-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V4xpDsbBwcaAC6zAZwhGTY9aDIGDbb/6hL8uebFBlz4utq8/KOXdEcX3TAaPqAsY xkfwq2dS9ZDZNYJrWb1FMQ== 0000950123-05-012089.txt : 20051012 0000950123-05-012089.hdr.sgml : 20051012 20051012162128 ACCESSION NUMBER: 0000950123-05-012089 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20051012 DATE AS OF CHANGE: 20051012 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAIN STREET RESTAURANT GROUP, INC. CENTRAL INDEX KEY: 0000847466 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 112948370 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-41360 FILM NUMBER: 051135242 BUSINESS ADDRESS: STREET 1: 5050 NORTH 40TH ST STREET 2: STE 200 CITY: PHOENIX STATE: AZ ZIP: 85018 BUSINESS PHONE: 6028529000 MAIL ADDRESS: STREET 1: 5050 NORTH 40TH ST STREET 2: STE 200 CITY: PHOENIX STATE: AZ ZIP: 85018 FORMER COMPANY: FORMER CONFORMED NAME: MAIN STREET & MAIN INC DATE OF NAME CHANGE: 19931115 FORMER COMPANY: FORMER CONFORMED NAME: ASSETRONICS INC DATE OF NAME CHANGE: 19900702 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Honigfeld Bradford CENTRAL INDEX KEY: 0001324511 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 973-597-6433 MAIL ADDRESS: STREET 1: C/O THE BRIAD GROUP STREET 2: 78 OKNER PARKWAY CITY: LIVINGSTON STATE: NJ ZIP: 07039 SC 13D/A 1 y13507sc13dza.txt AMENDMENT NO.1 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- SCHEDULE 13D/A (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 1)* MAIN STREET RESTAURANT GROUP, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $.001 (Title of Class of Securities) 560345308 (CUSIP NUMBER) BRADFORD L. HONIGFELD 78 OKNER PARKWAY LIVINGSTON, NJ 07039 COPY TO: BLAKE HORNICK, ESQ. PRYOR CASHMAN SHERMAN & FLYNN LLP 410 PARK AVENUE NEW YORK, NY 10022 (212) 326-0133 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) OCTOBER 12, 2005 (Date of Event which Requires Filing of this Statement) ---------- If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. 1 * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Bradford L. Honigfeld I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* BK and OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 2,260,802 ----------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 OWNED BY ----------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 2,260,802 WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,260,802 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.32% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- 3 INTRODUCTORY STATEMENT This Amendment No. 1 to Schedule 13D (this "Amendment") amends and supplements the Schedule 13D filed with the Securities and Exchange Commission (the "SEC") on April 29, 2005 (the "Schedule 13D"), by Mr. Bradford L. Honigfeld, the owner, developer and operator, through affiliated entities, of fast-food restaurants (Wendy's), casual dining restaurants (T.G.I. Friday's) and limited service hotels, with respect to the common stock, par value $.001 per share (the "Common Stock"), of Main Street Restaurant Group, Inc., a Delaware corporation (the "Issuer"). All capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed thereto in the Schedule 13D. Other than as set forth herein, there has been no material change in the information set forth in Items 1 through 7 of the Schedule 13D. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Item 3 of the Schedule 13D is hereby amended and supplemented by adding the following thereto: On June 16, 2005, Mr. Honigfeld purchased 81,600 shares of Common Stock in an open market transaction at an aggregate purchase price of approximately $266,832. Mr. Honigfeld purchased such shares of Common Stock using his own available funds. Item 3 of the Schedule 13D is hereby further amended as follows: By replacing the number 488,277 in clause (i) of the first sentence of the first paragraph of such item with the number 489,906. ITEM 4. PURPOSE OF TRANSACTION. Item 4 of the Schedule 13D is hereby amended and restated in its entirety as follows: Mr. Honigfeld acquired the Common Stock to which this Amendment and the Schedule 13D relate for the purpose of acquiring a significant equity position in the Issuer. On October 12, 2005, Mr. Honigfeld presented a letter to the Board of Directors of the Issuer setting forth an offer pursuant to which Mr. Honigfeld and/or his affiliates would purchase all of the issued and outstanding shares of Common Stock not currently owned by Mr. Honigfeld (assuming full conversion or cancellation of all securities convertible or exercisable for Common Stock) for a purchase price of $5.75 per share of Common Stock, payable in cash (the "Offer"). Mr. Honigfeld anticipates that the funds to consummate the Offer primarily would be obtained by him through Jefferies Funding LLC. The letter presented by Mr. Honigfeld to the Board of Directors of the Issuer is attached hereto as Exhibit 1 and the financing commitment letter issued by Jefferies Funding LLC is attached hereto as Exhibit 2. The Offer is conditioned upon and subject to: (i) the completion of a thirty (30) day due diligence review of the Issuer; (ii) the redemption by the Board of Directors of the Issuer, effective upon the consummation of the Offer, of the stockholder rights plan described in the Issuer's Current Report on Form 8-K filed with the SEC on May 26, 2005; (iii) the waiver by the Board of Directors of the Issuer of the applicable provisions of Section 203 of the Delaware General Corporation Law; (iv) the negotiation, execution and delivery of a definitive merger 4 agreement, in mutually satisfactory form; (v) the requisite approval, if any, by any governmental or regulatory agencies to the Offer and the obtaining of all other necessary and agreed upon material third party consents, including, without limitation, any franchisor or liquor license consents; (vi) the execution of irrevocable agreements by certain stockholders of the Issuer to vote and/or consent to the terms of the Offer, and to tender their shares of Common Stock into a tender offer, if applicable; and (vii) the closing of the financing necessary to consummate the Offer. The financing is subject to various customary closing conditions as more fully set forth in Exhibit 2 hereto. At this time, no definitive agreement between Mr. Honigfeld and the Issuer concerning the Offer has been reached and there can be no assurance that a definitive agreement will be reached or that such an agreement, if reached, will be consummated. Mr. Honigfeld anticipates that discussions between him and management of the Issuer with respect to the Offer will be ongoing, and that transactions relating to the Offer may take place at any time with or without prior notice. Mr. Honigfeld will not decide as to the specific means of proceeding with the Offer until after discussions with the Issuer have taken place. The possible activities of Mr. Honigfeld with respect to the Offer and his holdings in the Issuer are subject to change at any time depending upon, without limitation, the price and availability of the Common Stock, subsequent developments affecting the Issuer, the business prospects of the Issuer, general stock market and economic conditions, tax considerations and other factors deemed relevant. Mr. Honigfeld has engaged, and may in the future engage, legal and other advisors to assist him in evaluating the Offer and/or strategic alternatives that are or may become available with respect to his holdings in the Issuer. Mr. Honigfeld may elect at any time not to pursue the Offer for any reason or for no reason at all. Except as may develop with respect to the Offer, Mr. Honigfeld intends to review his holdings in the Issuer on a continuing basis and, depending upon, without limitation, the price and availability of the Common Stock, subsequent developments affecting the Issuer, the business prospects of the Issuer, general stock market and economic considerations, tax considerations and other factors deemed relevant, may at any time (as permitted by applicable law) acquire through open market purchases or otherwise additional shares of Common Stock; sell shares of Common Stock through the open market or otherwise; engage or participate in discussions with the Issuer's management and/or other stockholders of the Issuer; or engage in a transaction or series of transactions with the purpose or effect of acquiring or influencing control of the Issuer. Such discussions or transactions may take place at any time with or without prior notice and may include, without limitation, entering into one or more privately negotiated acquisitions of additional shares of Common Stock, making a tender offer for some or all of the Common Stock, waging a proxy contest for control of the Board of Directors of the Issuer or taking other actions that could have the purpose or effect of directly or indirectly acquiring or influencing control of the Issuer. Alternatively, on September 6, 2005 the Issuer filed a Registration Statement on Form S-3 with the SEC registering for resale 1,689,296 shares of the Common Stock held by Mr. Honigfeld. Mr. Honigfeld reserves the right at any time to determine not to pursue the Offer, and thereafter to either hold his position in the Issuer or to sell all or a portion thereof. Mr. Honigfeld previously had discussions with fewer than 10 stockholders of the Issuer concerning acquisitions of the Common Stock. However, except for the agreement between Mr. Honigfeld and Seller, no arrangements, agreements or understandings were made or reached in connection therewith. 5 Except as set forth in this Amendment, Mr. Honigfeld has no plan or proposal that relates to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Item 5 of the Schedule 13D is hereby amended and restated in its entirety as follows: (a) Mr. Honigfeld has acquired and, for the purpose of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, beneficially owns 2,260,802 shares of Common Stock, representing approximately 13.32% of the outstanding shares of Common Stock of the Issuer.(1) (b) Mr. Honigfeld has sole power to vote and to dispose of 2,260,802 shares of Common Stock. (c) None. (d) Inapplicable. (e) Inapplicable. - ---------- (1) For purposes of calculating the percentage of ownership of Common Stock held by Mr. Honigfeld, the Issuer is deemed to have 16,967,509 shares of Common Stock outstanding, as reported in its Quarterly Report on Form 10-Q filed on August 10, 2005. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1: Letter dated October 12, 2005 from Mr. Honigfeld to the Board of Directors of the Issuer. Exhibit 2: Financing Commitment Letter, dated October 12, 2005, issued by Jefferies Funding LLC, and associated Term Sheets. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: October 12, 2005 /s/ Bradford L. Honigfeld ---------------------------------------- Name: Bradford L. Honigfeld 6 EX-99.1 2 y13507exv99w1.txt LETTER TO BOARD OF DIRECTORS Exhibit 1 October 12, 2005 PERSONAL AND CONFIDENTIAL Main Street Restaurant Group, Inc. 5050 North 40th Street Suite 200 Phoenix, AZ 85018 Attn: John F. Antioco, Chairman William G. Shrader, CEO, President and Director Wanda Williams, Director Kenda B. Gonzales, Director Sergio S. Zyman, Director Michael S. Rawlings, Director RE: OFFER LETTER Ladies and Gentlemen: The purpose of this letter is to set forth an offer pursuant to which I and/or my affiliates would purchase all of the issued and outstanding shares of the common stock (the "Common Stock") of Main Street Restaurant Group, Inc., a Delaware corporation (the "Company"), not currently owned by me (assuming full conversion or cancellation of all securities convertible or exercisable for Common Stock) for a purchase price of $5.75 per share of Common Stock, payable in cash, subject to the terms and conditions set forth below (the "Offer"). Based upon my experience in the restaurant industry, I believe that the Offer is a fair one and generous to the Company's stockholders. I also believe that the Offer represents a multiple of approximately 8.7 times the projected EBITDA of the Company for the current fiscal year and a significant premium over the Company's historical market trading range. Enclosed herewith please find a fully executed financing commitment letter from Jefferies Funding LLC representing an aggregate commitment of $240 million (the "Financing"), which amount is sufficient to finance the Offer and to repay any and all existing indebtedness of the Company. As you know, I am the owner of 2,260,802 shares of Common Stock, which amount represents approximately 13.32% of the Common Stock currently issued and outstanding. I am also the President and Chief Executive Officer of The Briad Group and its affiliates, a privately-held, multi-state owner, developer and operator of franchised restaurants and limited service hotels. Due to my familiarity with the restaurant industry, my current equity position in the Company and the fact that I am already an authorized franchisee of TGI Friday's restaurants, I believe that I am in a position to consummate the Offer on an expedited basis. The Offer is conditioned upon and subject to: (i) the completion within thirty (30) days to my satisfaction of a legal, accounting and business due diligence review of the Company (which I believe can be completed quickly due to my experience in the restaurant industry and my familiarity with the Company's public filings); (ii) the redemption by the Company's Board of Directors, effective upon the consummation of the Offer, of the stockholder rights plan described in the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 26, 2005; (iii) the waiver by the Board of Directors of the Company of the applicable provisions of Section 203 of the Delaware General Corporation Law; (iv) the negotiation, execution and delivery of a definitive merger agreement, in mutually satisfactory form (the "Merger Agreement"); (v) the requisite approval, if any, by any governmental or regulatory agencies to the transaction contemplated by this letter and the obtaining of all other necessary and agreed upon material third party consents, including, without limitation, any franchisor or liquor license consents; (vi) the execution of irrevocable agreements by certain stockholders of the Company, including, without limitation, John Antioco, the Chairman of the Board of Directors of the Company, and CIC MSRG LP, to vote and/or consent to the terms of the Offer and the Merger Agreement, and to tender their shares of Common Stock into a tender offer, if applicable; and (vii) the closing of the Financing. I hereby request that the Company promptly make available to me (including my attorneys and accountants) all documents, instruments and records relating to the Company set forth on the due diligence request list previously provided by me to the Company's officers, permit physical inspection of the facilities of the Company by all such parties, and reasonably cooperate with me to complete my business, accounting and legal review of the Company. As an inducement to incur the time and expense of the foregoing due diligence review, I would request that, during the 30 day period beginning on the date of your favorable response to this letter and your provision of the due diligence information to us, (i) the Company negotiate exclusively with me and/or my affiliates with respect to the Offer and (ii) neither the Company nor any of its directors, officers, agents, shareholders, affiliates or other representatives, directly or indirectly, solicit, initiate or entertain offers from, discuss or negotiate with, or in any manner encourage, accept, respond to or consider any proposal of any person or entity other than me and/or my affiliates relating to the acquisition of all or any portion of the Company, its capital stock, assets or business, in whole or in part, whether through purchase, merger, consolidation, similar transaction or otherwise. This letter does not constitute or create, and shall not be deemed to constitute or create, any legally binding or enforceable obligation on the part of any party. No such obligation shall be created, except by the negotiation, signing and delivery of the Merger Agreement, containing such terms of the proposed transaction as shall be agreed upon by 2 the parties, and then only in accordance with the terms and conditions of such Merger Agreement. I am prepared to meet with you, or a committee of your members, to discuss this proposal further and to answer any questions that you may have concerning this proposal. My counsel is also prepared to talk with the Company's counsel at an appropriate time to coordinate the due diligence effort and the drafting of an appropriate Merger Agreement. I trust that you will give this proposal your immediate consideration, and that I will receive a prompt and favorable response so that we may schedule a meeting to initiate discussions with the committee and to commence the due diligence process. I look forward to working with you. Very truly yours, /s/ Bradford L. Honigfeld ---------------------------------------- Bradford L. Honigfeld cc: Robert Kant, Esq. Greenberg Traurig, LLP 2375 East Camelback Road Phoenix, AZ 85016 3 EX-99.2 3 y13507exv99w2.txt FINANCING COMMITMENT LETTER Exhibit 2 [JEFFERIES LOGO] JEFFERIES & COMPANY, INC. 520 Madison Avenue, 12th Floor New York, NY 10022 tel 212.284.2300 www.jefco.com October 12, 2005 Briad Restaurant Group, L.L.C. 78 Okner Parkway Livingston, NJ 07039 Briad Wenco, L.L.C. 78 Okner Parkway Livingston, NJ 07039 Main Street Acquisition Corporation c/o Briad Restaurant Group, L.L.C. 78 Okner Parkway Livingston, NJ 07039 ATTENTION: Brad Honigfeld, Chief Executive Officer Re: Financing Commitment Letter Ladies and Gentlemen: You have advised Jefferies Funding LLC ("Jefferies", "we" or "us") that Main Street Acquisition Corporation ("AcquisitionCo" or the "Issuer"), a newly-formed subsidiary of an entity (the "Parent") formed by affiliates of Brad Honigfeld ("Honigfeld") is contemplating an acquisition (the "Acquisition") of Main Street Restaurant Group, Inc. ("Main Street"). Immediately following the Acquisition and the Equity Contribution (as defined below), AcquisitionCo intends to combine (the "Combination") the business of Main Street with that of Briad Wenco, L.L.C. ("Wenco") and Briad Restaurant Group, L.L.C. ("BRG" and, collectively with Main Street and Wenco and each of their respective subsidiaries, the "Target"). BRG, Wenco and AcquisitionCo are collectively referred to herein as "you." SOURCES OF FUNDS We understand that the sources of funds required to fund the Acquisition, to repay existing indebtedness of the Target, to pay related fees, expenses and commissions, and to provide ongoing working capital requirements of the Target are expected to include: (i) a senior secured $20.0 million revolving credit facility (the "Revolving Credit Facility"), having such terms as are described in the Term Sheet attached as Exhibit A hereto; (ii) the issuance by the Issuer of senior secured notes yielding gross proceeds of $220.0 million (the "Senior Secured Notes" or the "Notes"), pursuant to a public offering or placement under Rule144A of the Securities Act of 1933, as amended (the "Securities Act") or other private placement (the "Notes Offering"), having such terms as are described in the Term Sheet attached as Exhibit B hereto; (iii) the contribution by Honigfeld of the equity interests in Main Street held by him on terms and conditions satisfactory to us (the "Rollover Equity Contribution"), and (iv) the contribution by Honigfeld of the equity interests in Wenco and BRG held by him on terms and conditions satisfactory to us (the "Equity Contribution"). The Revolving Credit Facility will be undrawn at closing. The Equity Contribution, the Rollover Equity Contribution, the Notes Offering, the Revolving Credit Facility, the Acquisition and the Combination are collectively referred to herein as the "Transactions." THE COMMITMENT We are pleased to inform you that, subject to the terms and conditions set forth herein, we hereby commit, directly or indirectly through one or more of our affiliates, (i) to provide the Revolving Credit Facility and (ii) to purchase Senior Secured Notes yielding gross proceeds of $220.0 million (collectively, the "Commitments"). The Commitments are expressly subject to: (i) the terms and conditions set forth in this commitment letter, and the respective summaries of terms and conditions and other provisions set forth as Exhibits A, B and C hereto (collectively, the "Commitment Letter") and the terms and conditions of the engagement letter, dated as of the date hereof (the "Engagement Letter"), among you and Jefferies & Company, Inc. ("Jefco"), and (ii) the execution and delivery of definitive documentation with regard to the Revolving Credit Facility (the "Credit Facility Documents") and the Senior Secured Notes (the "Note Documents" and, together with the Credit Facility Documents, the "Financing Documents") satisfactory to us and covering matters expressly referred to herein and such other matters as we may reasonably request and that are customary in transactions similar to the Transactions. If any of the foregoing conditions is not satisfied, we (a) shall have the right to terminate the Commitments (and thereafter (x) except as expressly provided herein or in the Engagement Letter, you and (y) we will have no obligations hereunder or in connection with the Acquisition) or (b) may, but shall not be obligated to, propose alternative financing amounts or structures to provide the Issuer with aggregate gross proceeds equal to the expected gross proceeds from the Notes Offering and the aggregate commitments under the Revolving Credit Facility. ROLE OF JEFFERIES AND JEFCO AND PRICING FLEXIBILITY You agree that (i) we will act as the sole and exclusive administrative agent, advisor, lead arranger, syndication agent and book-runner for the Revolving Credit Facility, and (ii) Jefco will act as sole and exclusive underwriter, initial purchaser, placement agent, advisor, book-runner and/or lead arranger, as the case may be, for the Notes Offering. No additional administrative agents, advisors, arrangers, syndication agents or book-runners will be appointed for the Revolving Credit Facility, and no other titles will be awarded in respect of the Revolving Credit Facility, without our consent in our sole discretion. No additional underwriters, initial purchasers, placement agents, advisors, book-runners or arrangers will be appointed for the Notes Offering, and no other titles will be awarded in respect of the Notes Offering, without Jefco's consent in its sole discretion. You understand that we intend (i) to syndicate all or part of the Commitment for the Revolving Credit Facility to a group of banks, financial institutions and other entities (collectively, "the Lenders") immediately upon execution of this Commitment Letter, and (ii) to resell the Senior Secured Notes to a group of financial institutions and other entities (collectively, "the Purchasers") immediately upon the purchase thereof. In connection therewith, Jefco and we will be entitled in our sole discretion to alter the structure, pricing, tenor, issuer, collateral, covenants and other terms and characteristics, of the Revolving Credit Facility and/or the Senior Secured Notes, if Jefco and we determine in our sole discretion that such changes are advisable to ensure 2 a successful syndication of the Revolving Credit Facility and a successful resale of the Senior Secured Notes. Notwithstanding the foregoing: (i) the gross proceeds of the issuance of the Senior Secured Notes shall not be decreased, and (ii) the fees set forth in the Engagement Letter shall not be increased. Our commitment is expressly subject to your agreement with the foregoing. PROCESS AND COOPERATION You agree to, and to use your commercially reasonable efforts after entering into a definitive merger or other acquisition agreement with Main Street (the "Merger Agreement") to cause the Target to (including by using your commercially reasonable efforts to include a covenant in the Merger Agreement to such effect), assist Jefco and us in syndicating the Revolving Credit Facility to potential Lenders and marketing the Senior Secured Notes to potential Purchasers as soon as practicable and at such times and locations as Jefco and we request. Without limiting the foregoing, you agree that you will, and will cause your representatives and advisers to: (a) promptly prepare and provide all financial and other information as Jefco or we may reasonably request with respect to (A) (x) you and each of your affiliates, and (y) after entering into the Merger Agreement, the Target and each of its affiliates and (B) the Transactions, including, without limitation, financial projections ("Projections") related to the foregoing; (b) ensure that Jefco's and our efforts to syndicate the Revolving Credit Facility and market the Senior Secured Notes benefit materially from your financial relationships and, after entering into the Merger Agreement, from the financial relationships of the Target and its affiliates, (c) cause your senior management to (and use commercially reasonable efforts after entering into the Merger Agreement to cause senior management of the Target and each of its affiliates (including, without limitation, the chief executive officer and the chief financial officer of the Target) to), participate in customary "road shows" or other meetings with potential Lenders under the Revolving Credit Facility and potential Purchasers of Senior Secured Notes, (d) prepare a confidential offering memorandum (each, an "Offering Memorandum") for each of the Revolving Credit Facility and the Notes Offering, and other marketing materials to be used in connection with the syndication of the Revolving Credit Facility and the marketing of the Notes Offering, which, in the case of the Offering Memorandum for the Senior Secured Notes, contains all financial statements (including all audited financial statements, all unaudited financial statements and all appropriate pro forma financial statements prepared in accordance with, or reconciled to, generally accepted accounting principles in the United States and prepared in accordance with Regulation S-X under the Securities Act and all other data that the Securities and Exchange Commission would require in a registered offering of the Senior Secured Notes on a Form S-1 registration statement); and (e) use commercially reasonable efforts to obtain, at your expense, but with our assistance, monitored public ratings of the Revolving Credit Facility and the Senior Secured Notes from Moody's Investment Service ("Moody's") and Standard & Poor's Ratings Group ("S&P"), at least 30 days prior to the scheduled closing date for the Acquisition, and to participate in the process of securing such ratings, including having your senior management and, after entering into the Merger Agreement, senior management (including, without limitation, the chief executive officer and chief financial officer) of the Target to meet with such ratings agencies. 3 CLEAR MARKET You agree that until the earliest of (i) the termination of the Commitments without the issuance and sale of the Senior Secured Notes or the provision of the Revolving Credit Facility; (ii) both (x) the successful syndication of the Revolving Credit Facility (as determined by us) and (y) the successful resale of the Senior Secured Notes (as determined by us); and (iii) 6 months following the date hereof: you will not, and will not permit or any of your affiliates to (and after entering into the Merger Agreement, you will not permit the Target or any of its affiliates to) directly or indirectly, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance of, any debt facility, or debt or equity security of the Issuer, the Target or any of their respective affiliates, in each case, in connection with the Transactions (other than the financings expressly contemplated hereby), including any renewals or refinancings of any existing debt facility, without our prior written consent, which may be given or withheld in our sole discretion. INFORMATION You represent, warrant and covenant that (a) (i) all information (other than the Projections) that has been or will be made available to Jefco or us or any of Jefco's or our representatives by (x) you or your representatives or (y) after entering into the Merger Agreement, the Target or its representatives, in each case in connection with the Transactions, and (ii) each Offering Memorandum (collectively, the "Information") is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading, and (b) the Projections that have been or will be made available to Jefco or us or Jefco's or our representatives by (x) you or your representatives or (y) after entering into the Merger Agreement, the Target or its representatives have been and will be prepared in good faith based upon reasonable assumptions. You agree to supplement the Information and the Projections as appropriate from time to time so that the representation and warranty in the preceding sentence is correct as of such date, and to promptly advise Jefco and us of all relevant developments affecting you, the Target, any of the Transactions or the accuracy of the Information or Projections. COMPENSATION As consideration for the Commitments, you agree to pay, or cause to be paid, to Jefco, us and Jefco's and our respective affiliates the fees, expenses and other amounts set forth herein and in the Engagement Letter when due and payable in accordance with the terms thereof. ARBITRATION Any dispute, claim or controversy directly or indirectly relating to or arising out of this Commitment Letter, the Engagement Letter, the termination or validity hereof or thereof, any alleged breach of this Commitment Letter or the Engagement Letter or the engagement contemplated by the Engagement Letter (any of the foregoing, a "Claim") shall be submitted to JAMS/ENDISPUTE in New York, New York under the JAMS/ENDISPUTE Comprehensive 4 Arbitration Rules and Procedures (with each of Jefco and we, on the one hand, and you, on the other hand, choosing one arbitrator, and the chosen arbitrators choosing the third arbitrator). The arbitrators shall, in their award, allocate all of the costs of the arbitration (and the mediation, if applicable), including the fees of the arbitrators and the reasonable attorneys' fees of the prevailing party, against the party who did not prevail. The award in the arbitration shall be final and binding. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1 16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. You agree and consent to personal jurisdiction, service of process and venue in any federal or state court within the State of New York in connection with any action brought to enforce an award in arbitration. MISCELLANEOUS This Commitment Letter is not assignable by you; provided that (i) AcquisitionCo may assign its right and obligations hereunder to an affiliate thereof that is reasonably satisfactory to us, and (ii) no such assignment shall limit the assignor's obligations hereunder. Any other attempted assignment by you made by you without our consent (which may be given or withheld in our sole discretion) shall be void and of no force and effect. Nothing contained herein shall prohibit us from performing any of our respective duties or obligations hereunder through any affiliate, and in such circumstances, you will also owe any related duties or obligations to such affiliate. This Commitment Letter has been and is made solely for the benefit of you, us and the other Indemnified Persons (as defined in the Engagement Letter) and your, our and their respective successors, permitted assigns, heirs and personal representatives, and no other person shall acquire or have any right under or by virtue of this Commitment Letter. You agree to indemnify and hold the Indemnified Persons harmless as set forth in the Engagement Letter, and, upon demand from time to time, to reimburse the Indemnified Persons for all out-of-pocket costs, expenses and other payments, including but not limited to reasonable legal fees and disbursements incurred or made in connection with the Commitments and the preparation, execution and delivery of the Financing Documents, regardless of whether or not any definitive documentation is executed, or the Commitments expire or are terminated in accordance with the terms hereof. You shall cause the Target and each of the guarantors of the Revolving Credit Facility and the Senior Secured Notes to become jointly and severally liable, as soon as reasonably practicable and, in any event, upon the closing of the Acquisition, for any and all of your liabilities and obligations relating to or arising out of any of your duties, responsibilities and obligations under this Commitment Letter and the Engagement Letter, in each case pursuant to documentation satisfactory in form and substance to us in our sole discretion. You acknowledge that we and our affiliates (including Jefco) may provide debt financing, equity capital or other services (including financial advisory services) to parties whose interests regarding the transactions described herein and otherwise may conflict with your interests. Notwithstanding the foregoing, until the Exclusivity Termination Date (as defined below), we and our controlled affiliates shall not provide any debt financing similar to the Notes (including, without limitation, any high yield financing whether sold through a private placement, pursuant to Rule 144A under the Securities Act of 1933, as amended, or otherwise) to finance an 5 acquisition of, or change of control transaction in respect of, Main Street. For purposes of this Commitment Letter, the "Exclusivity Termination Date" means the earlier of (i) the date on which you terminate the Engagement Letter in accordance with its terms, and (ii) the date on which you withdraw your offer to consummate the Acquisition (as evidenced by (a) an amendment to any Report on Schedule 13D filed, or to be filed, by or on behalf of you or any "group" of which you are a member (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act, of 1934, as amended) with the Securities and Exchange Commission indicating that Honigfeld no longer intends or desires, directly or indirectly, to consummate the Acquisition, or (b) any press release released by or on behalf of you or Honigfeld to such effect), unless the sole reason for the withdrawal of your offer to consummate the Acquisition is that (x) you have insufficient funds to consummate the Acquisition and (y) such insufficiency of funds results directly from the termination by us of this Commitment Letter or the Engagement Letter other than (i) in accordance with the terms hereof or thereof (other than a termination by us voluntarily without cause) or (ii) for cause. Consistent with our policy to hold in confidence the affairs of our customers, except as expressly contemplated hereby, we will not furnish confidential information obtained from you or your affiliates to any of our other customers. Furthermore, we will not use in connection with the transactions contemplated hereby, or furnish to you, confidential information obtained by us from any other person. This Commitment Letter is delivered to you with the understanding that neither the Commitment Letter nor any of the terms hereof may be disclosed to any third party without our prior written consent except to those of your directors, officers, employees, partners, agents and advisors, as may be required by law or governmental agency (and in each such case you agree, to the extent permitted by law, promptly to inform us and to cooperate with us in obtaining a protective order). We hereby consent to your disclosure of (A) this Commitment Letter (but not the Engagement Letter) (i) to Main Street and its respective directors, officers, employees, agents and financial and legal advisors for their use in connection with the evaluation of the Acquisition, or (ii) as an exhibit to any Report on Schedule 13D (including any amendment thereto) filed by or on behalf of Honigfeld with the Securities and Exchange Commission, and (B) the substance of this Commitment Letter (but not the Engagement Letter) in a press release issued by or on behalf of you or Honigfeld that is reasonably satisfactory to us. This Commitment Letter may not be amended or waived except by an instrument in writing signed by each of us and you. Notices given pursuant to any of the provisions of this Commitment Letter shall be in writing and shall be mailed or delivered (a) if to you, at the address set forth above, and (b) if to us, at our offices, at 520 Madison Avenue, 12th Floor, New York, New York 10022, Attention: General Counsel. This Commitment Letter may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument. Delivery of an executed signature page of this Commitment Letter by electronic transmission shall be as effective as delivery of an originally-executed counterpart thereof. This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and performed entirely within such state. To the fullest extent permitted by law, each of you and we irrevocably submit to the jurisdiction of any New York State court or federal court sitting in the borough of Manhattan in New York City in respect of any suit, action or proceeding arising out of or relating to the provisions of this 6 Commitment Letter or the making of the Commitments, and irrevocably agree that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court. Each of you and we hereby waive, to the fullest extent permitted by law, any objection which you or we may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in any such court, any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum and any right to trial by jury in any such suit, action or proceeding. This Commitment Letter sets forth the entire understanding of you and us as to the scope of the Commitments and the obligations of you and us hereunder. TERMINATION The Commitments will expire at 5:00 PM New York City time on October 13, 2005 unless accepted by you (as indicated by your signature below) prior to such time. Once accepted, the Commitments will also expire at the earliest to occur of: (i) the date on which we notify you in writing that one or more of the conditions set forth in Exhibit C hereto is not capable of being satisfied as of the expected closing date for the Revolving Credit Facility and the issuance of the Senior Secured Notes; (ii) the closing of the Acquisition without the funding of the Commitments; (iii) the commencement by, or on behalf of, you, any of your affiliates, or after entering into the Merger Agreement the Target or any of the Target's affiliates of an offering of any securities or the arrangement of any other financing relating to the Transactions for which (a) in the case of any financing other than a bank debt financing, Jefco is not the sole and exclusive underwriter, initial purchaser, placement agent, advisor, book-runner and/or lead arranger, or (b) in the case of a bank debt financing, we are not the sole and exclusive administrative agent, advisor, lead arranger, syndication agent and book-runner; (iv) the termination of the Engagement Letter in accordance with its terms; or (v) 5:00 PM New York City time on December 31, 2005 if the closing of the Acquisition has not occurred by such time; provided that any term or provision hereof to the contrary notwithstanding, (A) if the earliest to occur of the events specified in clauses (i) through (v) is the event specified in clause (iii)(b), only the commitment with respect to the Revolving Credit Facility shall expire, and (B) all of your obligations hereunder in respect of indemnification, confidentiality and fee and expense reimbursement shall survive any termination of the Commitments pursuant to this paragraph or otherwise. Notwithstanding anything to the contrary in this Commitment Letter, we shall be entitled, in our sole discretion, to terminate this Commitment Letter and our Commitment and other obligations hereunder (i) at any time on or after the date that is 15 business days following the date of this Commitment Letter (such date, the "Deadline Date") if you have not entered into an Exclusivity Agreement on or before the Deadline Date, or (ii) at any time on or before the date that is 30 days following the date, if any, on which you enter into an Exclusivity Letter in the event that we are not satisfied, in our sole discretion, with the results of our legal, accounting, business, financial and other due diligence investigation of you, the Target and your and their respective affiliates, and the officers, directors, employees and agents of each of the foregoing. For purposes of this Commitment Letter, "Exclusivity Agreement" means a binding exclusivity agreement among you and the Target, in form and substance reasonably satisfactory to us, pursuant to which the Target shall agree that: (i) it will negotiate exclusively with you with 7 respect to the Acquisition, and (ii) it will not, directly or indirectly, solicit, initiate or entertain offers from, discuss or negotiate with, or in any manner encourage, accept, respond or consider any proposal of any person or entity other than you relating to the acquisition of all or any portion of the Target, its capital stock, assets or business, in whole or in part, whether through purchase, merger, consolidation, similar transaction or otherwise. [Signature pages follow] 8 Please indicate your acceptance of the Commitments and your agreement to the matters contained in this Commitment Letter by executing and returning it and an executed counterpart of the Engagement Letter to us prior to the time of expiration set forth above. Sincerely, JEFFERIES FUNDING LLC By: /s/ Eric Macy ------------------------------------ Title: EVP Accepted and Agreed to this 12th day of October, 2005 BRIAD RESTAURANT GROUP, L.L.C. By: /s/ Bradford L. Honigfeld --------------------------------- Title: Authorized Officer ------------------------------ MAIN STREET ACQUISITION CORPORATION By: /s/ Bradford L. Honigfeld --------------------------------- Title: Authorized Officer ------------------------------ BRIAD WENCO, L.L.C. By: /s/ Bradford L. Honigfeld --------------------------------- Title: Authorized Officer ------------------------------ Enclosures: Exhibit A - Summary of Terms of Revolving Credit Facility Exhibit B - Summary of Terms of Senior Secured Notes Exhibit C - Conditions Precedent 9 EXHIBIT A SUMMARY OF TERMS OF REVOLVING CREDIT FACILITY I. PARTIES BORROWER................. Main Street Acquisition Corporation (the "Borrower"). GUARANTORS............... The direct parent company of the Borrower (the "Parent") and each of its direct and indirect subsidiaries (other than foreign subsidiaries to the extent necessary to limit material adverse tax consequences to the Borrower) (collectively, the "Guarantors"; the Borrower and the Guarantors, collectively, the "Credit Parties"). SOLE ADVISOR, SOLE LEAD Jefferies or its designee (in such capacities, ARRANGER, SOLE the "Arranger"); provided, that (i) Jefco or SYNDICATION AGENT AND its designee shall be the syndication agent, SOLE BOOK-RUNNER...... (ii) so long as no default or event of default has occurred and is continuing, the Borrower has consented to any such designee (which consent shall not be unreasonably withheld, and (iii) the consent of the Borrower shall not be required if such designee is an affiliate of Jefferies). ADMINISTRATIVE AGENT..... Jefferies or its designee (in such capacity, the "Administrative Agent"); provided, that (i) so long as no default or event of default has occurred and is continuing, the Borrower has consented to any such designee (which consent shall not be unreasonably withheld, and (ii) the consent of the Borrower shall not be required if such designee is an affiliate of Jefferies). COLLATERAL AGENT......... Jefferies or its designee; provided, that (i) so long as no event of default has occurred and is continuing, the Borrower has consented to any such designee (which consent shall not be unreasonably withheld, and (ii) the consent of the Borrower shall not be required if such designee is an affiliate of Jefferies). LENDERS.................. A syndicate of banks, financial institutions and other entities arranged by the Arranger (the "Lenders"). CLOSING DATE............. The date on which simultaneously the Revolving Credit Facility closes, the Senior Secured Notes are issued and the Acquisition is consummated (the "Closing Date"). LOAN DOCUMENTS........... The definitive documentation governing or evidencing
Exhibit A-1 the Revolving Credit Facility. II. DESCRIPTION OF REVOLVING CREDIT FACILITY REVOLVING CREDIT Five year revolving credit facility (the FACILITY.............. "Revolving Credit Facility") in an aggregate principal amount equal to $20.0 million (the loans thereunder, the "Revolving Credit Loans"). Maturity.............. The Revolving Credit Facility shall be available on a revolving basis during the period commencing on the Closing Date and ending on the fifth anniversary of the Closing Date (the "Revolving Credit Termination Date"). Letters of Credit..... A portion of the Revolving Credit Facility not in excess of $5.0 million shall be available for the issuance of standby letters of credit (the "Letters of Credit") by one or more Lenders to be selected in the syndication process (each such Lender in such capacity, an "Issuing Lender"). The face amount of any outstanding Letters of Credit will reduce availability under the Revolving Credit Facility on a dollar-for-dollar basis. No Letter of Credit shall have an expiration date after the earlier of (i) one year after the date of issuance and (ii) five business days prior to the Revolving Credit Termination Date; provided, that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (ii) above). Drawings under any Letter of Credit shall be reimbursed by the Borrower (whether with its own funds or with the proceeds of Revolving Credit Loans) on the same business day. To the extent that the Borrower does not so reimburse the Issuing Lender, the Lenders under the Revolving Credit Facility shall be irrevocably and unconditionally obligated to reimburse the Issuing Lender on a pro rata basis. Swing Line Loans...... A portion of the Revolving Credit Facility not in excess of $1.0 million shall be available for swing line loans (the "Swing Line Loans") from a Lender to be determined by the Administrative Agent and to be reasonably satisfactory to the Borrower (in such capacity, the "Swing Line Lender") on same-day notice. Any such Swing Line Loans will reduce availability under the Revolving Credit
Exhibit A-2 Facility on a dollar-for-dollar basis. Each Lender under the Revolving Credit Facility shall acquire, under certain circumstances, an irrevocable and unconditional pro rata participation in each Swing Line Loan. Use of Proceeds....... The proceeds of the Revolving Credit Loans will be used to finance, in part, the Acquisition and for general corporate purposes of the Borrower and its subsidiaries in the ordinary course of business. III. CERTAIN PAYMENT PROVISIONS FEES AND INTEREST RATES.. As set forth on Annex A-I hereto. OPTIONAL PREPAYMENTS..... Revolving Credit Loans may be prepaid in minimum amounts to be agreed upon, without premium, penalty or fee. MANDATORY PREPAYMENTS.... None. IV. COLLATERAL The obligations of each Credit Party in respect of the Revolving Credit Facility will be secured by a perfected first priority security interest in all of its tangible and intangible assets (including, without limitation, intellectual property, real property, licenses, permits and all of the capital stock of each Credit Party (but limited to 65% of the voting stock and 100% of the non-voting stock of foreign subsidiaries) (collectively, the "Collateral"); provided that (i) the security interests in leasehold property may be granted and perfected after the Closing Date on or before a date to be agreed upon by the parties, and (ii) any landlord consents relating thereto may be obtained after the Closing Date on or before a date to be agreed upon by the parties. The security interest in the Collateral securing the Revolving Credit Facility will be senior to the security interest in the collateral securing the Notes in the manner and to the extent set forth in an intercreditor agreement (the "Intercreditor Agreement") among the Borrower, the Lenders (or a representative or agent on their behalf) and the purchasers of the Notes (or a representative or agent on their behalf). V. OTHER PROVISIONS REPRESENTATIONS AND Customary for facilities and transactions of this type and
Exhibit A-3 WARRANTIES............... others deemed appropriate by the Administrative Agent for this transaction in particular, including without limitation as to: financial statements; absence of undisclosed liabilities; no material adverse change; corporate existence; compliance with law; corporate power and authority; enforceability of Loan Documents; no conflict with law or contractual obligations; no material litigation; no default; ownership of property; liens; intellectual property; no burdensome restrictions; taxes; Federal Reserve regulations; ERISA; Investment Company Act; subsidiaries; environmental matters; labor matters; and accuracy of disclosure. AFFIRMATIVE COVENANTS.... Customary for facilities and transactions of this type and others deemed appropriate by the Administrative Agent for this transaction in particular, including as to: delivery of financial statements, reports, accountants' letters, projections, officers' certificates and other information requested by the Lenders; payment of other obligations; continuation of business and maintenance of existence and material rights and privileges; compliance with laws and material contractual obligations; maintenance of property and insurance; maintenance of books and records; right of the Lenders to inspect property and books and records; notices of defaults, litigation and other material events; and compliance with environmental laws; and borrowing base certificates. NEGATIVE COVENANTS....... Customary for facilities and transactions of this type and others deemed appropriate by the Administrative Agent for this transaction in particular, including limitations on indebtedness (including preferred stock); liens; guarantee obligations; mergers, consolidations, liquidations and dissolutions; sales of assets; leases; dividends and other payments in respect of capital stock; capital expenditures; investments, loans and advances; optional payments and modifications of subordinated and other debt instruments; transactions with affiliates; sale and leasebacks; changes in fiscal year; negative pledge clauses; and changes in lines of business. FINANCIAL COVENANTS...... Customary for facilities and transactions of this type and others deemed appropriate by the Administrative Agent for this transaction in particular, including maximum total leverage ratio, maximum senior leverage ratio, minimum interest coverage ratio, minimum fixed charge coverage ratio, maximum capital expenditures and minimum
Exhibit A-4 EBITDA. EVENTS OF DEFAULT........ Customary for facilities and transactions of this type and others deemed appropriate by the Administrative Agent for this transaction in particular (in certain cases, subject to customary and appropriate grace and cure periods and materiality thresholds to be agreed) including as to: nonpayment of principal when due; nonpayment of interest, fees or other amounts; material inaccuracy of representations and warranties; violation of covenants; cross-default; bankruptcy events; certain ERISA events; material judgments; and a change of control (the definition of which is to be agreed). VOTING................... Amendments and waivers with respect to the Loan Documents will require the approval of Lenders holding not less than a majority of the aggregate amount of the Revolving Credit Loans including participations in Letters of Credit and Swing Line Loans and unused commitments under the Revolving Credit Facility, except that (i) the consent of each Lender directly affected thereby shall be required with respect to (a) reductions in the amount or extensions of the final maturity of any Revolving Credit Loan, (b) reductions in the rate of interest or any fee or extensions of any due date thereof, (c) increases in the amount or extensions of the expiry date of any Lender's commitment, or (d) modifications to the assignment provisions of the Loan Documents which further restrict assignments thereunder, and (ii) the consent of 100% of the Lenders shall be required with respect to (a) modifications to any of the voting percentages, and (b) releases of any Guarantor or all or substantially all of the Collateral. ASSIGNMENTS AND PARTICIPATIONS........ The Lenders shall be permitted to assign and sell participations in their loans and commitments, subject, in the case of assignments (other than assignments (i) by the Administrative Agent to its affiliates or (ii) to another Lender or to an affiliate of a Lender), to the consent of (x) the Administrative Agent, the Issuing Lender, the Swing Line Lender and so long as no default or event of default has occurred and is continuing, and (y) the Borrower (which consent shall not be unreasonably withheld). In the case of partial assignments (other than to another Lender or to an affiliate of a Lender), the minimum assignment amount shall be $5.0 million. Participants shall have the same benefits as the Lenders
Exhibit A-5 with respect to yield protection and increased cost provisions. Voting rights of participants shall be limited to those matters with respect to which the affirmative vote of the Lender from which it purchased its participation would be required as described under "Voting" above. Pledges of Revolving Credit Loans in accordance with applicable law shall be permitted without restriction. Promissory notes shall be issued under the Revolving Credit Facility only upon request. YIELD PROTECTION......... The Loan Documents shall contain customary provisions (i) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy and other requirements of law and from the imposition of or changes in withholding or other taxes and (ii) indemnifying the Lenders for "breakage costs" incurred in connection with, among other things, any prepayment of a Eurodollar Loan (as defined in Annex A-I hereto) on a day other than the last day of an interest period with respect thereto. EXPENSES AND INDEMNIFICATION....... The Borrower shall pay (i) except as otherwise expressly set forth in Section 2(d) of the Engagement Letter, all out-of-pocket expenses of the Administrative Agent, the Collateral Agent, the Syndication Agent and the Arranger associated with the syndication of the Revolving Credit Facility and the preparation, negotiation, execution, delivery and administration of the Loan Documents and any amendment or waiver with respect thereto (including the fees, disbursements and other charges of counsel and the charges of Interlinks) and (ii) all out-of-pocket expenses of the Administrative Agent, the Collateral Agent, the Syndication Agent, the Arranger and the Lenders (including the fees, disbursements and other charges of counsel) in connection with the enforcement of the Loan Documents. The Administrative Agent, the Collateral Agent, the Syndication Agent, the Arranger, any other agent appointed in respect of the Revolving Credit Facility and the Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent resulting solely from the gross negligence or
Exhibit A-6 willful misconduct of the indemnified party as finally judicially determined by a court of competent jurisdiction). GOVERNING LAW AND FORUM................. State of New York. COUNSEL TO THE ADMINISTRATIVE AGENT, THE SYNDICATION AGENT AND THE ARRANGER...... Proskauer Rose LLP.
Exhibit A-7 ANNEX A-I TO EXHIBIT A TO COMMITMENT LETTER INTEREST AND CERTAIN FEES Interest Rate Options.... The Borrower may elect that the Revolving Credit Loans comprising each borrowing bear interest at a rate per annum equal to: (i) the Base Rate plus the Applicable Margin; or (ii) the Eurodollar Rate plus the Applicable Margin provided, that all Swing Line Loans shall bear interest based upon the Base Rate. As used herein: "Base Rate" means the higher of (i) the prime lending rate as set forth on the British Banking Association Telerate Page 5 (the "Prime Rate"), and (ii) the federal funds effective rate from time to time plus 0.5%. "Applicable Margin" means (i) 3.0%, in the case of Base Rate Loans (as defined below) and (ii) 4.0%, in the case of Eurodollar Loans (as defined below). "Eurodollar Rate" means the rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits for one, two, three or six (or, if available to all Lenders, nine or twelve) months (as selected by the Borrower) are offered in the interbank Eurodollar market. Interest Payment Dates... In the case of Revolving Credit Loans bearing interest based upon the Base Rate ("Base Rate Loans"), quarterly in arrears. In the case of Revolving Credit Loans bearing interest based upon the Eurodollar Rate ("Eurodollar Loans"), on the last day of each relevant interest period and, in the case of any interest period longer than three months, on
Annex A-I-1 each successive date three months after the first day of such interest period. Commitment Fees.......... The Borrower shall pay a commitment fee calculated at the rate of 0.5% per annum, on the average daily unused portion of the Revolving Credit Facility, payable quarterly in arrears. Swing Line Loans shall, for purposes of the commitment fee calculations only, not be deemed to be a utilization of the Revolving Credit Facility. Letter of Credit Fees.... The Borrower shall pay a commission on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans on the face amount of each such Letter of Credit. Such commission shall be shared ratably among the Lenders participating in the Revolving Credit Facility and shall be payable quarterly in arrears. In addition to letter of credit commissions, a fronting fee calculated at a rate per annum to be agreed upon by the Borrower and the Issuing Bank on the face amount of each Letter of Credit shall be payable quarterly in arrears to the Issuing Lender for its own account. In addition, customary administrative, issuance, amendment, payment and negotiation charges shall be payable to the Issuing Lender for its own account. Default Rate............. At any time when the Borrower is in default in the payment of any amount (whether interest or principal, including defaulted interest) due under the Revolving Credit Facility, such amount shall bear interest at 2.0% above the rate otherwise applicable thereto. Rate and Fee Basis....... All per annum rates shall be calculated on the basis of a year of 360 days (or 365 or 366 days, as the case may be, in the case of Base Rate Loans the interest rate payable on which is then based on the Prime Rate) and the actual number of days elapsed.
Annex A-I-2 EXHIBIT B SUMMARY OF TERMS OF SENIOR SECURED NOTES ISSUER........................ Main Street Acquisition Corporation (the "Issuer"). ISSUE......................... Senior Secured Floating Rate Notes (the "Notes"). GROSS PROCEEDS................ $220.0 million. MATURITY...................... 5 years. INTEREST RATE................. The Issuer will pay interest on the Notes at an annual rate equal to six-month LIBOR plus a margin of 800 bps. The Issuer will pay interest on the Notes semi-annually in arrears, on each April 1, and October 1, beginning April 1, 2006. USE OF PROCEEDS............... The net proceeds will be used (i) to finance the Acquisition, (ii) to pay related fees and expenses, (iii) to repay existing indebtedness of the Issuer, and (iv) for general corporate purposes. DISTRIBUTION.................. In an offering pursuant to Rule 144A under the Securities Act, with registration rights (as summarized below). RANKING....................... The Notes will be the Issuer's senior secured obligations and will rank (i) senior in right of payment to all the Issuer's subordinated indebtedness and (ii) pari passu in right of payment with all the Issuer's existing and future senior indebtedness, including borrowings under the Revolving Credit Facility. The guarantees of the Notes will rank (i) senior in right of payment to any subordinated indebtedness of the guarantors of the Notes and (ii) pari passu in right of payment with all existing and future senior indebtedness of the guarantors of the Notes, including guarantees of borrowings under the Revolving Credit Facility. SECURITY INTEREST............. The Notes and the related guarantees will be secured by a perfected second priority security interest in all of the tangible and intangible assets of the Issuer and each guarantor of the Notes including, without limitation, intellectual property, real property, licenses, permits and all of the capital stock of the Issuer and each guarantor (but limited to 65% of the voting stock and 100% of the non-voting stock of foreign subsidiaries) (collectively, the "Collateral"); provided that (i) the security interests in leasehold property may be granted and perfected after the Closing Date on or before a date to be agreed upon by the parties, and (ii) any landlord consents relating thereto may be obtained after the Closing Date on or before a date to be
Exhibit B-1 agreed upon by the parties. The security interest in the collateral securing the Revolving Credit Facility will be senior to the security interest in the Collateral securing the Notes in the manner and to the extent set forth in the Intercreditor Agreement. GUARANTEES.................... The Notes will be unconditionally guaranteed on a senior secured basis by the direct parent company of the Issuer and each of the Issuer's restricted subsidiaries (other than foreign subsidiaries to the extent necessary to limit material adverse tax consequences to the Issuer). The guarantees of the Notes will be secured by a perfected second priority security interest in the Collateral. The security interest in the collateral securing the guarantees of the Revolving Credit Facility will be senior to the security interest in the Collateral securing the guarantees of the Notes in the manner and to the extent set forth in the Intercreditor Agreement. OPTIONAL REDEMPTION........... On or after October 1, 2006, the Issuer may redeem all or a portion of the Notes at a premium to the face amount, plus accrued and unpaid interest and liquidated damages, if any, to the date of redemption: FOR THE PERIOD PERCENTAGE -------------- ---------- On or after October 1, 2006..... 103% On or after October 1, 2007..... 102% On or after October 1, 2008..... 101% October 1, 2009 and thereafter.. 100% CHANGE OF CONTROL............. If the Issuer experiences a change of control, the holders of the Notes will have the right to sell to the Issuer their Notes at 101% of the face amount of the Notes, plus accrued and unpaid interest, if any. ASSET SALES................... If any member of the Note Group (as defined in Exhibit C) sells assets (subject to customary exceptions to be agreed), the Issuer shall use the net proceeds to (i) repay the Revolving Credit Facility and permanently reduce the commitments thereunder and/or (ii) reinvest such net proceeds in long-term fixed assets used in the business of the Issuer and its subsidiaries within 270 days of its receipt thereof. To the extent such net proceeds are not so used, the Issuer shall offer to purchase the Notes at a price equal to 100% of their principal amount, plus accrued and unpaid interest thereon and liquidated damages, if any, to the date of purchase. RESTRICTIVE COVENANTS......... The Indenture will contain, but not be limited to, certain
Exhibit B-2 covenants, that among other things, limit the ability of the Issuer and its restricted subsidiaries to do the following (subject to exceptions to be mutually agreed upon): - Incur additional debt or issue disqualified stock; - Pay dividends, make investments or make other restricted payments; - Redeem stock; - Issue stock of subsidiaries; - Create or suffer to exist liens; - Make capital expenditures; - Enter into transactions with affiliates; - Incur dividend or other payment restrictions with regard to restricted subsidiaries; - Merge, consolidate or sell all or substantially all assets; and - Transfer or sell assets.
Exhibit B-3 REGISTRATION RIGHTS........... Pursuant to a registration rights agreement between the Issuer and Jefferies or Jefco (as the case may be), the Issuer shall: - File a registration statement for the exchange notes with the Securities and Exchange Commission (the "SEC") within 90 days from the date the Notes are issued; - Cause that registration statement to be declared effective within 180 days from the date the Notes are issued; and - Consummate the exchange offer within 30 days after the registration statement is declared effective. If: - The Issuer does not file the required registration statement within such 90 days; - The SEC does not declare the required registration statement effective within such 180 days; or - The Issuer does not complete the exchange offer within 30 days after the registration statement is declared effective; then the Issuer will pay liquidated damages in cash at a rate per annum to be mutually agreed on, until such time as the Issuer corrects the registration default. TRANSFER RESTRICTIONS......... The Notes have not been registered under the Securities Act and are not freely transferable. The Notes are subject to restrictions on transfer and may only be offered or sold through exemptions from the registration requirements of the Securities Act (or in transactions not covered by the Securities Act). EVENTS OF DEFAULT............. Customary for transactions of the type contemplated by this Commitment Letter. GOVERNING LAW AND FORUM....... New York.
Exhibit B-4 EXHIBIT C CONDITIONS PRECEDENT The Commitments of Jefferies to provide the Revolving Credit Facility and to purchase Senior Secured Notes are subject to satisfaction of the following conditions precedent: A. CONDITIONS TO BOTH THE REVOLVING CREDIT FACILITY AND THE NOTES OFFERING (i) The Acquisition shall have been consummated in accordance with the Acquisition Agreement and any related documentation (together, the "Definitive Acquisition Documents"), and the Definitive Acquisition Documents shall be in full force and effect. The Definitive Acquisition Documents shall be in form and substance satisfactory to Jefferies, the Lenders and the Purchasers in their sole discretion. There shall not have been any breach, amendment, modification or waiver of any of the terms or conditions of the Definitive Acquisition Documents without the prior written consent of Jefferies, the Lenders and the Purchasers; (ii) The Note Documents, the Credit Facility Documents and the Intercreditor Agreement shall be prepared by counsel to Jefferies and shall be in form and substance satisfactory to Jefferies, the Lenders and the Purchasers; (iii) The Equity Contribution and the Rollover Equity Contribution shall have occurred, in each case, on terms and conditions satisfactory to Jefferies, the Lenders and the Purchasers; and, immediately following the closing of the Revolving Credit Facility and the purchase of the Senior Secured Notes, the Combination shall have occurred in a manner and on terms and conditions satisfactory to Jefferies, the Lenders and the Purchasers; (iv) The Issuer, the Target and their respective subsidiaries (collectively, the "Note Group") shall have no indebtedness for borrowed money other than the Senior Secured Notes and indebtedness under the Revolving Credit Facility; (v) On the Closing Date, after giving effect to the Transactions, the Revolving Credit Facility shall be undrawn; (vi) Receipt of all material governmental, shareholder and third party consents and approvals necessary in connection with the financings contemplated hereby without any action being taken by any component authority that could restrain, prevent or impose any materially adverse conditions on such financings, and no such law or regulation shall be applicable which, in the judgment of Jefferies, is likely to have any such effect; (vii) There not having occurred any event or circumstance that has or is reasonably likely to have any material adverse effect on (a) the Acquisition, the Revolving Credit Facility, the Senior Secured Notes or any of the other Transactions, or (b) the business, results of operations, properties, assets, liabilities, management, condition (financial or otherwise) or prospects of (x) the Note Group, taken as a whole, (y) the Issuer and the guarantors of the Notes, taken as a whole, or (z) the Borrower and the guarantors of the Revolving Credit Facility, taken as a whole, Exhibit C-1 in each case since the date of the last audited financial statements of the Note Group delivered to Jefferies on or before the date hereof (a "Material Adverse Effect"); (viii) None of the Information made available to Jefco or Jefferies or any of their respective representatives by you or any of your representatives as of the date of the Commitment Letter and as of the closing shall, in the determination of Jefferies, the Lenders or the Purchasers (i) be inaccurate, incomplete or misleading in any material respect, or (ii) contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. None of the Information made available to Jefco or Jefferies or any of their respective representatives by the Target or its representatives after entering into the Merger Agreement as of the date of on which the Merger Agreement was entered into and as of the closing shall, in the determination of Jefferies, the Lenders or the Purchasers (i) be inaccurate, incomplete or misleading in any material respect, or (ii) contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. No fact, circumstance or condition not previously known to Jefferies shall become known which, individually or in the aggregate, could reasonably be expected to cause the Projections to be unattainable in the short or long term in a manner deemed material by Jefferies; (ix) No material adverse change or material disruption, circumstance or condition shall exist or shall have occurred in the U.S. financial, banking or capital markets generally (including, without limitation, the acquisition finance market, the high-yield market or the markets for loans or debt securities issued by companies similar to the Target or the Issuer), and no insurrection or armed conflict involving the United States or any other national or international calamity or acts of terror against the United States or its interests shall have occurred, which, in Jefferies' judgment, has materially impaired or could be expected to materially impair the ability of Jefco or Jefferies to successfully syndicate the Revolving Credit Facility and resell the Senior Secured Notes; (x) Jefferies shall have received evidence satisfactory to it that the consolidated adjusted pro forma EBITDA (earnings before interest, taxes, depreciation and amortization) of Main Street and its subsidiaries for the most recent twelve-month period for which monthly financial statements are available (which amount shall be calculated on an adjusted pro forma basis reflecting the Transactions) was not less than $43.5 million. For all purposes hereof, EBITDA shall be presented in a manner satisfactory to Jefferies, including with respect to any adjustments thereto; (xi) Absence of any action, suit, investigation or proceeding pending or, to the knowledge of the Issuer, threatened in any court or before any arbitrator or governmental instrumentality that could reasonably be expected to have a Material Adverse Effect; (xii) Jefferies shall have received (i) customary opinions of counsel to the Note Group as to the transactions contemplated hereby (including without limitation with respect to compliance with the corporate aspects of the Transactions and with all applicable U.S. Federal securities laws), (ii) such corporate resolutions, certificates (including without limitation a solvency Exhibit C-2 certificate from the Issuer's Chief Financial Officer) and (ii) such other documents as Jefferies, any Lender or any Purchaser may reasonably request; (xiii) (x) The compliance by you of your obligations under this Commitment Letter and the Engagement Letter; (y) immediately before and following the closing of the Transactions there shall be no default or event of default under the Financing Documents or other event that, with notice and/or the passage of time, is reasonably likely to become a default or event of default thereunder, and (z) the satisfaction of Jefferies, the Lenders and the Purchasers as to the accuracy of all representations and warranties under the Financing Documents; provided that, for the avoidance of doubt, (i) the security interests to be granted by the applicable members of the Note Group in leasehold property (to secure the obligations in respect of the Revolving Credit Facility and the Senior Secured Notes) may be granted and perfected after the Closing Date on or before a date to be agreed upon by the parties, and (ii) any landlord consents relating thereto may be obtained after the Closing Date on or before a date to be agreed upon by the parties; (xiv) All fees, expenses and other amounts then due to Jefferies or any of its affiliates as set forth in the Engagement Letter or otherwise shall have been paid in full (in accordance with the terms thereof); and (xv) Jefferies shall have received the results of a recent lien and litigation search in each relevant jurisdiction with respect to the members of the Note Group and their respective subsidiaries, and such search shall reveal no liens on any of the assets of the any member of the Note Group or any such subsidiary except for (x) liens permitted by both the Note Documents and the Credit Facility Documents, and (y) liens to be discharged on or prior to the Closing Date pursuant to documentation satisfactory to Jefferies, the Lenders and the Purchasers. B. ADDITIONAL CONDITIONS TO THE REVOLVING CREDIT FACILITY ONLY (i) The Issuer shall have provided Jefferies and the Lenders with a final Offering Memorandum for the Revolving Credit Facility no later than 30 days prior to the contemplated closing date for the Senior Secured Notes and the Revolving Credit Facility (the "Closing Date"). Such Offering Memorandum shall not contain any untrue statements of material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and (ii) The Senior Secured Notes shall have been issued in accordance with the Note Documents. C. ADDITIONAL CONDITIONS TO THE NOTES OFFERING ONLY (i) The Issuer shall have provided Jefferies and the Purchasers with a preliminary Offering Memorandum for the Senior Secured Notes no later than 30 days prior to the contemplated Closing Date and a final, printed Offering Memorandum not later than 5 days prior to the Closing Date. The Offering Memorandum shall not contain any untrue statements of material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; and Exhibit C-3 (ii) Jefferies shall have received from an accounting firm of national standing and reputation, customary comfort letters, in form and substance satisfactory to Jefferies, (i) dated the date of the Offering Memorandum, with respect to the financial statements and financial information contained in the Offering Memorandum and (ii) dated the Closing Date, to the effect that such accounting firm reaffirms the statements made in the letter furnished pursuant to clause (i) (except that the specified date referred to in such bring-down letters shall be a date not more than five days prior to the Closing Date). Exhibit C-4 -----END PRIVACY-ENHANCED MESSAGE-----