Ohio
|
5812 | 34-1566328 | ||
(State or Other Jurisdiction
of Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification No.) |
Carmen J. Romano, Esq. | Marc D. Jaffe, Esq. | |
James A. Lebovitz, Esq. | Ian D. Schuman, Esq. | |
Dechert LLP | Latham & Watkins LLP | |
Cira Centre | 885 Third Avenue | |
2929 Arch Street | New York, New York 10022 | |
Philadelphia, Pennsylvania 19104 | (212) 906-1200 | |
(215) 994-4000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum
|
Proposed Maximum
|
Amount of
|
||||||||||||||||||
Title of Each Class of Securities to be
|
Amount to be
|
Offering Price Per
|
Aggregate Offering
|
Registration
|
||||||||||||||||
Registered | Registered(1) | Share | Price(2) | Fee(3) | ||||||||||||||||
Common stock, no par value per share
|
9,582,950 | $ | 16.00 | $ | 153,327,200 | $ | 10,932.23 | |||||||||||||
(1) | Includes 1,249,950 shares of common stock issuable upon exercise of an option to purchase additional shares granted to the underwriters. |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended, based on an estimate of the proposed maximum aggregate offering price. |
(3) | $12,300.00 was previously paid on July 1, 2010. |
The
information in this preliminary prospectus is not complete and
may be changed. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold until the
registration statement is effective. This preliminary prospectus
is not an offer to sell nor does it seek an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
PER SHARE | TOTAL | |||||||
Public Offering Price
|
$ | $ | ||||||
Underwriting Discounts and Commissions
|
$ | $ | ||||||
Proceeds to Bravo Brio Restaurant Group, Inc. (Before Expenses)
|
$ | $ | ||||||
Proceeds to Selling Shareholders (Before Expenses)
|
$ | $ |
Jefferies & Company
|
Piper Jaffray | Wells Fargo Securities |
KeyBanc Capital Markets | Morgan Keegan & Company, Inc. |
BRAVO is a fun, white tablecloth restaurant offering classic Italian food in a Roman-ruin decor. BRAVO! is inspired by the traditional Italian ristorante where fresh, made-to-order food is prepared in our open Italian kitchens in full view of our Guests, creating the energy of live theater. |
The posh décor and upscale vibe of BRAVO! lends itself to a very comfortable dining experience. Metromix Orlando |
2010 Readers Poll Choice for BEST ITALIAN 1st Place BRAVO! Cucina Italiana Pittsburgh Magazine Little Rock, AR (1) Naples, FL (1) Orlando, FL (1) West Des Moines, IA (1) Chicago, IL (2) Indianapolis, IN (3) Leawood, KS (1) Louisville, KY (1) Baton Rouge, LA (1) New Orleans, LA (1) Detroit, MI (3) Lansing, MI (1) Kansas City, MO (1) St Louis, MO (1) Greensboro, NC (1) Charlotte, NC (1) Albuquerque, NM (1) Bu3alo, NY (1) West Nyack, NY (1) Akron, OH (1) Canton, OH (1) Cincinnati, OH (2) Cleveland, OH (2) Columbus, OH (2) Dayton, OH (1) Toledo, OH (1) Oklahoma City, OK (1) Allentown, PA (1) Pittsburgh, PA (5) Knoxville, TN (1) San Antonio, TX (1) Fredericksburg, VA (1) Virginia Beach, VA (1) Milwaukee, WI (2) BravoItalian.com |
Page
ii
ii
ii
1
14
31
33
35
36
37
39
41
45
62
76
85
100
102
105
109
111
113
117
123
123
123
123
F-1
EX-4.1
EX-10.9
EX-10.11
EX-10.13
EX-10.14
EX-10.15
EX-10.19
EX-23.1
EX-23.3
EX-23.4
i
Table of Contents
ii
Table of Contents
11
42
II-4
1
Table of Contents
2
Table of Contents
The Food.
We offer
made-to-order
menu items prepared using traditional Italian culinary
techniques with an emphasis on fresh ingredients and authentic
recipes. Our food menu is complemented by a wine list that
offers both familiar varieties as well as wines exclusive to our
restaurants. An attention to detail, culinary expertise and
focused execution reflects our chef-driven culture.
The Service.
We are committed to delivering
superior service to each guest, at each meal, each and every
day. We place significant emphasis on maintaining high
waitstaff-to-table
ratios, thoroughly training all service personnel on the details
of each menu item and staffing each restaurant with experienced
management teams to ensure consistent and attentive guest
service.
The Experience.
Lively, high-energy
environments blending dramatic design elements with a warm and
inviting atmosphere create a memorable guest experience.
Signature architectural and décor elements include the
lively theatre of exhibition kitchens, high ceilings, white
tablecloths, a centerpiece bar and relaxing patio areas. These
elements, along with our superior service and value, help form a
bond between our guests and our restaurants, encouraging guest
loyalty and more frequent visits.
3
Table of Contents
4
Table of Contents
5
Table of Contents
our financial results depend significantly upon the success of
our existing and new restaurants;
our long-term success is highly dependent on our ability to
successfully develop and expand our operations;
changes in economic conditions, including continued effects from
the recent recession, could materially affect our business,
financial condition and results of operations;
we have had net losses in the past, in part due to a 3.8%
decrease in sales per comparable restaurant in 2008 as compared
to 2007 and a 7.1% decrease in sales per comparable restaurant
in 2009 as compared to 2008, and our future profitability is
uncertain;
damage to our reputation or lack of acceptance of our brands in
existing and new markets could negatively affect our business,
financial condition and results of operations;
because many of our restaurants are concentrated in local or
regional areas, we are susceptible to economic and other trends
and developments, including adverse weather conditions, in these
areas;
changes in food availability and costs could adversely affect
our operating results;
increases in our labor costs, including as a result of changes
in government regulation, could slow our growth or harm our
business; and
guest traffic at our restaurants could be significantly affected
by competition in the restaurant industry in general and, in
particular, within the dining segments of the restaurant
industry in which we compete.
6
Table of Contents
Shares of common stock offered by us
5,000,000 shares.
Shares of common stock offered by the selling shareholders
3,333,000 shares, or 4,582,950 shares if the
underwriters exercise their over-allotment option in full.
Over-allotment option
The selling shareholders have granted the underwriters an
option for a period of 30 days to purchase up to 1,249,950
additional shares of our common stock to cover
overallotments.
Ownership after offering
Upon completion of this offering, our executive officers,
directors and affiliated entities will own approximately 48.2%
of our outstanding common stock, or 42.1% if the underwriters
exercise their over-allotment option in full, and will as a
result have significant control over our affairs.
Common stock to be outstanding after this offering
19,250,000 shares.
Use of proceeds
We estimate that we will receive net proceeds from the sale
of shares of our common stock in this offering of
$67.0 million, after deducting estimated underwriting
discounts and commissions and estimated offering expenses
payable by us, based on an assumed initial offering price of
$15.00 per share, the midpoint of the range set forth on
the cover page of this prospectus. We intend to use the net
proceeds of this offering, together with $45.0 million in
borrowings under our new term loan facility, to:
Based upon an assumed initial public offering price of $15.00
per share, we do not expect to incur any borrowings under our
new revolving credit facility at the time of the consummation of
this offering.
As of June 27, 2010, approximately $79.4 million
principal amount of loans were outstanding under our existing
senior credit facilities and approximately $32.4 million
aggregate principal amount of our 13.25% senior
subordinated secured notes were outstanding.
Any remaining net proceeds will be used for general corporate
purposes. Affiliates of Wells Fargo Securities, LLC and
Jefferies & Company, Inc., underwriters in this
offering, are parties to our existing senior credit facilities
and will receive approximately $16.1 million and
$2.9 million, respectively, of the proceeds used to repay
the loans outstanding under our existing senior credit
facilities.
We will not receive any of the proceeds from the sale of
shares of common stock by the selling shareholders. See
Use of Proceeds, Principal and Selling
Shareholders, Description of Indebtedness and
Underwriting Conflicts of Interest.
7
Table of Contents
Dividend policy
We do not currently pay cash dividends on our stock and do
not anticipate paying any dividends on our common stock in the
foreseeable future. Any future determination relating to our
dividend policy will be made at the discretion of our board of
directors and will depend on then existing conditions, including
our financial condition, results of operations, contractual
restrictions, capital requirements, business prospects and other
factors our board of directors may deem relevant. In addition,
we anticipate that our ability to declare and pay dividends will
also be restricted by covenants in our new senior credit
facilities. See Description of Indebtedness New
Senior Credit Facilities and Risk
Factors Our substantial indebtedness may limit our
ability to invest in the ongoing needs of our business.
Proposed Nasdaq Global Market symbol
BBRG.
Risk factors
Investment in our common stock involves substantial risks.
You should read this prospectus carefully, including the section
entitled Risk Factors and the consolidated financial
statements and the related notes to those statements included
elsewhere in this prospectus before investing in our common
stock.
Conflicts of interest
As described in Use of Proceeds, we intend to use
a portion of the net proceeds from this offering to repay all
loans outstanding under our existing senior credit facilities.
Because an affiliate of Wells Fargo Securities, LLC will receive
more than 5.0% of the net proceeds of this offering, the
offering will be conducted in accordance with Rule 2720 of
the Conduct Rules of the National Association of Securities
Dealers, as administered by the Financial Industry Regulatory
Authority. This rule requires, among other things, that the
initial public offering price can be no higher than that
recommended by a qualified independent underwriter
and that a qualified independent underwriter has participated in
the preparation of, and has exercised the usual standards of
due diligence with respect to, the registration
statement and this prospectus. Jefferies & Company,
Inc. has agreed to act as qualified independent underwriter for
the offering and to undertake the legal responsibilities and
liabilities of an underwriter under the Securities Act of 1933,
or the Securities Act, specifically including those inherent in
Section 11 of the Securities Act.
assumes that the underwriters do not exercise their
over-allotment option; and
other than historical financial information, reflects
(1) the exchange of all shares of our issued and
outstanding common stock for 7,234,370 shares of new common
stock at a fixed exchange ratio of approximately 1:6.9 and
(2) the exchange of all shares of our issued and
outstanding Series A preferred stock for
7,015,630 shares of new common stock at a fixed exchange
ratio of approximately 1:117.9 immediately prior to the
consummation of this offering. See Reorganization
Transactions.
8
Table of Contents
9
Table of Contents
Twenty-Six
Year Ended(1)
Weeks Ended
December 30,
December 28,
December 27,
June 28,
June 27,
2007
2008
2009
2009
2010
(Dollars in thousands, except per share data)
$
265,374
$
300,783
$
311,709
$
153,514
$
170,996
75,340
84,618
82,609
40,765
44,389
89,663
102,323
106,330
53,733
58,100
41,567
47,690
48,917
25,265
26,560
16,054
18,736
19,636
10,435
11,310
16,768
15,042
17,123
8,898
8,936
5,647
5,434
3,758
2,060
1,685
12,309
14,651
16,088
7,889
8,335
8,506
6,436
462
229
157
153
51
257,810
297,229
301,054
149,198
159,366
7,564
3,554
10,655
4,316
11,630
11,853
9,892
7,119
3,693
3,543
(4,289
)
(6,338
)
3,536
623
8,087
(3,503
)
55,061
135
120
104
$
(786
)
$
(61,399
)
$
3,401
$
503
$
7,983
(8,920
)
(10,175
)
(11,599
)
(5,420
)
(6,179
)
$
(9,706
)
$
(71,574
)
$
(8,198
)
$
(4,917
)
$
1,804
$
0.43
$
0.54
$
0.41
$
0.52
19,250
19,250
20,098
20,098
$
31,291
$
32,501
$
33,782
$
10,829
$
14,943
$
(35,536
)
$
(43,088
)
$
(24,957
)
$
(12,627
)
$
(8,568
)
$
4,156
$
10,529
$
(9,258
)
$
1,362
$
(6,356
)
$
28,782
$
24,578
$
14,121
$
6,292
$
3,110
$
20,260
$
27,218
$
34,790
$
13,020
$
20,770
7.6
%
9.0
%
11.2
%
8.5
%
12.1
%
63
75
81
79
85
49
54
64
59
71
0.6
%
(3.8
)%
(7.1
)%
(8.6
)%
1.6
%
38
44
45
45
47
31
33
37
35
41
$
3,890
$
3,715
$
3,464
$
1,733
$
1,722
0.9
%
(4.1
)%
(6.9
)%
(8.6
)%
0.6
%
10
Table of Contents
Twenty-Six
Year Ended(1)
Weeks Ended
December 30,
December 28,
December 27,
June 28,
June 27,
2007
2008
2009
2009
2010
(Dollars in thousands, except per share data)
25
31
36
34
38
18
21
27
24
30
$
5,308
$
5,401
$
4,896
$
2,483
$
2,526
0.2
%
(3.6
)%
(7.4
)%
(8.6
)%
2.4
%
$
740
$
682
$
249
$
246
$
268
$
(33,110
)
$
(34,320
)
$
(36,156
)
$
(33,797
)
$
(32,614
)
$
195,048
$
157,764
$
160,842
$
160,401
$
159,144
$
114,136
$
125,950
$
118,031
$
127,975
$
111,790
$
(14,692
)
$
(76,091
)
$
(72,690
)
$
(75,590
)
$
(64,707
)
Actual
As Adjusted(2)
As of
As of
June 27,
June 27,
2010
2010
(In thousands)
$
268
$
268
$
(32,614
)
$
(36,694
)
$
159,144
$
158,353
$
111,790
$
45,000
$
(64,707
)
$
(699
)
(1)
We utilize a 52- or 53-week accounting period which ends on the
Sunday closest to December 31. The fiscal years ended
December 27, 2009, December 28, 2008 and
December 30, 2007 each have 52 weeks.
(2)
Gives effect to (i) the reorganization transactions
expected to occur prior to the consummation of this offering,
(ii) this offering, (iii) the application of the net
proceeds of this offering and of borrowings under our new senior
credit facilities as described under Use of Proceeds
and (iv) all of the adjustments mentioned below.
As adjusted basic net income available to common shareholders
per share consists of as adjusted net income available to common
shareholders divided by the basic weighted average common shares
outstanding. Adjustments to net income (loss) available to
common shareholders for the year ended December 27, 2009
reflect (i) the removal of $1.6 million of management
fees, (ii) a $0.4 million decrease in loan
amortization fees, (iii) an estimated $5.5 million
decrease in interest expense resulting from our entry into our
new senior credit facilities as described in Description
of Indebtedness and the repayment of all loans under our
existing senior credit facilities and our 13.25% senior
subordinated notes as described in Use of Proceeds,
(iv) a $2.6 million increase in tax expenses due to
higher income before taxes relating to our as adjusted net
income available to common shareholders and (v) the removal
of the $11.6 million undeclared preferred dividend.
Adjustments to net income available to common shareholders for
the twenty-six weeks ended June 27, 2010 reflect
(i) the removal of $0.8 million of management fees,
(ii) a $0.2 million decrease in loan amortization
fees, (iii) an estimated $2.7 million decrease in
interest expense resulting from our entry into our new senior
credit facilities as described in Description of
Indebtedness and the repayment of all loans under our
existing senior credit facilities and our 13.25% senior
subordinated notes as described in Use of Proceeds,
(iv) a $1.3 million increase in tax expenses due to
higher income before taxes relating to our as adjusted net
income available to common shareholders and (v) the removal
of the $6.2 million undeclared preferred dividend. As
adjusted net income (loss) available to common shareholders for
the year ended December 27, 2009 and the twenty-six weeks
ended June 27, 2010 also omits the following non-recurring
items arising in connection with this offering: (i) a
$1.5 million write-down of existing loan origination fees,
(ii) the payment of management termination fees of
$0.8 million and (iii) a $0.9 million increase in
stock compensation costs. Basic weighted average common shares
outstanding for each of the periods presented consist of the
19,250,000 shares of our common stock that will be
outstanding following the consummation of this offering.
Table of Contents
As adjusted diluted net income available to common shareholders
per share consists of as adjusted net income available to common
shareholders divided by the diluted weighted average common
shares outstanding. Diluted weighted average common shares
outstanding for each of the periods presented reflect the
19,250,000 shares of our common stock that will be
outstanding following the consummation of this offering as well
as the potential dilution that could occur if all options to
purchase shares of our common stock that will become fully
vested and exercisable upon the consummation of this offering
were exercised, which amounts to a dilutive effect of
848,244 shares.
As adjusted working capital (deficit) as of June 27, 2010
included in the as adjusted balance sheet data shown above
reflects (i) an adjustment to current assets to give effect
to the removal of $0.7 million of pre-paid fees relating to
this offering and (ii) adjustments to current liabilities
to give effect to the payment of management termination fees of
$0.8 million in connection with this offering, the removal
of fees related to this offering but not yet paid of
$0.7 million, the removal of $0.1 million of accrued
management fees, a $2.0 million increase in payables relating to
loan origination fees and management fees and a
$1.4 million increase in the current portion of long-term
debt as a result of entry into our new senior credit facilities.
As adjusted total assets as of June 27, 2010 included in
the as adjusted balance sheet data shown above reflects a
decrease in total assets as of June 27, 2010 due to the
adjustments to current assets described above and the
cancellation of $1.5 million in net loan origination fees,
partially offset by $1.4 million in new loan origination
fees.
As adjusted total debt as of June 27, 2010 included in the
as adjusted balance sheet data shown above reflects a
$1.4 million increase in the current portion of long-term
debt as a result of entry into our new senior credit facilities,
a $68.2 million decrease in the long-term portion of our
debt as a result of the repayment of all loans under our
existing senior credit facilities and our 13.25% senior
subordinated notes, partially offset by $45.0 million of
borrowings under our new senior credit facilities as described
in Use of Proceeds and Description of
Indebtedness.
As adjusted total stockholders equity (deficiency in
assets) as of June 27, 2010 included in the as adjusted
balance sheet data shown above reflects $67.0 million in
net proceeds from this offering, partially offset by a
$1.5 million expense from loan origination fees, the
payment of management termination fees of $0.8 million in
connection with this offering and $0.7 million in accrued
professional fees associated with this offering.
(3)
Adjusted EBITDA represents earnings before interest, taxes,
depreciation and amortization plus the sum of asset impairment
charges and management fees and expenses. We are presenting
Adjusted EBITDA, which is not required by U.S. generally
accepted accounting principles, or GAAP, because it provides an
additional measure to view our operations, when considered with
both our GAAP results and the reconciliation to net income
(loss) which we believe provides a more complete understanding
of our business than could be obtained absent this disclosure.
We use Adjusted EBITDA, together with financial measures
prepared in accordance with GAAP, such as revenue and cash flows
from operations, to assess our historical and prospective
operating performance and to enhance our understanding of our
core operating performance. Adjusted EBITDA is presented
because: (i) we believe it is a useful measure for
investors to assess the operating performance of our business
without the effect of non-cash depreciation and amortization
expenses and asset impairment charges; (ii) we believe that
investors will find it useful in assessing our ability to
service or incur indebtedness; and (iii) we use Adjusted
EBITDA internally as a benchmark to evaluate our operating
performance or compare our performance to that of our
competitors. The use of Adjusted EBITDA as a performance measure
permits a comparative assessment of our operating performance
relative to our performance based on our GAAP results, while
isolating the effects of some items that vary from period to
period without any correlation to core operating performance or
that vary widely among similar companies. Companies within our
industry exhibit significant variations with respect to capital
structures and cost of capital (which affect interest expense
and tax rates) and differences in book depreciation of
facilities and equipment (which affect relative depreciation
expense), including significant differences in the depreciable
lives of similar assets among various companies. Our management
believes that Adjusted EBITDA facilitates
company-to-company
comparisons within our industry by eliminating some of the
foregoing variations.
12
Table of Contents
Adjusted EBITDA is not a measurement determined in accordance
with GAAP and should not be considered in isolation or as an
alternative to net income, net cash provided by operating,
investing or financing activities or other financial statement
data presented as indicators of financial performance or
liquidity, each as presented in accordance with GAAP. Adjusted
EBITDA should not be considered as a measure of discretionary
cash available to us to invest in the growth of our business.
Adjusted EBITDA as presented may not be comparable to other
similarly titled measures of other companies and our
presentation of Adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by unusual
items.
Our management recognizes that Adjusted EBITDA has limitations
as an analytical financial measure, including the following:
Adjusted EBITDA does not reflect our capital expenditures or
future requirements for capital expenditures;
Adjusted EBITDA does not reflect the interest expense, or the
cash requirements necessary to service interest or principal
payments, associated with our indebtedness;
Adjusted EBITDA does not reflect depreciation and amortization,
which are non-cash charges, although the assets being
depreciated and amortized will likely have to be replaced in the
future, nor does Adjusted EBITDA reflect any cash requirements
for such replacements; and
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs.
This prospectus also includes information concerning Adjusted
EBITDA margin, which is defined as the ratio of Adjusted EBITDA
to revenues. We present Adjusted EBITDA margin because it is
used by management as a performance measurement to judge the
level of Adjusted EBITDA generated from revenues and we believe
its inclusion is appropriate to provide additional information
to investors.
A reconciliation of Adjusted EBITDA and EBITDA to net income is
provided below.
Twenty-Six
Year Ended
Weeks Ended
December 30,
December 28,
December 27,
June 28,
June 27,
2007
2008
2009
2009
2010
(In thousands)
$
(786
)
$
(61,399
)
$
3,401
$
503
$
7,983
(3,503
)
55,061
135
120
104
11,853
9,892
7,119
3,693
3,543
12,309
14,651
16,088
7,889
8,335
$
19,873
$
18,205
$
26,743
$
12,205
$
19,965
8,506
6,436
387
507
1,611
815
805
$
20,260
$
27,218
$
34,790
$
13,020
$
20,770
(4)
We consider a restaurant to be comparable in the first full
quarter following the eighteenth month of operations. Changes in
comparable restaurant sales reflect changes in sales for the
comparable group of restaurants over a specified period of time.
13
Table of Contents
declining economic conditions, including housing market
downturns, rising unemployment rates, lower disposable income
and consumer confidence and other events or factors that
adversely affect consumer spending in the markets we serve;
increased competition (both in the upscale affordable dining
segment and in other segments of the restaurant industry);
changes in consumer preferences;
guests budgeting constraints and choosing not to order
certain high-margin items such as desserts and beverages (both
alcoholic and non-alcoholic);
guests failure to accept menu price increases that we may
make to offset increases in key operating costs;
our reputation and consumer perception of our concepts
offerings in terms of quality, price, value and service; and
guest experiences from dining in our restaurants.
food and other raw materials costs, many of which we do not or
cannot effectively hedge;
labor costs, including wage, workers compensation, health
care and other benefits expenses;
rent expenses and other costs under leases for our new and
existing restaurants;
energy, water and other utility costs;
costs for insurance (including health, liability and
workers compensation);
information technology and other logistical costs; and
expenses due to litigation against us.
14
Table of Contents
our inability to generate sufficient funds from operations or to
obtain favorable financing to support our development;
identification and availability of, and competition for, high
quality locations that will continue to drive high levels of
sales per unit;
acceptable lease arrangements, including sufficient levels of
tenant allowances and construction contributions;
the financial viability of our landlords, including the
availability of financing for our landlords;
construction and development cost management;
timely delivery of the leased premises to us from our landlords
and punctual commencement of build-out construction activities;
delays due to the highly customized nature of our restaurant
concepts and the complex design, construction and pre-opening
processes for each new location;
obtaining all necessary governmental licenses and permits on a
timely basis to construct and operate our restaurants;
competition in new markets, including competition for restaurant
sites;
unforeseen engineering or environmental problems with the leased
premises;
adverse weather during the construction period;
anticipated commercial, residential and infrastructure
development near our new restaurants;
recruitment of qualified managers, chefs and other key operating
personnel; and
other unanticipated increases in costs, any of which could give
rise to delays or cost overruns.
15
Table of Contents
16
Table of Contents
17
Table of Contents
18
Table of Contents
19
Table of Contents
20
Table of Contents
21
Table of Contents
22
Table of Contents
requires us to utilize a substantial portion of our cash flow
from operations to payments on our indebtedness, reducing the
availability of our cash flow to fund working capital, capital
expenditures, development activity and other general corporate
purposes;
increases our vulnerability to adverse general economic or
industry conditions;
limits our flexibility in planning for, or reacting to, changes
in our business or the industries in which we operate;
makes us more vulnerable to increases in interest rates, as
borrowings under our new senior credit facilities are expected
to be at variable rates;
limits our ability to obtain additional financing in the future
for working capital or other purposes; and
places us at a competitive disadvantage compared to our
competitors that have less indebtedness.
23
Table of Contents
24
Table of Contents
25
Table of Contents
26
Table of Contents
our quarterly or annual earnings or those of other companies in
our industry;
changes in laws or regulations, or new interpretations or
applications of laws and regulations, that are applicable to our
business;
the publics reaction to our press releases, our other
public announcements and our filings with the SEC;
changes in accounting standards, policies, guidance,
interpretations or principles;
additions or departures of our senior management personnel;
sales of common stock by our directors and executive officers;
sales or distributions of common stock by our sponsors;
adverse market reaction to any indebtedness we may incur or
securities we may issue in the future;
actions by shareholders;
the level and quality of research analyst coverage for our
common stock, changes in financial estimates or investment
recommendations by securities analysts following our business or
failure to meet such estimates;
the financial disclosure we may provide to the public, any
changes in such disclosure or our failure to meet such
disclosure;
various market factors or perceived market factors, including
rumors, whether or not correct, involving us, our distributors
or suppliers or our competitors;
introductions of new offerings or new pricing policies by us or
by our competitors;
acquisitions or strategic alliances by us or our competitors;
short sales, hedging and other derivative transactions in the
shares of our common stock;
the operating and stock price performance of other companies
that investors may deem comparable to us; and
other events or factors, including changes in general conditions
in the United States and global economies or financial markets
(including those resulting from Acts of God, war, incidents of
terrorism or responses to such events).
27
Table of Contents
8,333,000 shares will be shares that we and the selling
shareholders are selling in this offering and, unless purchased
by affiliates, may be resold in the public market immediately
after this offering;
44,063 shares will be shares that are held by non-employee
existing shareholders and will be eligible for sale on the date
of this prospectus; and
10,872,937 shares will be restricted
securities, as defined in Rule 144 under the
Securities Act, and eligible for sale in the public market
pursuant to the provisions of Rule 144, all of which are
subject to
lock-up
agreements and will become available for resale in the public
market beginning 180 days after the date of this prospectus.
28
Table of Contents
advance notice requirements for shareholders proposals and
nominations;
availability of blank check preferred stock;
establish a classified board of directors so that not all
members of our board of directors are elected at one time;
the right of the board of directors to elect a director to fill
a vacancy created by the expansion of the board of directors or
due to the resignation or departure of an existing board member;
the prohibition of cumulative voting in the election of
directors, which would otherwise allow less than a majority of
shareholders to elect director candidates; and
limitations on the removal of directors.
29
Table of Contents
30
Table of Contents
31
Table of Contents
32
Table of Contents
the success of our existing and new restaurants;
our ability to successfully develop and expand our operations;
changes in economic conditions, including continuing effects
from the recent recession;
our history of net losses;
damage to our reputation or lack of acceptance of our brands;
economic and other trends and developments, including adverse
weather conditions, in those local or regional areas in which
our restaurants are concentrated;
the impact of economic factors, including the availability of
credit, on our landlords and other retail center tenants;
changes in availability or cost of our principal food products;
increases in our labor costs, including as a result of changes
in government regulation;
labor shortages or increased labor costs;
increasing competition in the restaurant industry in general as
well as in the dining segments of the restaurant industry in
which we compete;
changes in attitudes or negative publicity regarding food safety
and health concerns;
the success of our marketing programs;
potential fluctuations in our quarterly operating results due to
new restaurant openings and other factors;
the effect on existing restaurants of opening new restaurants in
the same markets;
the loss of key members of our management team;
strain on our infrastructure and resources caused by our growth;
the impact of federal, state or local government regulations
relating to building construction and the opening of new
restaurants, our existing restaurants, our employees, the sale
of alcoholic beverages and the sale or preparation of food;
the impact of litigation;
our inability to obtain adequate levels of insurance coverage;
the impact of our substantial indebtedness;
future asset impairment charges;
security breaches of confidential guest information;
inadequate protection of our intellectual property;
our ability to raise capital in the future;
the failure or breach of our information technology systems;
a major natural or man-made disaster at our corporate facility;
increased costs and obligations as a result of being a public
company;
the impact of federal, state and local tax rules;
33
Table of Contents
concentration of ownership among our existing executives,
directors and principal shareholders may prevent new investors
from influencing significant corporate decisions; and
other factors discussed under the headings Risk
Factors, Managements Discussion and Analysis
of Financial Condition and Results of Operations and
Business.
34
Table of Contents
To repay all our loans outstanding under our existing senior
credit facilities, and any accrued and unpaid interest and
related LIBOR breakage costs and other fees. As of June 27,
2010, approximately $79.4 million principal amount of loans
were outstanding under our existing senior credit facilities.
The weighted-average interest rate for the year ended
December 27, 2009 of our indebtedness under our existing
senior credit facilities was 3.47%. Our existing senior credit
facilities can be prepaid without premium or penalty, other than
any related LIBOR breakage costs and other fees. Our existing
senior credit facilities mature on June 29, 2012.
Affiliates of Wells Fargo Securities, LLC will receive more than
5% of the proceeds from this offering (after taking into account
underwriters discounts and commissions and offering
expenses payable by us) as lenders under our existing senior
credit facilities. An affiliate of Jefferies &
Company, Inc. is also a lender under our existing senior credit
facilities, although it will receive less than 5% of the
proceeds from this offering (after taking into account
underwriters discounts and commissions and offering
expenses payable by us).
To repay all of our 13.25% senior subordinated secured
notes, and any accrued and unpaid interest. As of June 27,
2010, approximately $32.4 million aggregate principal
amount of our 13.25% senior subordinated secured notes were
outstanding. Interest on our 13.25% senior subordinated
secured notes is payable monthly at an annual interest rate of
13.25%, with the principal due on December 29, 2012.
Pursuant to the note purchase agreement governing the
13.25% senior subordinated secured notes, we were entitled
to elect monthly during the first year to accrue interest at the
rate of 14.25% per annum with no payments. Commencing in the
second year of the note purchase agreement through the maturity
date, we have the option to accrue interest at an annual rate of
13.25%, consisting of cash interest equal to 9% and
paid-in-kind
interest of 4.25%. Interest accrued but unpaid during the term
of the notes is capitalized into the principal balance. Our
13.25% senior subordinated secured notes can be prepaid
without premium or penalty.
35
Table of Contents
36
Table of Contents
on an actual basis; and
on an as adjusted basis to give effect to (1) the sale of
shares of common stock in this offering at an assumed initial
public offering price of $15.00 per share, which is the midpoint
of the range set forth on the cover of this prospectus, and
after deducting underwriting discounts and commissions and
estimated fees and expenses payable by us, (2) the
reorganization transactions and (3) the application of the
net proceeds of this offering and borrowings under our new
senior credit facilities as described under Use of
Proceeds, as if the events had occurred on June 27,
2010.
As of June 27, 2010
(In thousands)
Actual
As Adjusted
$
268
$
268
$
$
79,406
32,384
45,000
111,790
45,000
100,629
(64,707
)
2,293
$
147,712
$
47,293
(1)
The existing revolving credit facility is a part of our existing
senior credit facilities and provides for borrowings of up to
$30.0 million, of which $26.1 million was available as
of June 27, 2010 for working capital and general corporate
purposes (after giving effect to $3.9 million of
outstanding letters of credit at June 27, 2010).
(2)
We borrowed $82.5 million in term loans under our existing
senior credit facilities. Between June 29, 2006 and
June 27, 2010, we repaid approximately $3.1 million of
our outstanding term loans.
(3)
Reflects the balance sheet liability of our 13.25% senior
subordinated secured notes calculated in accordance with GAAP.
From November 2006 through January 2010, the Company elected to
capitalize accrued but unpaid interest on the senior
subordinated secured notes as permitted under the related note
purchase agreement. Total unpaid interest capitalized into the
balance of the senior subordinated secured notes since the
issuance of the senior subordinated secured notes amounted to
approximately $6.7 million.
(4)
A $1.00 increase (decrease) in the assumed initial public
offering price of $15.00 per share, which is the midpoint
of the range set forth on the cover of this prospectus, would
increase (decrease) total stockholders equity (deficiency
in assets) by $4.7 million, and a $1.00 decrease in the
assumed initial public offering price of $15.00 per share would
increase borrowings under our new revolving credit facility and
total debt by $4.7 million, assuming in each case the
number of shares offered by us, as set forth on the cover of
this prospectus, remains the same and after deducting estimated
underwriting discounts and commissions and estimated offering
expenses payable by us. As adjusted total stockholders
equity (deficiency in assets) as of June 27, 2010 included
in the as adjusted balance sheet data shown above reflects
$67.0 million in net proceeds from this offering.
(5)
Reflects the liquidation preference for our Series A
preferred stock, including undeclared preferred dividends of
$41.1 million, as of June 27, 2010.
37
Table of Contents
(6)
As of June 27, 2010, without giving effect to the
reorganization transactions, the Company had
1,050,000 shares of outstanding common stock. As part of
the reorganization transactions, all shares of our issued and
outstanding common stock will be exchanged for shares of new
common stock at a fixed exchange ratio of approximately 1:6.9
and all shares of our issued and outstanding Series A preferred
stock will be exchanged for shares of new common stock at a
fixed exchange ratio of approximately 1:117.9. Immediately
following the reorganization transactions but prior to the
consummation of this offering, the Company will have
14,250,000 shares of new common stock outstanding. In
connection with this offering, the Company will issue an
additional 5,000,000 shares of new common stock and,
immediately following this offering, the Company will have
19,250,000 shares of new common stock shares outstanding.
38
Table of Contents
Per Share
$
15.00
$
(4.54
)
$
4.50
$
(0.04
)
$
15.04
39
Table of Contents
Shares Purchased
Total Consideration
Average Price
Number
Percentage
Amount
Percentage
per Share
10,916,667
56.7
%
$
70,000,000
35.9
%
$
6.41
8,333,000
43.3
%
124,995,000
64.1
%
15.00
19,250,000
100
%
$
194,995,000
100
%
$
10.13
40
Table of Contents
Year Ended(1)
Twenty-Six Weeks Ended
December 25,
December 31,
December 30,
December 28,
December 27,
June 28,
June 27,
2005
2006
2007
2008
2009
2009
2010
(Dollars in thousands, except per share data)
$
198,787
$
241,369
$
265,374
$
300,783
$
311,709
$
153,514
$
170,996
59,050
70,632
75,340
84,618
82,609
40,765
44,389
66,565
81,054
89,663
102,323
106,330
53,733
58,100
31,710
36,966
41,567
47,690
48,917
25,265
26,560
10,491
14,072
16,054
18,736
19,636
10,435
11,310
13,098
15,401
16,768
15,042
17,123
8,898
8,936
4,072
4,658
5,647
5,434
3,758
2,060
1,685
7,179
9,414
12,309
14,651
16,088
7,889
8,335
475
3,266
8,506
6,436
428
359
462
229
157
153
51
193,068
235,822
257,810
297,229
301,054
149,198
159,366
5,719
5,547
7,564
3,554
10,655
4,316
11,630
258
5,643
11,853
9,892
7,119
3,693
3,543
5,461
(96
)
(4,289
)
(6,338
)
3,536
623
8,087
39
613
(3,503
)
55,061
135
120
104
$
5,422
$
(709
)
$
(786
)
$
(61,399
)
$
3,401
$
503
$
7,983
(4,257
)
(8,920
)
(10,175
)
(11,599
)
(5,420
)
(6,179
)
$
5,422
$
(4,966
)
$
(9,706
)
$
(71,574
)
$
(8,198
)
$
(4,917
)
$
1,804
NM
NM
$
(9.24
)
$
(68.17
)
$
(7.81
)
$
(4.68
)
$
1.72
NM
NM
1,050
1,050
1,050
1,050
1,050
41
Table of Contents
Year Ended(1)
Twenty-Six Weeks Ended
December 25,
December 31,
December 30,
December 28,
December 27,
June 28,
June 27,
2005
2006
2007
2008
2009
2009
2010
(Dollars in thousands, except per share data)
$
23,015
$
23,397
$
31,291
$
32,501
$
33,782
$
10,829
$
14,943
$
(27,976
)
$
(27,077
)
$
(35,536
)
$
(43,088
)
$
(24,957
)
$
(12,627
)
$
(8,568
)
$
4,931
$
3,855
$
4,156
$
10,529
$
(9,258
)
$
1,362
$
(6,356
)
$
21,477
$
21,079
$
28,782
$
24,578
$
14,121
$
6,292
$
3,110
$
13,373
$
18,407
$
20,260
$
27,218
$
34,790
$
13,020
$
20,770
6.7
%
7.6
%
7.6
%
9.0
%
11.2
%
8.5
%
12.1
%
49
57
63
75
81
79
85
35
44
49
54
64
59
71
1.1
%
0.0
%
0.6
%
(3.8
)%
(7.1
)%
(8.6
)%
1.6
%
30
34
38
44
45
45
47
21
28
31
33
37
35
41
$
4,002
$
3,919
$
3,890
$
3,715
$
3,464
$
1,733
$
1,722
0.2
%
(0.1
)%
0.9
%
(4.1
)%
(6.9
)%
(8.6
)%
0.6
%
19
23
25
31
36
34
38
14
16
18
21
27
24
30
$
5,320
$
5,479
$
5,308
$
5,401
$
4,896
$
2,483
$
2,526
2.1
%
0.2
%
0.2
%
(3.6
)%
(7.4
)%
(8.6
)%
2.4
%
$
654
$
829
$
740
$
682
$
249
$
246
$
268
$
(30,518
)
$
(18,334
)
$
(33,110
)
$
(34,320
)
$
(36,156
)
$
(33,797
)
$
(32,614
)
$
95,992
$
180,132
$
195,048
$
157,764
$
160,842
$
160,401
$
159,144
$
9,607
$
112,056
$
114,136
$
125,950
$
118,031
$
127,975
$
111,790
$
22,814
$
(13,906
)
$
(14,692
)
$
(76,091
)
$
(72,690
)
$
(75,590
)
$
(64,707
)
(1)
We utilize a 52- or 53-week accounting period which ends on the
Sunday closest to December 31. The fiscal years ended
December 27, 2009, December 28, 2008,
December 30, 2007 and December 25, 2005, each have
52 weeks, while the fiscal year ended December 31,
2006 had 53 weeks. Average sales per comparable restaurant
have been adjusted to reflect 52 weeks.
(2)
The Company was structured as a Subchapter S corporation
for the year ended December 25, 2005 and was changed to a C
corporation effective June 29, 2006 as part of the 2006
recapitalization. As a result, corporate income taxes and per
share data for 2005 and 2006 is not meaningful and therefore not
shown in the table above. If the Company had been a C
corporation during 2005 and the pre-recapitalization period of
2006, the income tax expense would have been $1.9 million
and $0.5 million, respectively, higher than the amounts
presented in the table above.
(3)
Does not give effect to the reorganization transactions expected
to occur prior to the consummation of this offering. See
Reorganization Transactions.
(4)
Adjusted EBITDA represents earnings before interest, taxes,
depreciation and amortization plus the sum of asset impairment
charges and management fees and expenses. We are presenting
Adjusted EBITDA, which is
Table of Contents
not required by U.S. generally accepted accounting principles,
or GAAP, because it provides an additional measure to view our
operations, when considered with both our GAAP results and the
reconciliation to net income (loss) which we believe provides a
more complete understanding of our business than could be
obtained absent this disclosure. We use Adjusted EBITDA,
together with financial measures prepared in accordance with
GAAP, such as revenue and cash flows from operations, to assess
our historical and prospective operating performance and to
enhance our understanding of our core operating performance.
Adjusted EBITDA is presented because: (i) we believe it is
a useful measure for investors to assess the operating
performance of our business without the effect of non-cash
depreciation and amortization expenses and asset impairment
charges; (ii) we believe that investors will find it useful
in assessing our ability to service or incur indebtedness; and
(iii) we use Adjusted EBITDA internally as a benchmark to
evaluate our operating performance or compare our performance to
that of our competitors. The use of Adjusted EBITDA as a
performance measure permits a comparative assessment of our
operating performance relative to our performance based on our
GAAP results, while isolating the effects of some items that
vary from period to period without any correlation to core
operating performance or that vary widely among similar
companies. Companies within our industry exhibit significant
variations with respect to capital structures and cost of
capital (which affect interest expense and tax rates) and
differences in book depreciation of facilities and equipment
(which affect relative depreciation expense), including
significant differences in the depreciable lives of similar
assets among various companies. Our management believes that
Adjusted EBITDA facilitates company-to-company comparisons
within our industry by eliminating some of the foregoing
variations.
Adjusted EBITDA does not reflect our capital expenditures or
future requirements for capital expenditures;
Adjusted EBITDA does not reflect the interest expense, or the
cash requirements necessary to service interest or principal
payments, associated with our indebtedness;
Adjusted EBITDA does not reflect depreciation and amortization,
which are non-cash charges, although the assets being
depreciated and amortized will likely have to be replaced in the
future, nor does Adjusted EBITDA reflect any cash requirements
for such replacements; and
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs.
43
Table of Contents
Year Ended
Twenty-Six Weeks Ended
December 25,
December 31,
December 30,
December 28,
December 27,
June 28,
June 27,
2005
2006
2007
2008
2009
2009
2010
(In thousands)
$
5,422
$
(709
)
$
(786
)
$
(61,399
)
$
3,401
$
503
$
7,983
39
613
(3,503
)
55,061
135
120
104
258
5,643
11,853
9,892
7,119
3,693
3,543
7,179
9,414
12,309
14,651
16,088
7,889
8,335
$
12,898
$
14,961
$
19,873
$
18,205
$
26,743
$
12,205
$
19,965
475
3,266
8,506
6,436
180
387
507
1,611
815
805
$
13,373
$
18,407
$
20,260
$
27,218
$
34,790
$
13,020
$
20,770
44
Table of Contents
and Results of Operations
Pursue Disciplined Restaurant Growth.
We
believe that there are significant opportunities to grow our
brands on a nationwide basis in both existing and new markets
where we believe we can generate attractive unit level
economics. We are presented with many opportunities to grow our
restaurant base, and we carefully evaluate each opportunity to
determine that each site selected for development has a high
probability of meeting our return of investment targets. Our
disciplined growth strategy includes accepting only those sites
that we believe present attractive rent and tenant allowance
structures as well as reasonable construction costs given the
sales potential of the site. We believe that each brand is at an
early stage of its expansion.
Grow Existing Restaurant Sales.
We will
continue to pursue targeted local marketing efforts and evaluate
operational initiatives designed to increase unit volumes
without relying on discounting programs.
45
Table of Contents
Maintain Margins Throughout Our Growth.
We
will continue to aggressively protect our margins using
economies of scale, including marketing and purchasing synergies
between our brands and leveraging our corporate infrastructure
as we continue to open new restaurants.
Comparable Restaurants and Comparable Restaurant
Sales
. We consider a restaurant to be comparable
in the first full quarter following the eighteenth month of
operations. Changes in comparable restaurant sales reflect
changes in sales for the comparable group of restaurants over a
specified period of time. Changes in comparable sales reflect
changes in guest count trends as well as changes in average
check. Our comparable restaurant base consisted of 59 and 71
restaurants at June 28, 2009 and June 27, 2010,
respectively, and 49, 54 and 64 restaurants at December 30,
2007, December 28, 2008 and December 27, 2009,
respectively.
Average Check.
Average check is calculated by
dividing revenues by guest counts for a given time period.
Average check reflects menu price influences as well as changes
in menu mix. Management uses this indicator to analyze trends in
guests preferences, effectiveness of menu changes and price
increases and per guest expenditures.
Average Unit Volume.
Average unit volume
consists of the average sales of our restaurants over a certain
period of time. This measure is calculated by dividing total
restaurant sales within a period by the relevant period. This
indicator assists management in measuring changes in guest
traffic, pricing and development of our brands.
Operating Margin.
Operating margin represents
income from operations before interest and taxes as a percentage
of our revenues. By monitoring and controlling our operating
margins, we can gauge the overall profitability of our company.
46
Table of Contents
47
Table of Contents
Year Ended
Twenty-Six Weeks Ended
December 30,
% of
December 28,
% of
December 27,
% of
June 28,
% of
June 27,
% of
2007
Revenue
2008
Revenue
2009
Revenue
2009
Revenue
2010
Revenue
(Dollars in thousands, unless percentage)
$
265,374
$
300,783
$
311,709
$
153,514
$
170,996
75,340
28.4
%
84,618
28.1
%
82,609
26.5
%
40,765
26.6
%
44,389
26.0
%
89,663
33.8
%
102,323
34.0
%
106,330
34.1
%
53,733
35.0
%
58,100
34.0
%
41,567
15.7
%
47,690
15.9
%
48,917
15.7
%
25,265
16.5
%
26,560
15.5
%
16,054
6.0
%
18,736
6.2
%
19,636
6.3
%
10,435
6.8
%
11,310
6.6
%
16,768
6.3
%
15,042
5.0
%
17,123
5.5
%
8,898
5.8
%
8,936
5.2
%
5,647
2.1
%
5,434
1.8
%
3,758
1.2
%
2,060
1.3
%
1,685
1.0
%
12,309
4.6
%
14,651
4.9
%
16,088
5.2
%
7,889
5.1
%
8,335
4.9
%
8,506
2.8
%
6,436
2.1
%
462
0.2
%
229
0.1
%
157
0.1
%
153
0.1
%
51
0.0
%
257,810
97.1
%
297,229
98.8
%
301,054
96.6
%
149,198
97.2
%
159,366
93.2
%
7,564
2.9
%
3,554
1.2
%
10,655
3.4
%
4,316
2.8
%
11,630
6.8
%
11,853
4.5
%
9,892
3.3
%
7,119
2.3
%
3,693
2.4
%
3,543
2.1
%
(4,289
)
(1.6
)%
(6,338
)
(2.1
)%
3,536
1.1
%
623
0.4
%
8,087
4.7
%
(3,503
)
(1.3
)%
55,061
18.3
%
135
0.0
%
120
0.1
%
104
0.1
%
$
(786
)
(0.3
)%
$
(61,399
)
(20.4
)%
$
3,401
1.1
%
$
503
0.3
%
$
7,983
4.7
%
48
Table of Contents
49
Table of Contents
50
Table of Contents
51
Table of Contents
Twenty-Six Weeks Ended,
June 28,
June 27,
2009
2010
(In thousands)
$
10,829
$
14,943
(12,627
)
(8,568
)
1,362
(6,356
)
(436
)
19
682
249
$
246
$
268
52
Table of Contents
Fiscal Year
2007
2008
2009
(In thousands)
$
31,291
$
32,501
$
33,782
(35,536
)
(43,088
)
(24,957
)
4,156
10,529
(9,258
)
(89
)
(58
)
(433
)
829
740
682
$
740
$
682
$
249
53
Table of Contents
54
Table of Contents
55
Table of Contents
56
Table of Contents
57
Table of Contents
58
Table of Contents
Net Proceeds Multiple
IRR Target
2
10
%
2
20
%
2
30
%
3
40
%
Payments Due by Year
Total
2010
2011-2012
2013-2014
After 2014
(In thousands)
$
79,818
$
825
$
78,993
$
$
5,550
5,550
32,270
32,270
393
214
179
118,031
1,039
116,992
504
504
268,142
18,398
38,121
38,992
172,631
3,650
3,650
944
944
$
391,271
$
24,535
$
155,113
$
38,992
$
172,631
(1)
In connection with this offering, we intend to enter into new
senior credit facilities, consisting of a $45.0 million
term loan facility and a $40.0 million revolving credit
facility. We intend to use the net proceeds of this offering,
together with $45.0 million of borrowings under our new
senior credit facilities, to repay all our loans outstanding
under our existing senior credit facilities, and any accrued and
unpaid interest and related LIBOR breakage costs and other fees,
and all of our 13.25% senior subordinated secured notes,
and any accrued and unpaid interest. Based upon an assumed
initial public offering price of $15.00 per share, we do not
expect to incur any borrowings under our new revolving credit
facility at the time of the consummation of this offering. See
Use of Proceeds and Description of
Indebtedness.
(2)
The indebtedness underlying the mortgage notes was paid in full
in May 2010.
59
Table of Contents
(3)
The interest obligation was calculated using the average
interest rate at December 27, 2009 of 3.47% for our
existing senior secured credit facilities, the stated interest
rate for the 13.25% senior subordinated secured notes and
the average interest rate at December 27, 2009 of 4.61% for
the mortgage notes.
(4)
In connection with this offering, we intend to replace our
existing standby letters of credit with standby letters of
credit under our new senior credit facilities.
60
Table of Contents
61
Table of Contents
62
Table of Contents
63
Table of Contents
The Food.
We offer
made-to-order
menu items prepared using traditional Italian culinary
techniques with an emphasis on fresh ingredients and authentic
recipes. Our food menu is complemented by a wine list that
offers both familiar varieties as well as wines exclusive to our
restaurants. An attention to detail, culinary expertise and
focused execution reflects our chef-driven culture. Each
brands menu has its own distinctive flavor profile, with
BRAVO! favoring the more classic Italian cuisine that includes a
variety of pasta dishes and pizzas and BRIO favoring a broader
selection of premium steaks, chops, seafood, flatbreads,
bruschettas and pastas. All of our new menu items are developed
by our Corporate Executive Chefs through a six month ideation
process designed to meet our high standards of quality and
exceed our guests expectations.
The Service.
We are committed to delivering
superior service to each guest, at each meal, each and every
day. We place significant emphasis on maintaining high
waitstaff-to-table
ratios, thoroughly training all service personnel on the details
of each menu item and staffing each restaurant with experienced
management teams to ensure consistent and attentive guest
service. An attention to detail, culinary expertise and focused
execution underscores our chef-driven culture. Only trained,
experienced chefs and culinary staff are hired and allowed to
operate in the kitchen.
Best-in-class
service standards are designed to ensure satisfied guests and
attract both new and repeat guest traffic.
The Experience.
Lively, high-energy
environments blending dramatic design elements with a warm and
inviting atmosphere create a memorable guest experience.
Signature architectural and décor elements include the
lively theatre of exhibition kitchens, high ceilings, white
tablecloths, a centerpiece bar and relaxing patio areas. In
addition, the majority of our restaurants include attractive
outdoor patios with full bar and dining areas at the front of
our restaurants that create an exciting and inviting atmosphere
for our guests. These elements, along with our superior service
and value, help form a bond between our guests and our
restaurants, encouraging guest loyalty and more frequent visits.
64
Table of Contents
65
Table of Contents
66
Table of Contents
Offer Italian Food and Wines.
We seek to
differentiate ourself from other multi-location restaurants by
offering affordable cuisine prepared using fresh ingredients and
authentic Italian cooking methods. To ensure that the menu is
consistently prepared to our high standards, we have developed a
comprehensive ten week management training program. As part of
their skill preparation, all of our executive chefs perform a
cooking demonstration. This enables our Corporate Executive
Chefs to evaluate a candidates skill set. All executive
chefs are required to complete ten weeks of kitchen training,
including mastering all stations, ordering, receiving and
inventory control. Due to our high average unit volumes, the
executive chefs are trained throughout the ten weeks to ensure
that their food is consistently prepared on a timely basis. In
addition, all executive chefs are trained on product and labor
management programs to achieve maximum efficiencies. Both of
these tools reinforce our commitment to training our employees
to run their business from a profit and loss perspective, as
well as the culinary side.
Deliver Superior Guest Service.
Significant
time and resources are spent in the development and
implementation of our training programs, resulting in a
comprehensive service system for both hourly service people and
management. We offer guests prompt, friendly and efficient
service, keeping
waitstaff-to-table
ratios high, and staffing each restaurant with experienced
on the floor management teams to ensure consistent
and attentive guest service. We employ food runners to ensure
prompt delivery of fresh dishes at the appropriate temperature,
thus allowing the waitstaff to focus on overall guest
satisfaction. All service personnel are thoroughly trained in
the specific flavors of each dish. Using a thorough
understanding of our menu, the servers assist guests in
selecting menu items complementing individual preferences.
Leverage Our Partnership Management
Philosophy.
A key element to our current
expansion and success has been the development of our
partnership management philosophy, which is based on the premise
that active and ongoing economic participation (via a bonus
plan) by each restaurants general manager, executive chef,
assistant managers and sous chefs is essential to long-term
success. The purpose of this structure is to attract and retain
an experienced management team, incentivize the team to execute
our strategy and objectives and provide stability to the
operating management team. This program is offered to all
restaurant management. This provides our management team with
the financial incentive to develop people, build lifelong guests
and operate their restaurants in accordance with our standards.
67
Table of Contents
68
Table of Contents
69
Table of Contents
70
Table of Contents
71
Table of Contents
the rise in the number of women in the market place;
increase in average household income;
an aging U.S. population; and
an increased willingness by consumers to pay for the convenience
of meals prepared outside of their homes.
72
Table of Contents
73
Table of Contents
Number of
Restaurants
1
1
2
1
2
9
2
3
3
1
1
2
2
6
4
1
1
1
1
2
4
16
1
6
1
5
4
2
85
74
Table of Contents
75
Table of Contents
52
Founder, Director and Chairman
48
Director, President and Chief Executive Officer
48
Chief Financial Officer, Treasurer and Secretary
42
Chief Operating Officer
54
Senior Vice President of Operations, BRAVO!
46
Senior Vice President, Development
64
Director
55
Director
59
Director
61
Director
64
Director Nominee
62
Director Nominee
76
Table of Contents
77
Table of Contents
78
Table of Contents
serve as an independent and objective party to monitor our
financial reporting process and internal control systems;
79
Table of Contents
review and appraise the audit efforts of our independent
registered public accountants and exercise ultimate authority
over the relationship between us and our independent registered
public accountants; and
provide an open avenue of communication among the independent
registered public accountants, financial and senior management
and the board of directors.
discuss with management and the independent registered public
accountants our annual and interim financial statements,
earnings press releases, earnings guidance and any reports or
other financial information submitted to the shareholders, the
SEC, analysts, rating agencies and others, including any
certification, report, opinion or review rendered by the
independent registered public accountants;
review the regular internal reports to management prepared by
the internal auditors and managements response;
discuss with management and the independent registered public
accountants the Quarterly Reports on
Form 10-Q,
the Annual Reports on
Form 10-K,
including our disclosures under Managements
Discussion and Analysis of Financial Conditions and Results of
Operations, and any related public disclosure prior to its
filing;
have sole authority for the appointment, compensation,
retention, oversight, termination and replacement of our
independent registered public accountants (subject, if
applicable, to shareholder ratification) and the independent
registered public accountants will report directly to the audit
committee;
pre-approve all auditing services and all non-audit services to
be provided by the independent registered public accountants;
review the performance of the independent registered public
accountants with both management and the independent registered
public accountants;
periodically meet with the independent registered public
accountants separately and privately to hear their views on the
adequacy of our internal controls, any special audit steps
adopted in light of material control deficiencies and the
qualitative aspects of our financial reporting, including the
quality and consistency of both accounting policies and the
underlying judgments, or any other matters raised by them;
obtain and review a report from the independent registered
public accountants at least annually regarding (1) the
independent registered public accountants internal
quality-control procedures, (2) any material issues raised
by the most recent quality-control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years
respecting one or more independent audits carried out by the
firm, (3) any steps taken to deal with any such issues, and
(4) all relationships between the independent registered
public accountants and their related entities and us and our
related entities;
review with financial management and the independent registered
public accountants the quality and consistency, not just the
acceptability, of the judgments and appropriateness of the
accounting principles and financial disclosure practices used by
us, including an analysis of the effects of any alternative GAAP
methods on the financial statements;
approve any significant changes to our auditing and accounting
principles and practices after considering the advice of the
independent registered public accountants and management;
focus on the reasonableness of control processes for identifying
and managing key business, financial and regulatory reporting
risks;
discuss with management our major financial risk exposures and
the steps management has taken to monitor and control such
exposures, including our risk assessment and risk management
policies;
80
Table of Contents
periodically meet with appropriate representatives of management
and the internal auditors separately and privately to consider
any matters raised by each of them, including any audit problems
or difficulties and managements response;
periodically review the effect of regulatory and accounting
initiatives, as well as any off-balance sheet structures, on our
financial statements;
following the completion of the annual audit, review separately
with management and the independent registered public
accountants any difficulties encountered during the course of
the audit, including any restrictions on the scope of work or
access to required information;
periodically review any processes and policies for communicating
with investors and analysts;
review and resolve any disagreement between management and the
independent registered public accountants in connection with the
annual audit or the preparation of the financial statements;
review with the independent registered public accountants and
management the extent to which changes or improvements in
financial or accounting practices, as approved by the audit
committee, have been implemented;
review our code of conduct and review managements
processes for communicating and enforcing this code of conduct;
review managements monitoring of our compliance with our
code of conduct and ensure that management has the proper review
system in place to ensure that our financial statements,
reports, and other financial information disseminated to
governmental organizations and the public satisfy legal
requirements;
review, with our counsel, any legal matter that could have a
significant impact on our financial statements and any legal
compliance matters;
review and approve all related-party transactions;
establish and periodically review procedures for (1) the
receipt, retention and treatment of complaints received by us
regarding accounting, internal accounting controls or auditing
matters and (2) the confidential, anonymous submission by
our employees of concerns regarding questionable accounting or
auditing matters;
review and reassess the audit committees charter at least
annually and submit any recommended changes to the board of
directors for its consideration;
provide the report required by Item 306 of
Regulation S-K
promulgated by the SEC for inclusion in our annual proxy
statement;
report periodically, as deemed necessary or desirable by the
audit committee, but at least annually, to the full board of
directors regarding the audit committees actions and
recommendations, if any;
establish policies for our hiring of employees or former
employees of the independent registered public accountants who
were engaged on our account;
perform any other activities consistent with the audit
committees charter, our regulations and governing law, as
the audit committee or the board of directors deems necessary or
appropriate; and
annually evaluate the audit committees performance and
report the results of such evaluation to the board of directors.
81
Table of Contents
identify individuals qualified to serve as our directors;
nominate qualified individuals for election to our board of
directors at annual meetings of shareholders;
establish a policy for considering shareholder nominees for
election to our board of directors; and
recommend to our board the directors to serve on each of our
board committees.
review periodically the composition of our board;
identify and recommend director candidates for our board;
recommend nominees for election as directors to our board;
recommend the composition of the committees of the board to our
board;
review periodically our code of conduct and obtain confirmation
from management that the policies included in the code of
conduct are understood and implemented;
evaluate periodically the adequacy of our conflicts of interest
policy, if any;
consider with management public policy issues that may affect us;
review periodically our committee structure and operations and
the working relationship between each committee and the
board; and
consider, discuss and recommend ways to improve our boards
effectiveness.
have the sole authority to retain and terminate any compensation
consultant used to assist us, the board of directors or the
compensation committee in the evaluation of the compensation of
our executive officers and directors;
82
Table of Contents
to the extent necessary or appropriate to carry-out its
responsibilities, have the authority to retain special legal,
accounting, actuarial or other advisors;
annually review and recommend to the board for approval
corporate goals and objectives to serve as the basis for the
compensation of our executive officers, evaluate the performance
of our executive officers in light of such goals and objectives
and determine and recommend to the board for approval the
compensation level of our executive officers based on such
evaluation;
interpret, implement, administer, review and recommend to the
board for approval all aspects of remuneration to our executive
officers and other key officers, including their participation
in incentive-compensation plans and equity-based compensation
plans;
review and recommend to the board for approval all employment
agreements, consulting agreements, severance arrangements and
change in control agreements for our executive officers;
develop, approve, administer and recommend to the board of
directors and our shareholders for their approval (to the extent
such approval is required by any applicable law, regulation or
Nasdaq Global Market rules) all of our stock ownership, stock
option and other equity-based compensation plans and all related
policies and programs;
make individual determinations and recommend to the board for
approval any grants of any shares, stock options or other
equity-based awards under all equity-based compensation plans,
and exercise such other power and authority as may be required
or permitted under such plans;
have the authority to form and delegate authority to
subcommittees;
report regularly, but not less frequently than annually, to our
board of directors;
annually review and reassess the adequacy of its charter and
recommend any proposed changes to our board of directors for its
approval; and
annually review its own performance, and report the results of
such review to our board of directors.
83
Table of Contents
84
Table of Contents
attract, motivate and retain outstanding individual named
executive officers;
reward named executive officers for attaining desired levels of
profit and shareholder value; and
align the financial interests of each named executive officer
with the interests of our shareholders to encourage each named
executive officer to contribute to our long-term performance and
success.
85
Table of Contents
Base salaries.
Annual cash bonuses.
Equity-based incentive compensation.
Severance and
change-in-control
benefits.
Perquisites.
General benefits.
86
Table of Contents
Target
Award
Actual Award
($)
($)
155,400
62,160
75,000
30,000
70,000
28,000
70,000
28,000
35,000
14,000
100,000
40,000
87
Table of Contents
Net Proceeds Multiple
IRR Target
2
10
%
2
20
%
2
30
%
3
40
%
88
Table of Contents
$14.00 Per Share
$15.00 Per Share
$16.00 Per Share
$
4,539,573
$
4,901,292
$
5,263,011
949,420
1,025,071
1,100,722
1,176,399
1,270,136
1,363,873
1,176,399
1,270,136
1,363,873
1,162,569
1,255,204
1,347,839
1,134,897
1,225,327
1,315,757
89
Table of Contents
90
Table of Contents
Non-Equity
Stock
Option
Incentive Plan
All Other
Total
Salary
Bonus
Awards
Awards
Compensation
Compensation
Compensation
Year
($)
($)(1)
($)
($)(2)
($)
($)(3)
($)
2009
518,000
62,160
580,160
2009
206,000
9,270
2,526
30,000
247,796
2009
185,000
9,250
2,526
28,000
224,776
2009
185,000
6,475
2,526
28,000
222,001
2009
165,000
4,950
1,684
14,000
185,634
2009
186,500
40,000
226,500
(1)
The amounts reported in this column represent discretionary
bonuses paid to certain named executive officers in 2009 in lieu
of
cost-of-living
increases in base salaries for 2010.
(2)
Amounts in this column represent the grant date fair value,
calculated pursuant to ASC 718, of stock options granted in
2009. See Note 11 to our audited consolidated financial
statements for a discussion of the calculation of grant date
fair value.
(3)
Certain personal benefits provided to certain of our named
executive officers, including car allowances and complimentary
dining, are not required to be disclosed in the table because
the amount of such benefits do not exceed the applicable
disclosure thresholds. See Perquisites.
(4)
Pursuant to SEC regulations, Mr. Doody is included in the
Summary Compensation Table because he served as an executive
officer of the Company during 2009 and his total compensation
exceeds that of one of the other named executive officers.
Exercise
Grant Date
Estimated Future Payouts Under
or Base
Fair Value
Non-Equity Incentive Plan
Estimated Future Payouts Under
Price of
of Stock and
Awards(1)
Equity Incentive Plan Awards(2)
Option
Option
Grant
Threshold
Target
Maximum
Threshold
Target
Maximum
Awards
Awards
Date
($)
($)
($)
(#)
(#)
(#)
($/SH)
($)
155,400
75,000
9/9/09
3,307
1.45
2,526
70,000
9/9/09
3,307
1.45
2,526
70,000
9/9/09
3,307
1.45
2,526
35,000
9/9/09
2,205
1.45
1,684
100,000
91
Table of Contents
(1)
Amounts reported in this column represent the target
performance-based bonus of each named executive office, as
described in Compensation Discussion and Analysis.
(2)
Options reported in this column generally vest over a period of
four years of continued employment, but are only exercisable by
named executive officers if financial performance goals are met
or exceeded in connection with a public offering or a sale of a
majority of the stock or assets of the Company, as described in
the Compensation Discussion and Analysis section, above. The
number of shares reported as target are the total
number of shares granted to named executive officers in 2009.
Option Awards
Number of
Number of
Equity Incentive
Securities
Securities
Plan Awards
Underlying
Underlying
Number of
Unexercised
Unexercised
Securities
Options
Options
Underlying
Option
Option
(#)
(#)(1)
Unearned
Exercise
Expiration
Exercisable
Unexercisable
Options(#)(1)
Price($)(1)
Date
361,719
1.45
2/13/17
72,344
1.45
2/13/17
3,307
1.45
9/9/19
90,430
1.45
6/29/16
3,307
1.45
9/9/19
90,430
1.45
6/29/16
3,307
1.45
9/9/19
90,430
1.45
6/29/16
2,205
1.45
9/9/19
90,430
1.45
6/29/16
(1)
The named executive officers do not have the right to exercise
their vested options unless and until the Companys private
equity sponsors attain designated returns on their investment,
measured based on the sponsors receipt of net proceeds and
internal rate of return from an approved sale or public
offering. The board of directors has determined, in the exercise
of its discretion, that 80.0% of each outstanding option award
shall be deemed vested and exercisable in connection with this
offering, based upon the deemed achievement of designated
performance thresholds. See Equity
Compensation.
92
Table of Contents
Value of Enhanced
Additional Payment in
Option Vesting ($)
Respect of Options
Total ($)
4,901,292
4,901,292
1,025,071
1,025,071
1,270,136
1,270,136
1,270,136
1,270,136
1,255,204
1,255,204
1,225,327
1,225,327
93
Table of Contents
Non-Equity
Fees Earned
Stock
Option
Incentive Plan
All Other
or Paid in
Awards
Awards
Compensation
Compensation
Total
Cash ($)
($)
(#)
($)
($)(1)
($)
25,000
25,000
25,000
25,000
(1)
Certain personal benefits provided to our directors, including
complimentary dining, are not required to be disclosed in the
table because the amount of such benefits do not exceed the
applicable disclosure thresholds.
(2)
At December 27, 2009, each of Messrs. Hislop and
Bernstein held unexercised options to purchase an aggregate of
18,086 shares of our common stock.
(3)
Alton F. Doody, III, our Chairman, is not included in the above
table as he was a named executive officer during the year ended
December 27, 2009 and thus received no compensation for his
services as a director. Mr. Doodys compensation as a
named executive officer is set forth in the Summary Compensation
Table.
94
Table of Contents
95
Table of Contents
96
Table of Contents
cause all outstanding awards to be fully vested and exercisable
(if applicable);
cancel outstanding stock options and stock appreciation rights
in exchange for a cash payment in an amount equal to the excess,
if any, of the fair market value of the common stock underlying
the unexercised portion of such award over the exercise price or
grant price, as the case may be, of such portion, provided that
any stock option or stock appreciation right with an exercise
price or grant price, as the case may be, that equals or exceeds
the fair market value of our common stock will be cancelled
without payment;
terminate stock options and stock appreciation rights effective
immediately prior to the change in control after providing
participants with notice of such cancellation and an opportunity
to exercise such awards;
require the successor corporation to assume outstanding awards
and/or
to
substitute outstanding awards with awards involving the common
stock of such successor corporation; or
take such other actions as our board of directors deems
appropriate to preserve the rights of participants with respect
to their awards.
the acquisition of more than 50% of the combined voting power of
our then outstanding voting securities by any individual or
entity (other than acquisitions by us, our subsidiaries, any of
our or our subsidiaries benefit plans, an individual or
entity who, as of the effective date of the Stock Incentive
plan, owns 15% or more of the voting power or value of any class
of our capital stock (a substantial shareholder) or
an affiliate of a substantial shareholder);
a sale or other disposition during any
12-month
period to any person or entity (other than a substantial
shareholder or an affiliate of a substantial shareholder) of 51%
or more of our assets;
the consummation of a merger or consolidation involving us if
our shareholders, immediately before such merger or
consolidation, do not own, directly or indirectly, immediately
following such merger or consolidation, at least 50% of the
combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation; or
a change in the composition of a majority of the members of our
board of directors during any
12-month
period.
97
Table of Contents
98
Table of Contents
Accelerate the exercisability of all or a portion of the options,
Cancel outstanding options in exchange for a cash payment in an
amount equal to the excess, if any, of the fair market value of
the common stock underlying the unexercised portion of the
option over the exercise price of such portion,
Terminate all options immediately prior to such transaction,
provided the option holders are given an opportunity to exercise
the option within a specified period following their receipt of
written notice of the transaction and the intention to terminate
the options prior to such transaction, or
Require the successor corporation, if the Company does not
survive such transaction, to assume outstanding options or
provide awards involving the common stock of such successor on
terms and conditions that preserve the rights of the option
holders prior to such transaction.
99
Table of Contents
each person known to us to beneficially own more than 5% of the
outstanding shares of common stock;
each of our named executive officers;
each of our directors;
all directors and executive officers as a group; and
each selling shareholder.
Before Offering and
After Offering and
Reorganization Transactions
Reorganization Transactions
Number of
Number of
Additional
Shares of
Number of
Number of
Shares of
Number of
Series A
Percent of
Shares of
Percent of
Shares of
Common
Shares of
Percent of
Preferred
Series A
Common
Common
Common
Stock to be
Common
Common
Stock
Preferred
Stock
Stock
Stock to be
Sold at
Stock
Stock
Beneficially
Stock
Beneficially
Beneficially
Sold in this
Underwriters
Beneficially
Beneficially
Owned
Owned
Owned
Owned(1)
Offering
Option
Owned
Owned
47,659.500
80.1
%
841,050.0
80.1
%
1,577,335
591,536
3,824,433
19.9
%
1,577,335
591,536
3,824,433
19.9
74,304
27,866
180,159
*
104,026
39,012
252,224
1.3
5,503.750
9.3
97,125.0
9.3
1,318,125
6.8
349.500
*
6,100.0
*
83,238
*
47,659.500
80.1
841,050.0
80.1
3,824,433
(2)
19.9
47,659.500
80.1
841,050.0
80.1
120.325
*
1,847.5
*
26,917
*
367.450
*
6,235.0
*
86,284
*
260.750
*
5,925.0
*
71,567
*
187.000
*
3,300.0
*
44,786
*
2,057
771
4,987
*
54,448.275
91.5
%
961,582.5
91.6
%
5,455,350
28.3
%
100
Table of Contents
*
Less than 1%
(1)
The address of Bravo Development Holdings LLC
(Holdings) and Bruckmann, Rosser,
Sherrill & Co. II L.P. (BRS II) is
c/o Bruckmann,
Rosser, Sherrill & Co., Inc., 126 East 56th Street,
New York, New York 10022. BRS II is a member of Holdings. As
part of the reorganization transactions, BRS II will receive
shares of our common stock in exchange for its units of
Holdings. See Reorganization Transactions.
(2)
BRSE, L.L.C. is the general partner of BRS II and as such may be
deemed to have indirect beneficial ownership of the shares of
common stock held by BRS II. Mr. Rosser is a manager of
BRSE, L.L.C. and a partner of BRS II and as such may be deemed
to have indirect beneficial ownership of the shares of common
stock held by BRS II. Mr. Rosser expressly disclaims
beneficial ownership of the shares of common stock held by BRS
II except to the extent of his pecuniary interest in such shares.
Officers of BRSE, L.L.C. serve as power of attorney holders
of Ms. Frist and as such BRS II may be deemed to have
indirect beneficial ownership of the shares of common stock held
by Ms. Frist. BRS II expressly disclaims beneficial
ownership of the shares of common stock held by Ms. Frist.
Ms. Frist is a current member of Holdings. The address of
Ms. Frist is
c/o Bruckmann,
Rosser, Sherrill & Co., Inc., 126 East
56
th
Street, New York, New York 10022. As part of the reorganization
transactions, Ms. Frist will receive shares of our common
stock in exchange for her units of Holdings. See
Reorganization Transactions.
(3)
The address of CHBravo Holding I LLC (CHBravo) is
c/o Castle
Harlan, Inc., 150 East
58
th
Street, New York, New York 10155. CHBravo is a member of
Holdings. As part of the reorganization transactions, CHBravo
will receive shares of our common stock in exchange for its
units of Holdings. See Reorganization Transactions.
(4)
Current member of Holdings. The address of Golub Capital
Partners IV, L.P. (GCP) and Golub Capital
Coinvestment L.P. (GCC) is
c/o Golub
Capital, 551 Madison Avenue,
6
th
Floor, New York, New York 10022. As part of the reorganization
transactions, each of GCP and GCC will receive shares of our
common stock in exchange for its units of Holdings. See
Reorganization Transactions.
(5)
Includes 47,659.50 shares of Series A preferred stock
and 841,050 shares of common stock owned by Holdings.
(6)
Messrs. Rosser and Pittaway may be deemed to share
beneficial ownership of the shares held by Holdings by virtue of
their status as members of the advisory board of Holdings. Each
of Messrs. Rosser and Pittaway expressly disclaims
beneficial ownership of any shares held by Holdings that exceed
his pecuniary interest therein. The members of the advisory
board of Holdings share investment and voting power with respect
to securities owned by Holdings, but no individual controls such
investment or voting power.
(7)
The address of Mr. Rosser is c/o Bruckmann, Rosser,
Sherrill & Co., Inc., 126 East
56
th
Street, New York, New York, 10022.
(8)
The address of Mr. Pittaway is c/o Castle Harlan, Inc., 150
East 58
th
Street, New York, New York, 10155.
101
Table of Contents
102
Table of Contents
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
107
Table of Contents
108
Table of Contents
109
Table of Contents
110
Table of Contents
44,063 shares will be eligible for sale on the date of this
prospectus;
10,872,937 shares will be eligible for sale upon the
expiration of the
lock-up
agreements, as more particularly described below, beginning
180 days after the date of this prospectus; and
1,414,203 shares will be eligible for sale, upon the
exercise of vested options, upon the expiration of the
lock-up
agreements, as more particularly described below, beginning
180 days after the date of this prospectus.
111
Table of Contents
1% of the number of shares of our common stock then outstanding,
which will equal 192,500 shares immediately after this
offering; or
the average weekly trading volume of the common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
112
Table of Contents
Non-United
States Holders
an individual who is a citizen or resident of the United States;
a corporation (or other business entity treated as a corporation
for U.S. federal income tax purposes) created or organized
in the United States 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 United States
federal income taxation; or
a trust that (1) is subject to the primary supervision of a
court within the United States and the control of one or more
U.S. persons, or (2) was in existence on
August 20, 1996, was treated as a U.S. domestic trust
immediately prior to that date, and has validly elected to
continue to be treated as a U.S. domestic trust.
113
Table of Contents
the gain is U.S. trade or business income, as described
above;
the
non-U.S. holder
is an individual who is present in the United States for 183 or
more days in the taxable year of the disposition and meets other
conditions; or
we are or have been a U.S. real property holding
corporation, which we refer to as USRPHC,
under section 897 of the Code at any time during the
shorter of the five year period ending on the date of
disposition and the
non-U.S. holders
holding period for our common stock.
114
Table of Contents
115
Table of Contents
116
Table of Contents
Number of
8,333,000
117
Table of Contents
Total With Full
Total Without
Exercise of
Exercise of Over-
Over-Allotment
Per Share
Allotment Option
Option
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
118
Table of Contents
the history and prospects for the industry in which we compete;
our past and present operations;
our historical results of operations;
our prospects for future business and earning potential;
our management;
the general condition of the securities markets at the time of
this offering;
the recent market prices of securities of generally comparable
companies;
the market capitalization and stages of development of other
companies which we and the representatives believe to be
comparable to us; and
other factors deemed to be relevant.
119
Table of Contents
1.
to legal entities which are authorised or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
120
Table of Contents
2.
to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts;
3.
to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to
obtaining the prior consent of the representatives for any such
offer; or
4.
in any other circumstances falling within Article 3(2) of
the Prospectus Directive, provided that no such offer of the
shares shall result in a requirement for the publication by us
or any underwriter of a prospectus pursuant to Article 3 of
the Prospectus Directive.
1.
it is a qualified investor within the meaning of the law in that
Relevant Member State implementing Article 2(1)(e) of the
Prospectus Directive; and
2.
in the case of any shares acquired by it as a financial
intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the shares acquired by it in the
offer have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Relevant Member State, other than qualified investors, as that
term is defined in the Prospectus Directive, or in circumstances
in which the prior consent of the representatives has been given
to the offer or resale; or (ii) where shares have been
acquired by it on behalf of persons in any Relevant Member State
other than qualified investors, the offer of those shares to it
is not treated under the Prospectus Directive as having been
made to such persons.
1.
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 Financial Services and Markets Act
2000 (the FSMA)) to persons who are investment
professionals falling within Article 19(5) of the FSMA
(Financial Promotion) Order 2005 or in circumstances in which
Section 21(1) of the FSMA does not apply to us; and
2.
it has complied with and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the shares in, from or otherwise involving the
United Kingdom.
121
Table of Contents
122
Table of Contents
123
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-20
F-21
F-22
F-23
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
Fiscal Year Ended
December 30,
December 28,
December 27,
2007
2008
2009
$
265,374
$
300,783
$
311,709
75,340
84,618
82,609
89,663
102,323
106,330
41,567
47,690
48,917
16,054
18,736
19,636
16,768
15,042
17,123
5,647
5,434
3,758
12,309
14,651
16,088
8,506
6,436
462
229
157
257,810
297,229
301,054
7,564
3,554
10,655
11,853
9,892
7,119
(4,289
)
(6,338
)
3,536
(3,503
)
55,061
135
$
(786
)
$
(61,339
)
$
3,401
(8,920
)
(10,175
)
(11,599
)
(9,706
)
(71,574
)
(8,198
)
$
(9.24
)
$
(68.17
)
$
(7.81
)
1,050
1,050
1,050
F-4
Table of Contents
Stockholders
Additional
Equity
Common Stock
Preferred Stock
Paid-In
Retained
Treasury Stock
(Deficiency in
Shares
Amount
Shares
Amount
Capital
Deficit
Shares
Amount
Assets)
1,050,000
$
1
59,500
$
1
$
110,972
$
(124,880
)
$
$
(13,906
)
(786
)
(786
)
(14,701
)
(928
)
(928
)
14,701
928
928
1,050,000
1
59,500
1
110,972
(125,666
)
(14,692
)
(61,399
)
(61,399
)
(1,585
)
(100
)
(100
)
1,585
100
100
1,050,000
1
59,500
1
110,972
(187,065
)
(76,091
)
3,401
3,401
(1,217
)
(184
)
(184
)
1,217
184
184
1,050,000
$
1
59,500
$
1
$
110,972
$
(183,664
)
$
$
(72,690
)
F-5
Table of Contents
Fiscal Year Ended
December 30,
December 28,
December 27,
2007
2008
2009
$
(786
)
$
(61,399
)
$
3,401
12,309
14,651
16,088
620
114
(236
)
8,506
6,436
(2,258
)
(3,139
)
(5,016
)
2,758
1,285
1,340
(3,557
)
54,895
(1,699
)
446
(452
)
(149
)
24
(213
)
2,343
(882
)
9
6,012
1,596
(1,805
)
9,399
15,205
10,771
933
(587
)
431
1,915
(1,153
)
(545
)
3,451
2,939
3,573
31,291
32,501
33,782
(35,274
)
(42,496
)
(25,708
)
500
(251
)
251
(262
)
(341
)
(35,536
)
(43,088
)
(24,957
)
33,250
104,450
103,450
12,762
(33,927
)
(93,921
)
(112,708
)
928
100
184
(928
)
(100
)
(184
)
(6,570
)
(1,359
)
4,156
10,529
(9,258
)
(89
)
(58
)
(433
)
829
740
682
$
740
$
682
$
249
$
11,275
$
8,840
$
7,030
$
336
$
(83
)
$
300
$
3,706
$
963
$
994
F-6
Table of Contents
1.
SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
F-7
Table of Contents
F-8
Table of Contents
F-9
Table of Contents
2.
RECAPITALIZATION
F-10
Table of Contents
3.
PROPERTY AND
EQUIPMENT
2008
2009
$
5,252
$
5,402
112,573
124,331
70,733
76,714
4,587
4,255
139
501
193,284
211,203
(52,244
)
(66,323
)
$
141,040
$
144,880
4.
OTHER
ASSETS
2008
2009
$
4,512
$
4,512
1,397
1,393
117
117
127
150
6,153
6,172
(1,873
)
(2,606
)
(38
)
(58
)
(16
)
(16
)
(1,927
)
(2,680
)
$
4,226
$
3,492
F-11
Table of Contents
5.
LONG-TERM
DEBT
2008
2009
$
80,644
$
79,818
30,930
32,270
13,750
5,550
626
393
125,950
118,031
(1,049
)
(1,039
)
$
124,901
$
116,992
F-12
Table of Contents
$
1,039
6,470
110,522
$
118,031
6.
ACCRUED
EXPENSES
2008
2009
$
9,210
$
10,268
4,279
4,853
2,234
3,546
3,536
2,991
$
19,259
$
21,658
F-13
Table of Contents
7.
OTHER LONG-TERM
LIABILITIES
2008
2009
$
12,201
$
13,975
407
166
370
200
79
122
755
$
13,812
$
14,463
8.
LEASES
$
18,398
18,933
19,188
19,378
19,614
172,631
$
268,142
2007
2008
2009
$
9,229
$
10,618
$
11,391
1,090
933
705
$
10,319
$
11,551
$
12,096
F-14
Table of Contents
9.
BONUS
PLANS
10.
EMPLOYEE BENEFIT
PLAN
11.
STOCK OPTION
PLAN
2007
2008
2009
256,702
245,874
$
$
10.00
$
10.00
265,890
18,500
$
10.00
$
$
8.92
(9,188
)
(10,828
)
(6,499
)
$
10.00
$
10.00
$
10.00
256,702
245,874
257,875
$
10.00
$
10.00
$
9.92
$
$
$
F-15
Table of Contents
Weighted-
Number of
Average Grant
Shares
Date Fair Value
144,293
$
3.60
18,500
3.25
(59,844
)
3.61
(527
)
3.61
102,422
$
3.61
2007
2008
2009
$
$
$
54
166
135
54
166
135
(3,298
)
50,107
(259
)
4,788
(3,557
)
54,895
$
(3,503
)
$
55,061
$
135
F-16
Table of Contents
2008
2009
$
41,446
$
38,127
2,989
2,819
2,292
4,918
4,619
4,425
6,819
9,893
1,076
809
59,241
60,991
(361
)
(305
)
610
(638
)
249
(943
)
(59,490
)
(60,048
)
$
$
2007
2008
2009
$
(1,501
)
$
(2,218
)
$
1,238
(2,706
)
(2,890
)
(3,073
)
(377
)
(389
)
292
1,081
1,068
1,120
59,490
558
$
(3,503
)
$
55,061
$
135
F-17
Table of Contents
13.
COMMITMENTS AND
CONTINGENCIES
14.
RELATED-PARTY
TRANSACTIONS
15.
SUBSEQUENT
EVENTS
F-18
Table of Contents
F-19
Table of Contents
F-20
Table of Contents
Twenty-Six Weeks Ended
June 28,
June 27,
2009
2010
$
153,514
$
170,996
40,765
44,389
53,733
58,100
25,265
26,560
10,435
11,310
8,898
8,936
2,060
1,685
7,889
8,335
153
51
149,198
159,366
4,316
11,630
3,693
3,543
623
8,087
120
104
$
503
$
7,983
$
(5,420
)
$
(6,179
)
$
(4,917
)
$
1,804
$
(4.68
)
$
1.72
1,050
1,050
F-21
Table of Contents
Twenty-Six Weeks Ended
June 28, 2009
June 27, 2010
$
503
$
7,983
7,896
8,334
58
78
(1,857
)
(2,267
)
663
114
1,431
2,456
93
(10
)
677
363
(4,071
)
(4,305
)
5,268
4,158
(3,452
)
(3,352
)
3,249
767
371
624
10,829
14,943
(12,878
)
(8,568
)
251
(12,627
)
(8,568
)
62,350
35,550
(60,988
)
(41,906
)
1,362
(6,356
)
(436
)
19
682
249
$
246
$
268
3,998
3,373
192
149
570
229
661
F-22
Table of Contents
1.
BASIS OF
PRESENTATION
F-23
Table of Contents
2.
LONG-TERM
DEBT
F-24
Table of Contents
3.
COMMITMENTS AND
CONTINGENCIES
4.
SUBSEQUENT
EVENTS
F-25
Table of Contents
The restaurant presents a
winning combination: It manages
to be a place that people want to
go to and a place they want to go
back to.
The Capital Annapolis, MD
Table of Contents
Tuscan Tuscan
Culina Culinary
creations creations
are are mastered
mastered at BR at
BRIO.
Collumbu Columbus s D Dispatch
Birmingham, AL (1) Phoenix, AZ (2) Denver, CO (2) Farmington, CT (1) Washington DC (1) Ft.
Lauderdale, FL (2) Naples, FL (1) Orlando, FL (2) Palm Beach, FL (1) Tampa, FL (1) Atlanta, GA (2)
Chicago, IL (1) Newport, KY (1) Annapolis, MD (1) Detroit, MI (2) Kansas City, MO (1) St. Louis, MO
(1) Charlotte, NC (1) Raleigh, NC (1) Cherry Hill, NJ (1) Las Vegas, NV (1) Cleveland, OH (2)
Columbus, OH (2) Dayton, OH (1) Dallas, TX (2) Houston, TX (2) Richmond, VA (1)
BrioItalian.com
Table of Contents
BRIO, meaning lively or full of life, brings the pleasure of the Tuscan country villa to the
American city. The food, staying true to the Tuscan philosophy of to eat well is to live well, is
simply prepared using the finest and freshest ingredients. Escape to BRIO and experience the
flavors of Tuscany. Buon Appetito!
Table of Contents
Table of Contents
$
12,300
17,750
25,000
750,000
1,500,000
125,000
3,500
15,000
301,450
2,750,000
any threatened, pending or completed civil action, suit or
proceeding;
any threatened, pending or completed criminal action, suit or
proceeding;
any threatened, pending or completed administrative action or
proceeding;
any threatened, pending or completed investigative action or
proceeding.
II-1
Table of Contents
II-2
Table of Contents
Exhibit
1
.1***
Form of Underwriting Agreement.
3
.1*
Form of Second Amended and Restated Articles of Incorporation of
Bravo Brio Restaurant Group, Inc.
3
.2*
Form of Second Amended and Restated Regulations of Bravo Brio
Restaurant Group, Inc.
4
.1
Form of Common Stock Certificate.
5
.1***
Opinion of Vorys, Sater, Seymour and Pease LLP.
10
.1*
Note Purchase Agreement, dated as of June 29, 2006, by and
among Bravo Development, Inc., as borrower, Bravo Development
Holdings, LLC and the domestic subsidiaries of the borrower from
time to time parties thereto, as guarantors, the Purchasers
Party thereto, as purchasers, and Golub Capital Incorporated, as
administrative agent.
10
.2*
First Amendment to Note Purchase Agreement, dated as of
March 17, 2008, by and among Bravo Development, Inc.,
Bravo Development Holdings, LLC, the Guarantors, the Purchasers
and Golub Capital Incorporated, as administrative agent.
10
.3*
New Investors Securities Holders Agreement, dated as of
June 29, 2006, by and among Bravo Development, Inc.,
Bravo Development Holding LLC, and the other investors and
parties named therein.
10
.4*
Securities Holders Agreement, dated as of June 29, 2006, by
and among Bravo Development, Inc., Bravo Development
Holdings LLC, Alton F. Doody, III, John C. Doody, and the
other investors and parties named therein.
10
.5*
Registration Rights Agreement, dated as of June 29, 2006,
by and among Bravo Development, Inc., Bravo Development Holdings
LLC and the other investors named therein.
10
.6*
Management Agreement, dated as of June 29, 2006, by and
among Bruckmann Rosser, Sherrill & Co., Inc., Castle
Harlan, Inc. and Bravo Development, Inc.
10
.7*
Management Agreement, dated as of June 29, 2006, by and
among Castle Harlan, Inc., Bruckmann Rosser,
Sherrill & Co., Inc. and Bravo Development, Inc.
10
.8*
Employment Agreement, effective January 12, 2007, by and
between Bravo Development, Inc. and Saed Mohseni.
10
.9
Form of Employment Agreement by and between Bravo Brio
Restaurant Group, Inc. and James J. OConnor.
10
.10*
Bravo Development, Inc. 2006 Stock Option Plan.
10
.11
Amendment No. 1 to the Bravo Development, Inc. 2006 Stock
Option Plan.
10
.12*
Form of Option Award Letter under the Bravo Development, Inc.
2006 Stock Option Plan.
10
.13
Form of Bravo Brio Restaurant Group, Inc. Stock Incentive Plan.
10
.14
Form of Non-Qualified Option Award Letter under the Bravo Brio
Restaurant Group, Inc. Stock Incentive Plan.
10
.15
Form of Restricted Stock Award Letter under the Bravo Brio
Restaurant Group, Inc. Stock Incentive Plan.
10
.16***
Form of Exchange Agreement by and among Bravo Brio Restaurant
Group, Inc., Bravo Development Holdings LLC and the individual
shareholders of Bravo Brio Restaurant Group, Inc. listed on the
signature pages thereto.
10
.17*
Form of Plan of Reorganization by and between Bravo Brio
Restaurant Group, Inc. and Bravo Development Holdings LLC.
10
.18*
**
Bravo! Development, Inc. Foodservice Distribution Agreement,
dated as of June 18, 2006, by and between Bravo
Development, Inc. and Distribution Market Advantage, Inc.
10
.19
Commitment Letter, dated as of October 4, 2010, by and among
Bravo Brio Restaurant Group, Inc., Wells Fargo Bank, National
Association, Bank of America, N.A., Wells Fargo Securities, LLC
and Banc of America Securities LLC.
21
.1*
Subsidiaries of Bravo Brio Restaurant Group, Inc.
23
.1
Consent of Deloitte & Touche LLP.
23
.2***
Consent of Vorys, Sater, Seymour and Pease LLP (included in
Exhibit 5.1).
II-3
Table of Contents
Exhibit
23
.3
Consent of James S. Gulmi.
23
.4
Consent of Fortunato N. Valenti.
24
.1*
Powers of Attorney.
99
.1*
Consent of Technomic, Inc.
*
Previously filed.
**
Certain information in this exhibit has been omitted and filed
separately with the SEC. Confidential treatment has been
requested with respect to the omitted portions.
***
To be filed by amendment.
Table of Contents
By:
President, Chief Executive Officer and Director (Principal
Executive Officer)
Chief Financial Officer, Treasurer and Secretary (Principal
Financial and
Accounting Officer)
Director
Director
Director
Director
Director
*By
II-5
Table of Contents
Exhibit
1
.1***
Form of Underwriting Agreement.
3
.1*
Form of Second Amended and Restated Articles of Incorporation of
Bravo Brio Restaurant Group, Inc.
3
.2*
Form of Second Amended and Restated Regulations of Bravo Brio
Restaurant Group, Inc.
4
.1
Form of Common Stock Certificate.
5
.1***
Opinion of Vorys, Sater, Seymour and Pease LLP.
10
.1*
Note Purchase Agreement, dated as of June 29, 2006, by and
among Bravo Development, Inc., as borrower, Bravo Development
Holdings, LLC and the domestic subsidiaries of the borrower from
time to time parties thereto, as guarantors, the Purchasers
Party thereto, as purchasers, and Golub Capital Incorporated, as
administrative agent.
10
.2*
First Amendment to Note Purchase Agreement, dated as of
March 17, 2008, by and among Bravo Development, Inc., Bravo
Development Holdings, LLC, the Guarantors, the Purchasers and
Golub Capital Incorporated, as administrative agent.
10
.3*
New Investors Securities Holders Agreement, dated as of
June 29, 2006, by and among Bravo Development, Inc., Bravo
Development Holding LLC, and the other investors and parties
named therein.
10
.4*
Securities Holders Agreement, dated as of June 29, 2006, by
and among Bravo Development, Inc., Bravo Development
Holdings LLC, Alton F. Doody, III, John C. Doody, and the
other investors and parties named therein.
10
.5*
Registration Rights Agreement, dated as of June 29, 2006,
by and among Bravo Development, Inc., Bravo Development Holdings
LLC and the other investors named therein.
10
.6*
Management Agreement, dated as of June 29, 2006, by and
among Bruckmann Rosser, Sherrill & Co., Inc., Castle
Harlan, Inc. and Bravo Development, Inc.
10
.7*
Management Agreement, dated as of June 29, 2006, by and
among Castle Harlan, Inc., Bruckmann Rosser,
Sherrill & Co., Inc. and Bravo Development, Inc.
10
.8*
Employment Agreement, effective January 12, 2007, by and
between Bravo Development, Inc. and Saed Mohseni.
10
.9
Form of Employment Agreement by and between Bravo Brio
Restaurant Group, Inc. and James J. OConnor.
10
.10*
Bravo Development, Inc. 2006 Stock Option Plan.
10
.11
Amendment No. 1 to the Bravo Development, Inc. 2006 Stock
Option Plan.
10
.12*
Form of Option Award Letter under the Bravo Development, Inc.
2006 Stock Option Plan.
10
.13
Form of Bravo Brio Restaurant Group, Inc. Stock Incentive Plan.
10
.14
Form of Non-Qualified Option Award Letter under the Bravo Brio
Restaurant Group, Inc. Stock Incentive Plan.
10
.15
Form of Restricted Stock Award Letter under the Bravo Brio
Restaurant Group, Inc. Stock Incentive Plan.
10
.16***
Form of Exchange Agreement by and among Bravo Brio Restaurant
Group, Inc., Bravo Development Holdings LLC and the individual
shareholders of Bravo Brio Restaurant Group, Inc. listed on the
signature pages thereto.
10
.17*
Form of Plan of Reorganization by and between Bravo Brio
Restaurant Group, Inc. and Bravo Development Holdings LLC.
10
.18*
**
Bravo! Development, Inc. Foodservice Distribution Agreement,
dated as of June 18, 2006, by and between Bravo
Development, Inc. and Distribution Market Advantage, Inc.
10
.19
Commitment Letter, dated as of October 4, 2010, by and among
Bravo Brio Restaurant Group, Inc., Wells Fargo Bank, National
Association, Bank of America, N.A., Wells Fargo Securities, LLC
and Banc of America Securities LLC.
21
.1*
Subsidiaries of Bravo Brio Restaurant Group, Inc.
23
.1
Consent of Deloitte & Touche LLP.
II-6
Table of Contents
Exhibit
23
.2***
Consent of Vorys, Sater, Seymour and Pease LLP (included in
Exhibit 5.1).
23
.3
Consent of James S. Gulmi.
23
.4
Consent of Fortunato N. Valenti.
24
.1*
Powers of Attorney.
99
.1*
Consent of Technomic, Inc.
*
Previously filed.
**
Certain information in this exhibit has been omitted and filed
separately with the SEC. Confidential treatment has been
requested with respect to the omitted portions.
***
To be filed by amendment.
II-7
COMMON INCORPORATED UNDER THE LAWS OF THE STATE OF OHIO SEE REVERSE SIDE FOR CERTAIN DEFINITIONS CUSIP 10567B 10 9 THIS CERTIFIES THAT is the owner of FULLY PAID AND NON-ASSESSABLE COMMON SHARES, NO PAR VALUE, OF BRAVO BRIO RESTAURANT GROUP, INC. transferable on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. IN WITNESS WHEREOF, the said Corporation has caused this certificate to be signed by facsimile signatures of its duly authorized officers. Dated: CHIEF EXECUTIVE OFFICER AND PRESIDENT CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY COUNTERSIGNED AND REGISTERED: WELLS FARGO BANK, N.A. TRANSFER AGENT AND REGISTRAR BY AUTHORIZED SIGNATURE AMERICAN FINANCIAL PRINTING INCORPORATED MINNEAPOLIS THIS CERTIFICATE IS TRANSFERABLE IN SOUTH SAINT PAUL, MN. |
RELATIVE RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK OTHER THAN COMMON SHARES. THIS CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON WRITTEN REQUEST SENT TO ITS PRINCIPAL EXECUTIVE OFFICES WITHIN FIVE DAYS AFTER THIS CORPORATIONS RECEIPT OF SUCH WRITTEN REQUEST, AND WITHOUT CHARGE, A FULL STATEMENT OF THE BOARDS AUTHORITY TO CREATE AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK AS WELL AS THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR SERIES OF SHARES OF CAPITAL STOCK THEN OUTSTANDING OR AUTHORIZED TO BE ISSUED. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM as tenants in common UTMA Custodian (Cust) (Minor) TEN ENT as tenants by entireties under Uniform Transfers to Minors JT TEN as joint tenants with right of survivorship Act and not as tenants in common (State) Additional abbreviations may also be used though not in above list. For value received hereby sell, assign, and transfer unto (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE) Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated X X NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE GUARANTEED ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION (SUCH AS A BANK OR BROKER) WHICH IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (STAMP), THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM (MSP), OR THE STOCK EXCHANGES MEDALLION PROGRAM (SEMP) AND MUST NOT BE DATED. GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE. |
2
(1) | contingent upon the effectiveness of a general release of claims in form and substance satisfactory to the Employer which is executed within forty-five (45) days of the date of such Separation, Base Salary continuation during the period commencing on the sixtieth (60 th ) date following such Separation and ending on the date that is two (2) years thereafter; | ||
(2) | any accrued but unpaid Base Salary; and | ||
(3) | any accrued and vested benefits under any employee benefit plan of the Employer or its Affiliates in which Executive was participating immediately prior to Separation, such benefits to be provided in accordance with the terms of the applicable employee benefit plan; provided that in no event shall Executive be entitled to receive any payment for accrued but unused vacation time. |
3
4
5
6
7
|
To the Employer: | Bravo Brio Restaurant Gropu, Inc. | ||
|
777 Goodale Boulevard, Suite 100 | |||
|
Columbus, OH 43212 | |||
|
Attention: Chief Executive Officer | |||
|
||||
|
With a copy to Employers | |||
|
counsel at: | Carmen J. Romano, Esq. Dechert LLP | ||
|
Cira Center | |||
|
2929 Arch Street | |||
|
Philadelphia, PA 19104 | |||
|
||||
|
To Executive: | at the address listed in the Employers personnel records |
8
9
10
BRAVO BRIO RESTAURANT GROUP, INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
EXECUTIVE:
|
1. | Section 1.1 of the Plan is hereby amended by adding the following to the end thereof: |
2. | Section 3.1 of the Plan is hereby amended by adding the following to the end thereof: |
3. | Section 9.2 of the Plan is hereby deleted in its entirety. |
4. | In all other respects, the Plan is affirmed. |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
BRAVO BRIO RESTAURANT GROUP, INC. | ||||
|
||||
|
By: | |||
|
||||
|
||||
|
Name: | |||
|
||||
|
||||
|
Title: | |||
|
||||
|
||||
|
Date: | |||
|
||||
|
16
| Upon your termination of service with the Company and its Subsidiaries by reason of your death or Disability, any vested portion of your Award shall remain exercisable until the earlier of: (a) 180 days after your Termination Date or (b) the Expiration Date. | ||
| Upon your termination of service with the Company and its Subsidiaries by the Company (or a Subsidiary) without Cause or by your voluntary termination, any vested portion of your Award shall remain exercisable until the earlier of (a) 30 days after your Termination Date or (b) the Expiration Date. | ||
| Upon your termination of service with the Company or any of its Subsidiaries for any other reason, any unexercised portion of your Award shall be immediately forfeited with no further compensation due to you upon your Termination Date. |
Very truly yours,
BRAVO BRIO RESTAURANT GROUP, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
|
||||
Dated:
|
||||
|
|
2
Very truly yours, | ||||||
|
||||||
BRAVO BRIO RESTAURANT GROUP, INC. | ||||||
|
||||||
|
By: | |||||
|
Name: |
|
||||
|
Title: |
2
Wells Fargo Bank, National Association
|
Bank of America, N.A. | |
101 Federal Street, 20th Floor
|
100 Federal Street | |
Boston, MA 02110
|
MA5-100-09-06 | |
|
Boston, MA 02110 | |
|
||
Wells Fargo Securities, LLC
|
Banc of America Securities LLC | |
One Wachovia Center
|
One Bryant Park | |
301 South College Street
|
New York, New York 10036 | |
Charlotte, NC 28288-0737
|
Re: |
Commitment Letter
$85 Million Senior Secured Credit Facilities |
2
3
4
5
6
7
8
Sincerely,
|
||||
By: | /s/ Meghan E. Hinds | |||
Name: | Meghan E. Hinds | |||
Title: | Vice President | |||
WELLS FARGO SECURITIES, LLC
|
||||
By: | /s/ Bill G. Cvetkovski | |||
Name: | Bill G. Cvetkovski | |||
Title: | Director | |||
BANK OF AMERICA, N.A.
|
||||
By: | /s/ Angelo Maragos | |||
Name: | Angelo Maragos | |||
Title: | Vice President | |||
BANC OF AMERICA SECURITIES LLC
|
||||
By: | /s/ Christin M. OHara | |||
Name: | Christin M. OHara | |||
Title: | Managing Director | |||
By:
|
/s/ James J. OConnor | |||
|
|
|||
|
Title: Chief Financial Officer |
SENIOR SECURED CREDIT FACILITIES
SUMMARY OF PROPOSED TERMS AND CONDITIONS
Capitalized terms not otherwise defined herein have the same meanings as specified therefor
in the Commitment Letter to which this Summary of Proposed Terms and Conditions is attached
.
Bravo Brio Restaurant Group, Inc., an Ohio corporation (the
Borrower
).
Wells Fargo Securities, LLC and Banc of America Securities
LLC will act as joint lead arrangers and joint lead
bookrunners (in such capacity, the
Lead Arrangers
).
Wells Fargo Bank, National Association, Bank of America, N.A.
and a syndicate of financial institutions and other entities
(each a
Lender
and, collectively, the
Lenders
).
Wells Fargo Bank, National Association (in such capacity, the
Administrative Agent
, the
Issuing Bank
or the
Swingline
Lender
, as the case may be).
Bank of America, N.A.
Senior secured credit facilities (the
Senior Credit
Facilities
) in an aggregate principal amount of $85 million,
such Senior Credit Facilities to consist of:
(a)
Revolving Credit Facility
. A 5-year revolving credit
facility in an aggregate principal amount of $40 million (the
Revolving Credit Facility
) (with a $10 million subfacility
for standby letters of credit (each, a
Letter of Credit
)
and a $10 million subfacility for swingline loans (each, a
Swingline Loan
), on customary terms and conditions with
compensation to be agreed). Letters of Credit will be issued
by the Issuing Bank and Swingline Loans will, at the sole
discretion of the Swingline Lender, be made available by the
Swingline Lender and each Lender will purchase an irrevocable
and unconditional participation in each Letter of Credit and
Swingline Loan.
(b)
Term Loan Facility
. A 5-year term loan facility in an
aggregate principal amount of $45 million (the
Term Loan Facility
).
Use of Proceeds:
|
The Term Loan Facility and, if applicable, up to $25 million of the Revolving Credit Facility, together with proceeds of the IPO received on the Closing Date, will be used on the Closing Date to (a) refinance certain existing indebtedness of the Borrower and its subsidiaries (the Refinancing ) and (b) pay certain fees and expenses incurred in connection with the IPO, the Refinancing and the Senior Credit Facilities (collectively, the Transactions ). | |
|
||
|
The Revolving Credit Facility will be used to provide ongoing working capital and for other general corporate purposes of the Borrower and its subsidiaries. | |
|
||
Closing Date:
|
The date on which the Senior Credit Facilities are closed (the Closing Date ), to occur on or before November 15, 2010. | |
|
||
Availability:
|
The Revolving Credit Facility will be available on a revolving basis from and after the Closing Date until the Revolving Credit Maturity Date (as defined below); provided that no more than $25 million may be drawn under the Revolving Credit Facility on the Closing Date. | |
|
||
|
The Term Loan Facility will be available only in a single draw of the full amount of the Term Loan Facility on the Closing Date. |
Incremental Term Loans / Revolving
Facility Increase: |
The Borrower will be entitled to incur (a) additional term loans under a new term facility that will be included in the Senior Credit Facilities (each, an Incremental Term Loan ) and/or (b) increases in the Revolving Credit Facility (each, a Revolving Facility Increase ), in an aggregate principal amount for all such Incremental Term Loans and Revolving Facility Increases of up to $20 million; provided that (a) no default or event of default exists immediately prior to or after giving effect thereto, (b) the other terms and documentation in respect of any Incremental Term Loans, to the extent not consistent with the Term Loan Facility, will be reasonably satisfactory to the Administrative Agent and (c) no Lender will be required or otherwise obligated to provide any such Incremental Term Loan or Revolving Facility Increase. Incremental Term Loans and Revolving Facility Increases will have the same Guarantees from the Guarantors and will be secured on a pari passu basis by the same Collateral as the other Senior Credit Facilities. | |
|
||
|
The yield on the Incremental Term Loans and/or any Revolving Facility Increase (taking into account the applicable interest rate margin (including any applicable interest rate floor) and upfront fees payable to the lenders making such Incremental Term Loans or providing such Revolving Facility Increase, as applicable) may not exceed (a) with respect to the Incremental Term Loans, the then-current yield on the Term Loan Facility by more than 25 basis points and (b) with respect to any Revolving Facility Increase, the then-current yield on the Revolving Credit Facility (it being understood |
2
|
that the pricing of the Term Loan Facility or the Revolving Credit Facility, as applicable, may be increased and/or additional fees may be paid to existing Lenders holding the Term Loan Facility and/or the Revolving Credit Facility to the extent necessary to satisfy such requirements). | |
|
||
Documentation:
|
The documentation for the Senior Credit Facilities will include, among other items, a credit agreement, guarantees and appropriate pledge, security, mortgage and other collateral documents (collectively, the Financing Documentation ), all consistent with this Term Sheet. | |
|
||
Guarantors:
|
The obligations of the Borrower under the Senior Credit Facilities, under any hedging agreements entered into between any Loan Party (as defined below) and any counterparty that is a Lender (or any affiliate thereof) at the time such hedging agreement is executed and under any treasury management arrangements between any Loan Party and a Lender (or any affiliate thereof) will be unconditionally guaranteed, on a joint and several basis, by each existing and subsequently acquired or formed direct and indirect subsidiary of the Borrower (each a Guarantor ; and such guarantee being referred to herein as a Guarantee ); provided that Guarantees by foreign subsidiaries will be required only to the extent such Guarantees would not have material adverse federal income tax consequences for the Borrower (by constituting an investment of earnings in United States property under Section 956 (or a successor provision) of the Internal Revenue Code, triggering an increase in the gross income of the Borrower pursuant to Section 951 (or a successor provision) of the Internal Revenue Code without corresponding credits or other offsets). All Guarantees shall be guarantees of payment and not of collection. The Borrower and the Guarantors are herein referred to as the Loan Parties and, individually, as a Loan Party . | |
|
||
Security:
|
There will be granted to the Administrative Agent, for the benefit of the Lenders, any counterparty to any hedging agreement that is a Lender (or any affiliate thereof) at the time such hedging agreement is executed and any Lender (or any affiliate thereof) with treasury management arrangements with any Loan Party, valid and perfected first priority (subject to certain customary exceptions satisfactory to the Administrative Agent and set forth in the Financing Documentation) liens and security interests in and liens on all of the following (collectively, the Collateral ): |
(a) | All present and future capital stock or other membership or partnership equity ownership or profit interests (collectively, Equity Interests ) owned or held of record or beneficially by each of the Loan Parties, and 65% of the voting stock (and 100% of the non-voting stock) of all present and future first-tier foreign subsidiaries of any Loan Party (to the extent, and for so long as, the pledge of any greater percentage would have |
3
material adverse federal income tax consequences for the Borrower); provided that any first-tier foreign subsidiary that is disregarded for tax purposes shall not be deemed to be a foreign subsidiary; | |||
(b) | Substantially all of (i) the tangible and intangible personal property and assets of the Loan Parties (including, without limitation, all equipment, inventory and other goods, accounts, licenses, contracts, intellectual property and other general intangibles, deposit accounts, securities accounts and other investment property and cash) and (ii) all owned real property interests; and | ||
(c) | All products, profits, rents and proceeds of the foregoing. |
|
All such security interests in personal property and all liens on real property will be created pursuant to, and will comply with, customary Financing Documentation reasonably satisfactory to the Administrative Agent. On the Closing Date, such security interests in personal property will have become perfected (or arrangements for the perfection thereof reasonably satisfactory to the Administrative Agent will have been made it being understood that (i) with respect to any fee property owned by any Loan Party as of the Closing Date, all mortgages and other customary real estate documentation related thereto will be permitted to be delivered to the Administrative Agent within thirty (30) days after the Closing Date and (ii) with respect to leased real property, leasehold mortgages will not be required, but the Borrower will be required to use commercially reasonable efforts to obtain a customary landlord waiver from the applicable landlord in form and substance reasonably acceptable to the Administrative Agent). | |
|
||
Final Maturity:
|
The final maturity of the Revolving Credit Facility will occur on the fifth anniversary of the Closing Date (the Revolving Credit Maturity Date ) and the commitments with respect to the Revolving Credit Facility will automatically terminate on such date. | |
|
||
|
The final maturity of the Term Loan Facility will occur on the fifth anniversary of the Closing Date (the Term Loan Maturity Date ). | |
|
||
Amortization:
|
The Term Loan Facility will amortize in equal quarterly installments based on the following amortization table, with the remainder due on the Term Loan Maturity Date. |
Principal | ||||
Year | Amortization | |||
1
|
5 | % | ||
2
|
5 | % | ||
3
|
10 | % | ||
4
|
10 | % | ||
5
|
70 | % |
4
Interest Rates and Fees:
|
Interest rates and fees in connection with the Senior Credit Facilities will be as specified in the Fee Letters and on Schedule I attached hereto. | |
Mandatory Prepayments
and Commitment
Reductions:
|
Subject to the next paragraph, the Senior Credit Facilities
will be required to be prepaid with:
(a) 100% of the net cash proceeds of the issuance or
incurrence of debt by the Borrower or any of its
subsidiaries, subject to baskets and other exceptions to be
mutually agreed upon;
|
|
|
(b) 100% of the net cash proceeds of all asset sales,
insurance and condemnation recoveries and other asset
dispositions by the Borrower or any of its subsidiaries,
excluding sales of inventory in the ordinary course of
business and subject to baskets, reinvestment provisions and
other exceptions to be mutually agreed upon; and
|
|
|
(c) 50% of Excess Cash Flow (to be defined in the Financing
Documentation) for fiscal year 2011 and each fiscal year of
the Borrower thereafter, if the Consolidated Total Leverage
Ratio as of the end of the applicable fiscal year is equal to
or greater than 1.50 to 1.0. If such ratio as of the end of
any applicable fiscal year is less than 1.50 to 1.0, no
prepayment from Excess Cash Flow will be required for such
fiscal year.
|
|
|
All such mandatory prepayments will be applied first , to prepay outstanding loans under the Term Loan Facility and second , to prepay outstanding loans under the Revolving Credit Facility (without a permanent reduction in the aggregate commitment under the Revolving Credit Facility). All such mandatory prepayments of the Term Loan Facility will be applied to the remaining scheduled amortization payments on a pro rata basis. | |
Optional Prepayments and
Commitment Reductions:
|
Loans under the Senior Credit Facilities may be prepaid and unused commitments under the Revolving Credit Facility may be reduced at any time, in whole or in part, at the option of the Borrower, upon notice and in minimum principal amounts and in multiples to be agreed upon, without premium or penalty (except LIBOR breakage costs). Any optional prepayment of the Term Loan Facility will be applied to the remaining scheduled amortization payments on a pro rata basis. | |
Conditions to Initial
Extensions of Credit:
|
The making of the initial extensions of credit under the Senior Credit Facilities will be subject to satisfaction of the conditions precedent set forth in Section 2 of the Commitment Letter and in the Conditions Annex attached hereto as Annex B . |
5
Conditions to All
Extensions of Credit:
|
Each extension of credit under the Senior Credit Facilities will be subject to satisfaction of the following conditions precedent: (a) all of the representations and warranties in the Financing Documentation shall be true and correct in all material respects (except to the extent that such representation and warranty is qualified by materiality) as of the date of such extension of credit and (b) no event of default under the Senior Credit Facilities or unmatured default shall have occurred and be continuing or would result from such extension of credit. | |
Representations and
Warranties:
|
Usual and customary for facilities of this type and such others as may be reasonably requested by the Lead Arrangers, including, without limitation, the following (which will be applicable to the Borrower and its subsidiaries and be subject to materiality thresholds and exceptions to be mutually agreed): organizational and legal status, financial statements; capital structure; organizational power and authority; no default; no conflict with laws or material agreements; enforceability; absence of material litigation, environmental regulations and liabilities; ERISA; necessary consents and approvals; compliance with all applicable laws and regulations including, without limitation, Regulations T, U and X, Investment Company Act, the Patriot Act, environmental laws and OFAC; payment of taxes and other obligations; ownership of properties; intellectual property; liens; insurance; solvency; absence of any material adverse change; senior debt status; collateral matters including, without limitation, perfection and priority of liens; labor matters; material contracts; no burdensome restrictions; and accuracy of disclosure. | |
Affirmative Covenants:
|
Usual and customary for facilities of this type, including, without limitation, the following (which will be applicable to the Borrower and its subsidiaries and be subject to materiality thresholds and exceptions to be mutually agreed): use of proceeds; payment of taxes and other obligations; continuation of business and maintenance of existence and rights and privileges; necessary consents, approvals, licenses and permits; compliance with laws and regulations (including environmental laws, ERISA and the Patriot Act); maintenance of property and insurance (including hazard and business interruption 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; financial reporting (including annual audited and quarterly unaudited financial statements (in each case, accompanied by covenant compliance certificates) and annual updated budgets); management letters; additional Guarantors and Collateral; other collateral matters; and further assurances (including, without limitation, with respect to security interests in after-acquired property). |
6
Negative Covenants:
|
Usual and customary for facilities of this type, including, without limitation, the following (which will be applicable to the Borrower and its subsidiaries and be subject to materiality thresholds and exceptions to be mutually agreed): limitation on debt; limitation on liens; limitation on further negative pledges; limitation on loans, advances, acquisitions and other investments; limitation on dividends, distributions, issuances of equity interests, redemptions and repurchases of equity interests; limitation on fundamental changes and asset sales and other disposition (including, without limitation, sale-leaseback transactions); limitation on prepayments, redemptions and purchases of subordinated and certain other debt; limitation on transactions with affiliates; limitation on dividend and other payment restrictions affecting subsidiaries; limitation on changes in line of business, fiscal year and accounting practices; limitation on amendment of organizational documents and material contracts; and limitation on additional designated senior debt. | |
Financial Covenants:
|
The following: | |
|
(a) Maximum Consolidated Total Leverage Ratio, initially set
at 2.00 to 1.00 for each fiscal quarter ending after the
Closing Date and prior to September 30, 2011, with a step
down to 1.75 to 1.00 for each fiscal quarter ending
thereafter;
|
|
|
(b) Minimum Consolidated Fixed Charge Coverage Ratio of 1.50
to 1.00; and
|
|
|
(c) Maximum Consolidated Capital Expenditures: The sum of
Consolidated Capital Expenditures for any fiscal year
less
(b) the amount of payments of tenant incentives actually
received by the Borrower and its subsidiaries during such
fiscal year, shall be less than or equal to (i) for fiscal
year 2010, $12,000,000, and (ii) for each fiscal year
thereafter (A) if the Consolidated Total Leverage Ratio as of
the end of the immediately preceding fiscal year is equal to
or less than 1.00 to 1.00, an amount equal to 70% of
Consolidated EBITDA for such immediately preceding fiscal
year and (ii) if the Consolidated Total Leverage Ratio as of
the end of the immediately preceding fiscal year is greater
than or equal to 1.00 to 1.00, an amount equal to 60% of
Consolidated EBITDA for such immediately preceding fiscal
year;
provided
that the maximum amount of Consolidated
Capital Expenditures permitted in each fiscal year shall be
increased by one hundred (100%) of the unused Consolidated
Capital Expenditures from the immediately preceding fiscal
year (calculated without reference to any amounts carried
forward to such preceding year from any earlier year pursuant
to this proviso).
|
|
|
The financial covenants will apply to the Borrower and its subsidiaries on a consolidated basis, with definitions, opening levels, step-ups or step-downs (as applicable) to be mutually agreed upon; |
7
|
provided that EBITDA and Fixed Charges will reflect rent expense on a cash basis (versus GAAP), and Consolidated Capital Expenditures will be net of tenant incentives received. | |
Events of Default:
|
Usual and customary for facilities of this type, including, without limitation, the following (with materiality thresholds, exceptions and grace periods to be mutually agreed): non-payment of obligations (including termination payments under applicable hedging agreements); inaccuracy of representation or warranty; non-performance of covenants and obligations; default on other material debt (including hedging agreements); change of control; bankruptcy or insolvency; impairment of security; ERISA; material judgments; actual or asserted invalidity or unenforceability of any Financing Documentation or liens securing obligations under the Financing Documentation; default under permitted subordinated debt or invalidity or unenforceability of subordination provisions contained in the documentation related thereto. | |
Defaulting Lender
Provisions, Yield
Protection and Increased
Costs:
|
Customary for facilities of this type, including, without limitation, in respect of breakage or redeployment costs incurred in connection with prepayments, cash collateralization for Letters of Credit or Swingline Loans in the event any lender under the Revolving Credit Facility becomes a Defaulting Lender (as such term shall be defined in the Financing Documentation), changes in capital adequacy and capital requirements or their interpretation, illegality, unavailability, reserves without proration or offset and payments free and clear of withholding or other taxes. | |
Assignments and
Participations:
|
(a)
Revolving Credit Facility
: Subject to the consents
described below (which consents will not be unreasonably
withheld or delayed), each Lender will be permitted to make
assignments to other financial institutions in respect of the
Revolving Credit Facility in a minimum amount equal to $1
million.
|
|
|
(b)
Term Loan Facility
: Subject to the consents described
below (which consents will not be unreasonably withheld or
delayed), each Lender will be permitted to make assignments
to other financial institutions in respect of the Term Loan
Facility in a minimum amount equal to $1 million.
|
|
|
(c)
Consents
: The consent of the Borrower will be required
for any assignment unless (i) an Event of Default has
occurred and is continuing, (ii) the assignment is to a
Lender, an affiliate of a Lender or an Approved Fund (as such
term shall be defined in the Financing Documentation) or
(iii) the assignment is by either of the Banks in connection
with the primary syndication to a Lender approved by the
Borrower during the syndication process and is during the
period commencing on the Closing Date and ending on the date that
|
8
|
is 90 days following the Closing Date. The consent of
the Administrative Agent will be required for any assignment
(i) in respect of the Revolving Credit Facility or an
unfunded commitment under the Term Loan Facility, to an
entity that is not a Lender with a commitment in respect of
the applicable Facility, an affiliate of such Lender or an
Approved Fund and (ii) in respect of the Term Loan Facility,
to an entity that is not a Lender, an affiliate of a Lender
or an Approved Fund. The consent of the Issuing Bank and the
Swingline Lender will be required for any assignment under
the Revolving Credit Facility. Participations will be
permitted without the consent of the Borrower or the
Administrative Agent.
|
|
|
(d)
No Assignment or Participation to Certain Persons
. No
assignment or participation may be made to natural persons,
the Borrower or any of its affiliates or subsidiaries, or any
Defaulting Lender (to be defined in the Financing
Documentation).
|
|
Required Lenders:
|
On any date of determination, those Lenders who collectively hold more than 50% of the outstanding loans and unfunded commitments under the Senior Credit Facilities, or if the Senior Credit Facilities have been terminated, those Lenders who collectively hold more than 50% of the aggregate outstandings under the Senior Credit Facility (the Required Lenders ); provided , however , that if any Lender shall be a Defaulting Lender at such time, then the outstanding loans and unfunded commitments under the Senior Credit Facilities of such Defaulting Lender shall be excluded from the determination of Required Lenders. | |
Amendments and Waivers:
|
Amendments and waivers of the provisions of the Financing Documentation will require the approval of the Required Lenders, except that (a) the consent of all Lenders directly adversely affected thereby will be required with respect to (i) increases in the commitment of such Lenders, (ii) reductions of principal, interest or fees, (iii) extensions of scheduled maturities or times for payment and (iv) reductions in the voting percentages, (b) the consent of all Lenders will be required with respect to releases of all or substantially all of the value of the Collateral or Guarantees (other than in connection with transactions permitted pursuant to the Financing Documentation) and (c) the consent of the Lenders holding more than 50% of the outstanding loans and unfunded commitments under the Revolving Credit Facility shall be required to approve any amendment, waiver or consent for the purpose of satisfying a condition precedent to borrowing under the Revolving Credit Facility that would not be satisfied but for such amendment, waiver or consent. | |
Indemnification:
|
The Loan Parties will indemnify the Lead Arrangers, the Administrative Agent, each of the Lenders and their respective affiliates, partners, directors, officers, agents and advisors and hold |
9
|
them harmless from and against all liabilities, damages, claims, costs, expenses (including reasonable fees, disbursements, settlement costs and other charges of counsel) relating to the Transactions or any transactions related thereto and the Borrowers use of the loan proceeds or the commitments; provided that such indemnity will not, as to any indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such indemnitee. This indemnification shall survive and continue for the benefit of all such persons or entities. | |
Expenses:
|
The Loan Parties will reimburse the Lead Arrangers and the Administrative Agent (and all Lenders in the case of enforcement costs and documentary taxes) for all reasonable out-of-pocket costs and expenses in connection with the syndication, negotiation, execution, delivery and administration of the Financing Documentation and any amendment or waiver with respect thereto (including, without limitation, reasonable fees and expenses of counsel thereto). | |
Governing Law and Forum:
|
New York. | |
Waiver of Jury Trial and
Punitive and
Consequential Damages:
|
All parties to the Financing Documentation waive the right to trial by jury and the right to claim punitive or consequential damages. | |
Counsel for the Lead
Arrangers and the
Administrative Agent:
|
Moore & Van Allen PLLC. |
10
Interest:
|
At the Borrowers option, loans (other than Swingline Loans) will bear interest based on the Base Rate or LIBOR, as described below: | |
|
A. Base Rate Option | |
|
Interest will be at the Base Rate plus the applicable Interest Margin (as described below). The Base Rate is defined as the highest of (a) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1%, (b) the prime commercial lending rate of the Administrative Agent, as established from time to time at its principal U.S. office (which such rate is an index or base rate and will not necessarily be its lowest or best rate charged to its customers or other banks) and (c) the daily LIBOR (as defined below) for a one month Interest Period (as defined below) plus 1%. Interest shall be payable quarterly in arrears on the last day of each calendar quarter and (i) with respect to Base Rate Loans based on the Federal Funds Rate and LIBOR, shall be calculated on the basis of the actual number of days elapsed in a year of 360 days and (ii) with respect to Base Rate Loans based on the prime commercial lending rate of the Administrative Agent, shall be calculated on the basis of the actual number of days elapsed in a year of 365/366 days. Any loan bearing interest at the Base Rate is referred to herein as a Base Rate Loan . | |
|
Base Rate Loans will be made on same day notice and will be in minimum amounts to be agreed upon. | |
|
B. LIBOR Option | |
|
Interest will be determined for periods ( Interest Periods ) of one, two, three or six months as selected by the Borrower and will be at an annual rate equal to the London Interbank Offered Rate ( LIBOR ) for the corresponding deposits of U.S. dollars plus the applicable Interest Margin (as described below). LIBOR will be determined by the Administrative Agent at the start of each Interest Period and, other than in the case of LIBOR used in determining the Base Rate, will be fixed through such period. Interest will be paid on the last day of each Interest Period or, in the case of Interest Periods longer than three months, quarterly, and will be calculated on the basis of the actual number of days elapsed in a year of 360 days. LIBOR will be adjusted for maximum statutory reserve requirements (if any). Any loan bearing interest at LIBOR (other than a Base Rate Loan for which interest is determined by reference to LIBOR) is referred to herein as a LIBOR Rate Loan . | |
|
LIBOR Rate Loans will be made on three business days prior notice |
11
|
and, in each case, will be in minimum amounts to be agreed upon. | |
|
Swingline loans will bear interest at the Base Rate plus the applicable Interest Margin. | |
Default Interest:
|
(a) Automatically upon the occurrence and during the continuance of any payment event of default or upon a bankruptcy event of default of the Borrower or any other Loan Party or (b) at the election of the Required Lenders (or the Administrative Agent at the direction of Required Lenders), upon the occurrence and during the continuance of any other event of default, all outstanding principal, fees and other obligations under the Senior Credit Facility shall bear interest at a rate per annum of two percent (2%) in excess of the rate then applicable to such loan (including the applicable Interest Margin) and shall be payable on demand of the Administrative Agent. | |
Interest Margins:
|
The initial applicable Interest Margin will be, for both the Revolving Credit Facility and the Term Loan Facility, determined based on the Closing Leverage Ratio (as defined in Annex B), with the initial Interest Margins for each facility to be the percentages set forth in the applicable level of the Pricing Grid below that corresponds to the Closing Leverage Ratio. From and after the date on which the Borrower will have delivered financial statements for the fiscal quarter ending December 26, 2010, the Interest Margin with respect to the each of the Term Loan Facility and the Revolving Credit Facility will be determined in accordance with the Pricing Grid set forth below. | |
Commitment Fee:
|
A commitment fee (the Commitment Fee ) will accrue on the unused amounts of the commitments under the Revolving Credit Facility. Swingline loans will, for purposes of the commitment fee calculations only, not be deemed to be a utilization of the Revolving Credit Facility. A Lender that is, and for so long as it is, a Defaulting Lender, shall not be entitled to receive a Commitment Fee in respect of its commitment under the Revolving Credit Facility and the amount of such Defaulting Lenders commitment under the Revolving Credit Facility will be deducted from in the aggregate commitments under the Revolving Credit Facility for purposes of calculating the Commitment Fee payable at any time by the Borrower. Such Commitment Fee will initially be determined based on the Closing Leverage Ratio, with the initial Commitment Fee to be the percentage set forth in the applicable level of the Pricing Grid below that corresponds to the Closing Leverage Ratio. From and after the date on which the Borrower will have delivered financial statements for the for the fiscal quarter ending December 26, 2010, the Commitment Fee will be determined in accordance with the Pricing Grid set forth below. All accrued Commitment Fees will be fully earned and due and payable quarterly in arrears (calculated on a 360-day basis) for the account of the Lenders under the Revolving Credit Facility and will accrue from the Closing Date. |
12
Letter of Credit Fees:
|
The Borrower will pay to the Administrative Agent, for the account of the Lenders under the Revolving Credit Facility, letter of credit participation fees equal to the Interest Margin for LIBOR Rate Loans under the Revolving Credit Facility, in each case, on the undrawn amount of all outstanding letters of credit. | |
Other Fees:
|
The Lead Arrangers and the Administrative Agent will receive such other fees as will have been agreed in a fee letter between them and the Borrower. | |
Pricing Grid:
|
The applicable Interest Margins and the Commitment Fee with respect to the Revolving Credit Facility shall be based on the Consolidated Total Leverage Ratio pursuant to the following grid: |
Interest | Interest | |||||||||||||
Margin for | Margin for | |||||||||||||
Consolidated Total Leverage | LIBOR Rate | Base Rate | Commitment | |||||||||||
Level | Ratio | Loans | Loans | Fee | ||||||||||
I |
Less than 1.00 to 1.00
|
2.75 | % | 1.75 | % | 0.500 | % | |||||||
II |
Greater than or equal
to 1.00 to 1.00 but
less than 1.50 to 1.00
|
3.00 | % | 2.00 | % | 0.625 | % | |||||||
III |
Greater than or equal
to 1.50 to 1.00
|
3.25 | % | 2.25 | % | 0.750 | % |
13
Closing and the making of the
initial extensions of credit under
the Senior Credit Facilities will be
subject to the satisfaction of
conditions precedent usual and
customary for facilities of this
type, including, without limitation:
|
authorizations shall have been
obtained and shall be in full force
and effect, (vi) there shall not
have occurred since December 27,
2009 any event or condition that has
had or that could reasonably be
expected to have a Material Adverse
Effect, (vii) there shall not be (A)
any pending or threatened
bankruptcy, or (B) any pending or
threatened litigation or other
proceeding that could reasonably be
expected to have a Material Adverse
Effect. (viii) all principal,
interest and other amounts
outstanding in connection with
existing debt of the Loan Parties
(other than outstanding letters of
credit under the Borrowers existing
credit facility, which will be
continued under the Financing
Documentation, and certain other
debt to be agreed) will have been
paid in full and all liens securing
such debt shall be released and (ix)
all fees and expenses due to the
Lenders, the Lead Arrangers, the
Administrative Agent and counsel to
the Lead Arrangers and the
Administrative Agent will have been
paid.
|
|
|
(b) The Lead Arrangers will have
received, in form and substance
reasonably satisfactory to the Lead
Arrangers, (i) copies of interim
unaudited financial statements for
each quarterly period ended since
the last audited financial
statements for which financial
statements are available and (ii)
pro
forma
consolidated financial
statements for the Borrower and its
subsidiaries for the four-quarter
period most recently ended prior to
the Closing Date for which financial
statements are available giving
pro
forma
effect to the Transactions
(prepared in accordance with
Regulation S-X under the Securities
Act of 1933, as amended, and all
other rules and regulations of the
SEC under such Securities Act, and
including other adjustments
reasonably acceptable to the Lead
Arrangers) and a
pro
forma
balance
sheet of the Borrower and its
subsidiaries as of the Closing Date
giving
pro
forma
effect to the
Transactions.
|
|
|
(c) The Lead Arrangers will be
reasonably satisfied that, after
giving
pro
forma
effect to the
Transactions, the ratio of total
debt of the Borrower and its
subsidiaries as of the Closing Date
to consolidated EBITDA of the
Borrower and its subsidiaries for
the four quarter period ended
September 26, 2010 (such ratio, the
Closing Leverage Ratio
), will not
exceed 1.75 to 1.00.
|
|
|
(d) The Loan Parties will have
provided the documentation and other
information to the Lenders that is
required by regulatory authorities
under applicable know your
customer and anti-money-laundering
rules and regulations, including,
without limitation, the Patriot Act.
|
|
|
(e) Prior to or simultaneously with
the closing of the Senior Credit
Facilities the Borrower shall have
consummated an underwritten initial
public offering (other than a public
offering
|
2
|
pursuant to a registration
statement on Form S-4 or S-8) of its
common stock (i) pursuant to an
effective registration statement
filed with the SEC in accordance
with the Securities Act and (ii)
resulting in gross primary proceeds
to the Borrower of at least $50
million.
|
3
Sincerely yours,
|
||||
/s/ James S. Gulmi | ||||
Sincerely yours,
|
||||
/s/ Fortunato N. Valenti | ||||