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These excerpts taken from the WEN 10-K filed Mar 14, 2008. Series A and B
Notes
On December
21, 2007, in connection with the Merger with Deerfield, the Company issued notes
to the sellers with a principal balance of $73.9 million ($48.9 million Series A
Notes and $25.0 million Series B Notes) recorded at fair value of $71.2 million,
net of a $2.7 million fair value discount that will be amortized into interest
expense using a method that approximates the effective yield method from
issuance date to maturity on December 21, 2012. Two employees of the Company
hold $0.8 million of the Series A Notes, one of these employees is also a member
of the Company’s board of directors (the “Board”). Additionally, another member
of the Board holds $19.5 million of the Series B Notes.
The holders
of the Series A and B Notes entered into an intercreditor agreement (together
with the note purchase agreements and related agreements, the “Note Documents”)
with respect to their relative rights, which agreement provides, among other
things, that the rights of the holders of the Series A Notes, including with
respect to repayment of the Series A Notes, will be subordinated to the rights
of the holders of the
- 33 -
DEERFIELD CAPITAL CORP. AND ITS
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Series B
Notes, unless a specified principal amount of Series B Notes is prepaid by June
30, 2008. If such principal amount is repaid by June 30, 2008, the rights of the
holders of the two series of Notes will be on a pari passu basis. The Notes are
guaranteed by DFR and certain of its subsidiaries and are secured by certain
equity interests owned by such guarantors as specified in the Note Documents.
The Note Documents include an event of default if the Company fails to pay
principal or interest due in respect of any material indebtedness or fails to
observe the terms of or perform in accordance with the agreements evidencing
such material indebtedness if the effect of such failure is to either permit the
holders of such indebtedness to declare such indebtedness to be due prior to its
stated maturity or make such indebtedness subject to a mandatory offer to
repurchase.
The Series A
and B Notes bear interest at a variable rate based upon LIBOR and an initial
additional margin of 5.0% per annum. Commencing 24 months after the issuance
date, such additional annual margin of the Series A and B Notes will increase by
increments of 0.5% per annum in each three-month period for eighteen months and
0.25% per annum for each three-month period thereafter.
The Note
Documents contain various restrictive covenants with respect to DFR and its
subsidiaries incurring additional indebtedness or guarantees, creating liens on
their assets and certain other matters and in each case subject to those
exceptions specified in the Note Documents. The Company will be obligated to
prepay the Series A and B Notes upon a Change of Control (as defined in the Note
Documents).
The Company
may redeem the Series A and B Notes before their maturity from time to time, in
whole or in part, at a redemption price equal to 100% of the aggregate
outstanding principal amount of the Series A and B Notes to be redeemed plus
accrued and unpaid interest. Any redemption of the Series A and B Notes shall be
made on a pro rata basis based on the aggregate principal amount of all
outstanding Series A and B Notes as of the date the Company provides notice of
such redemption.
Subject to
the terms of the intercreditor agreement, the Company must use a specified
portion of the net cash proceeds received by DFR or any of its subsidiaries from
any of the following transactions to make an offer to each holder to repurchase
such holder’s Series A and B Notes at an offer price of 100% of the aggregate
outstanding principal amount of the Series A and B Notes to be repurchased plus
accrued and unpaid interest to the date of repurchase: (i) an asset sale outside
the ordinary course of business or an event of loss, each as defined in the note
purchase agreements, (ii) a debt issuance as defined in the note purchase
agreements, (iii) an equity issuance as defined in the note purchase agreements,
or (iv) certain exercises of warrants, rights, or options to acquire capital
stock as defined in the note purchase agreements of DFR or any of its
subsidiaries, in each case subject to specified exceptions set forth in the Note
Documents.
In addition,
the Note Documents will require the Issuer and DFR to use their commercially
reasonable efforts to obtain a replacement debt facility, the proceeds of which
would be used to refinance the obligations under the Notes.
Series A and B Notes On December 21, 2007, in connection with the Merger with Deerfield, the Company issued notes to the sellers with a principal balance of $73.9 million ($48.9 million Series A Notes and $25.0 million Series B Notes) recorded at fair value of $71.2 million, net of a $2.7 million fair value discount that will be amortized into interest expense using a method that approximates the effective yield method from issuance date to maturity on December 21, 2012. Two employees of the Company hold $0.8 million of the Series A Notes, one of these employees is also a member of the Company’s board of directors (the “Board”). Additionally, another member of the Board holds $19.5 million of the Series B Notes. The holders of the Series A and B Notes entered into an intercreditor agreement (together with the note purchase agreements and related agreements, the “Note Documents”) with respect to their relative rights, which agreement provides, among other things, that the rights of the holders of the Series A Notes, including with respect to repayment of the Series A Notes, will be subordinated to the rights of the holders of the - 33 - DEERFIELD CAPITAL CORP. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Series B Notes, unless a specified principal amount of Series B Notes is prepaid by June 30, 2008. If such principal amount is repaid by June 30, 2008, the rights of the holders of the two series of Notes will be on a pari passu basis. The Notes are guaranteed by DFR and certain of its subsidiaries and are secured by certain equity interests owned by such guarantors as specified in the Note Documents. The Note Documents include an event of default if the Company fails to pay principal or interest due in respect of any material indebtedness or fails to observe the terms of or perform in accordance with the agreements evidencing such material indebtedness if the effect of such failure is to either permit the holders of such indebtedness to declare such indebtedness to be due prior to its stated maturity or make such indebtedness subject to a mandatory offer to repurchase. The Series A and B Notes bear interest at a variable rate based upon LIBOR and an initial additional margin of 5.0% per annum. Commencing 24 months after the issuance date, such additional annual margin of the Series A and B Notes will increase by increments of 0.5% per annum in each three-month period for eighteen months and 0.25% per annum for each three-month period thereafter. The Note Documents contain various restrictive covenants with respect to DFR and its subsidiaries incurring additional indebtedness or guarantees, creating liens on their assets and certain other matters and in each case subject to those exceptions specified in the Note Documents. The Company will be obligated to prepay the Series A and B Notes upon a Change of Control (as defined in the Note Documents). The Company may redeem the Series A and B Notes before their maturity from time to time, in whole or in part, at a redemption price equal to 100% of the aggregate outstanding principal amount of the Series A and B Notes to be redeemed plus accrued and unpaid interest. Any redemption of the Series A and B Notes shall be made on a pro rata basis based on the aggregate principal amount of all outstanding Series A and B Notes as of the date the Company provides notice of such redemption. Subject to the terms of the intercreditor agreement, the Company must use a specified portion of the net cash proceeds received by DFR or any of its subsidiaries from any of the following transactions to make an offer to each holder to repurchase such holder’s Series A and B Notes at an offer price of 100% of the aggregate outstanding principal amount of the Series A and B Notes to be repurchased plus accrued and unpaid interest to the date of repurchase: (i) an asset sale outside the ordinary course of business or an event of loss, each as defined in the note purchase agreements, (ii) a debt issuance as defined in the note purchase agreements, (iii) an equity issuance as defined in the note purchase agreements, or (iv) certain exercises of warrants, rights, or options to acquire capital stock as defined in the note purchase agreements of DFR or any of its subsidiaries, in each case subject to specified exceptions set forth in the Note Documents. In addition, the Note Documents will require the Issuer and DFR to use their commercially reasonable efforts to obtain a replacement debt facility, the proceeds of which would be used to refinance the obligations under the Notes. | EXCERPTS ON THIS PAGE:
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