Original Notes, and we accept the Original Notes, this will constitute a binding agreement between you and VICORP Restaurants, Inc., subject to the terms and conditions set forth in the Prospectus and this Letter of Transmittal. Unless you comply with the procedures described in the Prospectus under the caption "The exchange offer--Guaranteed delivery procedures," you must do one of the following on or prior to the expiration of the Exchange Offer to participate in the Exchange Offer: - tender your Original Notes by sending the certificates for your Original Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by this Letter of Transmittal to the Exchange Agent at one of the addresses listed above; or - tender your Original Notes by using the book-entry transfer procedures described in the Prospectus under the caption "The exchange offer--Book-entry transfer," and transmitting this Letter of Transmittal, with any required signature guarantees, or an Agent's Message (as defined below) instead of this Letter of Transmittal, to the Exchange Agent. In order for a book-entry transfer to constitute a valid tender of your Original Notes in the Exchange Offer, the Exchange Agent must receive a confirmation of book-entry transfer (a "Book-Entry Confirmation") of your Original Notes into the Exchange Agent's account at The Depository Trust Company prior to the expiration of the Exchange Offer. The term "Agent's Message" means a message transmitted by The Depository Trust Company and received by the Exchange Agent and forming a part of the Book-Entry Confirmation, which states that The Depository Trust Company has received an express acknowledgment from you that you have received and have agreed to be bound by the terms of this Letter of Transmittal. If you use this procedure, we may enforce the Letter of Transmittal against you. DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY'S BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. If you are a holder of Original Notes and wish to tender your Original Notes in the Exchange Offer, but (1) the Original Notes are not immediately available, (2) time will not permit your Original Notes or other required documents to reach the Exchange Agent before the expiration of the Exchange Offer, or (3) the procedure for book-entry transfer cannot be completed prior to the expiration of the Exchange Offer, you may tender Original Notes by following the procedures described in the Prospectus under the caption "The exchange offer--Guaranteed delivery procedures." Only registered holders of Original Notes--which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the owner of the Original Notes--are entitled to tender their Original Notes for exchange in the Exchange Offer. If you are a beneficial owner whose Original Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your Original Notes in the Exchange Offer, you should promptly contact the person in whose name the Original Notes are registered and instruct that person to tender on your behalf. If you wish to tender in the Exchange Offer on your own behalf, prior to completing and executing this Letter of Transmittal and delivering the certificates for your Original Notes, you must either make appropriate arrangements to register ownership of the Original Notes in your name or obtain a properly completed bond power from the person in whose name the Original Notes are registered. YOU MUST COMPLETE THIS LETTER OF TRANSMITTAL IF YOU ARE A REGISTERED HOLDER OF ORIGINAL NOTES WHICH TERM, FOR PURPOSES OF THIS LETTER OF TRANSMITTAL, INCLUDES ANY PARTICIPANT IN THE DEPOSITORY TRUST COMPANY'S SYSTEM WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF THE ORIGINAL NOTES--AND EITHER (1) YOU WISH TO TENDER THE CERTIFICATES REPRESENTING YOUR ORIGINAL NOTES TO THE EXCHANGE AGENT TOGETHER WITH THIS LETTER OF TRANSMITTAL OR (2) YOU WISH TO TENDER YOUR ORIGINAL NOTES BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY AND YOU ELECT TO SUBMIT THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT INSTEAD OF AN AGENT'S MESSAGE. In order to properly complete this Letter of Transmittal, you must (1) complete the box entitled "Description of Original Notes Tendered," (2) if appropriate, check and complete the boxes relating to book-entry transfer and guaranteed delivery and the boxes entitled "Special Issuance Instructions" and "Special Delivery Instructions," (3) sign this Letter of Transmittal by completing the box entitled "Sign Here" and (4) complete the box entitled "Substitute Form W-9." By completing the box entitled "Description of Original Notes Tendered" and signing below, you will have tendered your Original Notes for exchange on the terms and conditions described in the Prospectus and this Letter of Transmittal. You should read the detailed instructions below before completing this Letter of Transmittal. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BOX BELOW TO BE COMPLETED BY ALL TENDERING HOLDERS OF ORIGINAL NOTES DESCRIPTION OF ORIGINAL NOTES TENDERED
NAME AND ADDRESS OF REGISTERED HOLDER 1 2 3 AGGREGATE PRINCIPAL CERTIFICATE PRINCIPAL AMOUNT AMOUNT NUMBER(S)* OF ORIGINAL NOTE(S) TENDERED** ---------- ------------------- ---------- ~~TOTAL:~~
* Need not be completed by holders who tender by book-entry transfer. ** Original Notes tendered by this Letter of Transmittal must be in denominations of $1,000 principal amount and any integral multiple thereof. Unless otherwise indicated in column 3, a holder will be deemed to have tendered ALL of the Original Notes represented by the certificate(s) listed in column 1. See Instruction 4. BOXES BELOW TO BE CHECKED AS APPLICABLE [ ] CHECK HERE IF THE CERTIFICATE(S) REPRESENTING YOUR ORIGINAL NOTES IS BEING TENDERED WITH THIS LETTER OF TRANSMITTAL. [ ] CHECK HERE IF THE CERTIFICATE(S) REPRESENTING YOUR ORIGINAL NOTES HAS BEEN LOST, DESTROYED OR STOLEN AND YOU REQUIRE ASSISTANCE IN OBTAINING A NEW CERTIFICATE(S). Certificate Number(s) ---------------------------------------------------------- Principal Amount(s) Represented ------------------------------------------------ You must contact the Exchange Agent to obtain instructions for replacing lost, destroyed or stolen certificate(s) representing Original Notes. See Instruction 12. 3 - -------------------------------------------------------------------------------- SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 1, 5 AND 6) To be completed ONLY if Exchange Notes or Original Notes not tendered or exchanged are to be delivered to someone other than the registered holder of the Original Notes whose name(s) appear(s) below or to the registered holder at an address other than that shown below. [ ] Original Note(s) to: [ ] Exchange Note(s) to: Name -------------------------------------------------------------------------- (PLEASE PRINT) Address ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (CITY, STATE, ZIP CODE) - -------------------------------------------------------------------------------- (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE INSTRUCTION 9) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5 AND 6) To be completed ONLY if Exchange Notes or Original Notes not tendered or exchanged are to be delivered to someone other than the registered holder of the Original Notes whose name(s) appear(s) below or to the registered holder at an address other than that shown below. [ ] Exchange Note(s) to: [ ] Mail Certificate to: Name --------------------------------------------------------------------------- (PLEASE PRINT) Address ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (CITY, STATE, ZIP CODE) - -------------------------------------------------------------------------------- (TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE INSTRUCTION 9) - -------------------------------------------------------------------------------- 4 [ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED UNDER A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ----------------------------------------------- Window Ticket Number (if any): ------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ---------------------------- Name of Institution Which Guaranteed Delivery: --------------------------------- If delivered by Book-Entry Transfer, complete the following: Name of Tendering Institution: ------------------------------------------------- Account Number: ---------------------------------------------------------------- Transaction Code Number: ------------------------------------------------------- BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY [ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ------------------------------------------------- Account Number: ---------------------------------------------------------------- Transaction Code Number: ------------------------------------------------------- [ ] CHECK HERE IF ORIGINAL NOTES THAT ARE NOT TENDERED OR NOT EXCHANGED ARE TO BE RETURNED BY CREDITING THE DEPOSITORY TRUST COMPANY ACCOUNT NUMBER INDICATED ABOVE. 5 Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, as described in the Prospectus and this Letter of Transmittal, I hereby tender to VICORP Restaurants, Inc. the aggregate principal amount of Original Notes described above in the box entitled "Description of Original Notes Tendered" in exchange for a like principal amount of Exchange Notes which have been registered under the Securities Act. Subject to and effective upon the acceptance for exchange of all or any portion of the Original Notes tendered by this Letter of Transmittal in accordance with the terms and conditions of the Exchange Offer--including, if the Exchange Offer is extended or amended, the terms and conditions of any extension or amendment--I hereby sell, assign and transfer to, or upon the order of, VICORP Restaurants, Inc. all right, title and interest in and to the Original Notes tendered by this Letter of Transmittal. I hereby irrevocably constitute and appoint the Exchange Agent as my agent and attorney-in-fact--with full knowledge that the Exchange Agent is also acting as the agent of VICORP Restaurants, Inc. in connection with the Exchange Offer--with respect to the tendered Original Notes, with full power of substitution, such power of attorney being deemed to be an irrevocable power coupled with an interest, subject only to the right of withdrawal described in the Prospectus, to (1) deliver certificates for the tendered Original Notes to VICORP Restaurants, Inc. together with all accompanying evidences of transfer and authenticity to, or upon the order of, VICORP Restaurants, Inc., upon receipt by the Exchange Agent, as my agent, of the Exchange Notes to be issued in exchange for the tendered Original Notes, (2) present certificates for the tendered Original Notes for transfer, and to transfer the tendered Original Notes on the books of VICORP Restaurants, Inc., and (3) receive for the account of VICORP Restaurants, Inc. all benefits and otherwise exercise all rights of ownership of the tendered Original Notes, all in accordance with the terms and conditions of the Exchange Offer. I hereby represent and warrant that I have full power and authority to tender, sell, assign and transfer the Original Notes tendered by this Letter of Transmittal and that, when the tendered Original Notes are accepted for exchange, VICORP Restaurants, Inc. will acquire good, marketable and unencumbered title to the tendered Original Notes, free and clear of all liens, restrictions, charges and encumbrances, and that the tendered Original Notes are not subject to any adverse claims or proxies. I will, upon request, execute and deliver any additional documents deemed by VICORP Restaurants, Inc. or the Exchange Agent to be necessary or desirable to complete the exchange, sale, assignment and transfer of the Original Notes tendered by this Letter of Transmittal, and I will comply with my obligations under the Registration Rights Agreement, dated as of April 14, 2004 (the "Registration Rights Agreement"), by and among VICORP Restaurants, Inc., the Guarantors (as such term is defined therein), J. P. Morgan Securities, Inc. and CIBC World Markets Corp. I have read and I agree to all of the terms of the Exchange Offer. The name(s) and address(es) of the registered holder(s)--which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the holder of the Original Notes--of the Original Notes tendered by this Letter of Transmittal are printed above as they appear on the certificate(s) representing the Original Notes. The certificate number(s) and the Original Notes that I wish to tender are indicated in the appropriate boxes above. Unless I have otherwise indicated by completing the box entitled "Special Issuance Instructions" above, I hereby direct that the Exchange Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Original Notes, that the Exchange Notes be credited to the account indicated above maintained with The Depository Trust Company. Similarly, unless I have otherwise indicated by completing the box entitled "Special Delivery Instructions," I hereby direct that the Exchange Notes be delivered to the address shown below my signature. If I have (1) tendered any Original Notes that are not exchanged in the Exchange Offer for any reason or (2) submitted certificates for more Original Notes than I wish to tender, unless I have otherwise indicated by completing the boxes entitled "Special Issuance Instructions" or "Special Delivery Instructions." I hereby direct that certificates for any Original Notes that are not tendered or not exchanged should be issued in the name of the undersigned, if applicable, and delivered to the address shown below my signature or, in the case of a book-entry transfer of Original Notes, that Original Notes that are not tendered or not exchanged be credited to the account indicated above maintained with The Depository Trust Company, in each case, at VICORP Restaurants, Inc.'s expense, promptly following the expiration or termination of the Exchange Offer. 6 I understand that if I decide to tender Original Notes, and VICORP Restaurants, Inc. accepts the Original Notes for exchange, this will constitute a binding agreement between me and VICORP Restaurants, Inc., subject to the terms and conditions set forth in the Prospectus and this Letter of Transmittal. I also recognize that, under certain circumstances described in the Prospectus under the caption "The exchange offer--Conditions to the exchange offer," VICORP Restaurants, Inc. may not be required to accept for exchange any of the Original Notes tendered by this Letter of Transmittal. By tendering Original Notes and executing this Letter of Transmittal, or delivering an Agent's Message instead of this Letter of Transmittal, I hereby represent and agree that: (1) I am not an "affiliate" (as defined in Rule 405 under the Securities Act) of VICORP Restaurants, Inc.; (2) any Exchange Notes I receive in the Exchange Offer are being acquired by me in the ordinary course of my business; (3) at the time of the commencement of the Exchange Offer, neither I nor, to my knowledge, anyone receiving Exchange Notes from me, has any arrangement or understanding with any person to participate in the distribution (as defined in the Securities Act) of the Exchange Notes in violation of the Securities Act; (4) if I am not a Participating Broker-Dealer (as defined below), that I am not engaged in, and do not intend to engage in, the distribution of the Exchange Notes; and (5) if I am a Participating Broker-Dealer, that I will receive the Exchange Notes for my own account in exchange for Original Notes that I acquired as a result of my market-making or other trading activities and that I will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the Exchange Notes I receive. As used in this Letter of Transmittal, a "Participating Broker-Dealer" is a broker-dealer that receives Exchange Notes for its own account in exchange for Original Notes that it acquired as a result of market-making or other trading activities. If I am a Participating Broker-Dealer, by making the representation set forth above and delivering a prospectus in connection with any resale transaction involving the Exchange Notes, I understand that I will not be deemed to have admitted that I am an "underwriter" within the meaning of the Securities Act. VICORP Restaurants, Inc. has agreed, subject to the terms of the Registration Rights Agreement, that for a period of not more than 180 days after the date of acceptance of Original Notes for exchange, it will make the Prospectus, as amended or supplemented from time to time, available to any Participating Broker-Dealer for use in connection with resales of the Exchange Notes. Each Participating Broker-Dealer, by tendering Original Notes and executing this Letter of Transmittal, or delivering an Agent's Message instead of this Letter of Transmittal, agrees that, upon receipt of notice from VICORP Restaurants, Inc. of the occurrence of any event or the discovery of any fact which makes any statement contained or incorporated by reference in the Prospectus untrue in any material respect or which causes the Prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference in the Prospectus, in light of the circumstances under which they were made, not misleading, the Participating Broker-Dealer will suspend the sale of Exchange Notes under the Prospectus. Each Participating Broker-Dealer further agrees that, upon receipt of a notice from VICORP Restaurants, Inc. to suspend the sale of Exchange Notes as provided above, the Participating Broker-Dealer will suspend resales of the Exchange Notes until (1) VICORP Restaurants, Inc. has amended or supplemented the Prospectus to correct the misstatement or omission and has furnished copies of the amended or supplemented Prospectus to the Participating Broker-Dealer or (2) VICORP Restaurants, Inc. has given notice that the sale of the Exchange Notes may be resumed, as the case may be. If VICORP Restaurants, Inc. gives notice to suspend the sale of the Exchange Notes as provided above, it will extend the period referred to above during which Participating Broker-Dealers are entitled to use the Prospectus in connection with the resale of Exchange Notes by the number of days during the period from and including the date of the giving of such notice to and including the date when Participating Broker-Dealers receive copies of the supplemented or amended Prospectus necessary to permit resales of the Exchange Notes or to and including the date on which VICORP Restaurants, Inc. has given notice that the sale of Exchange Notes may be resumed, as the case may be. As a result, a Participating Broker-Dealer who intends to use the Prospectus in connection with resales of Exchange Notes received in exchange for Original Notes in the Exchange Offer must notify VICORP Restaurants, Inc., on or prior to the expiration of the Exchange Offer, that it is a Participating Broker-Dealer. Participating Broker-Dealers must send the required written notice to VICORP Restaurants, Inc.'s executive offices located at 400 West 48th Avenue, Denver, Colorado 80216, Attention: Chief Financial Officer, and this notice must be received by VICORP Restaurants, Inc. at or prior to the expiration of the Exchange Offer. 7 Interest on the Exchange Notes will accrue (1) from the later of (a) the last date to which interest was paid on the Original Notes surrendered in exchange for the Exchange Notes or (b) if the Original Notes are surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of the exchange and as to which interest will be paid, the date to which interest will be paid on such interest payment date or (2) if no interest has been paid on the Original Notes, from April 14, 2004. All authority conferred in or agreed to be conferred in this Letter of Transmittal will survive my death or incapacity, and any obligation of mine under this Letter of Transmittal will be binding upon my heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns. Except as stated in the Prospectus, this tender is irrevocable. 8 SIGN HERE (SEE INSTRUCTIONS 2, 5 AND 6) (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW) (NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2) This Letter of Transmittal must be signed by (1) the registered holder(s)--which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the holder of the Original Notes--exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s) for the Original Notes tendered or on the register of holders maintained by VICORP Restaurants, Inc., or (2) by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted with this Letter of Transmittal--including any opinions of counsel, certifications and other information as may be required by VICORP Restaurants, Inc. for the Original Notes to comply with the restrictions on transfer applicable to the Original Notes. If the signature below is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another acting in a similar fiduciary or representative capacity, please set forth the signer's full title. See Instruction 5. X ----------------------------------------------------------------------------- X ----------------------------------------------------------------------------- SIGNATURE(s) OF STOCKHOLDERS Dated: , 200 --------------------------- ---- Name(s) ------------------------------------------------------------------------ (PLEASE PRINT) - -------------------------------------------------------------------------------- Capacity ----------------------------------------------------------------------- Address ------------------------------------------------------------------------ (ZIP CODE) Tax Identification or Social Security No. -------------------------------------- Area Code and Telephone No. ---------------------------------------------------- SIGNATURE(S) GUARANTEE (SEE INSTRUCTIONS 1 AND 5) Eligible Guarantor Institution ------------------------------------------------- Official Signature ------------------------------------------------------------- Dated: , 200 ----------------------- --- 9 TO BE COMPLETED BY ALL TENDERING HOLDERS OF SECURITIES PAYOR'S NAME: WELLS FARGO BANK, NATIONAL ASSOCIATION SUBSTITUTE PART 1--PLEASE PROVIDE TIN FORM W-9 YOUR TIN IN THE BOX AT -------------------------- DEPARTMENT OF THE TREASURY, RIGHT AND CERTIFY BY (Social Security Number or INTERNAL REVENUE SERVICE SIGNING AND DATING BELOW. Employer Identification Number) PAYER'S REQUEST ---------------------------------------------- FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") PART 2--FOR PAYEES EXEMPT FROM BACKUP AND CERTIFICATION WITHHOLDING (SEE INSTRUCTIONS) ---------------------------------------------- PART 3--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding. Signature Date --------------------- ---------

You must cross out item (2) in Part 3 above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1 OF THE SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and that I mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application in the near future). I understand that if I do not provide a taxpayer identification number to the payor within 60 days, the Payor is required to withhold 28 percent of all cash payments made to me thereafter until I provide a number. - --------------------------------------- --------------------- - --------------------------------------- --------------------- SIGNATURE DATE NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 28 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 10 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. You must complete this Letter of Transmittal if you are a holder of Original Notes-which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the holder of the Original Notes--and either (1) you wish to tender the certificates representing your Original Notes to the Exchange Agent together with this Letter of Transmittal or (2) you wish to tender your Original Notes by book-entry transfer to the Exchange Agent's account at The Depository Trust Company and you elect to submit this Letter of Transmittal to the Exchange Agent instead of an Agent's Message. In order to constitute a valid tender of your Original Notes, unless you comply with the procedures for Guaranteed Delivery described below, the Exchange Agent must receive the following documents at one of the addresses listed above on or prior to the expiration of the Exchange Offer: (1) certificates for the Original Notes, in proper form for transfer, or Book-Entry Confirmation of transfer of the Original Notes into the Exchange Agent's account at The Depository Trust Company, (2) a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or, in the case of a Book-Entry Confirmation, an Agent's Message instead of this Letter of Transmittal, and (3) all other documents required by this Letter of Transmittal. Original Notes tendered in the Exchange Offer must be in denominations of $1,000 principal amount and any integral multiple thereof. If you are a holder of the Original Notes and wish to tender your Original Notes, but (1) the certificates for Original Notes are not immediately available, (2) time will not permit your certificates for Original Notes or other required documents to reach the Exchange Agent before the expiration of the Exchange Offer, or (3) the procedure for book-entry transfer cannot be completed prior to the expiration of the Exchange Offer, you may effect a tender if: (1) the tender is made through an Eligible Guarantor Institution (as defined below); (2) prior to the expiration of the Exchange Offer, the Exchange Agent receives from an Eligible Guarantor Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form we have provided, setting forth your name and address and the amount of Original Notes you are tendering and stating that the tender is being made by Notice of Guaranteed Delivery; and (3) the Exchange Agent receives within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery: (a) the certificates for all physically tendered Original Notes, in proper form for transfer, or a Book-Entry Confirmation of transfer of the Original Notes into the Exchange Agent's account at The Depository Trust Company, as the case may be, (b) a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or, in the case of a Book-Entry Confirmation, an Agent's Message instead of this Letter of Transmittal, and (c) all other documents required by the Letter of Transmittal. The Notice of Guaranteed Delivery may be sent by overnight courier, hand delivery, registered or certified mail or facsimile transmission and must include a guarantee by an Eligible Guarantor Institution in the form set forth in the Notice. THE METHOD OF DELIVERY OF CERTIFICATES FOR ORIGINAL NOTES, LETTERS OF TRANSMITTAL, AGENT'S MESSAGES AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR ELECTION. IF YOU DELIVER YOUR ORIGINAL NOTES BY MAIL, WE RECOMMEND REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE TIMELY DELIVERY. DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES, LETTERS OF TRANSMITTAL, AGENT'S MESSAGES OR OTHER REQUIRED DOCUMENTS TO VICORP RESTAURANTS, INC. VICORP Restaurants, Inc. will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of this Letter of Transmittal or delivery of an Agent's Message instead of the Letter of Transmittal, waives any right to receive any notice of the acceptance of such tender. 2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if: (a) this Letter of Transmittal is signed by the registered holder--which term, for purposes of this Letter of Transmittal, includes any participant in The Depository Trust Company's system whose name appears on a security position listing as the owner of the Original Notes--of Original Notes tendered with this Letter of Transmittal, unless such holder(s) has completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" above, or 11 (b) the Original Notes are tendered for the account of a firm that is an Eligible Guarantor Institution. In all other cases, an Eligible Guarantor Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. An "Eligible Guarantor Institution" (as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") means: - Banks (as defined in Section 3(a) of the Federal Deposit Insurance Act); - Brokers, dealers, municipal securities dealers, municipal securities brokers, government securities dealers and government securities brokers (as defined in the Exchange Act); - Credit unions (as defined in Section 19B(1)(A) of the Federal Reserve Act); - National securities exchanges, registered securities associations and clearing agencies (as these terms are defined in the Exchange Act); and - Savings associations (as defined in Section 3(b) of the Federal Deposit Insurance Act). 3. Inadequate Space. If the space provided in the box captioned "Description of Original Notes Tendered" is inadequate, the certificate number(s) and/or the principal amount of Original Notes and any other required information should be listed on a separate signed schedule which is attached to this Letter of Transmittal. 4. Partial Tenders and Withdrawal Rights. Tenders of Original Notes will be accepted only in denominations of $1,000 principal amount and integral multiples thereof. If you are tendering less than all of the Original Notes evidenced by any certificate you are submitting, please fill in the principal amount of Original Notes which are to be tendered in column 3 ("Principal Amount of Original Notes Tendered") of the box entitled "Description of Original Notes Tendered." In that case, unless you have otherwise indicated by completing the boxes entitled "Special Issuance Instructions" or "Special Delivery Instructions," new certificate(s) for the remainder of the Original Notes that were evidenced by your old certificate(s) will be sent to the registered holder of the Original Notes, promptly after the expiration of the Exchange Offer. All Original Notes represented by certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided in this Letter of Transmittal, tenders of Original Notes may be withdrawn at any time on or prior to the expiration of the Exchange Offer. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent prior to the expiration of the Exchange Offer at one of the addresses listed above. Any notice of withdrawal must specify the name of the person who tendered the Original Notes to be withdrawn, identify the Original Notes to be withdrawn, including the principal amount of the Original Notes, and, where certificates for Original Notes have been transmitted, specify the name in which the Original Notes are registered, if different from that of the withdrawing holder. If certificates for Original Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of the certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Guarantor Institution unless the holder is an Eligible Guarantor Institution. If Original Notes have been tendered using the procedure for book-entry transfer described in the Prospectus under the caption "The exchange offer--Book-entry transfer," any notice of withdrawal must specify the name and number of the account at The Depository Trust Company to be credited with the withdrawn Original Notes and otherwise comply with the procedures of the book-entry transfer facility. All questions as to the validity, form and eligibility--including time of receipt--of these notices will be determined by VICORP Restaurants, Inc. Any such determination will be final and binding. Any Original Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Original Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the registered holder without cost to that holder as soon as practicable after withdrawal, non-acceptance of tender or termination of the Exchange Offer. In the case of Original Notes tendered using the procedure for book-entry transfer described in the Prospectus under the caption "The exchange offer--Book-entry transfer," the Original Notes will be credited to the tendering holder's account with The Depository Trust Company. Properly withdrawn Original Notes 12 may be retendered at any time on or prior to the expiration of the Exchange Offer by following one of the procedures described in the Prospectus under the caption "The exchange offer--Procedures for tendering original notes." 5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Original Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Original Notes tendered hereby are registered in the name of two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Original Notes are registered in different name(s) on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registered holders. When this Letter of Transmittal is signed by the registered holder(s) of the Original Notes listed and transmitted by this Letter of Transmittal, no endorsement(s) of certificate(s) or separate bond power(s) are required unless Exchange Notes are to be issued in the name of a person other than the registered holder(s). Signature(s) on the certificate(s) or bond power(s) must be guaranteed by an Eligible Guarantor Institution. If a person or persons other than the registered holder(s) of Original Notes signs the Letter of Transmittal, certificates for the Original Notes must be endorsed or accompanied by appropriate bond powers, signed exactly as the name or names of the registered holder(s) that appears on the certificates for the Original Notes and also must be accompanied by any opinions of counsel, certificates and other information as VICORP Restaurants, Inc. may require in accordance with the restrictions on transfer applicable to the Original Notes. Signatures on certificates or bond powers must be guaranteed by an Eligible Guarantor Institution. If you are a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or act in a similar fiduciary or representative capacity, and wish to sign this Letter of Transmittal or any certificates for Original Notes or bond powers, you must indicate your status when signing. If you are acting in any of these capacities, you must submit proper evidence satisfactory to us of your authority to so act unless we waive this requirement. 6. Special Issuance and Delivery Instructions. If Exchange Notes are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if Exchange Notes are to be delivered to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Certificates for Original Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained with The Depository Trust Company. See Instruction 4. 7. Irregularities. All questions as to the validity, form, eligibility--including time of receipt--and acceptance of Original Notes tendered for exchange will be determined by VICORP Restaurants, Inc. in its sole discretion. Our determination will be final and binding. We reserve the absolute right to reject any and all tenders of Original Notes improperly tendered or to not accept any Original Notes, the acceptance of which might be unlawful as determined by us or our counsel. We also reserve the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any Original Notes either before or after the expiration of the Exchange Offer--including the right to waive the ineligibility of any holder who seeks to tender Original Notes in the Exchange Offer. Our interpretation of the terms and conditions of the Exchange Offer as to any particular Original Notes either before or after the expiration of the Exchange Offer--including the terms and conditions of the Letter of Transmittal and the accompanying instructions--will be final and binding. Unless waived, any defects or irregularities in connection with tenders of Original Notes for exchange must be cured within a reasonable period of time, as determined by us. Neither we, the Exchange Agent nor any other person has any duty to give notification of any defect or irregularity with respect to any tender of Original Notes for exchange, nor will we have any liability for failure to give such notification. 13 8. Questions, Requests for Assistance and Additional Copies. Questions and requests for assistance may be directed to the Exchange Agent at the addresses and telephone number listed on the front of this Letter of Transmittal. Additional copies of the Prospectus, this Letter of Transmittal or the Notice of Guaranteed Delivery may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 9. Taxpayer Identification Number and Backup Withholding. Federal income tax law generally requires that a tendering holder whose Original Notes are accepted for exchange must provide the Exchange Agent (as payor) with such holder's correct Taxpayer Identification Number (a "TIN"), which, in the case of a holder who is an individual, is such holder's social security number. If the Exchange Agent is not provided with the correct TIN or an adequate basis for an exemption, such holder may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding in an amount equal to 28% of the amount of any reportable payments made after the exchange to such tendering holder. If withholding results in an overpayment of taxes, a refund may be obtained. To prevent backup withholding, each tendering holder must provide such holder's correct TIN by completing the "Substitute Form W-9" set forth herein, certifying that the TIN provided is correct (or that such Holder is awaiting a TIN) and that (i) the Holder is exempt from backup withholding, (ii) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. Exempt holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt Holder should write "Exempt" in Part 2 of Substitute Form W-9. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for additional instructions. In order for a nonresident alien or foreign entity to qualify as exempt, such person must submit a completed Form W-8, "Certificate of Foreign Status," signed under penalty of perjury attesting to such exempt status. Such form may be obtained from the Exchange Agent. If the Original Notes are held in more than one name or are not in the name of the actual owner, consult the W9 Guidelines for information on which TIN to report. If the holder does not have a TIN, such holder should consult the W-9 Guidelines for instructions on applying for a TIN, write "Applied For" in the space for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth herein. If the holder does not provide such holder's TIN to the Exchange Agent within 60 days, backup withholding will begin and continue until such holder furnishes such holder's TIN to the Exchange Agent. NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT THE HOLDER HAS ALREADY APPLIED FOR A TIN OR THAT SUCH HOLDER INTENDS TO APPLY FOR ONE IN THE NEAR FUTURE. 10. Waiver of Conditions. VICORP Restaurants, Inc.'s obligation to complete the Exchange Offer is subject to the conditions described in the Prospectus under the caption "The exchange offer--Conditions to the exchange offer." These conditions are for our benefit only and we may assert them regardless of the circumstances giving rise to any condition. We may also waive any condition in whole or in part at any time in our sole discretion. Our failure at any time to exercise any of the foregoing rights will not constitute a waiver of that right and each right is an ongoing right that we may assert at any time. 11. No Conditional Tenders. No alternative, conditional or contingent tenders will be accepted. All tendering holders of Original Notes, by execution of this Letter of Transmittal, waive any right to receive notice of the acceptance of Original Notes for exchange. 12. Lost, Destroyed or Stolen Certificates. If any certificates(s) representing Original Notes have been lost, destroyed or stolen, the holder should check the box above regarding lost, destroyed or stolen certificates and promptly notify the Exchange Agent. The holder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificate(s) have been followed. 14 13. Transfer Taxes. VICORP Restaurants, Inc. will pay all transfer taxes, if any, applicable to the transfer of Original Notes to it or its order pursuant to the Exchange Offer. If, however, Exchange Notes and/or substitute Original Notes not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Original Notes tendered hereby, or if tendered Original Notes are registered in the name of any person other than the person signing this Letter, or if a transfer tax is imposed for any reason other than the transfer of Original Notes to VICORP Restaurants, Inc. or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 13, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL NOTES SPECIFIED IN THIS LETTER OF TRANSMITTAL. IMPORTANT: UNLESS YOU COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES DESCRIBED ABOVE, THIS LETTER OF TRANSMITTAL (OR A FACSIMILE OF THIS LETTER OF TRANSMITTAL), OR, IN THE CASE OF ORIGINAL NOTES TENDERED BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY, AN AGENT'S MESSAGE INSTEAD OF THIS LETTER OF TRANSMITTAL, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION OF THE EXCHANGE OFFER. 15 EX-99.2 44 c86044exv99w2.txt FORM OF GUIDELINE FOR CERTIFICATION Exhibit 99.2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER - Social Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the type of number to give the payer.
GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF - - ------------------------ ----------------------- 1. Individual The individual 2. Two or more The actual owner of the individuals(1) (joint account or, if combined account) funds, the first individual on the account(2) 3. custodian account of a The minor(3) minor (Uniform Gift to Minors Act) 4. a. The usual revocable The grantor-trustee(2) savings trust(grantor is also trustee) The actual owner(2) b. So-called trust The owner(4) account that is not a legal or valid trust under state law The owner(4) 5. Sole proprietorship 6. Sole proprietorship

GIVE THE EMPLOYER INDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF - - ------------------------- -------------------- 7. A valid trust, estate, or The legal entity (5) pension trust 8. Corporate account The corporation 9. Association, club, The organization religious, charitable, educational or other tax- exempt organization 10. Partnership account The partnership 11. A broker or registered The broker or nominee nominee 12. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments
(1) Includes husband and wife, and adult minor. If adult and minor, give Social Security number of the adult or, if the minor is the only contributor, the minor. (2) List first and circle the name of the person whose number you furnish. (3) Circle the minor's name and furnish the minor's social security number. (4) Show your individual name. You may also enter your business name. You may use either your SSN or EIN. (5) List first and circle the name of the valid trust, estate or pension fund. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity is not designated in the account title.) NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER (TIN) ON SUBSTITUTE FORM W-9 (SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE) PAGE 2 NAME If your are an individual, you must generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your FIRST name, the last name shown on your social security card, and your new last name. OBTAINING A NUMBER If you don't have a taxpayer identification number ("TIN"), apply for one immediately. To apply, obtain Form SS-5, Application for a Social Security Card, from our local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number, from you local Internal Revenue Service (the "IRS") office. PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING The following is a list of payees generally exempt from backup withholding and or which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except that a corporation (except certain hospitals described in Regulations section 1.6041-3(a)) that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. (1) A corporation. (2) An organization exempt from tax under section 501 (a), or an individual retirement plan ("IRA"), or a custodial account under section 403 (b) (7) if the account satisfies the requirements of section 401(f) (2) (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivision or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S., the District of Columbia or a possession of the U.S. (9) A futures commission merchant registered with the commodity Futures Trading Commission. (10) A real estate investment trust (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584 (a). (13) A financial institution. (14) A middleman know in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc, Nominee List. (15) A trust exempt from tax under section 664( c) or described in section 4947 (a) (1). Payments of dividends generally not subject to backup withholding include the following: o Payments to nonresident aliens subject to withholding under section 1441. o Payments to partnerships not engaged in a trade or business in the U.S. and that have a least one nonresident alien partner. o Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: o Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payor's trade or business and you have not provided your correct TIN to the payor. o Payments of tax-exempt interest (including exempt-interest dividends under section 852). o Payments described in section 6049(b) (5) to nonresident aliens. o Payments on tax-free covenant bonds under section 1451. o Payments made by certain foreign organizations. o Mortgage interest paid by you. Payments that are not subject to information reporting are generally also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and the regulations under those sections. PRIVACY ACT NOTICE. - Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payors must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payor. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TIN. - If you fail to furnish your correct TIN to a requester (the person asking you to furnish your TIN), you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. - If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. - Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS EX-99.3 45 c86044exv99w3.txt FORM OF NOTICE OF GUARANTEED DELIVERY Exhibit 99.3 VICORP RESTAURANTS, INC. NOTICE OF GUARANTEED DELIVERY This form or one substantially equivalent to this form must be used to accept the offer (the "Exchange Offer") of VICORP Restaurants, Inc. to exchange an aggregate principal amount of up to $126,530,000 of its 10 1/2% Senior Notes due 2011 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding 10 1/2% Senior Notes due 2011 (the "Original Notes"), which were issued in an offering under Rule 144A of the Securities Act and were not registered under the Securities Act. The Exchange Offer will expire at 5:00 p.m., New York City time, on _____________, 2004, unless extended (as it may be extended, the "Expiration Date"). As described in the enclosed Prospectus, dated ____________, 2004 (the "Prospectus"), if you are a registered holder of Original Notes and wish to tender your Original Notes, but (1) the certificates for Original Notes are not immediately available, (2) time will not permit your certificates for Original Notes or other required documents to reach Wells Fargo Bank, National Association, as exchange agent (the "Exchange Agent"), before the Expiration Date or (3) the procedure for book-entry transfer cannot be completed before the Expiration Date, you may effect a tender of your Original Notes if (1) the tender is made through an eligible guarantor institution (as defined in the Prospectus under the caption "The exchange offer--Procedures for tendering original notes"); (2) prior to the Expiration Date, the Exchange Agent receives from an eligible guarantor institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in this form, setting forth your name and address, and the amount of Original Notes you are tendering and stating that the tender is being made by Notice of Guaranteed Delivery. These documents may be sent by overnight courier, registered or certified mail or facsimile transmission. If you elect to use this procedure, you must also guarantee that within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Original Notes, in proper form for transfer, or a book-entry confirmation (as defined in the Prospectus under the caption "The exchange offer--Procedures for tendering original notes") of transfer of the Original Notes into the Exchange Agent's account at The Depository Trust Company (including the agent's message (as defined in the Prospectus under the caption "The exchange offer--Acceptance for exchange and issuance of exchange notes") that forms a part of the book-entry confirmation), as the case may be, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, will be deposited by the eligible guarantor institution with the Exchange Agent; and (3) the Exchange Agent receives the certificates for all physically tendered Original Notes, in proper form for transfer, or a book-entry confirmation of transfer of the Original Notes into the Exchange Agent's account at The Depository Trust Company, as the case may be, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other required documents or, in the case of a book-entry confirmation, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an agent's message instead of the Letter of Transmittal, in each case, within three NYSE trading days after the date of execution of this Notice of Guaranteed Delivery. Delivery to: WELLS FARGO BANK, NATIONAL ASSOCIATION, Exchange Agent By facsimile (for eligible guarantor institutions only): 612-667-4927 Confirm by telephone: 800-344-5128 By registered & certified mail: By regular mail or overnight couriers: In person by hand only: Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. MAC # N9303-121 MAC # N9303-121 608 Second Avenue South Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations, 12th Floor P.O. Box 1517 6th & Marquette Avenue Minneapolis, MN 55402 Minneapolis, MN 55480-1517 Minneapolis, MN 55479

DELIVERY OF A LETTER OF TRANSMITTAL OR AGENT'S MESSAGE TO AN ADDRESS OTHER THAN THE ADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THAN AS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL OR AGENT'S MESSAGE. Ladies and Gentlemen: Subject to the terms and conditions set forth in the Prospectus and the accompanying Letter of Transmittal, the undersigned hereby tenders to VICORP Restaurants, Inc. the principal amount of Original Notes set forth below pursuant to the guaranteed delivery procedure described in the Prospectus under the caption "The exchange offer--Guaranteed delivery procedures." Principal Amount of Original Notes Tendered:* $ -------------------------------- Certificate Nos. (if available): ------------------------------------------------ If Original Notes will be delivered by book-entry transfer to The Depository Trust Company, provide account number. Account Number: ---------------------------------------------------------------- Total Principal Amount Represented by Original Notes Certificate(s): ----------- ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. PLEASE SIGN HERE X ---------------------------------------------- -------------------------- X ---------------------------------------------- -------------------------- Signature(s) of Owner(s) or Authorized Signatory Date Area Code and Telephone Number: ( ) ---------------- Must be signed by the holder(s) of Original Notes as their name(s) appear(s) on certificates for Original Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. - ---------- *Must be in denominations of principal amount of $1,000 and any integral multiple thereof. 2 PLEASE PRINT NAME(s) AND ADDRESS(ES) Name(s): ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- Capacity: ----------------------------------------------------------------- Address(es): ----------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------- GUARANTEE (Not to be used for signature guarantee) The undersigned, an eligible guarantor institution, hereby guarantees that the certificates representing the principal amount of Original Notes tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Original Notes into the Exchange Agent's account at The Depository Trust Company pursuant to the procedures set forth in the Prospectus under the caption "The exchange offer--Guaranteed delivery procedures," together with any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at the address set forth above, no later than three NYSE trading days after the Expiration Date. - ---------------------------------------- ------------------------------------ Name of Firm Authorized Signature - ---------------------------------------- ------------------------------------ Address Title Name: - ---------------------------------------- ----------------------------- Zip Code (Please type or print) Area Code and Telephone Number: Dated: , 200 --------- -------------------- ---- NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES WITH THIS FORM. CERTIFICATES FOR ORIGINAL NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL. 3 EX-99.4 46 c86044exv99w4.txt FORM OF LETTER EXHIBIT 99.4 VICORP RESTAURANTS, INC. OFFER TO EXCHANGE 10 1/2% SENIOR NOTES DUE 2011, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ALL ISSUED AND OUTSTANDING 10 1/2% SENIOR NOTES DUE 2011 To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: VICORP Restaurants, Inc., a Delaware corporation ("VICORP Restaurants"), is offering, subject to the terms and conditions set forth in its Prospectus, dated , 2004 (the "Prospectus"), relating to the offer (the "Exchange Offer") of VICORP Restaurants to exchange an aggregate principal amount of up to $126,530,000 of its 10 1/2% Senior Notes due 2011 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding 10 1/2% Senior Notes due 2011 (the "Original Notes"). The Original Notes were issued on April 14, 2004 in an offering under Rule 144A of the Securities Act that was not registered under the Securities Act. The Exchange Offer is being extended to all holders of the Original Notes in order to satisfy certain obligations of VICORP Restaurants contained in the Registration Rights Agreement, dated as of April 14, 2004, by and among VICORP Restaurants, the Guarantors (as such term is defined therein), J. P. Morgan Securities, Inc. and CIBC World Markets Corp. The Exchange Notes are substantially identical to the Original Notes, except that the transfer restrictions and registration rights applicable to the Original Notes do not apply to the Exchange Notes. We are requesting that you contact your clients for whom you hold Original Notes regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Original Notes registered in your name or in the name of your nominee; or who hold Original Notes registered in their own names, we are enclosing the following documents: 1. Prospectus dated _______________, 2004; 2. The Letter of Transmittal for your use and for the information of your clients; 3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if: (a) certificates for the Original Notes are not immediately available, (b) time will not permit the certificates for the Original Notes or other required documents to reach the Exchange Agent before the expiration of the Exchange Offer or (c) the procedure for book-entry transfer cannot be completed prior to the expiration of the Exchange Offer; 4. A form of letter that may be sent to your clients for whose account you hold Original Notes registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with respect to the Exchange Offer; 5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. Return envelopes addressed to Wells Fargo Bank, National Association, the Exchange Agent for the Exchange Offer. Your prompt action is requested. The Exchange Offer will expire at 5:00 P.M., New York City time, on ___________, 2004, unless the Exchange Offer is extended (as it may be extended, the "Expiration Date"). Original Notes tendered pursuant to the Exchange Offer may be withdrawn at any time before the Expiration Date. Unless a holder of Original Notes complies with the procedures described in the Prospectus under the caption "The exchange offer - Guaranteed delivery procedures," the holder must do one of the following on or prior to the Expiration Date to participate in the Exchange Offer: o tender the Original Notes by sending the certificates for the Original Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, to Wells Fargo Bank, National Association, as Exchange Agent, at one of the addresses listed in the Prospectus under the caption "Exchange Agent"; or o tender the Original Notes by using the book-entry procedures described in the Prospectus under the caption "The exchange offer - Book-entry transfer" and transmitting a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an agent's message instead of the Letter of Transmittal, to the Exchange Agent. In order for a book-entry transfer to constitute a valid tender of Original Notes in the Exchange Offer, the Exchange Agent must receive a confirmation of book-entry transfer (a "Book-Entry Confirmation") of the Original Notes into the Exchange Agent's account at The Depository Trust Company prior to the Expiration Date. The term "agent's message" means a message, transmitted by The Depository Trust Company and received by the Exchange Agent and forming a part of the Book-Entry Confirmation, which states that The Depository Trust Company has received an express acknowledgment from the tendering holder of Original Notes that the holder has received and has agreed to be bound by the Letter of transmittal. If a registered holder of Original Notes wishes to tender the Original Notes in the Exchange Offer, but (a) the certificates for the Original Notes are not immediately available, (b) time will not permit the certificates for the Original Notes or other required documents to reach the Exchange Agent before the Expiration Date, or (c) the procedure for book-entry transfer cannot be completed before the Expiration Date, a tender of Original Notes may be effected by following the Guaranteed Delivery Procedures described in the Prospectus under the caption "The exchange offer--Guaranteed delivery procedures." VICORP Restaurants will, upon request, reimburse brokers, dealers, commercial banks, trust companies and other nominees for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the related documents to the beneficial owners of Original Notes held by them as nominee or in a fiduciary capacity. VICORP Restaurants will pay or cause to be paid all stock transfer taxes applicable to the exchange of Original Notes in the Exchange Offer, except as set forth in Instruction 13 of the Letter of Transmittal. Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to Wells Fargo Bank, National Association, the Exchange Agent for the Exchange Offer, at its address and telephone number set forth on the front of the Letter of Transmittal. Very truly yours, VICORP RESTAURANTS, INC. NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF VICORP RESTAURANTS, INC. OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. Enclosures 2 EX-99.5 47 c86044exv99w5.txt FORM OF LETTER TO CLIENTS Exhibit 99.5 VICORP RESTAURANTS, INC. OFFER TO EXCHANGE 10 1/2% SENIOR NOTES DUE 2011, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ALL ISSUED AND OUTSTANDING 10 1/2% SENIOR NOTES DUE 2011 To Our Clients: Enclosed for your consideration is a Prospectus, dated , 2004 (the "Prospectus"), and the related Letter of Transmittal (the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of VICORP Restaurants, Inc. ("VICORP Restaurants") to exchange an aggregate principal amount of up to $126,530,000 of its 10 1/2% Senior Notes due 2011 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of our issued and outstanding 10 1/2% Senior Notes due 2011 (the "Original Notes"), which were issued on April 14, 2004 in an offering under Rule l44A of the Securities Act and were not registered under the Securities Act. The Exchange Offer is being extended to all holders of the Original Notes in order to satisfy certain obligations of VICORP Restaurants contained in the Registration Rights Agreement, dated as of April 14, 2004, (the "Registration Rights Agreement"), by and among VICORP Restaurants, Guarantors (as such term is defined therein), J. P. Morgan Securities, Inc. and CIBC World Markets Corp. The Exchange Notes are substantially identical to the Original Notes, except that the transfer restrictions and registration rights relating to the Original Notes do not apply to the Exchange Notes. These materials are being forwarded to you as the beneficial owner of the Original Notes held by us for your account but not registered in your name. A tender of such Original Notes may only be made by us as the holder of record and pursuant to your instructions. Accordingly, we request instructions as to whether you wish us to tender on your behalf the Original Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Original Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 P.M., New York City time, on , 2004, unless the Exchange Offer is extended. Any Original Notes tendered pursuant to the Exchange Offer may be withdrawn at any time before the expiration of the Exchange Offer. Your attention is directed to the following: 1. The Exchange Offer is for any and all Original Notes. 2. The Exchange Offer is subject to certain conditions set forth in the Prospectus under the caption "The exchange offer--Conditions to the exchange offer." 3. Any transfer taxes incident to the transfer of Original Notes from the holder to VICORP Restaurants will be paid by VICORP Restaurants, except as otherwise provided in Instruction 13 of the Letter of Transmittal. 4. The Exchange Offer expires at 5:00 P.M., New York City time, on , 2004, unless the Exchange Offer is extended. If you wish to have us tender your Original Notes, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER ORIGINAL NOTES. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the Exchange Offer made by VICORP Restaurants, Inc. with respect to its Original Notes. This will instruct you to tender the Original Notes held by you for the account of the undersigned, subject to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal. Please tender the Original Notes held by you for my account as indicated below: 10 1/2% Senior Notes due 2011 $______________ (Aggregate Principal Amount of Original Notes) [ ] Please do not tender any Original Notes held by you for my account. Dated: , 20 Signature(s): ------------------------------------------------------------------- Print Name(s) here: ------------------------------------------------------------- (Print Address(es)): ------------------------------------------------------------ (Area Code and Telephone Number(s)): -------------------------------------------- (Tax Identification or Social Security Number(s)): ------------------------------ None of the Original Notes held by us for your account will be tendered unless we receive written instructions from you to do so. 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Colorado	5812	84-0511072
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)






		Proposed Maximum	Proposed Maximum
Title of Each Class of	Amount to	Offering Price	Aggregate Offering	Amount of
Securities to be Registered	be Registered	Per Share(1)	Price(1)	Registration Fee(1)


10 1/2% Senior Notes due 2011	$126,530,000	100%	$126,530,000	$16,031

Guarantees of the 10 1/2% Senior Notes(2)	—	—	—	—

Total	$126,530,000	100%	$126,530,000	$16,031


Original notes		10 1/2% Senior Notes due 2011, which were issued on April 14, 2004.

Exchange notes		10 1/2% Senior Notes due 2011. The terms of the exchange notes are substantially identical to those of the outstanding original notes, except that the transfer restrictions and registration rights relating to the original notes do not apply to the exchange notes.

Exchange offer		We are offering to issue up to $126,530,000 aggregate principal amount of exchange notes in exchange for a like principal amount of original notes to satisfy our obligations under the registration rights agreement that we entered into when the original notes were sold in transactions under Rule 144A under the Securities Act.

Expiration date; tenders		The exchange offer will expire at 5:00 p.m., New York City time, on 2004, unless extended. By tendering your original notes, you represent to us that:


Withdrawal; non-acceptance		You may withdraw any original notes tendered in the exchange offer at any time prior to 5:00 p.m., New York City time, on , 2004. If we decide for any reason not to accept any original notes tendered for exchange, the original notes will be returned to the registered holder at our expense promptly after the expiration or termination of the exchange offer. In the case of original notes tendered by book-entry transfer into the exchange agent’s account at The Depository Trust Company, any withdrawn or unaccepted original notes will be credited to the tendering holder’s account at The Depository Trust Company. For further information regarding the withdrawal of tendered original notes, see “The exchange offer— Terms of the exchange offer; period for tendering original notes” and “—Withdrawal rights.”

Conditions to the exchange offer		The exchange offer is subject to customary conditions, which we may waive. See the discussion below under the caption “The exchange offer— Conditions to the exchange offer” for more information regarding the conditions to the exchange offer.

Procedures for tendering original notes		Unless you comply with the procedures described below under the caption “The exchange offer— Guaranteed delivery procedures” on page 33, you must do one of the following on or prior to the expiration of the exchange offer to participate in the exchange offer:

		• tender your original notes by sending the certificates for your original notes, in proper form for transfer, a properly completed and duly executed letter of transmittal, with any required signature guarantees, and all other documents required by the letter of transmittal, to Wells Fargo Bank, National Association as exchange agent, at one of the addresses listed below under the caption “The exchange offer— Exchange agent;” or

		• tender your original notes by using the book-entry transfer procedures described below and transmitting a properly completed and duly executed letter of transmittal, with any required signature guarantees, or an agent’s message instead of the letter of transmittal, to the exchange agent. In order for a book-entry transfer to constitute a valid tender of your original notes in the exchange offer, Wells Fargo Bank, National Association, as exchange agent, must receive a confirmation of book-entry transfer of your original notes into the exchange agent’s account at The Depository Trust Company prior to the expiration of the exchange offer. For more information regarding the use of book-entry transfer procedures, see the discussion below under the caption “The exchange offer— Book-entry transfer.”

Guaranteed delivery procedures		If you are a registered holder of the original notes and wish to tender your original notes in the exchange offer, but

		• the original notes are not immediately available,

		• time will not permit your original notes or other required documents to reach the exchange agent before the expiration of the exchange offer, or

		• the procedure for book-entry transfer cannot be completed prior to the expiration of the exchange offer, then you may tender original


Issuer		VICORP Restaurants, Inc.

Securities		$126,530,000 aggregate principal amount of 10 1/2% Senior Notes due 2011.

Maturity		April 15, 2011.

Interest payment dates		April 15 and October 15, commencing October 15, 2004.

Optional redemption		The exchange notes will be redeemable at our option, in whole or in part, at any time on or after April 15, 2008, at the redemption prices set forth in this prospectus, together with accrued and unpaid interest, if any, to the date of redemption.

		At any time prior to April 15, 2007, we may redeem up to 35% of the original principal amount of exchange notes with the proceeds of one or more offerings of common shares of either VI Acquisition Corp. (the proceeds of which are contributed to VICORP Restaurants, Inc.), or VICORP Restaurants, Inc., at a redemption price of 110.5% of the principal amount of the exchange notes, together with accrued and unpaid interest, if any, to the date of redemption.

		Prior to April 15, 2008, upon the occurrence of a change of control, we may redeem all, but not part, of the outstanding principal amount of the exchange notes at a price equal to 100% of the principal amount of the exchange notes plus a “make-whole” premium.

Guarantees		On the issue date, the exchange notes will be guaranteed on a senior unsecured basis by VI Acquisition Corp., our parent company, and by all subsidiaries that provide guarantees under our new senior secured credit facility. Additionally, any additional existing and future subsidiaries of VI Acquisition Corp. that guarantee our indebtedness will guarantee the exchange notes until such guarantees of other indebtedness are released. The guarantees will be unsecured senior indebtedness of our subsidiary guarantors and will have the same ranking with respect to indebtedness of our subsidiary guarantors as the exchange notes will have with respect to our indebtedness.

Ranking		The exchange notes will:

		• be unsecured;

		• be effectively junior to our secured debt to the extent of the value of the assets securing such debt;

		• rank equally with all of our existing and future unsecured unsubordinated debt;

		• be senior to any future senior subordinated or subordinated debt; and

		• be structurally subordinated to all of the existing and future liabilities (including trade payables) of each of our subsidiaries that do not guarantee the exchange notes.


	Page
Prospectus summary		1
Risk factors		15
The exchange offer		28
Use of proceeds		36
Capitalization		37
Unaudited pro forma combined and consolidated financial data		38
Selected financial data		43
Management’s discussion and analysis of financial condition and results of operations		47
Business		66
Management		78
Executive compensation		80
Principal stockholders		83
Certain relationships and related party transactions		85
Description of other indebtedness		87
Description of notes		89
Exchange offer; registration rights		136
Book-entry settlement and clearance		137
Certain United States federal income and estate tax considerations		139
Certain ERISA considerations		144
Plan of distribution		146
Legal matters		147
Experts		147
Available information		147
Index to financial statements		F-1
Stock Purchase Agreement
Amendment No.1 to Stock Purchase Agreement
Amendment No.2 to Stock Purchase Agreement
Stock Purchase Agreement
Amended and Restated Articles of Incorporation
Bylaws
Amended and Restated Certificate of Incorporation
Bylaws
Certificate of Incorporation
Bylaws
Indenture
Purchase Agreement
Amendment No.1 to Purchase Agreement
Registration Rights Agreement
Stockholders Agreement
Registration Rights Agreement
Joinder Agreement
Joinder Agreement
Amended and Restated Loan and Security Agreement
Management Agreement
Management Agreement
Management Agreement
Nonstatutory Stock Option Agreement
Subscription Agreement
Subscription Agreement
Amended and Restated Subscription Agreement
Management Agreement
Management Agreement
Management Agreement
Employment Agreement
Amendment to Employment Agreement
Employment Agreement
Employment Agreement
Form of Indemnification Agreement
Form of Indemnification Agreement
Form of Indemnification Agreement
Professional Services Agreement
Statement Regarding Computation of Ratios
Subsidiaries of the Registrant
Consent of Ernst & Young LLP
Form T-1 Statement of Eligibility
Form of Letter of Transmittal
Form of Guideline for Certification
Form of Notice of Guaranteed Delivery
Form of Letter
Form of Letter to Clients


		As of April 15, 2004, as a result of the refinancing in which we issued the original notes and entered into our new senior secured credit facility.

		• we had approximately $145.5 million of total indebtedness; and

		• we had approximately $15.0 million of secured indebtedness under our new senior secured credit facility (excluding an additional $10.5 million represented by letters of credit) to which the exchange notes would have been effectively subordinated and $3.9 million of capitalized lease obligations. We also had the ability to borrow up to $30.0 million under our new senior secured revolving credit facility.

Covenants		We will issue the exchange notes under an indenture with Wells Fargo Bank, National Association, as trustee. The indenture will, among other things, limit our ability and the ability of our restricted subsidiaries (as defined under the heading “Description of notes”) to:

		• incur additional debt;

		• issue redeemable stock and preferred stock;

		• repurchase capital stock;

		• make other restricted payments including, without limitation, paying dividends, making investments and redeeming debt that is junior in right of payment to the exchange notes;

		• create liens;

		• sell or otherwise dispose of assets, including capital stock of subsidiaries;

		• enter into agreements that restrict dividends from subsidiaries;

		• enter into mergers or consolidations;

		• enter into transactions with affiliates;

		• guarantee indebtedness; and

		• enter into sale-leaseback transactions.

		These covenants will be subject to a number of important exceptions and qualifications. For more details, see “Description of notes.”

Mandatory offers to purchase		The occurrence of a change of control will be a triggering event requiring us to offer to purchase from you all or a portion of your exchange notes at a price equal to 101% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase.

		Certain asset dispositions will be triggering events which may require us to use the proceeds from those asset dispositions to make an offer to purchase the exchange notes at 100% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase if such proceeds are not otherwise used within 365 days to repay senior secured indebtedness, to repay indebtedness under our new senior secured credit facility (with a corresponding reduction in commitment) or to invest in assets related to our business.

Exchange offer; registration rights		You have the right to exchange the original notes for exchange notes with substantially identical terms. This exchange offer is intended to satisfy that right. The exchange notes will not provide you with any further exchange or registration rights.

Resales of exchange notes		We believe that you will be able to offer for resale, resell or otherwise transfer the exchange notes issued in the exchange offer without


October 30, 2000 to May 13, 2001		VICORP Restaurants, Inc.
May 14, 2001 to October 28, 2001		Midway Investors Holdings Inc.
Fiscal year ended October 27, 2002		Midway Investors Holdings Inc.
October 28, 2002 to June 13, 2003		Midway Investors Holdings Inc.
June 14, 2003 to October 26, 2003		VI Acquisition Corp.
Twenty-four week fiscal period from October 28, 2002 to April 13, 2003		Midway Investors Holdings Inc.
Twenty-four week fiscal period from October 27, 2003 to April 15, 2004		VI Acquisition Corp.




						Fiscal year
						ended						Twenty-four week			Twenty-four week
			Combined			October 27,			Combined			period ended			period ended
(In thousands)			2001 Period			2002			2003 Period			April 13, 2003			April 15, 2004


Income statement data:
Revenues:
	Restaurant operations		$	373,820		$	377,630		$	381,853		$	178,352		$	191,390
	Franchise operations			8,270			7,295			7,343			3,427			2,455

		Total revenues		382,090			384,925			389,196			181,779			193,845
Costs and expenses:
	Restaurant costs:
		Food		109,742			104,298			103,405			48,696			52,095
		Labor		122,747			122,850			124,516			57,941			60,299
	Other operating expenses(1)			96,305			100,002			106,160			48,455			54,564
	Franchise operating expenses			5,242			4,591			4,594			2,086			1,300
	General and administrative expenses			27,393			27,598			26,935			13,108			12,624
	Goodwill amortization(2)			462			—			—			—			—
	Transaction expenses(3)			15,993			279			10,662			472			45

Operating profit				4,206			25,307			12,924			11,021			12,918
Interest expense				4,816			9,786			10,880			4,095			6,551
Debt extinguishment costs(3)				—			—			6,516			—			6,856
Other income, net				727			787			580			336			49

Income (loss) before income taxes				117			16,308			(3,892	)		7,262			(440	)
Provision for income taxes (benefit)				(2,083	)		5,779			(2,266	)		2,542			(136	)

Net income (loss)			$	2,200		$	10,529		$	(1,626	)	$	4,720		$	(304	)
Balance sheet data (at end of period):
Cash and cash equivalents			$	5,668		$	16,021		$	460		$	16,256		$	2,110
Working capital(4)				(27,954	)		(14,797	)		(26,949	)		(17,553	)		(16,496	)
Total assets				187,384			193,850			272,475			191,902			271,443
Total debt(5)				97,351			95,088			146,516			86,899			143,946
Total stockholders’ equity				38,221			48,836			70,679			53,181			71,269
Cash flow and other financial data:
Adjusted EBITDA(6)				38,874			41,695			39,268			18,475			20,272
Net rent expense(7):
	Net rent expense, less amortization of rent-related purchase accounting adjustments			19,646			23,922			25,938			11,624			13,536
	Amortization of rent-related purchase accounting adjustments			(139	)		(301	)		100			(154	)		391
Capital expenditures(8)				11,194			10,599			20,749			7,727			5,804
Depreciation and amortization				18,087			15,330			14,254			6,595			6,645
Cash flow from operating activities				11,985			29,119			14,146			18,399			15,099
Cash flow from investing activities				(127,501	)		(10,278	)		(150,911	)		(9,335	)		(5,739	)
Cash flow from financing activities				120,081			(8,388	)		121,204			(8,829	)		(7,710	)
Ratio data:
Ratio of total debt to Adjusted EBITDA				2.5	x		2.3	x		3.7	x		4.7	x		7.1	x
Ratio of Adjusted EBITDA to interest expense				8.1	x		4.3	x		3.6	x		4.5	x		3.1	x
Operating data:
Village Inn company-operated locations (at end of period)				109			109			118			116			119
Bakers Square company-operated locations (at end of period)				147			148			149			148			150
Village Inn franchised locations (at end of period)				115			115			105			105			104
Change in same unit sales— Village Inn				(0.2	)%		0.2	%		0.1	%		(0.4	)%		2.9	%
Change in same unit sales— Bakers Square				(0.3	)%		1.8	%		(2.5	)%		(1.2	)%		(1.2	)%
Change in total same unit sales				(0.3	)%		1.1	%		(1.4	)%		(0.8	)%		1.9	%




		As of
(In millions)		April 15, 2004


New senior secured credit facility
	Revolving credit facility(1)	$	—
	Term loan		15.0
10 1/2% senior unsecured notes			126.5
Capitalized leases			3.9
	Total indebtedness		145.5
Stockholders’ equity			71.3


By registered & certified mail:	By regular mail or overnight couriers:	In person by hand only:
Wells Fargo Bank, N.A.	Wells Fargo Bank, N.A.	Wells Fargo Bank, N.A.
MAC#N9303-121	MAC#N9303-121	608 Second Avenue South
Corporate Trust Operations	Corporate Trust Operations	Corporate Trust Operations, 12th Floor
P.O. Box 1517	6th & Marquette Avenue	Minneapolis, MN 55402
Minneapolis, MN 55480-1517	Minneapolis, MN 55479




(In millions)
Sources			Uses


Revolving credit facility(1)	$	—	Repayment of prior debt	$	131.8
Term loan facility		15.0	Transaction fees and expenses(2)		8.0
10 1/2% notes		125.0	General corporate purposes		0.2

Total sources	$	140.0	Total uses	$	140.0





(In thousands)			At April 15, 2004


Current maturities of long-term debt and capitalized lease obligations			$	308

Long-term debt:
	Principal amount of notes		$	126,530
	Original issue discount of notes			(1,530	)
	New senior secured credit facility:(1)
		Revolver		—
		Term loan		15,000
	Capitalized lease obligations			3,637

		Total long-term debt (excluding current maturities of long-term debt and capitalized lease obligations)		143,637
Stock subject to redemption(2)				1,063
Stockholders’ equity:
	Common stock			—
	Preferred stock			75,675
	Paid-in capital			2,426
	Treasury stock			(1,004	)
	Accumulated deficit			(5,828	)

		Total stockholders’ equity		71,269

Total capitalization			$	215,969




			Predecessor			Successor
			period from			period from									Pro forma for
			October 28,			June 14,						Adjustments			the fiscal year
			2002 to			2003 to						for the			ended
			June 13,			October 26,						June 2003			October 26,
(In thousands)			2003			2003			Subtotal			acquisition			2003


Revenues:
	Restaurant operations		$	243,157		$	138,696		$	381,853		$	—		$	381,853
	Franchise operations			4,513			2,830			7,343						7,343

				247,670			141,526			389,196			—			389,196
Costs and expenses:
	Restaurant costs:
		Food		66,186			37,219			103,405			—			103,405
		Labor		79,016			45,500			124,516			—			124,516
	Other operating expenses			65,629			40,531			106,160			1,391	(1)		107,551
	Franchise operating expenses			2,648			1,946			4,594			(76	)(2)		4,518
	General and administrative expenses			16,629			9,447			26,076			—			26,076
	Transaction expenses			9,436			1,226			10,662			(9,485	)(3)		1,177
	Management fees			674			185			859						859

				240,218			136,054			376,272			(8,170	)		368,102

Operating profit				7,452			5,472			12,924			8,170			21,094
Interest expense				(5,550	)		(5,330	)		(10,880	)		(1,823	)(4)		(12,703	)
Debt extinguishment costs				(6,516	)		—			(6,516	)		6,516	(5)		—
Other income, net				433			147			580			—			580

Income (loss) before income taxes				(4,181	)		289			(3,892	)		12,863			8,971
Provision for income taxes (benefit)				(1,986	)		(280	)		(2,266	)		5,132	(6)		2,866

Net income (loss)				(2,195	)		569			(1,626	)		7,731			6,105
Preferred stock dividends and accretion				(2,260	)		(2,627	)		(4,887	)		(2,079	)(7)		(6,966	)

Net income (loss) attributable to common stockholders			$	(4,455	)	$	(2,058	)	$	(6,513	)	$	5,652		$	(861	)




	Fiscal year ended
(In thousands)	October 26, 2003


Depreciation of fixed assets(a)	$	70
Sale-leaseback related operating expenses, net(b)		598
Amortization of fair market value rent expense(c)		723

	$	1,391




																								Midway
																					VI			Investors			VI
																					Acquisition			Holdings			Acquisition
			VICORP Restaurants, Inc.									Midway Investors Holdings Inc.									Corp.			Inc.			Corp.

									Period from			Period from						Period from			Period from			Twenty-four			Twenty-four
			Fiscal year			Fiscal year			October 30,			May 14,			Fiscal year			October 28,			June 14,			weeks			weeks
			ended			ended			2000 to			2001 to			ended			2002 to			2003 to			ended			ended
			October 31,			October 29,			May 13,			October 28,			October 27,			June 13,			October 26,			April 13,			April 15,
(In thousands)			1999			2000			2001			2001			2002			2003			2003			2003			2004


Income statement data:
	Revenues:
		Restaurant operations	$	354,717		$	367,397		$	203,494		$	170,326		$	377,630		$	243,157		$	138,696		$	178,352		$	191,390
		Franchise operations		4,561			8,629			4,453			3,817			7,295			4,513			2,830			3,427			2,455

		Total revenues		359,278			376,026			207,947			174,143			384,925			247,670			141,526			181,779			193,845
Cost and expenses:
	Restaurant costs:
		Food		106,991			109,496			60,423			49,319			104,298			66,186			37,219			48,696			52,095
		Labor		116,571			121,109			66,359			56,388			122,850			79,016			45,500			57,941			60,299
	Other operating expenses(1)			86,551			89,099			50,455			45,850			100,002			65,629			40,531			48,455			54,564
	Franchise operating expenses			1,296			5,308			2,476			2,766			4,591			2,648			1,946			2,086			1,300
	General and administrative expenses			28,992			27,366			15,049			12,344			27,598			17,303			9,632			13,108			12,624
	Goodwill amortization(2)			—			—			—			462			—			—			—			—			—
	Impairment of assets and site closing costs			746			—			—			—			—			—			—			—			—
	Transaction expenses(3)			—			—			15,993			—			279			9,436			1,226			472			45

Operating profit (loss)				18,131			23,648			(2,808	)		7,014			25,307			7,452			5,472			11,021			12,918
Interest expense				1,012			817			292			4,524			9,786			5,550			5,330			4,095			6,551
Debt extinguishment costs(3)				—			—			—			—			—			6,516			—			—			6,856
Other income, net				1,422			494			102			625			787			433			147			336			49

Income (loss) before income taxes				18,541			23,325			(2,998	)		3,115			16,308			(4,181	)		289			7,262			(440	)
Provision for income taxes (benefit)				1,214			8,654			(2,316	)		233			5,779			(1,986	)		(280	)		2,542			(136	)

Net income (loss)			$	17,327		$	14,671		$	(682	)	$	2,882		$	10,529		$	(2,195	)	$	569		$	4,720		$	(304	)
Balance sheet data (at end of period):
	Cash and cash equivalents		$	28,094		$	1,003		$	11,510		$	5,568		$	16,021		$	9,036		$	460		$	16,256		$	2,110
	Working capital(4)			10,255			(21,585	)		(10,600	)		(27,954	)		(14,797	)		(61,150	)		(26,949	)		(17,553	)		(16,496	)
	Total assets			223,178			195,213			196,120			187,384			193,850			186,658			272,475			191,902			271,443
	Total debt(5)			6,170			4,740			3,272			97,351			95,088			83,974			146,516			86,899			143,946
	Total stockholders’ equity			151,848			126,697			134,987			38,221			48,836			9,915			70,679			53,181			71,269
Cash flow and other financial data:
	Adjusted EBITDA(6)		$	39,946		$	42,022		$	23,043		$	15,831		$	41,695		$	26,795		$	12,473		$	18,475		$	20,272
	Net rent expense:(7)
		Net rent expense, less amortization of rent-related purchase accounting adjustments		13,138			15,351			8,643			11,003			23,922			15,788			10,150			11,624			13,536
		Amortization of rent-related purchase accounting adjustments		—			—			—			(139	)		(301	)		(222	)		322			(154	)		391
	Capital expenditures(8)			32,996			27,064			6,929			4,265			10,599			9,904			10,845			7,727			5,804
	Depreciation and amortization			19,647			17,880			9,756			8,331			15,330			8,948			5,306			6,595			6,645
	Cash flow from operating activities			31,908			38,259			18,346			(6,361	)		29,119			12,203			1,943			18,399			15,099
	Cash flow from investing activities			(1,954	)		(24,099	)		(6,870	)		(120,631	)		(10,278	)		(11,041	)		(139,870	)		(9,335	)		(5,739	)
	Cash flow from financing activities			(4,526	)		(41,251	)		(969	)		121,050			(8,388	)		(8,147	)		129,351			(8,829	)		(7,710	)
Ratio data:
	Ratio of earnings to fixed charges(9)			3.9	x		4.3	x		0.2	x		1.4	x		1.0	x		0.8	x		1.0	x		2.5	x		1.8	x
	Ratio of total debt to Adjusted EBITDA			0.2	x		0.1	x								2.5	x								4.7	x		7.1	x
	Ratio of Adjusted EBITDA to interest expense												3.5	x		4.3	x		4.8	x		2.3	x		4.5	x		3.1	x
Operating data:
	Village Inn company-operated locations (at end of period)			102			107			108			109			109			117			118			116			119
	Bakers Square company-operated locations (at end of period)			150			149			150			147			148			148			149			148			150
	Village Inn franchised locations (at end of period)			116			115			116			115			115			106			105			105			104
	Change in same unit sales— Village Inn			0.9	%		1.9	%		0.4	%		(0.9	)%		0.2	%		(0.2	)%		0.4	%		(0.4	)%		2.9	%
	Change in same unit sales— Bakers Square			4.6	%		1.7	%		(0.6	)%		(0.1	)%		1.8	%		(1.3	)%		(4.7	)%		(1.2	)%		1.2	%
	Change in total same unit sales			3.2	%		1.8	%		(0.2	)%		(0.4	)%		1.1	%		(0.8	)%		(2.6	)%		(0.8	)%		1.9	%





			Predecessors																					Predecessor


			Period ended									Fiscal year ended			Period ended									Twenty-four weeks ended
									Combined												Combined
			May 13,			October 28,			2001			October 27,			June 13,			October 26,			2003			April 13,			April 15,
(In thousands)			2001			2001			Period			2002			2003			2003			Period			2003			2004


Revenues:
	Restaurant operations		$	203,494		$	170,326		$	373,820		$	377,630		$	243,157		$	138,696		$	381,853		$	178,352		$	191,390
	Franchise operations			4,453			3,817			8,270			7,295			4,513			2,830			7,343			3,427			2,455

				207,947			174,143			382,090			384,925			247,670			141,526			389,196			181,779			193,845
Costs and expenses:
	Restaurant costs:
		Food		60,423			49,319			109,742			104,298			66,186			37,219			103,405			48,696			52,095
		Labor		66,359			56,388			122,747			122,850			79,016			45,500			124,516			57,941			60,299
	Other operating expenses			50,455			45,850			96,305			100,002			65,629			40,531			106,160			48,455			54,564
	Franchise operating expenses			2,476			2,766			5,242			4,591			2,648			1,946			4,594			2,086			1,300
	General and administrative expenses			15,049			12,344			27,393			26,598			16,629			9,447			26,076			12,646			11,923
	Goodwill amortization			—			462			462			—			—			—			—			—			—
	Transaction expenses			15,993			—			15,993			279			9,436			1,226			10,662			472			45
	Management fees			—			—			—			1,000			674			185			859			462			701

				210,755			167,129			377,884			359,618			240,218			136,054			376,272			170,758			180,927

Operating profit (loss)				(2,808	)		7,014			4,206			25,307			7,452			5,472			12,924			11,021			12,918
Interest expense				(292	)		(4,524	)		(4,816	)		(9,786	)		(5,550	)		(5,330	)		(10,880	)		(4,095	)		(6,551	)
Debt extinguishment costs				—			—			—			—			(6,516	)		—			(6,516	)		—			(6,856	)
Other income, net				102			625			727			787			433			147			580			336			49

Income (loss) before income taxes				(2,998	)		3,115			117			16,308			(4,181	)		289			(3,892	)		7,262			(440	)
Provision for income taxes (benefit)				(2,316	)		233			(2,083	)		5,779			(1,986	)		(280	)		(2,266	)		2,542			(136	)

Net income (loss)				(682	)		2,882			2,200			10,529			(2,195	)		569			(1,626	)		4,720			(304	)
Preferred stock dividends and accretion				—			(1,690	)		(1,690	)		(3,570	)		(2,260	)		(2,627	)		(4,887	)		(1,505	)		(3,466	)

Net income (loss) attributable to common stockholders			$	(682	)	$	1,192		$	510		$	6,959		$	(4,455	)	$	(2,058	)	$	(6,513	)	$	3,215		$	(3,770	)




(In millions)				2004(1)		2005		2006		2007		2008		Thereafter		Total


Long-term debt:
	Senior secured credit facility			$	—	$	—	$	—	$	—	$	—	$	15.0	$	15.0
	10 1/2% senior unsecured notes				—		—		—		—		—		126.5		126.5

		Total notes payable			—		—		—		—		—		141.5		141.5
Capital lease obligations(2)					0.4		0.6		0.5		0.5		0.5		6.3		8.8
Operating lease obligations					13.9		25.1		23.7		21.5		19.4		175.6		279.2

			Total	$	14.3	$	25.7	$	24.2	$	22.0	$	19.9	$	323.4	$	429.5




		Number of
		company-		Number of		Total
		operated		franchised		number of
State of operation		restaurants		restaurants		restaurants


Alaska			—		3		3
Arizona			21		—		21
Arkansas			—		4		4
Colorado			32		16		48
Florida			11		16		27
Illinois			2		1		3
Indiana			1		—		1
Iowa			16		4		20
Kansas			—		10		10
Minnesota			—		3		3
Missouri			—		4		4
Nebraska			16		3		19
New Mexico			8		6		14
North Dakota			—		2		2
Oklahoma			—		6		6
Oregon			1		3		4
Texas			—		8		8
Utah			11		2		13
Virginia			—		1		1
Washington			—		3		3
Wyoming			—		9		9
	Total		119		104		223




Name	Age		Position


Debra Koenig		51	Chief Executive Officer and Director
Robert Kaltenbach		59	Chief Operating Officer
Anthony Carroll		52	Chief Financial Officer
Walter Van Benthuysen		65	Director and Chairman of the Board
Robert Cummings		56	Director
Wayne Kocourek		67	Director
Michael Solot		40	Director





									Long-term
									compensation


			Annual compensation						Awards


									Restricted		Securities
Name and principal									stock		underlying		All other
position			Year		Salary		Bonus		awards(1)		options(2)		compensation


Debra Koenig(3)				2003	$	251,505	$	—		—		—	$	63,557(4)
	Chief Executive Officer
Joseph Trungale				2003		339,066		—		—		—		1,046,248(5)
		Former Chief Executive Officer
Robert Kaltenbach				2003		430,560		71,782		—		—		506,308(6)
	Chief Operating Officer
William Hoppe				2003		107,689		—		—		—		116,633(7)
		Former Chief Financial Officer




	Amount and nature of		Percentage of outstanding
Name and address(1)	beneficial ownership		voting securities (2)


Wind Point Partners V, L.P.(3)		682,403		48.0%
Wind Point Partners IV, L.P.(4)		258,289		18.2%
Mid Oaks Investments LLC(5)		171,939		12.1%
Debra Koenig		108,905		7.7%
Robert Kaltenbach		52,795		3.7%
Anthony Carroll		14,295		1.0%
Walter Van Benthuysen		29,695		2.1%
Robert Cummings(3)(4)(6)		947,690		66.7%
Wayne Kocourek(7)		171,939		12.1%
Michael Solot		—		—
All executive officers and directors as a group (seven persons)(6)(7)		1,325,319		93.2%




Year	Percentage


2008		105.250%
2009		102.625%
2010 and thereafter		100.000%


	(9) cash dividends or loans to Holdings in amounts equal to:


	*Limitation on restrictions on distributions from Restricted Subsidiaries*


	*Limitation on sale of capital stock of Restricted Subsidiaries*


Audited consolidated financial statements
	Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm	F-2
	Consolidated balance sheets	F-5
	Consolidated statements of operations	F-6
	Consolidated statements of cash flows	F-7
	Consolidated statements of stockholders’ equity	F-8
	Notes to consolidated financial statements	F-11
Unaudited consolidated financial statements
	Consolidated balance sheets	F-33
	Consolidated statements of operations	F-34
	Consolidated statements of cash flows	F-35
	Notes to consolidated financial statements	F-36




				VI Acquisition			Midway
(In thousands, except per share data)				October 26, 2003			October 27, 2002


Assets
Current assets:
	Cash and cash equivalents			$	460		$	16,021
	Receivables, net				5,224			4,127
	Inventories				11,767			10,190
	Deferred income taxes, short-term				2,164			1,844
	Prepaid expenses				2,563			2,669
	Income tax receivable				961			—

		Total current assets			23,139			34,851
Property and equipment, net					85,479			88,630
Deferred income taxes, long-term					20,329			24,630
Long-term receivables, net					122			157
Goodwill					82,835			25,387
Franchise rights, net					11,949			14,722
Trademarks and tradenames					42,600			—
Other assets, net					6,022			5,473

			Total assets	$	272,475		$	193,850


Liabilities and stockholders’ equity
Current liabilities:
	Current maturities of long-term debt and capitalized lease obligations			$	9,326		$	8,747
	Accounts payable				12,705			12,760
	Accrued compensation				7,246			8,568
	Accrued taxes				6,885			8,754
	Other accrued expenses				13,926			10,819

		Total current liabilities			50,088			49,648
Long-term debt					133,441			80,488
Capitalized lease obligations					3,749			4,154
Other noncurrent liabilities					13,455			9,025
Class A redeemable preferred stock, $0.01 par value, 2,005.7 shares issued and outstanding at October 27, 2002.					—			1,699

			Total liabilities		200,733			145,014

Stock subject to repurchase					1,063			—
Stockholders’ equity:
	VI Acquisition Corp.:
		Preferred stock, $0.0001 par value:
			Series A, 200,000 shares authorized, 67,854 shares issued and outstanding at October 26, 2003		71,405			—
			Unclassified preferred stock, 100,000 shares authorized, no shares issued or outstanding		—			—
		Common stock $0.0001 par value:
			Class A, 2,800,000 shares authorized, 1,298,649 shares issued and outstanding at October 26, 2003		—			—
	Midway Investors Holdings Inc. (Predecessor):
		Preferred stock, $0.01 par value:
			Class A, 70,000 shares authorized, 18,229.1 shares issued and outstanding at October 27, 2002		—			19,221
			Class B, 70,000 shares authorized, 18,266.1 shares issued and outstanding at October 27, 2002		—			16,807
			Class C, 50,000 shares authorized, 2,380.1 shares issued and outstanding at October 27, 2002		—			2,380
		Common stock, $0.01 par value:
			Class A, 70,000 shares authorized, 19,397.4 shares issued and outstanding at October 27, 2002					—
			Class B, 70,000 shares authorized, 627.2 shares issued and outstanding at October 27, 2002		—			—
	Paid-in capital				2,332			3,989
	Treasury stock, at cost, 923.87 shares of preferred stock and 76,103 shares of common stock at October 26, 2003.				(1,000	)		—
	Retained earnings (deficit)				(2,058	)		8,151
	Accumulated other comprehensive loss				—			(1,290	)
	Deferred compensation				—			(422	)

		Total stockholders’ equity			70,679			48,836

			Total liabilities and stockholders’ equity	$	272,475		$	193,850





			VI Acquisition			Midway									VICORP

			Period ended			Period ended			Year ended			Period ended			Period ended
			October 26,			June 13,			October 27,			October 28,			May 13,
(In thousands)			2003			2003			2002			2001			2001


Revenues:
	Restaurant operations		$	138,696		$	243,157		$	377,630		$	170,326		$	203,494
	Franchise operations			2,830			4,513			7,295			3,817			4,453

				141,526			247,670			384,925			174,143			207,947
Cost and expenses:
	Restaurant costs:
		Food		37,219			66,186			104,298			49,319			60,423
		Labor		45,500			79,016			122,850			56,388			66,359
	Other operating expenses			40,531			65,629			100,002			45,850			50,455
	Franchise operating expenses			1,946			2,648			4,591			2,766			2,476
	General and administrative expenses			9,447			16,629			26,598			12,344			15,049
	Transaction expenses			1,226			9,436			279			—			15,993
	Management fees			185			674			1,000			462			—

				136,054			240,218			359,618			167,129			210,755

Operating profit (loss)				5,472			7,452			25,307			7,014			(2,808	)
Interest expense				(5,330	)		(5,550	)		(9,786	)		(4,524	)		(292	)
Debt extinguishment costs				—			(6,516	)		—			—			—
Other income, net				147			433			787			625			102

Income (loss) before income taxes				289			(4,181	)		16,308			3,115			(2,998	)
Provision for income taxes (benefit)				(280	)		(1,986	)		5,779			233			(2,316	)

Net income (loss)				569			(2,195	)		10,529			2,882			(682	)
Preferred stock dividends and accretion				(2,627	)		(2,260	)		(3,570	)		(1,690	)		—

Net income (loss) attributable to common stockholders			$	(2,058	)	$	(4,455	)	$	6,959		$	1,192		$	(682	)





	Common stock												Total
							Paid-in			Retained			stockholders’
(In thousands, except shares)	Shares			Amount			capital			earnings			equity


Balances at October 29, 2000		6,751,179		$	339		$	40,956		$	85,402		$	126,697
Common stock options exercised, including income tax benefits		10,000			1			148			—			149
Common stock issued under the directors’ stock plan		483			—			10			—			10
Employee stock purchase plan		3,316			—			58			—			58
Options exercised by board of directors		11,076			—			282			—			282
Net loss for period ended May 13, 2001		—			—			—			(682	)		(682	)

Pre-transaction balances at May 13, 2001		6,776,054			340			41,454			84,720			126,514
Elimination of VICORP Restaurants, Inc. equity		(6,776,054	)		(340	)		(41,454	)		(84,720	)		(126,514	)

Post-transaction balances at May 13, 2001		—		$	—		$	—		$	—		$	—





				Preferred stock																		Common stock

(In																																		Accumulated
thousands,				Class A						Class B						Class C						Class A		Class B										other						Total
except																												Paid-in			Retained			comprehensive			Deferred			stockholders’
shares)				Shares			Amount			Shares			Amount			Shares			Amount			Shares		Shares		Amount		capital			earnings			loss			compensation			equity


Balances at May 14, 2001					—		$	—			—		$	—			—		$	—			—		—	$	—	$	—		$	—		$	—		$	—		$	—
	Preferred stock Class A issued, net				18,299			16,837			—			—			—			—			—		—		—		—			—			—			—			16,837
	Preferred stock Class B issued, net				—			—			18,266			16,807			—			—			—		—		—		—			—			—			—			16,807
	Common stock Class A issued, net				—			—			—			—			—			—			19,397		—		—		1,785			—			—			—			1,785
	Common stock Class B issued, net				—			—			—			—			—			—			—		627		—		5			—			—			—			5
	Warrants issued				—			—			—			—			—			—			—		—		—		64			—			—			—			64
	Dividends on preferred stock Class A & B				—			766			—			765			—			—			—		—		—		—			(1,531	)		—			—			—
	Accretion of redeemable preferred stock Class A				—			—			—			—			—			—			—		—		—		—			(159	)		—			—			(159	)
	Net income for period ended October 28, 2001				—			—			—			—			—			—			—		—		—		—			2,882			—			—			2,882

	Balances at October 28, 2001				18,299			17,603			18,266			17,572			—			—			19,397		627		—		1,854			1,192			—			—			38,221
	Dividends on preferred stock Class A & B				—			1,618			—			1,615			—			—			—		—		—		—			(3,233	)		—			—			—
	Preferred stock Class C issued, net				—			—			—			(2,380	)		2,380			2,380			—		—		—		—			—			—			—			—
	Accretion of redeemable preferred stock				—			—			—			—			—			—			—		—		—		—			(337	)		—			—			(337	)
	Issuance of incentive stock options				—			—			—			—			—			—			—		—		—		2,135			—			—			(439	)		1,696
	Amortization of deferred compensation				—			—			—			—			—			—			—		—		—		—			—			—			17			17
	Comprehensive income:
		Unrealized loss on hedge transactions, net of tax			—			—			—			—			—			—			—		—		—		—			—			(1,290	)		—			(1,290	)
		Net income			—			—			—			—			—			—			—		—		—		—			10,529			—			—			10,529

			Total comprehensive income		—			—			—			—			—			—			—		—		—		—			—			—			—			9,239

Balances at October 27, 2002					18,299			19,221			18,266			16,807			2,380			2,380			19,397		627		—		3,989			8,151			(1,290	)		(422	)		48,836
	Dividends on Class A and B preferred stock				—			1,027			—			1,025			—			—			—		—		—		—			(2,052	)		—			—			—
	Class C preferred stock issued, net				—			—			—			(1,025	)		1,025			1,025			—		—		—		—			—			—			—			—
	Accretion of redeemable preferred stock				—			—			—			—			—			—			—		—		—		—			(212	)		—			—			(212	)
	Issuance of incentive stock options				—			—			—			—			—			—			—		—		—		1,790			—			—			(1,790	)		—
	Amortization of deferred compensation				—			—			—			—			—			—			—		—		—		87			—			—			436			523
	Issuance of warrants				—			—			—			—			—			—			—		—		—		129			—			—			—			129
	Realization of hedge transaction loss				—			—			—			—			—			—			—		—		—		—			—			1,263			—			1,263
	Amortization of deferred compensation				—			—			—			—			—			—			—		—		—		—			—			—			1,776			1,776
	Exercise of options				1,543			1,544			—			—			287			287			—		2,431		—		228			—			—			—			2,059
	Exercise of warrants				—			—			—			—			—			—			—		1,182		—		—			—			—			—			—
	Repurchase of Midway preferred stock				(19,842	)		(21,792	)		(18,266	)		(16,807	)		(3,692	)		(3,692	)		—		—		—		—			—			—			—			(42,291	)
	Comprehensive loss:																										—
		Unrealized loss on hedge transactions, net of tax			—			—			—			—			—			—			—		—		—		—			—			27			—			27
			Net loss		—			—			—			—			—			—			—		—		—		—			(2,195	)		—			—			(2,195	)

			Total comprehensive loss		—			—			—			—			—			—			—		—		—		—			—			—			—			(2,168	)

Balances at June 13, 2003					—			—			—			—			—			—			19,397		4,240		—		6,223			3,692			—			—			9,915
Elimination of Midway equity					—			—			—			—			—			—			—		—		—		(6,223	)		(3,692	)		—			—			(9,915	)

Balance at June 13, 2003, post- transaction					—		$	—			—		$	—			—		$	—			—		—	$	—	$	—		$	—		$	—		$	—		$	—





	Series A					Class A					Treasury			Treasury					Retained			Total
											stock			stock			Paid-in		earnings			stockholders’
(In thousands, except shares)	Shares			Amount		Shares			Amount		preferred			common			capital		(deficit)			equity


Balances at June 14, 2003		—		$	—		—		$	—	$	—		$	—		$	—	$	—		$	—
Issuance of preferred stock ($1,000 liquidation preference) and common stock (par value $0.0001)		67,854			67,854		1,358,649			—		—			—			1,358		—			69,212
Issuance of preferred stock options		—			—		—			—		—			—			896		—			896
Warrants issued		—			—		—			—		—			—			62		—			62
Exercise of options		924			924		—			—		—			—			—		—			924
Repurchase of preferred and common shares		(924	)		—		(60,000	)		—		(924	)		(76	)		16		—			(984	)
Dividends on Series A preferred stock		—			2,627		—			—		—			—			—		(2,627	)		—
Net income		—			—		—			—		—			—			—		569			569

Balances at October 26, 2003		67,854		$	71,405		1,298,649		$	—	$	(924	)	$	(76	)	$	2,332	$	(2,058	)	$	70,679




(In thousands)


2004	$	8,920
2005		9,920
2006		10,670
2007		10,920
2008		36,558
2009 and thereafter		65,373

	$	142,361




						Lease and
	Capital			Operating		sublease
(In thousands)	leases			leases		income


2004	$	816		$	25,883	$	(971	)
2005		631			25,086		(791	)
2006		472			23,691		(493	)
2007		471			21,541		(405	)
2008		467			19,395		(284	)
2009 and thereafter		6,311			175,553		(809	)

Total minimum lease payments		9,168		$	291,149	$	(3,753	)

Less: amount representing interest		(5,013	)

Present value of minimum lease payments		4,155
Less: current maturities of capitalized lease obligations		(406	)

Capitalized lease obligations	$	3,749


11.	Stockholders’ equity— Midway Investors Holdings Inc.