Exhibit 4.22
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
ELXSI,
ELXSI (NEW HAMPSHIRE), INC., ▇▇▇▇▇▇▇▇'▇ RESTAURANTS, LLC,
▇▇▇▇▇▇▇▇'▇ HOLDINGS COMPANY, INC., AND
▇▇▇▇▇▇▇▇'▇ FAMILY RESTAURANTS, INC.
as Borrowers,
and
▇▇▇▇▇ FARGO FOOTHILL, INC.
as Lender
Dated as of January 30, 2004
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of January 30, 2004, by and among ▇▇▇▇▇ FARGO
FOOTHILL, INC., a California corporation ("Lender") and assignee of Bank of
America, N.A., ELXSI, a California corporation ("Parent"), ELXSI (NEW
HAMPSHIRE), INC., a Delaware corporation ("ELXSI NH"), ▇▇▇▇▇▇▇▇'▇ RESTAURANTS,
LLC, a Delaware limited liability company ("▇▇▇▇▇▇▇▇'▇ LLC"), ▇▇▇▇▇▇▇▇'▇
HOLDINGS COMPANY, INC., a Delaware corporation ("Holdings"), and ▇▇▇▇▇▇▇▇'▇
FAMILY RESTAURANTS, INC., a Delaware corporation ("▇▇▇▇▇▇▇▇'▇"; Parent, ELXSI
NH, ▇▇▇▇▇▇▇▇'▇ LLC, Holdings and ▇▇▇▇▇▇▇▇'▇ are referred to hereinafter each
individually as a "Borrower", and individually and collectively, jointly and
severally, as the "Borrowers").
W I T N E S S E T H:
WHEREAS, Parent and Bank of America, N.A. (as successor by merger to
Bank of America Illinois, formerly Continental Bank, and referred to hereinafter
as "Bank") previously entered into that certain Loan and Security Agreement
dated as of July 1, 1991 (as previously amended, the "Original Loan Agreement")
whereunder Bank agreed to extend loans and other financial accommodations from
time to time to Parent;
WHEREAS, Parent and Bank also previously entered into that certain
Amended and Restated Loan and Security Agreement dated as of October 30, 1992,
as amended by the First Amendment to Amended and Restated Loan and Security
Agreement dated as of February 4, 1993, the Second Amendment to Amended and
Restated Loan and Security Agreement dated as of December 6, 1994, the Third
Amendment to Amended and Restated Loan and Security Agreement dated as of
January 25, 1995, the Fourth Amendment to Amended and Restated Loan and Security
Agreement dated as of May 5, 1995, and the Fifth Amendment to Amended and
Restated Loan and Security Agreement dated as of July 3, 1995 (as so amended,
the "First Restated Loan Agreement") whereunder Parent and Bank amended and
restated the Original Loan Agreement;
WHEREAS, Parent and Bank also previously entered into that certain
Amended and Restated Loan and Security Agreement dated as of June 27, 1996 (the
"Second Restated Loan Agreement") whereunder Parent and Bank amended and
restated the First Restated Loan Agreement;
WHEREAS, Parent and Bank subsequently entered into that certain Amended
and Restated Loan and Security Agreement dated December 30, 1996, as amended by
the First Amendment to Amended and Restated Loan and Security Agreement dated
June 30, 1997, the Second Amendment to Amended and Restated Loan and Security
Agreement dated as of September 27, 1997, the Third Amendment to Amended and
Restated Loan and Security Agreement dated as of March 25, 1999, the Fourth
Amendment to Amended and Restated Loan and Security Agreement dated as of April
1, 1999, the Fifth Amendment to Amended and Restated Loan and Security Agreement
dated as of December 29, 2000, the Sixth Amendment to Amended and Restated Loan
and Security Agreement dated as of May 15, 2001, the Seventh Amendment to
Amended and Restated Loan and Security Agreement dated as of August 23, 2001,
and the Eighth Amendment to Amended and Restated Loan and Security Agreement
dated as of November 14, 2001 (as so amended, the "Third Restated Loan
Agreement").
WHEREAS, Parent, Holdings, ▇▇▇▇▇▇▇▇'▇ and Lender (or Bank) entered into
that certain Amended and Restated Loan and Security Agreement dated as of April
22, 2002, as amended by that certain First Amendment to Amended and Restated
Loan and Security Agreement dated as of August 5, 2002, that certain Second
Amendment to Amended and Restated Loan and Security Agreement dated as of
December 30, 2002, that certain Third Amendment to Amended and Restated Loan and
Security Agreement dated as of January 31, 2003, that certain Fourth Amendment
to Amended and Restated Loan and Security Agreement dated as of March 31, 2003,
that certain Fifth Amendment to Amended and Restated Loan and Security Agreement
dated as of June 30, 2003, that certain Sixth Amendment to Amended and Restated
Loan and Security Agreement dated as of August 29, 2003, that certain Amended
and Restated Seventh Amendment to Amended and Restated Loan and Security
Agreement dated as of September 30, 2003, that certain Eighth Amendment to
Amended and Restated Loan and Security Agreement dated as of December 1, 2003,
and that certain Ninth Amendment to Amended and Restated Loan and Security
Agreement dated as of January 15, 2004 (as amended, restated, supplemented or
otherwise modified through the date hereof, the "Existing Loan Agreement");
WHEREAS, on June 18, 2003, Bank assigned all of its right, title and
interest in and to the Existing Loan Agreement and Related Agreements (as
defined in the Existing Loan Agreement) and Supplemental Documentation (as
defined in the Existing Loan Agreement) to Lender;
WHEREAS, since the assignment of the Existing Loan Agreement, Related
Agreements and Supplemental Documentation from Bank to Lender: (1) Parent has
formed ELXSI NH, its wholly-owned subsidiary; (2) Parent and ELXSI NH have
formed ▇▇▇▇▇▇▇▇'▇ LLC, of which ELXSI NH owns 99% of its Ordinary Voting Units
and Parent owns 1% of its Ordinary Voting Units; and (3) Holdings has become a
wholly-owned subsidiary of ▇▇▇▇▇▇▇▇'▇ LLC; and
WHEREAS, Borrowers and Lender now desire to amend and restate the
Existing Loan Agreement to, among other things, restate the Existing Loan
Agreement to reflect certain amendments thereto;
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Account" means an account (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.
"Account Debtor" means any Person who is obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Administrative Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.4(c).
"Administrative Borrower" has the meaning set forth in Section
16.11.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of Section 7.13 hereof: (a) any Person
which owns directly or indirectly 10% or more of the Stock having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interests
of a Person (other than as a limited partner of such Person) shall be deemed an
Affiliate of such Person, (b) each director (or comparable manager) of a Person
shall be deemed to be an Affiliate of such Person, and (c) each partnership or
joint venture in which a Person is a partner or joint venturer shall be deemed
an Affiliate of such Person.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Multiplier" means, for any date of determination, the
number set forth below opposite the applicable period in which such date falls:
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Applicable Multiplier Applicable Period
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2.75 Closing Date through and including June 29, 2004
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2.60 June 30, 2004, through and including December 30, 2004
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2.25 December 31, 2004, through and including June 29, 2005
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2.00 June 30, 2005, and thereafter
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"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to the sum of (a) 0.10% of the then Maximum
Revolver Amount times the number of months and partial months remaining until
the Maturity Date, plus (b) 0.10% of the unpaid principal amount of Term Loan A
on the day preceding the date of determination times the number of months and
partial months remaining until the Maturity Date, plus (c) 0.10% of the unpaid
principal amount of Term Loan B on the day preceding the date of determination
times the number of months and partial months remaining until the Term Loan B
Maturity Date.
"Asset Sales" means the Brockton Sale and any other sale of
Borrowers' assets not in the ordinary course of business.
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any officer or employee of Administrative
Borrower.
"Bank Product" means any financial accommodation extended to
Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to this Agreement) including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services or
(g) transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into from
time to time by Administrative Borrower or its Subsidiaries with a Bank Product
Provider in connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to any Bank Product Provider pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
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that Administrative Borrower or its Subsidiaries are obligated to reimburse to
Lender as a result of Lender purchasing participations from, or executing
indemnities or reimbursement obligations to, a Bank Product Provider with
respect to the Bank Products provided by such Bank Product Provider to
Administrative Borrower or its Subsidiaries.
"Bank Product Provider" means ▇▇▇▇▇ Fargo or any of its Affiliates.
"Bank Product Reserve" means, as of any date of determination, the
lesser of (a) $50,000.00, and (b) the amount of reserves that Lender has
established (based upon the Bank Product Providers' reasonable determination of
the credit exposure in respect of then extant Bank Products) in respect of Bank
Products then provided or outstanding.
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Base Rate" means, the rate of interest announced, from time to
time, within ▇▇▇▇▇ Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Margin" means 3.5 percentage points.
"Base Rate Term Loan A Margin" means 3.5 percentage points.
"Base Rate Term Loan B Margin" means 6.0 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"▇▇▇▇▇▇▇▇'▇" has the meaning set forth in the preamble to this
Agreement.
"▇▇▇▇▇▇▇▇'▇ Business" means the portion of Borrowers' business
conducted by ▇▇▇▇▇▇▇▇'▇.
"▇▇▇▇▇▇▇▇'▇ EBITDA" means, with respect to any fiscal period,
▇▇▇▇▇▇▇▇'▇ net earnings (or loss), minus extraordinary gains, gains on real
estate sales and interest income, plus non-recurring extraordinary losses,
losses on real estate sales, interest expense, income taxes, and depreciation
and amortization for such period, as determined in accordance with GAAP. For
purposes of this definition, net earnings (or loss) shall be determined without
deducting any fees paid to the Lender by ▇▇▇▇▇▇▇▇'▇ pursuant to Section 2.11(c)
and (e).
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"▇▇▇▇▇▇▇▇'▇ LLC" has the meaning set forth in the preamble to this
Agreement.
"▇▇▇▇▇▇▇▇'▇ Subordinated Note" means, collectively, the Senior
Subordinated Promissory Note, dated December 30, 2000, in the face principal
amount of $20,000,000 and the 15% Subordinated Promissory Note, dated December
30, 2000, in the face principal amount of $25,000,000, each issued to Parent by
▇▇▇▇▇▇▇▇'▇ and as the same may be amended, supplemented or otherwise modified
from time to time.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or ELXSI Corporation, as the case may be, or any committee
thereof duly authorized to act on behalf of the board of directors (or
comparable managers).
"Books" means all of Administrative Borrower's and its Subsidiaries'
now owned or hereafter acquired books and records (including all of their
Records indicating, summarizing, or evidencing their assets (including the
Collateral) or liabilities, all of Administrative Borrower's and its
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrower Collateral" means all of each Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims,
(d) all of its Deposit Accounts,
(e) all of its Equipment,
(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its securities
and Securities Accounts),
(i) all of its Negotiable Collateral,
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(j) money or other assets of such Borrower that now or hereafter
come into the possession, custody, or control of the Lender, and
(k) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loans).
"Borrowing Base" means, as of any date of determination, the result
(rounded to the nearest $50,000) of (a) the Applicable Multiplier times EBITDA
for the twelve-month period ending on the last day of the most recent month for
which Borrowers have provided Lender a Borrowing Base calculation pursuant to
Section 6.2 hereof, minus (b) the unpaid principal balance of Term Loan A.
"Brockton Sale" means the sale by ▇▇▇▇▇▇▇▇'▇ of the real property
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, for a sale price of not
less than $950,000.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the state of
California.
"Cadmus Notes" shall have the meaning set forth in Section 6.17(a)
of this Agreement.
"Capital Expenditures" means, with respect to any Person for any
period, the sum of (a) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that are capital expenditures as determined in
accordance with GAAP, whether such expenditures are paid in cash or financed,
and (b) to the extent not covered by clause (a), the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or capitalized assets of, or the Capital
Stock of, any other Person.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.
"Capital Stock" means, (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, units, participations, rights or other equivalents (however
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designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or ▇▇▇▇▇'▇ Investor Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1, from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) demand Deposit Accounts maintained with any
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any individual bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
agreements, in form and substance satisfactory to Lender, each of which is among
Administrative Borrower or one of its Subsidiaries, Lender, and one of the Cash
Management Banks.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Change of Control" means that (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 25%, or more, of the Stock of
ELXSI Corporation or the Parent having the right to vote for the election of
members of the Board of Directors, or (b) a majority of the members of the Board
of Directors do not constitute Continuing Directors, or (c) any Borrower ceases
to own, directly or indirectly, and control 100% of the outstanding Stock of
each of its Subsidiaries extant as of the Closing Date.
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"Closing Date" means the date on which Lender sends Administrative
Borrower a written notice that each of the conditions precedent set forth in
Section 3.1 either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the one (1) -year period ending December 31, 2004, on a month by
month basis, in form and substance (including as to scope and underlying
assumptions) satisfactory to Lender.
"Code" means the California Uniform Commercial Code, as in effect
from time to time.
"Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Administrative Borrower or its
Subsidiaries in or upon which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Administrative Borrower's or its Subsidiaries' Books,
Equipment or Inventory, in each case, in form and substance satisfactory to
Lender.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Commercial Tort Claim Assignment" has the meaning set forth in
Section 4.4(b).
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to
Lender.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Lender, executed and delivered by Administrative Borrower or one
of its Subsidiaries, Lender, and the applicable securities intermediary with
respect to a Securities Account or a bank with respect to a Deposit Account.
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"Copyright Security Agreement" means the Copyright Security
Agreement by and between Parent and Bank (as predecessor in interest to Lender),
which was executed in connection with the First Restated Loan Agreement, as it
may be amended, restated, supplemented or otherwise modified from time to time,
and any other copyright security agreement executed and delivered by a Borrower
for the benefit of Lender, the form and substance of which is satisfactory to
Lender.
"Cues Business" means the portion of Borrowers' business which is
conducted by the Cues division of Parent.
"Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Deposit Account" means any deposit account (as that term is defined
in the Code).
"Designated Account" means the Deposit Account of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Lender regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Lender.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains,
gains on real estate sales and interest income, plus non-recurring extraordinary
losses, losses on real estate sales, interest expense, income taxes, and
depreciation and amortization for such period, as determined in accordance with
GAAP. For purposes of this definition, net earnings (or loss) shall be
determined without deducting any fees paid by any of the Borrowers to Lender
pursuant to Section 2.11(c) and (e).
"ELXSI NH" has the meaning set forth in the preamble to this
Agreement.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
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assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of Lender, (e) so long
as no Event of Default has occurred and is continuing, any other Person approved
by Administrative Borrower (which approval of Administrative Borrower shall not
be unreasonably withheld, delayed, or conditioned), and (f) during the
continuation of an Event of Default, any other Person approved by Lender.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower, any Subsidiary of a Borrower, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or (c)
from or onto any facilities which received Hazardous Materials generated by any
Borrower, any Subsidiary of a Borrower, or any of their predecessors in
interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on any Borrower or any
Subsidiary of a Borrower, relating to the environment, employee health and
safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 USCss.1251 et seq; the Toxic Substances Control Act,
15 USC,ss. 2601 et seq; the Clean Air Act, 42 USCss.7401 et seq.; the Safe
Drinking Water Act, 42 USC.ss.3803 et seq.; the Oil -- --- -- ---- -- ---- --
---- Pollution Act of 1990, 33 ▇▇▇.▇▇. 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 ▇▇▇.▇▇. 11001 et seq.; the Hazardous
Material Transportation Act, 49 USCss. 1801 et seq.; and the -- ---- -- ---- --
---- Occupational Safety and Health Act, 29 USC.ss.651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended -- ---- from time
to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
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"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower or a Subsidiary of a Borrower under IRC Section 414(b), (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower or a Subsidiary of a Borrower under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which a Borrower or a Subsidiary of a Borrower is a member
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Borrower or a Subsidiary of a Borrower and whose employees
are aggregated with the employees of a Borrower or a Subsidiary of a Borrower
under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Loan Agreement" has the meaning set forth in the recitals
of this Agreement.
"Family Member" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, the ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Irrevocable Trust I
and, with respect to any individual, trusts or other estate planning vehicles
established for the benefit of such individual or Family Members of such
individual and in respect of which such individual serves as trustee or in a
similar capacity.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
12
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means general intangibles (as that term is
defined in the Code), including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Holdings" has the meaning set forth in the preamble to this
Agreement.
"Hedge Agreement" means any and all agreements or documents now
existing or hereafter entered into by Administrative Borrower or its
Subsidiaries that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging
Administrative Borrower's or its Subsidiaries' exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
13
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under Capital Leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in accordance
with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intercompany Permitted Indebtedness" has the meaning set forth in
Section 7.1(g).
"Intercompany Subordination Agreement" means an intercompany
subordination agreement executed and delivered by ELXSI Corporation, the
corporate parent of Parent, each Borrower and Lender, the form and substance of
which are satisfactory to Lender.
"Inventory" means inventory (as that term is defined in the Code).
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, relocation and similar advances to officers and employees of such Person
made in the ordinary course of business, and (b) bona fide Accounts arising in
the ordinary course of business consistent with past practices), purchases or
other acquisitions of Indebtedness, Stock, or all or substantially all of the
assets of such other Person (or of any division or business line of such other
Person), and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.
14
"Investment Property" means investment property (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"L/C" means (a) a letter of credit issued by Lender on the
application of a Borrower and (b) either of the following letters of credit
issued by ▇▇▇▇▇ Fargo Bank, N.A., as renewed, extended, increased or replaced,
from time to time:
---------------------------------------------------------------------------------------------------------------------
L/C Number Issue Date Beneficiary Account Party Face Amount Expiry Date
---------------------------------------------------------------------------------------------------------------------
NZS508055 12/24/03 Insurance Company of North ELXSI $ 217,240.00 6/30/04
America
---------------------------------------------------------------------------------------------------------------------
NZS493855 8/19/03 United States Fire Insurance ELXSI Corporation d/b/a $ 455,000.00 7/01/04
Company ▇▇▇▇▇▇▇▇'▇ Family Restaurants,
Inc.
---------------------------------------------------------------------------------------------------------------------
NZS495321 9/09/03 United States Fire Insurance ELXSI Corporation d/b/a $ 200,000.00 7/01/04
Company ▇▇▇▇▇▇▇▇'▇ Family Restaurants,
Inc.
---------------------------------------------------------------------------------------------------------------------
NZS508796 1/08/04 United States Fire Insurance ELXSI Corporation d/b/a $2,100,000.00 7/01/04
Company ▇▇▇▇▇▇▇▇'▇ Family Restaurants,
Inc.
---------------------------------------------------------------------------------------------------------------------
TOTAL $2,972,240.00
---------------------------------------------------------------------------------------------------------------------
"L/C Disbursement" means a payment made by Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by a Borrower or its Subsidiaries
under any of the Loan Documents that are paid, advanced, or incurred by Lender,
(b) fees or charges paid or incurred by Lender in connection with Lender's
transactions with Borrowers or their Subsidiaries, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by
Lender in the disbursement of funds to or for the account of Borrowers (by wire
transfer or otherwise), (d) charges paid or incurred by Lender resulting from
the dishonor of checks, (e) reasonable costs and expenses paid or incurred by
Lender to correct any default or enforce any provision of the Loan Documents, or
15
in gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Lender related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by Lender in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or Lender's relationship with any Borrower or any Subsidiary of a
Borrower, (h) Lender's reasonable costs and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Lender's reasonable costs and expenses
(including attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning any
Borrower or any Subsidiary of a Borrower or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"Lender-Related Person" means Lender, together with its Affiliates,
officers, directors, employees, attorneys, and agents.
"Lender's Account" means the account identified on Schedule L-1.
"Lender's Liens" means the Liens granted by Borrowers or their
Subsidiaries to Lender under this Agreement or the other Loan Documents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"Leverage Ratio" means for the twelve-month period ending on the
last day of any month, the ratio of (a) the unpaid principal amount of Term Loan
A and unpaid principal amount of Revolver Usage, as determined on such day, to
(b) EBITDA for such period.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
16
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements,
the Cash Management Agreements, the Control Agreements, the Copyright Security
Agreement, the Disbursement Letter, the Intercompany Subordination Agreement,
the Letters of Credit, the Mortgages, the Officers' Certificate, the Patent
Security Agreement, the Stock Pledge Agreement, the Trademark Security
Agreement, and any other agreement entered into, now or in the future, by any
Borrower and Lender in connection with this Agreement.
"Local Bank Account" has the meaning set forth in Section 4.7.
"Management Agreement" means the Management Agreement dated as of
September 25, 1989, as amended, between Parent, as assignee of ELXSI
Corporation, and Cadmus Corporation, a Massachusetts corporation, as assignee of
▇▇▇▇▇▇ Management Incorporated (assignee of Winchester National, Inc. d/b/a
▇▇▇▇▇▇ & Company), as further amended, supplemented or otherwise modified from
time to time.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers and their Subsidiaries, taken as
a whole, (b) a material impairment of a Borrower's or a Subsidiary of Borrower's
ability to perform its obligations under the Loan Documents to which it is a
party or of Lender's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Lender's Liens with respect to the Collateral as a result of an action or
failure to act on the part of a Borrower or a Subsidiary of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $8,000,000, as such amount may be
reduced from time to time in accordance with Section 2.1(g).
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, and amendments to previously
executed mortgages, deeds of trust, or deeds to secure debt, executed and
delivered by a Borrower or a Subsidiary of a Borrower in favor of Lender, in
form and substance satisfactory to Lender, that encumber the Real Property
Collateral and the related improvements thereto.
17
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
"Obligations" means (a) all loans (including the Term Loans),
Advances, debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrowers' Loan Account
pursuant hereto), obligations (including indemnification obligations), fees,
charges, costs, Lender Expenses (including any fees or expenses that, but for
the commencement of an Insolvency Proceeding, would have accrued), lease
payments, guaranties, covenants, and duties of any kind and description owing by
Borrowers to Lender pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.
"Officers' Certificate" means the certificate of officers submitted
to Lender by Administrative Borrower.
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(d).
"Patent Security Agreement" means the Patent Security Agreement by
and between Parent and Bank (as predecessor in interest to Lender), which was
executed in connection with the First Restated Loan Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, and any
other patent security agreement executed and delivered by a Borrower for the
benefit of Lender, the form and substance of which is satisfactory to Lender.
"Permitted Discretion" means a determination made in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment.
"Permitted Dispositions" means (a) sales or other dispositions of
Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
18
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business, and
(e) the Brockton Sale.
"Permitted Holder" means ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, the
Family Members for each, the Family Trusts for each and the Affiliates of each
of the foregoing.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments made by a Borrower in ELXSI Corporation (i)
to the extent of income tax obligations attributable to the taxable income of
such Borrower, or (ii) not in excess of $450,000, in the aggregate, to pay
liabilities arising in connection with ELXSI Corporation's stock splits in June,
1999, (e) Investments by a Borrower in another Borrower, (f) Investments
received in settlement of amounts due to a Borrower or any Subsidiary of a
Borrower effected in the ordinary course of business or owing to a Borrower or
any Subsidiary of a Borrower as a result of Insolvency Proceedings involving an
Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a
Borrower or any Subsidiary of a Borrower, and (g) Investments outstanding on the
date hereof and listed on Schedule 7.12.
"Permitted Liens" means (a) Liens held by Lender, whether created
under this Agreement or otherwise, (b) Liens for unpaid taxes that either (i)
are not yet delinquent, or (ii) do not constitute an Event of Default hereunder
and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase money Liens to
the extent that such Liens secure Permitted Purchase Money Indebtedness and so
long as such Lien attaches only to the asset purchased or acquired and the
proceeds thereof, (f) the interests of lessors under Capital Leases relating to
restaurants owned by any of the Borrowers, provided, however, that Borrowers
must obtain the prior written consent of Lender for any Capital Leases entered
into after the Closing Date, (g) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Borrowers' business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (i) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (j) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (k) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (l) Liens disclosed in the ALTA Title Loan Insurance
Policies delivered pursuant to this Agreement and not objected to within thirty
(30) days after receipt thereof, (m) banker's liens arising by operation of law
in connection with a Deposit Account or a Securities Account, and (n) Liens with
respect to any Real Property, easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation thereof.
19
"Permitted Protest" means the right of Administrative Borrower or
any of its Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), levy, assessment, taxes (other than payroll taxes or taxes
that are the subject of a United States federal tax lien), or rental payment,
provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Administrative Borrower or any
of its Subsidiaries, as applicable, in good faith, and (c) Lender is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Lender's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred for the acquisition of
personal property after the Closing Date in an aggregate amount not in excess of
$150,000 for each twelve-month period following the Closing Date.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Projections" means Parent's forecasted consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, and (c) cash
flow statements, all prepared on a consistent basis with Parent's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations) incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower or a Subsidiary of any Borrower and
the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
a Borrower or a Subsidiary of a Borrower.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
20
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Solvent" means, with respect to any Person on a particular date,
that, at fair valuations, the sum of such Person's assets is greater than all of
such Person's debts.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a pledge agreement, in form and
substance satisfactory to Lender, executed and delivered by each Borrower for
the benefit of Lender and a Pledge Agreement between ELXSI Corporation and
Lender whereby ELXSI Corporation pledges to Lender all capital stock issued by
Parent.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Taxes" has the meaning set forth in Section 16.5.
"Term Loan A" has the meaning set forth in Section 2.2.
"Term Loan B" has the meaning set forth in Section 2.2.
"Term Loans" means Term Loan A and Term Loan B.
21
"Term Loan A Amount" means $4,500,000.
"Term Loan B Amount" means $2,500,000.
"Term Loan B Maturity Date" means December 31, 2004.
"Trademark Security Agreement" means the Trademark Security
Agreement executed and delivered by any Borrower for the benefit of Bank (as
predecessor in interest to Lender), which was executed in connection with the
First Restated Loan Agreement, as it may be amended, restated, supplemented or
otherwise modified from time to time, and any other trademark security agreement
executed and delivered by a Borrower for the benefit of Lender, the form and
substance of which is satisfactory to Lender.
"UCC Filing Authorization Letter" means a letter duly executed by
each Borrower authorizing Lender to file appropriate financing statements on
Form UCC-1 without the signature of such Borrower, as applicable, in such office
or offices as may be necessary or, in the opinion of Lender, desirable to
perfect the security interests purported to be created by the Loan Documents.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Lender for the benefit of any of the Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"United States" means the United States of America.
"Voidable Transfer" has the meaning set forth in Section 16.8.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
22
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to the repayment in full of the
Obligations shall mean the repayment in full in cash of all Obligations other
than contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and are not required to be repaid or cash
collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
1.6 Effect of Restatement. This Agreement shall, except as otherwise
expressly set forth herein, supersede the Existing Loan Agreement, including,
without limitation, the Note evidencing Revolving Loans (as defined in the
Existing Loan Agreement) outstanding under the Existing Loan Agreement as of the
Closing Date from and after the Closing Date with respect to the transactions
hereunder and thereunder. The parties hereto acknowledge and agree, however,
that (i) this Agreement and all other Loan Documents executed and delivered
herewith do not constitute a novation, payment and reborrowing or termination of
the Liabilities (as defined in the Existing Loan Agreement) under the Existing
Loan Agreement and the other Related Agreements (as defined in the Existing Loan
Agreement) as in effect prior to the Closing Date, (ii) such Liabilities are in
all respects continuing with only the terms being modified as provided in this
Agreement and the other Loan Documents, (iii) all unpaid principal, accrued
interest and fees under the Existing Loan Agreement shall remain outstanding and
be paid in accordance with the terms of this Agreement, (iv) the liens and
security interests in favor of Lender securing payment of such Liabilities are
in all respects continuing and in full force and effect with respect thereto and
(v) all references in the other Related Agreements to any loan or credit
agreement executed by and between any of the Borrowers and Lender, or any of
Lender's predecessors in interest, shall be deemed to refer without further
amendment to this Agreement.
23
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
-----------------
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed an amount
equal to the lesser of (i) the Maximum Revolver Amount, or (ii) the Borrowing
Base less the Letter of Credit Usage.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Lender shall have the right to establish reserves in such amounts, and with
respect to such matters, as Lender in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that any of the Borrowers is required to pay under any
Section of this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has previously failed to pay
timely, (ii) amounts owing by any of the Borrowers or its Subsidiaries to any
Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than any existing Permitted Lien set forth on Schedule P-1 which has
priority over the Lender's Liens), which Lien or trust, in the Permitted
Discretion of Lender, likely would have a priority superior to the Lender's
Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral, (iii) amounts expected to be paid to
ELXSI Corporation (by dividend or otherwise) to provide funds to pay liabilities
of ELXSI Corporation arising in connection with its reverse stock splits in
June, 1999, in an aggregate amount not in excess of the lesser of $450,000 or
the amount of dividends expected to be paid within the next twelve months
(currently estimated to be $112,000 for 2004), and (iv) a reserve in the amount
by which the sum of (1) the Maximum Revolver Amount, plus (2) the unpaid
principal balance of Term Loan A, plus (3) the unpaid principal balance of Term
Loan B, exceeds the product of 3.30 times EBITDA for the twelve-month period
ending on the last day of the most recently ended calendar month (rounding such
product to the nearest $100,000) for which Borrowers have provided financial
statements to Lender in accordance with Section 6.3(a).
(c) Lender shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed the lesser of (i) the Maximum Revolver Amount, or (ii) the Borrowing
Base less the Letter of Credit Usage.
(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
24
(e) Borrowers and Lender acknowledge the making of Advances which
are outstanding on the Closing Date in accordance with the terms of the Existing
Loan Agreement and agree that, from and after the Closing Date, such Advances
shall continue to be outstanding pursuant to the terms and conditions of this
Agreement.
(f) Borrowers jointly and severally promise to pay to the order of
the Lender all unpaid principal of, and unpaid interest on, all Advances on the
earlier of the Maturity Date or the date of termination of this Agreement,
whether by its terms, by prepayment, or by acceleration.
(g) Upon at least ten days' prior written notice to Lender,
Borrowers may permanently reduce the Maximum Revolver Amount, provided, as
follows:
(i) any such reduction shall be in an aggregate amount of not
less than $250,000, or if greater, an integral multiple of $50,000;
(ii) no such reduction shall cause the Maximum Revolver Amount
to be reduced below the Revolver Usage; and
(iii) each such notice shall be accompanied by payment of a
prepayment fee equal to 0.10% of the amount of the permanent
reduction times the number of months and partial months remaining
until the Maturity Date.
2.2 Term Loans.
----------
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date Lender agrees to convert a portion of the Advances outstanding on
the Closing Date to a term loan ("Term Loan A") to Borrowers in an amount equal
to the Term Loan A Amount. Borrowers, jointly and severally, promise to pay to
the order of Lender the Term Loan A Amount as follows: (i) in consecutive
monthly principal payments in the amount of $125,000 each due on the first day
of each month, commencing ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) in additional principal payments
on the fifteenth day of each February, May, August, and November, commencing May
15, 2004, in the amount, if any, that (A) the unpaid principal balance of Term
Loan A on the last day of the most recently ended calendar quarter, exceeds (B)
the amount by which (x) the product of the Applicable Multiplier for such date
times EBITDA for the twelve-month period ending on the last day of the most
recently ended calendar quarter (rounding such product to the nearest $100,000),
exceeds (y) the Maximum Revolver Amount, and (iii) all unpaid principal of, and
interest on, Term Loan A shall be paid in full on the earlier of the Maturity
Date or the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration; provided, that if at any time, the Maximum
Revolver Amount exceeds the Applicable Multiplier times EBITDA for the
twelve-month period ending on the last day of the most recently ended calendar
quarter (rounding such product to the nearest $100,000), then all unpaid
principal of, and interest on, Term Loan A shall be immediately due and payable.
25
(b) Subject to the terms and conditions of this Agreement, on the
Closing Date Lender agrees to convert a portion of the Advances outstanding on
the Closing Date to a term loan ("Term Loan B") to Borrowers in an amount equal
to the Term Loan B Amount. Borrowers, jointly and severally, promise to pay to
the order of Lender the Term Loan B Amount as follows: (i) in principal payments
on the fifteenth day of May, August, and November, 2004, commencing May 15,
2004, in the amount, if any, that (A) the unpaid principal balance of Term Loan
B on the last day of the most recently ended calendar quarter, exceeds (B) the
amount by which (x) the product of 3.30 times EBITDA for the twelve-month period
ending on the last day of the most recently ended calendar quarter (rounding
such product to the nearest $100,000), exceeds the sum of (1) the Maximum
Revolver Amount, plus (2) the unpaid principal balance of Term Loan A, and (ii)
all unpaid principal of, and accrued, but unpaid interest on, Term Loan B shall
be paid in full on the earlier of the Term Loan B Maturity Date or the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration; provided, that if at any time, the sum of the Maximum Revolver
Amount plus the unpaid principal balance of Term Loan A exceeds the product of
3.30 times EBITDA for the twelve-month period ending on the last day of the most
recently ended calendar quarter (rounding such product to the nearest $100,000),
then all unpaid principal of, and interest on, Term Loan B shall be immediately
due and payable.
(c) All amounts outstanding under the Term Loans shall constitute
Obligations.
2.3 Borrowing Procedures and Settlements.
------------------------------------
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Lender (which
notice must be received by Lender no later than 10:00 a.m. (California time) on
a Business Day specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day. At Lender's election, in
lieu of delivering the above-described written request, any Authorized Person
may give Lender telephonic notice of such request by the required time. In such
circumstances, Borrowers agree that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such notice and the failure to
provide such written confirmation shall not affect the validity of the request.
(b) Making of Advances. If Lender has received a timely request for
a Borrowing in accordance with the provisions hereof, and subject to the
satisfaction of the applicable terms and conditions set forth herein, Lender
shall make the proceeds of such Advance available to Borrowers on the applicable
Funding Date by transferring available funds equal to such proceeds to
Administrative Borrower's Designated Account. Each Advance shall be in a minimum
principal amount of $25,000 and an integral multiple of $5,000 in excess of that
amount, except Advances made by Lender to pay obligations of Borrowers as
permitted by this Agreement or the other Loan Documents.
26
2.4 Payments.
--------
(a) Payments by Borrowers. Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Lender's Account for the
account of Lender and shall be made in immediately available funds, no later
than 11:00 a.m. (California time) on the date specified herein. Any payment
received by Lender later than 11:00 a.m. (California time), shall be deemed to
have been received on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.
(b) Application of Payments.
(i) All payments shall be remitted to Lender and all such
payments and all proceeds of Collateral received by Lender, shall be
applied as follows, except as otherwise provided in Section
2.4(b)(v):
A. first, to pay any Lender Expenses then due to Lender
under the Loan Documents, until paid in full,
B. second, to pay any fees then due to Lender under the
Loan Documents until paid in full,
C. third, to pay interest due in respect of Advances and
the Term Loans until paid in full,
D. fourth, to pay all principal amounts then due and
payable (other than as a result of an acceleration thereof) with
respect to the Term Loans until paid in full,
E. fifth, so long as no Event of Default has occurred and
is continuing, and at Lender's election (which election Lender
hereby agrees will not be made if an Overadvance would be
created thereby), to pay amounts then due and owing by
Administrative Borrower or its Subsidiaries in respect of Bank
Products, until paid in full,
F. sixth, so long as no Event of Default has occurred and
is continuing, to pay the principal of all Advances until paid
in full,
G. seventh, if an Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances
until paid in full, (ii) to Lender, to be held by Lender as cash
collateral in an amount up to 110% of the then extant Letter of
Credit Usage until paid in full, and (iii) to Lender, to be held
by Lender, for the benefit of the Bank Products Providers, as
cash collateral in an amount up to the amount of the Bank
27
Product Reserve established prior to the occurrence of, and not
in contemplation of, the subject Event of Default until
Borrowers' and their Subsidiaries' obligations in respect of the
then extant Bank Products have been paid in full or the cash
collateral amount has been exhausted,
H. eighth, if an Event of Default has occurred and is
continuing, to pay the outstanding principal balance of the Term
Loans (in the inverse order of the maturity of the installments
due thereunder) until the Term Loans are paid in full,
I. ninth, to pay any other Obligations (including the
provision of amounts to Lender, to be held by Lender, for the
benefit of the Bank Product Providers, as cash collateral in an
amount up to the amount determined by Lender in its Permitted
Discretion as the amount necessary to secure Borrowers' and
their Subsidiaries' obligations in respect of the then extant
Bank Products), and,
J. tenth, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable
law.
(ii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.4(b) shall not be deemed
to apply to any payment by Borrowers specified by Borrowers to be
for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.
(iv) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
28
(v) All net cash proceeds from Asset Sales shall be applied as
follows:
A. first, to prepayment of unpaid principal of Term Loan
B, until paid in full,
B. second, to prepayment of unpaid principal of Term Loan
A, until paid in full, and
C. third, to prepayment of unpaid principal of Advances
and the Maximum Revolver Amount shall be permanently reduced by the
amount of the net cash proceeds from Asset Sales to the extent not
applied to payment of Term Loans; provided however, that any
permanent reduction of the Maximum Revolver Amount pursuant to this
Section 2.4(b)(v) shall not be subject to any Applicable Prepayment
Premium.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to Lender
pursuant to Section 2.1 or Section 2.12 is greater than either the Dollar or
percentage limitations set forth in Section 2.1 or Section 2.12, as applicable
(an "Overadvance"), Borrowers immediately shall pay to Lender, in cash, the
amount of such excess, which amount shall be used by Lender to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full as and when due and
payable under the terms of this Agreement and the other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
-------------------------------------------------------------
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance, at a per annum rate equal to the Base Rate
plus the Base Rate Margin, (ii) if the relevant Obligation is a portion of Term
Loan A, at a per annum rate equal to the Base Rate plus the Base Rate Term Loan
A Margin, (iii) if the relevant Obligation is a portion of Term Loan B, at a per
annum rate equal to the Base Rate plus the Base Rate Term Loan B Margin, and
(iv) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate
Margin.
(b) Letter of Credit Fee. Borrowers shall pay Lender a Letter of
Credit fee (in addition to the charges, commissions, fees, and costs set forth
in Section 2.12(e)) which shall accrue at a rate equal to 3.5% per annum times
the Daily Balance of the undrawn amount of all outstanding Letters of Credit.
29
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Lender),
(i) all Obligations (except for undrawn Letters of Credit and
except for Bank Product Obligations) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to 3 percentage
points above the per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 3 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Except as expressly provided to the contrary in this
Agreement, interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time
that Obligations or obligation to extend credit hereunder are outstanding.
Borrowers hereby authorize Lender, from time to time, without prior notice to
Borrowers, to charge such interest and fees, all Lender Expenses (as and when
incurred), the charges, commissions, fees, and costs provided for in Section
2.12(e) (as and when accrued or incurred), the fees and costs provided for in
Section 2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loan and including any amounts due and payable
to the Bank Product Providers in respect of Bank Products up to the amount of
the then extant Bank Products Reserve) to Borrowers' Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and Lender, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess
30
of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
---------------
(a) Borrowers shall and shall cause each of their Subsidiaries to
(i) establish and maintain cash management services of a type and on terms
satisfactory to Lender at one or more of the banks set forth on Schedule 2.7(a)
(each a "Cash Management Bank"), and shall request in writing and otherwise take
such reasonable steps to ensure that all of their and their Subsidiaries'
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank (except as permitted by clause (ii) below), and (ii) except
as otherwise provided in Section 2.7(e), deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all of their Collections (including those sent directly by
their Account Debtors to a Cash Management Bank) into a bank account in Lender's
name (for the account of Borrowers) (a "Cash Management Account") at one of the
Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Lender and Borrowers, in form and substance
acceptable to Lender; provided, that in the case of Bank of America, N.A., such
Cash Management Agreements shall be obtained within one hundred twenty days
after the Closing Date. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as Lender or
bailee-in-possession for Lender, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Lender's
Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Account Bank; provided, however, that (i) such prospective
Cash Management Bank shall be satisfactory to Lender and Lender shall have
consented in writing in advance to the opening of a Cash Management Account with
the prospective Cash Management Bank, and (ii) prior to the time of the opening
of such Cash Management Account, a Borrower or a Subsidiary of a Borrower, as
applicable, and such prospective Cash Management Bank shall have executed and
delivered to Lender a Cash Management Agreement. A Borrower or a Subsidiary of a
Borrower, as applicable, shall close any of its Cash Management Accounts (and
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Lender that
the creditworthiness of any Cash Management Bank is no longer acceptable in
Lender's reasonable judgment, or as promptly as practicable and in any event
31
within 60 days of notice from Lender that the operating performance, funds
transfer, or availability procedures or performance of the Cash Management Bank
with respect to Cash Management Accounts or Lender's liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in
Lender's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrowers hereby ▇▇▇▇▇ ▇ ▇▇▇▇ to
Lender.
(e) Borrowers may maintain Deposit Accounts (including Local Bank
Accounts) for the deposit of revenues from the operation of the ▇▇▇▇▇▇▇▇'▇
Business, provided that Borrower shall on a daily basis cause funds from such
accounts to be transferred to a Cash Management Account to the extent necessary
to cause the aggregate funds on deposit for any restaurant of any Borrower in a
Deposit Account that is not a Cash Management Account not to exceed $3,000.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
Lender (whether from transfers to Lender by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Lender's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Lender only if it is received into the Lender's Account on a
Business Day on or before 11:00 a.m. (California time). If any payment item is
received into the Lender's Account on a non-Business Day or after 11:00 a.m.
(California time) on a Business Day, it shall be deemed to have been received by
Lender as of the opening of business on the immediately following Business Day.
From and after the Closing Date, Lender shall be entitled to charge Borrowers
for one Business Day of `clearance' or `float' at the rate then applicable under
Section 2.6 to Advances on all Collections that are received by Borrowers and
their Subsidiaries (regardless of whether forwarded by the Cash Management Banks
to Lender). This across-the-board one Business Day clearance or float charge on
all Collections of Borrowers and their Subsidiaries is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrowers and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging interest on such Collections through the
completion of a period ending one Business Day after the receipt thereof.
2.9 Designated Account. Lender is authorized to make the Advances
and the Term Loans, and Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
32
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Lender hereunder. Unless otherwise agreed by Lender and Administrative Borrower,
any Advance requested by Borrowers and made by Lender hereunder shall be made to
the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Lender
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loans, all Advances
made by Lender to Borrowers or for Borrowers' account, the Letters of Credit
issued by Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents (except for Bank Product
Obligations), including, accrued interest, fees and expenses, and Lender
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Lender from Borrowers or for Borrowers' account,
including all amounts received in the Lender's Account from any Cash Management
Bank. Lender shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Expenses owing, and
such statements, absent manifest error, shall be conclusively presumed to be
correct and accurate and constitute an account stated between Borrowers and
Lender unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Lender the following fees and
charges, which fees and charges shall be non-refundable (except as otherwise
expressly provided in this Section 2.11) when paid (irrespective of whether this
Agreement is terminated thereafter):
(a) Unused Line Fee. On the first day of each month during the term
of this Agreement, an unused line fee in the amount equal to 0.50% per annum
times the result of (i) the Maximum Revolver Amount, less (i) the sum of (A) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, plus (B) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month;
(b) Audit, Appraisal, and Valuation Charges. Audit, appraisal, and
valuation fees and charges as follows, (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses for each financial audit of a Borrower performed by
personnel employed by Lender, (ii) if implemented, a fee of $850 per day, per
applicable individual, plus out-of-pocket expenses for the establishment of
electronic collateral reporting systems, (iii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral, or
any portion thereof, performed by personnel employed by Lender, and (iv) the
actual charges paid or incurred by Lender if it elects to employ the services of
one or more third Persons to perform financial audits of Borrowers or their
33
Subsidiaries, to establish electronic collateral reporting systems, to appraise
the Collateral, or any portion thereof, or to assess Borrowers' and their
Subsidiaries' business valuation;
(c) Anniversary Fee. On each anniversary of the Closing Date during
the term of this Agreement, an anniversary fee in the amount of $75,000;
(d) Servicing Fee. On the first day of each month during the term of
this Agreement, a servicing fee in the amount of $5,000;
(e) Closing Fee. A fee in the amount of $500,000 shall be paid on
the Closing Date, subject to being rebated according to the following schedule:
(i) if Term Loan B is repaid in full on or before February 29,
2004, then $450,000 shall be rebated to Borrowers;
(ii) if Term Loan B is repaid in full on or before March 31,
2004, then $400,000 shall be rebated to Borrowers;
(iii) if Term Loan B is repaid in full before on or before June
30, 2004, then $300,000 shall be rebated to Borrowers; or
(iv) if Term Loan B is repaid in full on or before September
30, 2004, then $200,000 shall be rebated to Borrowers; and
(f) Restatement Fee. A fee in the amount of $150,000 shall be paid
as follows: in equal installments of $50,000 on each of April 1, July 1 and
October 1, 2004.
2.12 Letters of Credit
-----------------
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to issue L/C's for the account of Borrowers or to purchase participations
or execute indemnities or reimbursement obligations (each such undertaking, an
"L/C Undertaking") with respect to letters of credit issued by an Underlying
Issuer (as of the Closing Date, the prospective Underlying Issuer is to be ▇▇▇▇▇
Fargo) for the account of Borrowers. To request the issuance of an L/C or an L/C
Undertaking (or the amendment, renewal, or extension of an outstanding L/C or
L/C Undertaking), Administrative Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by Lender) to Lender (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance of
an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
34
information as shall be necessary to prepare, amend, renew, or extend such L/C
or L/C Undertaking. If requested by Lender, Borrowers also shall be an applicant
under the application with respect to any Underlying Letter of Credit that is to
be the subject of an L/C Undertaking. Lender shall have no obligation to issue a
Letter of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $5,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrowers and Lender acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to Lender
(in the exercise of its Permitted Discretion), including the requirement that
the amounts payable thereunder must be payable in Dollars. If Lender is
obligated to advance funds under a Letter of Credit, Borrowers immediately shall
reimburse such L/C Disbursement to Lender by paying to Lender an amount equal to
such L/C Disbursement not later than 11:00 a.m., California time, on the date
that such L/C Disbursement is made, if Administrative Borrower shall have
received written or telephonic notice of such L/C Disbursement prior to 10:00
a.m., California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than
11:00 a.m., California time, on the Business Day that Administrative Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances under Section 2.6. To the extent an L/C Disbursement is deemed to be an
Advance hereunder, Borrowers' obligation to reimburse such L/C Disbursement
shall be discharged and replaced by the resulting Advance.
(b) Each Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless from any loss, cost, expense, or liability, and reasonable
attorneys' fees incurred by Lender arising out of or in connection with any
Letter of Credit; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of Lender. Each
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Lender's
interpretations of any L/C issued by Lender to or for such Borrower's account,
even though this interpretation may be different from such Borrower's own, and
each Borrower understands and agrees that Lender shall not be liable for any
error, negligence, or mistake, whether of omission or commission, in following
35
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Lender to indemnify the Underlying Issuer
for certain costs or liabilities arising out of claims by Borrowers against such
Underlying Issuer. Each Borrower hereby agrees to indemnify, save, defend, and
hold Lender harmless with respect to any loss, cost, expense (including
reasonable attorneys fees), or liability incurred by Lender under any L/C
Undertaking as a result of Lender's indemnification of any Underlying Issuer;
provided, however, that no Borrower shall be obligated hereunder to indemnify
for any loss, cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of Lender.
(c) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon Lender's instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.
(d) Any and all charges, commissions, fees, and costs incurred by
Lender relating to Underlying Letters of Credit shall be Lender Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrowers to
Lender for the account of Lender; it being acknowledged and agreed by each
Borrower that, as of the Closing Date, the usage charge imposed by the
prospective Underlying Issuer is .825% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(e) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or Lender with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or Lender
any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify
36
Administrative Borrower, and Borrowers shall pay on demand such amounts as
Lender may specify to be necessary to compensate Lender for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Advances
hereunder. The determination by Lender of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 Capital Requirements. If, after the date hereof, Lender
determines that (i) the adoption of or change after the Closing Date in any law,
rule, regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change after the Closing Date in the interpretation or
application thereof by any Governmental Authority charged with the
administration thereof, or (ii) compliance by Lender or its parent bank holding
company with any guideline, request or directive of any such entity regarding
capital adequacy (whether or not having the force of law), has the effect of
reducing the return on Lender's or such holding company's capital as a
consequence of Lender's obligations hereunder to a level below that which Lender
or such holding company could have achieved but for such adoption, change, or
compliance (taking into consideration Lender's or such holding company's then
existing policies with respect to capital adequacy and assuming the full
utilization of such entity's capital) by any amount deemed by Lender to be
material, then Lender may notify Administrative Borrower thereof within a
reasonable period thereafter. Following receipt of such notice, Borrowers agree
to pay Lender on demand the amount of such reduction of return of capital as and
when such reduction is determined, payable within 90 days after presentation by
Lender of a statement in the amount and setting forth in reasonable detail
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest or
demonstrable error). In determining such amount, Lender may use any reasonable
averaging and attribution methods.
2.14 Joint and Several Liability of Borrowers.
----------------------------------------
(a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.14), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
37
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.14 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Lender under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Person composing Borrowers hereby assents to,
and waives notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by Lender at any time or times in respect of any
default by any Person composing Borrowers in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Lender in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Person composing Borrowers. Without
limiting the generality of the foregoing, each Borrower assents to any other
action or delay in acting or failure to act on the part of Lender with respect
to the failure by any Person composing Borrowers to comply with any of its
respective Obligations, including, without limitation, any failure strictly or
diligently to assert any right or to pursue any remedy or to comply fully with
applicable laws or regulations thereunder, which might, but for the provisions
of this Section 2.14 afford grounds for terminating, discharging or relieving
any Person composing Borrowers, in whole or in part, from any of its Obligations
under this Section 2.14, it being the intention of each Person composing
Borrowers that, so long as any of the Obligations hereunder remain unsatisfied,
the Obligations of such Person composing Borrowers under this Section 2.14 shall
not be discharged except by performance and then only to the extent of such
performance. The Obligations of each Person composing Borrowers under this
Section 2.14 shall not be diminished or rendered unenforceable by any winding
38
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Person composing Borrowers or Lender. The joint
and several liability of the Persons composing Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, constitution or place
of formation of any of the Persons composing Borrowers or Lender.
(f) Each Person composing Borrowers represents and warrants to
Lender that such Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Person
composing Borrowers further represents and warrants to Lender that such Borrower
has read and understands the terms and conditions of the Loan Documents. Each
Person composing Borrowers hereby covenants that such Borrower will continue to
keep informed of Borrowers' financial condition, the financial condition of
other guarantors, if any, and of all other circumstances which bear upon the
risk of nonpayment or nonperformance of the Obligations.
(g) Each of the Persons composing Borrowers waives all rights and
defenses arising out of an election of remedies by Lender, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for a guaranteed obligation, has destroyed Lender's rights of subrogation and
reimbursement against such Borrower by the operation of Section 580(d) of the
California Code of Civil Procedure or otherwise.
(h) Each of the Persons composing Borrowers waives all rights and
defenses that such Borrower may have because the Obligations are secured by Real
Property. This means, among other things:
(i) Lender may collect from such Borrower without first
foreclosing on any Real Property Collateral or personal property
Collateral pledged by Borrowers.
(ii) If Lender forecloses on any Real Property Collateral
pledged by Borrowers:
A. The amount of the Obligations may be reduced only by
the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price.
B. Lender may collect from such Borrower even if Lender,
by foreclosing on the Real Property Collateral, has destroyed
any right such Borrower may have to collect from the other
Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
39
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this Section 2.14 are made for the benefit of
Lender and its successors and assigns, and may be enforced by it or them from
time to time against any or all of the Persons composing Borrowers as often as
occasion therefor may arise and without requirement on the part of Lender,
successor, or assign first to marshal any of its or their claims or to exercise
any of its or their rights against any of the other Persons composing Borrowers
or to exhaust any remedies available to it or them against any of the other
Persons composing Borrowers or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 2.14 shall remain in effect until all of
the Obligations shall have been paid in full or otherwise fully satisfied. If at
any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by Lender
upon the insolvency, bankruptcy or reorganization of any of the Persons
composing Borrowers, or otherwise, the provisions of this Section 2.14 will
forthwith be reinstated in effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
Lender with respect to any of the Obligations or any collateral security
therefor until such time as all of the Obligations have been paid in full in
cash. Any claim which any Borrower may have against any other Borrower with
respect to any payments to Lender hereunder or under any other Loan Documents
are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Obligations and, in the
event of any insolvency, bankruptcy, receivership, liquidation, reorganization
or other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full in cash before any payment or distribution of
any character, whether in cash, securities or other property, shall be made to
any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, ▇▇▇ for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Lender, and such Borrower shall
40
deliver any such amounts to Lender for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of Lender to make the initial Advance (or otherwise to extend any
credit provided for hereunder), is subject to the fulfillment, to the
satisfaction of Lender, of each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before February 2, 2004;
(b) Lender shall have received each of the following documents, in
form and substance satisfactory to Lender, duly executed, and each such document
shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) a Control Agreement covering each Cash Management
Account,
(iii) the Disbursement Letter,
(iv) the Intercompany Subordination Agreement,
(v) the amendments to each of the Mortgages encumbering Real
Property owned in fee by any Borrower, in form and substance
satisfactory to Lender,
(vi) the Officers' Certificate,
(vii) the Stock Pledge Agreement from ELXSI Corporation,
together with all certificates representing the shares of Stock
pledged thereunder and hereunder, as well as Stock powers with
respect thereto endorsed in blank, to the extent not previously
delivered, and
(viii) all certificates representing ownership interests in
ELXSI NH, ▇▇▇▇▇▇▇▇'▇ LLC, and Holdings, as well as instruments of
transfer with respect thereto endorsed in blank.
(c) Lender shall have received a certificate from the Secretary of
each Borrower attesting to the resolutions of such Borrower's board of directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;
41
(d) Lender shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(e) Lender shall have received a certificate of status with respect
to each Borrower, dated within 10 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;
(f) Lender shall have received certificates of status with respect
to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(g) Lender shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.7, the form and
substance of which shall be satisfactory to Lender;
(h) Lender shall have received opinions of Borrowers' counsel in
form and substance satisfactory to Lender;
(i) Lender shall have received a certificate of the Vice President
of Parent to the effect that all tax returns required to be filed by Borrowers
and their Subsidiaries have been timely filed and all taxes upon Borrowers and
their Subsidiaries or their properties, assets, income, and franchises
(including Real Property taxes, sales taxes, and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of Permitted
Protests;
(j) Lender shall have completed its business and legal due
diligence, including (i) a collateral audit and review of Borrowers' books and
records and verification of Borrowers' representations and warranties to Lender,
the results of which shall be satisfactory to Lender, and (ii) unless waived, an
inspection of each of the locations where Borrowers' and their Subsidiaries'
Inventory is located, the results of which shall be satisfactory to Lender;
(k) Lender shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are satisfactory
to Lender in its sole discretion;
(l) Lender shall have received the Closing Date Business Plan;
42
(m) Borrowers shall have paid all Lender Expenses incurred in
connection with the transactions evidenced by this Agreement and the closing fee
payable in accordance with Section 2.11(f) hereof shall be deducted from the
proceeds of Term Loan B;
(n) Lender shall have received (i) appraisals of the Real Property
Collateral satisfactory to Lender, and (ii) endorsements to the mortgagee title
insurance policies (or marked commitments to issue the same) for the fee-owned
Real Property Collateral issued by a title insurance company satisfactory to
Lender (each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in
amounts satisfactory to Lender assuring Lender that the Mortgages on such Real
Property Collateral are valid and enforceable first priority mortgage Liens on
such Real Property Collateral free and clear of all defects and encumbrances
except Permitted Liens, and the Mortgage Policies otherwise shall be in form and
substance satisfactory to Lender;
(o) unless waived, Lender shall have received a phase I
environmental report and a real estate survey with respect to each parcel
composing the Real Property Collateral; the environmental consultants and
surveyors retained for such reports or surveys, the scope of the reports or
surveys, and the results thereof shall be acceptable to Lender;
(p) Lender shall have received affirmations of, or amended and
restated, subordination agreements from each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, whereby each agrees that all sums owing to each by
any of the Borrowers in connection with the ELXSI 1991 Phantom Stock Plan shall
remain subordinated to the prior payment in full of the Obligations, provided,
that, so long as no Default or Event of Default shall occur and be continuing,
Additional Compensation (as defined in such affirmations or subordination
agreements) may be paid to each;
(q) Lender shall have received a copy of the trust instrument
governing the ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Irrevocable Trust I together with a
certificate of the Trustee thereunder certifying such document as being a true,
correct, and complete copy thereof;
(r) Borrowers and each of their Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrowers or their
Subsidiaries of the Loan Documents or with the consummation of the transactions
contemplated thereby; and
(s) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of Lender to continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment, on or before the date applicable
thereto, of each of the conditions subsequent set forth below (the failure by
43
Borrowers to so perform or cause to be performed constituting an Event of
Default):
(a) within 30 days of the Closing Date, deliver to Lender certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.7, the form and substance of which shall be
satisfactory to Lender and its counsel;
(b) within 30 days of the Closing Date, deliver to Lender
endorsements to the Mortgage Policies insuring liens against fee-owned
properties, showing the recording of each amendment executed in connection
herewith and showing Lender to be the insured thereunder; and
(c) within 10 days after written request therefor, deliver to Lender
an executed security agreement and/or guaranty from any or all of Vermont
▇▇▇▇▇▇▇▇'▇, Inc., Cues B.V., and Knopafex, Ltd., securing or guaranteeing the
Obligations.
3.3 Conditions Precedent to all Extensions of Credit. The obligation
of Lender to make any Advances hereunder at any time (or to extend any other
credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties (x)
relate solely to an earlier date or (y) relate to an action or omission
permitted by Lender to the extent of such permission);
(b) no Default or Event of Default, that has not been waived by
Lender, shall have occurred and be continuing on the date of such extension of
credit, nor shall either result from the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature restricting or prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against any Borrower, Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall continue in full force and effect for a
term ending on December 31, 2006 (the "Maturity Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
44
Bank Products Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Lender in an amount equal to 110% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to Lender, and (b)
providing cash collateral (in an amount determined by Lender as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Lender for the
benefit of the Bank Product Providers with respect to the then extant Bank
Products Obligations). No termination of this Agreement, however, shall relieve
or discharge Borrowers or their Subsidiaries of their duties, Obligations, or
covenants hereunder and the Lender's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and Lender's obligations to
provide additional credit hereunder have been terminated. When this Agreement
has been terminated and all of the Obligations have been paid in full and
Lender's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Lender will, at Borrowers' sole expense, execute
and deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release of record the Lender's Liens and all
notices of security interests and liens previously filed by Lender with respect
to the Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at
any time upon 90 days' prior written notice by Administrative Borrower to
Lender, to terminate this Agreement by paying to Lender, in cash, the
Obligations (including (a) either (i) providing cash collateral to be held by
Lender in an amount equal to 110% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to Lender, and (b)
providing cash collateral (in an amount determined by Lender as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Lender for the
benefit of the Bank Product Providers with respect to the then extant Bank
Products Obligations), in full, together with the Applicable Prepayment Premium.
If Administrative Borrower has sent a notice of termination pursuant to the
provisions of this Section, then Lender's obligations to extend credit hereunder
shall terminate and Borrowers shall be obligated to repay the Obligations
(including (a) either (i) providing cash collateral to be held by Lender in an
amount equal to 110% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to Lender, and (b) providing cash
collateral (in an amount determined by Lender as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Lender for the benefit of
the Bank Product Providers with respect to the then extant Bank Products
Obligations), in full, together with the Applicable Prepayment Premium, on the
date set forth as the date of termination of this Agreement in such notice. In
the event of the termination of this Agreement and repayment of the Obligations
at any time prior to the Maturity Date, for any other reason, including (a)
termination upon the election of Lender to terminate after the occurrence and
during the continuation of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructure, reorganization or compromise of the Obligations by the confirmation
45
of a plan of reorganization, or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to Lender or
profits lost by Lender as a result of such early termination, and by mutual
agreement of the parties as to a reasonable estimation and calculation of the
lost profits or damages of Lender, Borrowers shall pay the Applicable Prepayment
Premium to Lender, measured as of the date of such termination. Notwithstanding
anything to the contrary contained in this Section 3.6, the Borrowers shall have
the right voluntarily to reduce the Maximum Revolver Amount from time to time in
accordance with Section 2.1(g) and no such reduction shall be considered a
termination of this Agreement until such time as the Maximum Revolver Amount is
reduced to zero.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby reaffirms its grant
of a security interest under the Original Loan Agreement and in connection with
the Existing Loan Agreement in the property described therein and further grants
to Lender for the benefit of Lender and the Bank Product Providers a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Borrower Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with the
terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrowers of each of their covenants and duties under the Loan
Documents. The Lender's Liens in and to the Borrower Collateral shall attach to
all Borrower Collateral without further act on the part of Lender or Borrowers.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers and their
Subsidiaries have no authority, express or implied, to dispose of any item or
portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Borrower
Collateral, including proceeds, is evidenced by or consists of Negotiable
Collateral, and if and to the extent that Lender determines that perfection or
priority of Lender's security interest is dependent on or enhanced by
possession, the applicable Borrower, immediately upon the request of Lender,
shall endorse and deliver physical possession of such Negotiable Collateral to
Lender.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrowers that Borrowers' Accounts, chattel paper, or General Intangibles have
been assigned to Lender or that Lender has a security interest therein, or (b)
collect Borrowers' Accounts, chattel paper, or General Intangibles directly and
charge the collection costs and expenses to the Loan Account. Each Borrower
agrees that it will hold in trust for Lender, as Lender's trustee, any of its or
its Subsidiaries' Collections that it receives and immediately will deliver such
Collections to Lender or a Cash Management Bank in their original form as
received by such Borrower or its Subsidiaries.
46
4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery
of Additional Documentation Required.
----------------------------------------------------------------
(a) Borrowers authorize Lender to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of Borrowers where permitted
by applicable law. Borrowers hereby ratify the filing of any financing statement
filed without the signature of Borrowers prior to the date hereof.
(b) If Borrowers or their Subsidiaries acquire any commercial tort
claims after the date hereof, Borrowers shall promptly (but in any event within
3 Business Days after such acquisition) deliver to Lender a written description
of such commercial tort claim and shall deliver a written agreement, in form and
substance satisfactory to Lender, pursuant to which the applicable Borrower or
its Subsidiary shall pledge and collaterally assign all of its right, title and
interest in and to such commercial tort claim to Lender, as security for the
Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Lender, Borrowers shall execute
or deliver to Lender and shall cause their Subsidiaries to execute or deliver to
Lender any and all financing statements, original financing statements in lieu
of continuation statements, fixture filings, security agreements, pledges,
assignments, Commercial Tort Claim Assignments, endorsements of certificates of
title, and all other documents (collectively, the "Additional Documents") that
Lender may request in its Permitted Discretion, in form and substance
satisfactory to Lender, to create, perfect and continue perfected or to better
perfect the Lender's Liens in the assets of Borrowers and their Subsidiaries
(whether now owned or hereafter arising or acquired, tangible or intangible,
real or personal), to create and perfect Liens in favor of Lender in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Borrower authorizes Lender
to execute any such Additional Documents in the applicable Borrower's name and
authorize Lender to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Lender shall require,
Borrowers shall (i) provide Lender with a report of all new material patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers or
their Subsidiaries during the prior period, (ii) cause all material patents,
copyrights, and trademarks acquired or generated by Borrowers or their
Subsidiaries that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of a Borrower's or a Subsidiary of a Borrower's
ownership thereof, and (iii) cause to be prepared, executed, and delivered to
Lender supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
47
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender's officers, employees, or
Lenders designated by Lender) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or ▇▇▇▇ of lading relating to the Borrower Collateral, drafts against Account
Debtors, or notices to Account Debtors, (c) send requests for verification of
Borrowers' or their Subsidiaries' Accounts, (d) endorse such Borrower's name on
any of its payment items (including all of its Collections) that may come into
Lender's possession, (e) at any time that an Event of Default has occurred and
is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting
Borrowers' or their Subsidiaries' Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that
Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and Lender's
obligations to extend credit hereunder are terminated.
4.6 Right to Inspect. Lender (through any of its officers,
employees, or agents) shall have the right, from time to time hereafter, during
reasonable business hours, to inspect the Books and make copies or abstracts
thereof and to check, test, and appraise the Collateral, or any portion thereof,
in order to verify Borrowers' and their Subsidiaries' financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral.
4.7 Control Agreements. Borrowers agree that they will not, and will
not permit their Subsidiaries to, transfer assets out of any of their Cash
Management Accounts or Securities Accounts; provided, however, that so long as
no Event of Default has occurred and is continuing or would result therefrom,
Borrowers and their Subsidiaries may use such assets (and the proceeds thereof)
to the extent not prohibited by this Agreement or the other Loan Documents and,
if the transfer is to another bank or securities intermediary, so long as the
applicable Borrower or Subsidiary, Lender, and the substitute bank or securities
intermediary have entered into a Control Agreement. Notwithstanding the
foregoing, the parties understand and agree that as of the Closing Date: (a)
Borrowers have numerous local bank accounts which are not Cash Management
Accounts (each, a "Local Bank Account") into which deposits are made on a daily
basis in connection with the ▇▇▇▇▇▇▇▇'▇ Business and from which funds are
directed to be transferred to a Cash Management Account, (b) the Local Bank
Accounts are not required to be subject to a Control Agreement, unless requested
by Lender, (c) the transfer of funds from the Local Bank Accounts to a Cash
Management Account shall not constitute a Default or an Event of Default under
this Agreement, and (d) the failure of a Local Bank Account to be subject to a
48
Control Agreement shall not constitute a Default or an Event of Default under
this Agreement until forty-five (45) days after a written request by Lender that
such Local Bank Account become subject to a Control Agreement. Borrowers agree
that they will and will cause their Subsidiaries to take any or all reasonable
steps that Lender requests in order for Lender to obtain control in accordance
with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect to any of
its or their Securities Accounts, Deposit Accounts, electronic chattel paper,
Investment Property, and letter-of-credit rights. No arrangement contemplated
hereby or by any Control Agreement in respect of any Securities Accounts or
other Investment Property shall be modified by Borrowers without the prior
written consent of Lender. Upon the occurrence and during the continuance of a
Default or Event of Default, Lender may notify any bank or securities
intermediary to liquidate the applicable Deposit Account or Securities Account
or any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Lender's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement, each Borrower makes
the following representations and warranties to Lender which shall be true,
correct, and complete, in all material respects, as of the date hereof, and
shall be true, correct, and complete, in all material respects, as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties (x) relate solely to an earlier date or (y)
relate to an action or omission permitted by Lender to the extent of such
permission) and such representations and warranties shall survive the execution
and delivery of this Agreement, provided that any representation or warranty
made by Borrowers under the Original Loan Agreement or the Existing Loan
Agreement shall also survive the execution and delivery of this Agreement:
5.1 No Encumbrances. Each Borrower and its Subsidiaries has good and
indefeasible title to their personal property assets and good and marketable
title to their Real Property, in each case, free and clear of Liens except for
Permitted Liens.
5.2 Accounts. The Accounts are bona fide existing payment obligations of
Account Debtors created by the sale and delivery of Inventory or the rendition
of services to such Account Debtors in the ordinary course of Borrowers'
business, owed to Borrowers without any known defenses, disputes, offsets,
counterclaims, or rights of return or cancellation in excess of the reserves set
forth in the most recent balance sheet provided to Lender under Section 6.3
hereof.
5.3 Inventory. All Inventory is of good and merchantable quality, free
from known defects in excess of reserves set forth in the most recent balance
sheet provided to Lender under Section 6.3 hereof.
49
5.4 Equipment. All of the Equipment of Borrowers and their Subsidiaries
is used or held for use in their business and is fit for such purposes.
5.5 Location of Inventory and Equipment. Except as identified on
Schedule 5.5, the Inventory and Equipment of Borrowers and their Subsidiaries
are not stored with a bailee, warehouseman, or similar party and, except as
identified on Schedule 5.5, are located only at, or in-transit between, the
locations identified on Schedule 5.5 (as such Schedule may be updated pursuant
to Section 6.8).
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.
5.7 State of Incorporation; Location of Chief Executive Office; FEIN;
Organizational ID Number; Commercial Tort Claims.
(a) The jurisdiction of organization of each Borrower and each of
its Subsidiaries is set forth on Schedule 5.7(a).
(b) The chief executive office of each Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 5.7 (b) (as such
Schedule may be updated pursuant to Section 6.8). ----------------
(c) Each Borrower's and each of its Subsidiaries' FEIN and
organizational identification number, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Borrowers and their Subsidiaries do not
hold any commercial tort claims, except as set forth on Schedule 5.7(d).
5.8 Due Organization and Qualification; Subsidiaries.
------------------------------------------------
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
50
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
(e) The aggregate book value of the assets of Cues B.V., a
Netherlands registered entity, is less than $1,000,000; the aggregate book value
of the assets of Knopafex, Ltd., an Ontario, Canada registered entity, is less
than $1,500,000; the aggregate book value of the assets of Vermont ▇▇▇▇▇▇▇▇'▇,
Inc., a Vermont corporation, is less than $100,000.
5.9 Due Authorization; No Conflict.
------------------------------
(a) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the other Loan Documents to which it is a
party have been duly authorized by all necessary corporate or limited liability
company action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the other Loan Documents to which it is a
party do not and will not (i) violate any provision of federal, state, or local
law or regulation applicable to any Borrower, the Governing Documents of any
Borrower, or any order, judgment, or decree of any court or other Governmental
Authority binding on any Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of Borrower, other than Permitted Liens, or (iv) require any approval
of any Borrower's interestholders or any approval or consent of any Person under
any material contractual obligation of any Borrower, other than consents or
approvals that have been obtained and that are still in force and effect.
(c) Other than the filing of financing statements, and the
recordation of the Mortgages and amendments thereto contemplated by this
Agreement, the execution, delivery, and performance by each Borrower of this
Agreement and the other Loan Documents to which such Borrower is a party do not
51
and will not require any registration with, consent, or approval of, or notice
to, or other action with or by, any Governmental Authority, other than consents
or approvals that have been obtained and that are still in force and effect and
filings with the SEC that are required by the Exchange Act.
(d) As to each Borrower, this Agreement and the other Loan Documents
to which such Borrower is a party, and all other documents contemplated hereby
and thereby, when executed and delivered by such Borrower will be the legally
valid and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Lender's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Borrowers and their Subsidiaries that have been delivered by Borrowers to Lender
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrowers' and
their Subsidiaries' financial condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrowers and their Subsidiaries since the date of the
latest financial statements submitted to Lender on or before the Closing Date.
5.12 Fraudulent Transfer.
-------------------
(a) Each Borrower and each Subsidiary of a Borrower is Solvent.
(b) No transfer of property is being made by any Borrower or any
Subsidiary of a Borrower and no obligation is being incurred by any Borrower or
any Subsidiary of a Borrower in connection with the transactions contemplated by
this Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrowers or their Subsidiaries.
5.13 Employee Benefits. None of Borrowers, any of their Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
52
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
to Borrowers' knowledge, none of Borrowers' or their Subsidiaries' properties or
assets has ever been used by Borrowers, their Subsidiaries, or by previous
owners or operators (provided, however, that Borrowers have not made any
independent inquiry of such previous owners or operators) in the disposal of, or
to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation, in any material respect, of applicable Environmental
Law, (b) to Borrowers' knowledge, none of Borrowers' nor their Subsidiaries'
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) none of Borrowers nor any of their Subsidiaries have received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Borrowers or their
Subsidiaries, and (d) none of Borrowers nor any of their Subsidiaries have
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by any Borrower or any Subsidiary of a Borrower resulting
in the releasing or disposing of Hazardous Materials into the environment.
5.15 Brokerage Fees. Borrowers and their Subsidiaries have not utilized
the services of any broker or finder in connection with obtaining financing from
Lender under this Agreement and no brokerage commission or finders fee is
payable by Borrowers or their Subsidiaries in connection herewith.
5.16 Intellectual Property. Each Borrower and each Subsidiary of a
Borrower owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business as currently conducted.. Attached hereto as Schedule 5.16 (as updated
from time to time) is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark applications, and copyright
registrations as to which each Borrower or one of its Subsidiaries is the owner
or is an exclusive licensee.
5.17 Leases. Borrowers and their Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating. All of such leases are valid
and subsisting and no material default by Borrowers or their Subsidiaries exists
under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Borrowers' and their
Subsidiaries' Deposit Accounts and Securities Accounts, including, with respect
to each bank or securities intermediary (i) the name and address of such Person,
and (ii) the account numbers of the Deposit Accounts or Securities Accounts
maintained with such Person.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers or their Subsidiaries in writing to
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
53
other Loan Documents or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of Borrowers or their Subsidiaries in writing to the Lender will be,
true and accurate, in all material respects, on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Projections contained in the
Closing Date Business Plan represent, and as of the date on which any other
Projections are delivered to Lender, such additional Projections represent,
Borrowers' good faith best estimate of their and their Subsidiaries' future
performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower and each Subsidiary of a Borrower
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately reflects as of the Closing
Date the aggregate principal amount of such Indebtedness and the principal terms
thereof.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Obligations, Borrowers shall
and shall cause each of their respective Subsidiaries to do all of the
following:
6.1 Accounting System. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral consistent with past practices or that
contain additional information as from time to time reasonably may be requested
by Lender. Borrowers also shall keep an inventory reporting system that shows
all additions, sales, claims, returns, and allowances with respect to their and
their Subsidiaries' Inventory.
6.2 Collateral Reporting. Provide Lender with the following documents at
the following times in form satisfactory to Lender:
--------------------------------------------------------------------------------
Monthly (not later than (a) Summary Inventory reports for Cues' Inventory
the 20th day of each (on Excel sheets) specifying the cost (in dollars)
month) of Cues' Inventory, by category.
(b) a summary aging (on Excel sheets), by customer,
of the Accounts of the Cues Business, and
(c) a summary aging (on Excel sheets) of Borrowers'
and their Subsidiaries' accounts payable and any
book overdraft.
--------------------------------------------------------------------------------
54
--------------------------------------------------------------------------------
Monthly (not later than (a) a detailed calculation of the Borrowing Base
(i) the 30th day after end (including detail for the calculation of EBITDA)
of each month that is not
the last month of a
calendar quarter, and (ii)
the 45th day after the
end of each calendar
quarter)
--------------------------------------------------------------------------------
Quarterly (not later than (a) a report regarding each Borrower's and each
the 45th day after the Subsidiary of a Borrower's accrued, but unpaid, ad
end of each calendar valorem taxes (taxes on property owned or leased by
quarter) any Borrower).
--------------------------------------------------------------------------------
Upon request by Lender (a) copies of invoices in connection with
Borrowers' and their Subsidiaries' Accounts, credit
memos, remittance advices, deposit slips, shipping
and delivery documents in connection with
Borrowers' and their Subsidiaries' Accounts and,
for Inventory and Equipment acquired by Borrowers
or their Subsidiaries, purchase orders and
invoices, and
(b) such other reports as to the Collateral, or the
financial condition of Borrowers and their
Subsidiaries, as Lender may reasonably request.
--------------------------------------------------------------------------------
In addition, each Borrower agrees to cooperate fully with Lender to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Lender:
(a) as soon as available, but in any event within 30 days after the
end of each month (provided, however, that such 30-day period shall be extended
to 45 days after the end of each month which also represents the end of a
calendar quarter) during each of Parent's fiscal years,
(i) a company prepared consolidated and consolidating balance
sheet, income statement, and statement of cash flow covering
Parent's and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
A. the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
55
fairly present in all material respects the financial condition
of Parent and its Subsidiaries,
B. the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the date
of such certificate, as though made on and as of such date
(except to the extent that such representations and warranties
(x) relate solely to an earlier date or (y) relate to an action
or omission permitted by Lender to the extent of such
permission), and
C. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which
he or she may have knowledge and what action Borrowers have
taken, are taking, or propose to take with respect thereto),
(iii) for each month that is the date on which a financial
covenant in Section 7.18 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.18,
(iv) a report (x) for each of Borrowers' restaurants and stores
of sales showing the numbers of customers for the ▇▇▇▇▇▇▇▇'▇
Business; and (y) showing the revenue data for the Cues Business by
sales category, each for the preceding month and year to date, with
a comparison of such figures to the corresponding periods in the
prior fiscal year, all in form satisfactory to Lender, and
(v) such other data as may be reasonably requested by Lender,
(b) as soon as available, but in any event within 90 days after the
end of each of Parent's fiscal years ending on and after December 31, 2003,
(i) financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Lender and certified, without
any qualifications, by such accountants to have been prepared on a
consolidated (and, if requested by Lender, consolidating) basis in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management), and
56
(ii) a certificate of such accountants addressed to Lender
stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.18,
(c) as soon as available, but in any event within 30 days prior to
the start of each of Parent's fiscal years, copies of Borrowers' Projections, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Lender, in its sole discretion, for the forthcoming fiscal year,
month by month, certified by the chief financial officer of Parent as being such
officer's good faith best estimate of the financial performance of Parent and
its Subsidiaries during the period covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form
8-K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
shareholders generally,
(e) if and when filed by any Borrower or any Subsidiary of a
Borrower and as requested by Lender, satisfactory evidence of payment of
applicable excise taxes in each jurisdiction in which (i) any Borrower or any
Subsidiary of a Borrower conducts business or is required to pay any such excise
tax, (ii) where any Borrower's or any Subsidiary of a Borrower's failure to pay
any such applicable excise tax would result in a Lien on the properties or
assets of such Borrower or such Subsidiary, or (iii) where any Borrower's and
any Subsidiary of a Borrower's failure to pay any such applicable excise tax
reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto,
(g) promptly after the commencement thereof, but in any event within
5 days after the service of process with respect thereto on any Borrower or any
Subsidiary of a Borrower, notice of all actions, suits, or proceedings brought
by or against any Borrower or any Subsidiary of a Borrower before any
Governmental Authority which, if determined adversely to such Borrower or such
Subsidiary, reasonably could be expected to result in a Material Adverse Change,
and
57
(h) upon the request of Lender, any other report reasonably
requested relating to the financial condition of Borrowers or their
Subsidiaries.
Borrowers agree that no Subsidiary of Parent will have a fiscal year
different from that of Parent, except ▇▇▇▇▇▇▇▇'▇, which has a fiscal year that
ends on the Monday closest to December 31 each year. Borrowers agree to
cooperate with Lender to allow Lender to consult with their independent
certified public accountants if Lender reasonably requests the right to do so
and that, in such connection, their independent certified public accountants are
authorized to communicate with Lender and to release to Lender whatever
financial information concerning Borrowers or their Subsidiaries that Lender
reasonably may request.
6.4 Return. Cause returns and allowances, as between Borrowers and
their Subsidiaries and their Account Debtors, to be on the same basis and in
accordance with the usual customary practices of Borrowers and their
Subsidiaries, as they exist at the time of the execution and delivery of this
Agreement.
6.5 Maintenance of Properties. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct to their business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee,
so as to prevent any loss or forfeiture thereof or thereunder.
6.6 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers,
their Subsidiaries, or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrowers will, and will cause their Subsidiaries to, make
timely payment or deposit of all tax payments and withholding taxes required of
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Lender with proof satisfactory to Lender indicating that the
applicable Borrower or Subsidiary of a Borrower has made such payments or
deposits.
6.7 Insurance.
---------
(a) At Borrowers' expense, maintain insurance respecting their and
their Subsidiaries' assets wherever located, covering loss or damage by fire,
theft, explosion, and all other hazards and risks as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Borrowers
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrowers shall deliver copies of all such policies to Lender with a
satisfactory lender's loss payable endorsement naming Lender as sole loss payee
58
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days'
prior written notice to Lender in the event of cancellation of the policy for
any reason whatsoever.
(b) Administrative Borrower shall give Lender prompt notice of any
casualty loss covered by such insurance. Lender shall have the exclusive right
to adjust any casualty losses claimed under any such insurance policies in
excess of $50,000 (or in any amount after the occurrence and during the
continuation of an Event of Default), without any liability to Borrowers
whatsoever in respect of such adjustments. Prior to the payment in full of all
Obligations and termination of this Agreement, any monies received as payment
for any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain, shall be paid over to Lender to be applied at the
option of Lender either to the prepayment of the Obligations or shall be
disbursed to Administrative Borrower under staged payment terms reasonably
satisfactory to Lender for application to the cost of repairs, replacements, or
restorations, provided, that Administrative Borrower shall not be required to
pay Lender any amounts in excess of amounts required to pay in full all
Obligations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items or property destroyed prior to such damage or destruction.
(c) Borrowers shall not, and shall not suffer or permit their
Subsidiaries to, take out separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 6.7,
unless Lender is included thereon as named insured with the loss payable to
Lender under a lender's loss payable endorsement or its equivalent.
Administrative Borrower immediately shall notify Lender whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Lender.
6.8 Location of Inventory and Equipment. (a) Keep Borrowers' and
their Subsidiaries' Inventory and Equipment only at the locations identified on
Schedule 5.5 and their chief executive offices only at the locations identified
on Schedule 5.7(b); provided, however, that Administrative Borrower may amend
Schedule 5.5 and Schedule 5.7, in its sole discretion, so long as such amendment
occurs by written notice to Lender not less than 30 days prior to the date on
which such Inventory or Equipment is moved to such new location or such chief
executive office is relocated, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, the applicable Borrower provides to Lender a Collateral Access
Agreement with respect thereto, and (b) the aggregate current fair market value
of Inventory and Equipment that is in demonstration trucks or at physical
locations not identified on Schedule 5.5 shall not exceed $4,000,000 at any one
time.
59
6.9 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change.
6.10 Leases. Pay when due all rents and other amounts payable under any
leases to which any Borrower or any Subsidiary of a Borrower is a party or by
which any Borrower's or any Subsidiary of a Borrower's properties and assets are
bound, unless such payments are the subject of a Permitted Protest.
6.11 Existence. Except as otherwise permitted under Section 7.3 hereof,
at all times preserve and keep in full force and effect each Borrower's and each
Subsidiary of a Borrower's valid existence and good standing and any rights and
franchises material to their businesses; provided that failure to maintain the
good standing of a Borrower or a Subsidiary of a Borrower, which failure could
not reasonably be expected to result in a Material Adverse Change, shall not
constitute a Default or an Event of Default under this Agreement unless such
failure remains uncured thirty (30) days after written notice thereof from
Lender.
6.12 Environmental.
-------------
(a) Keep any property either owned or operated by any Borrower or
any Subsidiary of a Borrower free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Lender documentation of such compliance
which Lender reasonably requests, (c) promptly notify Lender of any release of a
Hazardous Material of any reportable quantity from or onto property owned or
operated by any Borrower or any Subsidiary of a Borrower and take any Remedial
Actions required to ▇▇▇▇▇ said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly, but in any event within 5 days
of its receipt thereof, provide Lender with written notice of any of the
following: (i) notice that an Environmental Lien has been filed against any of
the real or personal property of any Borrower or any Subsidiary of a Borrower,
(ii) commencement of any Environmental Action or notice that an Environmental
Action will be filed against any Borrower or any Subsidiary of a Borrower, and
(iii) notice of a violation, citation, or other administrative order relating to
the violation of an Environmental Law which reasonably could be expected to
result in a Material Adverse Change.
6.13 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Lender if any written
information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made. The foregoing to the contrary notwithstanding, any
notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
60
material fact nor shall any such notification have the affect of amending or,
modifying this Agreement or any of the Schedules hereto.
6.14 Formation of Subsidiaries. At the time that any Borrower forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Borrower shall (a) cause such new Subsidiary to
provide to Lender a joinder to this Agreement, together with such other security
documents (including Mortgages with respect to any Real Property of such new
Subsidiary), as well as appropriate UCC-1 financing statements (and with respect
to all property subject to a Mortgage, fixture filings), all in form and
substance satisfactory to Lender (including being sufficient to grant Lender a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Subsidiary), (b) provide to Lender a pledge agreement
and appropriate certificates and powers or UCC-1 financing statements,
hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in form and substance satisfactory to Lender, and (c) provide to
Lender all other documentation, including one or more opinions of counsel
satisfactory to Lender, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 6.14 shall be a Loan Document.
6.15 Sale of Cues Business' Inventory. If Borrower sells Inventory
related to the Cues Business for cash, all full and partial payments therefor
shall be immediately delivered by Borrower to Lender in their original form for
deposit in the Lender's Account. Borrower shall hold all such cash in trust for
Lender pending such delivery.
6.16 ▇▇▇▇▇▇▇▇'▇ Transaction. Ensure that at all times
(a) (i) Parent owns, beneficially and of record, on a fully-diluted
basis, 100% of the issued and outstanding capital stock of ELXSI NH and 1% of
the Ordinary Voting Units of ▇▇▇▇▇▇▇▇'▇ LLC, (ii) ELXSI NH owns, beneficially
and of record, on a fully-diluted basis, 99% of the Ordinary Voting Units of
▇▇▇▇▇▇▇▇'▇ LLC, (iii) ▇▇▇▇▇▇▇▇'▇ LLC owns, beneficially and of record, on a
fully-diluted basis, 100% of the issued and outstanding capital stock of
Holdings, and (iv) Holdings owns, beneficially and of record, on a fully-diluted
basis, 100% of the issued and outstanding capital stock of ▇▇▇▇▇▇▇▇'▇,
(b) Lender has a first perfected security interest in, and has
possession of, all issued and outstanding capital stock of Holdings and
▇▇▇▇▇▇▇▇'▇,
(c) no amendments, supplements or other modifications are made to
the ▇▇▇▇▇▇▇▇'▇ Subordinated Note without the prior express written consent of
Lender in each instance, and
61
(d) no payments of the ▇▇▇▇▇▇▇▇'▇ Subordinated Note are made in
violation of the Intercompany Subordination Agreement.
6.17 Cadmus Notes. Ensure that:
(a) no amendments, supplements or other modifications are made to
(i) the Amended and Restated Secured Promissory Note of Cadmus Corporation,
dated December 31, 2001, payable to Parent in the principal amount of
$2,000,000, and (ii) the Amended and Restated Promissory Note of Cadmus
Corporation payable to Parent in the principal amount of $7,003,364, dated
December 31, 2001 (collectively, the "Cadmus Notes") or any other document,
instrument or agreement evidencing or securing the same, nor any amounts due
thereunder, compromised or forgiven without the prior express written consent of
Lender in each instance, and
(b) if any of the Obligations remain outstanding, all proceeds of
the Cadmus Notes are immediately paid to Lender to be applied as follows:
(i) first, to prepayment of unpaid principal of Term Loan B,
until paid in full,
(ii) second, to prepayment of unpaid principal of Term Loan A,
until paid in full, and
(iii) third, to prepayment of unpaid principal of Advances.
6.18 Brockton Sale. Upon the closing of the Brockton Sale and as a
condition to the consummation of the Brockton Sale, deliver to Lender the net
cash proceeds from the Brocton Sale for application as follows: (a) the greatest
of (i) one-half of the aggregate net cash proceeds, (ii) $450,000 or (iii) an
amount designated by Administrative Borrower, shall be applied to the
outstanding principal amount of Term Loan B, and (b) all remaining net cash
proceeds shall be applied to the payment of outstanding Advances.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Obligations, Borrowers will
not and will not permit any of their respective Subsidiaries to do any of the
following:
7.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;
62
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b), (c) and (f) of this Section 7.1 (and continuance or renewal
of any Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Lender's
judgment, materially impair the prospects of repayment of the Obligations by
Borrowers or materially impair Borrowers' creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the then
extant principal amount of, or interest rate with respect to, the Indebtedness
so refinanced, renewed, or extended or add one or more Borrowers as liable with
respect thereto if such additional Borrowers were not liable with respect to the
original Indebtedness, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the
applicable Borrower, (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to
Lender as those that were applicable to the refinanced, renewed, or extended
Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or extended
is not recourse to any Person that is liable on account of the Obligations other
than those Persons which were obligated with respect to the Indebtedness that
was refinanced, renewed, or extended;
(e) endorsement of instruments or other payment items for deposit;
(f) Indebtedness composing Permitted Investments
(g) intercompany Indebtedness owing by a Borrower or a Subsidiary of
a Borrower to another Borrower (each an "Intercompany Permitted Indebtedness");
and
(h) Indebtedness arising from or in connection with Capital Leases
relating to restaurants operated by ▇▇▇▇▇▇▇▇'▇, but only to the extent such
Capital Leases have been consented to by Lender.
7.2 Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness and
accessions thereto).
63
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock;
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution); or
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets;
provided, that, so long as no Default or Event of Default shall have occurred
and be continuing, and after giving effect to any of the succeeding
transactions, no Default or Event of Default would exist hereunder and so long
as the Liens granted to Lender continue to be in effect: (x) any Subsidiary of a
Borrower may be merged or consolidated with or into any Borrower, if the latter
Borrower shall be the continuing or surviving entity, (y) any Borrower may be
merged or consolidated with or into any other Borrower, and (z) any Borrower or
any Subsidiary of a Borrower may sell, lease, license, assign, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to a Borrower.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Borrower or any Subsidiary of a Borrower.
7.5 Change Name. Change any Borrower's or any Subsidiary of a Borrower's
name, FEIN, organizational identification number, state of organization, or
organizational identity; provided, however, that a Borrower or a Subsidiary of a
Borrower may change its name upon at least 30 days prior written notice by
Administrative Borrower to Lender of such change and so long as, at the time of
such written notification, such Borrower or such Subsidiary provides any
financing statements necessary to perfect and continue perfected Lender's Liens.
7.6 Nature of Business. Make any change in the principal nature of their
business.
7.7 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(d) or Intercompany Permitted Indebtedness,
(i) prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower or any Subsidiary of a Borrower, other
than the Obligations in accordance with this Agreement, or
(ii) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument,
64
document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Section 7.1(b) or (c), or
(b) prepay, or modify any of the terms or conditions of any
agreement relating to, any obligations of any of the Borrowers owed to ▇▇▇▇▇ ▇.
▇▇▇▇▇ ("Shine"), including without limitation, (i) the Agreement among Shine,
▇▇▇▇▇▇▇▇'▇ and ELXSI pertaining to that certain letter agreement between Shine
and ELXSI (and others) dated December 11, 2001 (the "2001 Shine Agreement"), and
the litigation captioned ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇'▇ Family Restaurant's Inc,
and ELXSI and having Middlesex Superior Court Docket No. 02-04975 (the "Shine
Litigation"), and (ii) the 2001 Shine Agreement, which currently provide for no
principal payments prior to March 1, 2007.
7.8 Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.9 Consignments. Consign any of their Inventory or sell any of their
Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale.
7.10 Distributions. Other than distributions or declaration and payment
of dividends by a Borrower to (a) another Borrower or (b) ELXSI Corporation (i)
in an aggregate amount not in excess of the taxes attributable to such
Borrower's taxable income, and (ii) in an aggregate amount not in excess of the
lesser of $450,000 or the aggregate liabilities of ELXSI Corporation arising in
connection with its reverse stock split in June, 1999, make any distribution or
declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of any Borrower's Stock,
of any class, whether now or hereafter outstanding.
7.11 Accounting Methods. Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP) or enter
into, modify, or terminate any agreement currently existing, or at any time
hereafter entered into with any third party accounting firm or service bureau
for the preparation or storage of Borrowers' or their Subsidiaries' accounting
records without said accounting firm or service bureau agreeing to provide
Lender information regarding Borrowers' and their Subsidiaries' financial
condition.
7.12 Investments. Except for Permitted Investments and Intercompany
Permitted Indebtedness, directly or indirectly, make or acquire any Investment,
or incur any liabilities (including contingent obligations) for or in connection
with any Investment; provided, however, that Administrative Borrower and its
Subsidiaries shall not have Permitted Investments (other than in the Cash
Management Accounts and Local Bank Accounts as permitted by Section 2.7(e)) in
Deposit Accounts or Securities Accounts in an aggregate amount in excess of
$10,000 outstanding at any one time unless Administrative Borrower or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements or similar arrangements governing such
Permitted Investments in order to perfect (and further establish) the Lender's
65
Liens in such Permitted Investments. Subject to the foregoing proviso, Borrowers
shall not and shall not permit their Subsidiaries to establish or maintain any
Deposit Account or Securities Account unless Lender shall have received a
Control Agreement in respect of such Deposit Account or Securities Account.
7.13 Transactions with Affiliates. Except for payments of reasonable
compensation to employees, Intercompany Permitted Indebtedness and permitted
distributions and dividends pursuant to Section 7.10 hereof, directly or
indirectly enter into or permit to exist any transaction with any Affiliate of
any Borrower except for transactions that are in the ordinary course of
Borrowers' business, upon fair and reasonable terms, that are fully disclosed to
Lender, and that are no less favorable to Borrowers than would be obtained in an
arm's length transaction with a non-Affiliate; provided, that, subject to the
terms and provisions of this Agreement, the foregoing shall not prohibit the
existence or performance of the Management Agreement, provided, further that no
payment shall be made by any of the Borrowers under the Management Agreement
without the prior written consent of Lender.
7.14 Suspension. Suspend or go out of a substantial portion of their
business.
7.15 Compensation. Increase the annual fee or per-meeting fees paid to
the members of its Board of Directors during any year by more than 15% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year.
7.16 Use of Proceeds. Use the proceeds of the Advances and the Term Loans
for any purpose other than (a) on the Closing Date, to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes.
7.17 Inventory and Equipment with Bailees. Store the Inventory or
Equipment of Borrowers or their Subsidiaries at any time now or hereafter with a
bailee, warehouseman, or similar party without Lender's prior written consent;
provided, that ELXSI (Cues Division) may store demonstrations trucks (and the
Inventory and Equipment contained therein) used in connection with the Cues
Business with a bailee, warehouseman or similar party, from time to time,
consistent with past practices, provided, that the aggregate cost of such
Inventory and Equipment shall not exceed $4,000,000.
7.18 Financial Covenants.
-------------------
(a) Fail to maintain or achieve:
66
(i) Minimum EBITDA. EBITDA for the twelve-month period ended
on the last day of each month set forth below, measured on a month-
end basis, of at least the required amount set forth in the
following table:
-----------------------------------------------------------
Minimum Amount For the 12-month period ended
-----------------------------------------------------------
$4,000,000 January, February and March, 2004
-----------------------------------------------------------
$4,100,000 April, May and June, 2004
-----------------------------------------------------------
$3,900,000 July, 2004
-----------------------------------------------------------
$4,100,000 August, 2004
-----------------------------------------------------------
$4,300,000 September, 2004
-----------------------------------------------------------
$4,400,000 October, 2004
-----------------------------------------------------------
$4,600,000 November, 2004
-----------------------------------------------------------
$5,000,000 December, 2004, and each month thereafter
-----------------------------------------------------------
(ii) Minimum ▇▇▇▇▇▇▇▇'▇ EBITDA. ▇▇▇▇▇▇▇▇'▇ EBITDA, measured on
a month-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite
thereto:
--------------------------------------------------------------------------------
Minimum Amount Applicable Period
--------------------------------------------------------------------------------
($200,000) January 1, 2004, through and including January 31, 2004
--------------------------------------------------------------------------------
($200,000) January 1, 2004, through and including February 29, 2004
--------------------------------------------------------------------------------
$100,000 January 1, 2004, through and including March 31, 2004
--------------------------------------------------------------------------------
$300,000 January 1, 2004, through and including April 30, 2004
--------------------------------------------------------------------------------
$700,000 January 1, 2004, through and including May 31, 2004
--------------------------------------------------------------------------------
$1,300,000 January 1, 2004, through and including June 30, 2004
--------------------------------------------------------------------------------
$1,700,000 January 1, 2004, through and including July 31, 2004
--------------------------------------------------------------------------------
$2,200,000 January 1, 2004, through and including August 31, 2004
--------------------------------------------------------------------------------
67
--------------------------------------------------------------------------------
Minimum Amount Applicable Period
--------------------------------------------------------------------------------
$2,700,000 January 1, 2004, through and including September 30, 2004
--------------------------------------------------------------------------------
$3,300,000 January 1, 2004, through and including October 31, 2004
--------------------------------------------------------------------------------
$3,540,000 January 1, 2004, through and including November 30, 2004
--------------------------------------------------------------------------------
$3,700,000 Twelve-month period ended at December 31, 2004, and
twelve-month period ended at the end of each month thereafter
--------------------------------------------------------------------------------
(iii) Leverage Ratio. Leverage Ratio, as of the last day of each
month occurring during the applicable period set forth opposite
thereto, less than or equal to the following:
---------------------------------------------------------------------------
Applicable Ratio Applicable Period
---------------------------------------------------------------------------
2.75x Closing Date through and including June 29, 2004
---------------------------------------------------------------------------
2.60x June 30, 2004 through and including December 30, 2004
---------------------------------------------------------------------------
2.25x December 31, 2004, through and including June 29, 2005
---------------------------------------------------------------------------
2.00x June 30, 2005, and thereafter
---------------------------------------------------------------------------
(b) Make:
(i) Capital Expenditures. Capital expenditures in any fiscal
year in excess of the amount set forth in the following table for
the applicable period:
--------------------------------------------------------
Fiscal Year 2004 Fiscal Year 2005 Fiscal Year 2006
--------------------------------------------------------
$3,000,000 $3,200,000 $3,500,000
--------------------------------------------------------
7.19 Leases. Enter into or permit to exist, or permit any Subsidiary to
enter into or permit to exist, any arrangements for the leasing by Borrower or
such Subsidiary, as lessee under a lease which is not a Capital Lease, of any
real or personal property (or any interest therein) other than under (a) leases
in existence on the date hereof and listed on Schedule 7.19 and extensions and
renewals thereof (provided that any increase in the rental payments thereunder
will count against the permitted lease rentals in clause (b) below) and (b)
leases entered into after the date hereof having base rentals not exceeding in
the aggregate for all such leases entered into in a single calendar year
hereafter $500,000, on a noncumulative basis.
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8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due Lender,
reimbursement of Lender Expenses, or other amounts constituting Obligations);
8.2 (a) If Borrowers fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Section 6.7 or Article
7 hereof or this Agreement, (b) if Borrowers fail to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in Sections
6.2, 6.3, 6.6, 6.9, or 6.10 hereof and such failure is not cured within five (5)
days after the occurrence thereof, or (c) if Borrowers fail to perform, keep, or
observe any term, provision, condition, covenant, or agreement contained in any
other section of this Agreement or in any of the other Loan Documents and, in
the event such failure is capable of cure, is not cured within ten (10) days of
its occurrence;
8.3 If any material portion of any Borrower's or any Subsidiary of a
Borrower's assets is attached, seized, subjected to a writ or distress warrant,
levied upon, or comes into the possession of any third Person and such
attachment, seizure, levy, possession or similar event shall not be dissolved or
returned to such Borrower or Subsidiary (as applicable) within the lesser of (a)
twenty (20) days or (b) five (5) days prior to such assets being subject to
forfeiture;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any
Subsidiary of a Borrower;
8.5 If an Insolvency Proceeding is commenced against any Borrower or any
Subsidiary of a Borrower, and any of the following events occur: (a) the
applicable Borrower or Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted; provided, however, that, during the pendency of such
period, Lender shall be relieved of its obligations to extend credit hereunder,
(c) the petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; provided, however, that, during
the pendency of such period, Lender shall be relieved of its obligation to
extend credit hereunder, (d) an interim trustee is appointed to take possession
of all or any substantial portion of the properties or assets of, or to operate
all or any substantial portion of the business of, any Borrower or any
Subsidiary of a Borrower, or (e) an order for relief shall have been entered
therein;
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8.6 If any Borrower or any Subsidiary of a Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 (a) If a notice of Lien is filed of record with respect to a
Borrower's or any of its Subsidiaries' assets by the United States or any
department, agency, or instrumentality thereof (a "Federal Lien"), or by any
state, county, municipal, or governmental agency and such state, county,
municipal, or governmental agency Lien has priority over the Liens of Lender in
and to the Collateral or any portion thereof (a "Non-Federal Priority Lien"); or
(b) if a notice of Lien is filed of record with respect to a Borrower's assets
or any of its Subsidiaries' assets by any state, county, municipal, or
governmental agency that is not a Non-Federal Priority Lien (a "Non-Federal
Non-Priority Lien"); provided, however, that, if the aggregate amount claimed
with respect to any such Non-Federal Non-Priority Liens, or combination thereof,
is less than $50,000, an Event of Default shall not occur under this subsection
if the claims that are the subject of such Liens are the subject of Permitted
Protests and if the Liens are released, discharged, or bonded against within 30
days of each such Lien first being filed of record or, if earlier, at least 5
days prior to the date on which assets that are subject to such Liens are
subject to being sold or forfeited and, in any such case, Lender shall have the
absolute right to establish and maintain a reserve against the Borrowing Base
and the Maximum Revolver Amount in an amount equal to the aggregate amount of
the underlying claims (determined by Lender, in its Permitted Discretion, and
irrespective of any Permitted Protests with respect thereto and including any
penalties or interest that are estimated by Lender, in its Permitted Discretion,
to arise in connection therewith);
8.8 If one or more judgments or other claims involving an aggregate
amount of $50,000, or more, in excess of the amount covered by insurance,
becomes a Lien or encumbrance upon any portion of any Borrower's or any
Subsidiary of a Borrower's assets and the same is not released, discharged,
bonded against, or stayed pending appeal before the earlier of 30 days after the
date it first arises or 5 days prior to the date on which such asset is subject
to being forfeited by Borrower;
8.9 If there is a default in any material agreement to which any
Borrower or any Subsidiary of a Borrower is a party and such default (a) occurs
at the final maturity of the obligations thereunder, or (b) results in a right
by the other party thereto, irrespective of whether exercised, to accelerate the
maturity of the applicable Borrower's or Subsidiary's obligations thereunder, or
to terminate such agreement;
8.10 If any Borrower or any Subsidiary of a Borrower makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
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8.11 If any misstatement or misrepresentation exists in any material
respect now or hereafter in any warranty, representation, statement, or Record
made to Lender by any Borrower, any Subsidiary of a Borrower, or any officer,
employee, agent, or director of any Borrower or any Subsidiary of a Borrower;
8.12 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby; or
8.13 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower or any Subsidiary of a Borrower, or a proceeding
shall be commenced by any Borrower or any Subsidiary of a Borrower, or by any
Governmental Authority having jurisdiction over any Borrower or any Subsidiary
of a Borrower, seeking to establish the invalidity or unenforceability thereof,
or any Borrower or any Subsidiary of a Borrower shall deny that it has any
liability or obligation purported to be created under any Loan Document.
9. THE LENDER'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without notice
of its election and without demand) may do any one or more of the following, all
of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and Lender;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of Lender, but without affecting any of
the Lender's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Borrowers'
Account Debtors for amounts and upon terms which Lender considers advisable, and
in such cases, Lender will credit the Loan Account with only the net amounts
received by Lender in payment of such disputed Accounts after deducting all
Lender Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all of their returned Inventory in trust
for Lender, segregate all such Inventory from all other assets of Borrowers or
in Borrowers' possession;
70
(f) Without notice to or demand upon any Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
at a place that Lender may designate which is reasonably convenient to both
parties. Each Borrower authorizes Lender to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any Lien that in
Lender's determination appears to conflict with the Lender's Liens in and to the
Collateral and to pay all expenses incurred in connection therewith and to
charge Borrowers' Loan Account therefor. With respect to any of Borrowers' owned
or leased premises, each Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
(g) Without notice to any Borrower (such notice being expressly
waived), and without constituting an acceptance of any collateral in full or
partial satisfaction of an obligation (within the meaning of the Code), set off
and apply to the Obligations any and all (i) balances and deposits of any
Borrower held by Lender (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances and deposits of
any Borrower held by Lender, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Borrower Collateral. Each Borrower hereby grants to Lender a license or other
right to use, without charge, such Borrower's labels, patents, copyrights, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Borrower Collateral, in
completing production of, advertising for sale, and selling any Borrower
Collateral and such Borrower's rights under all licenses and all franchise
agreements shall inure to Lender's benefit;
(j) Sell the Borrower Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrowers' premises) as Lender
determines is commercially reasonable. It is not necessary that the Borrower
Collateral be present at any such sale;
(k) Lender shall give notice of the disposition of the Borrower
Collateral as follows:
(i) Lender shall give Administrative Borrower (for the benefit
of the applicable Borrower) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some
71
other disposition other than a public sale is to be made of the
Borrower Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section
12, at least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Borrower Collateral that is
perishable or threatens to decline speedily in value or that is of a
type customarily sold on a recognized market;
(l) Lender may credit bid and purchase at any public sale;
(m) Lender may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Borrower Collateral or to operate same
and, to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing; and
(n) Lender shall have all other rights and remedies available to it
at law or in equity pursuant to any other Loan Documents; provided, however,
that upon the occurrence of any Event of Default described in Section 8.4 or
Section 8.5, in addition to the remedies set forth above, without any notice to
Borrowers or any other Person or any act by the Lender, the Obligations then
outstanding, together with all accrued and unpaid interest thereon, and all fees
and all other amounts due under this Agreement and the other Loan Documents,
shall automatically and immediately become due and payable, without presentment,
demand, protest, or notice of any kind, all of which are expressly waived by
Borrowers.
9.2 Remedies Cumulative. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons when due and
payable, or fails to make any deposits or furnish any required proof of payment
or deposit, all as required under the terms of this Agreement, then, Lender, in
its sole discretion and without prior notice to any Borrower, may do any or all
of the following: (a) make payment of the same or any part thereof, (b) set up
such reserves in Borrowers' Loan Account as Lender deems necessary to protect
72
Lender from the exposure created by such failure, or (c) in the case of the
failure to comply with Section 6.7 hereof, obtain and maintain insurance
policies of the type described in Section 6.7 and take any action with respect
to such policies as Lender deems prudent. Any such amounts paid by Lender shall
constitute Lender Expenses and any such payments shall not constitute an
agreement by Lender to make similar payments in the future or a waiver by Lender
of any Event of Default under this Agreement. Lender need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Lender on which any such Borrower may in any way be liable.
11.2 Lender's Liability for Collateral. Each Borrower hereby agrees that:
(a) so long as Lender complies with its obligations, if any, under the Code,
Lender shall not in any way or manner be liable or responsible for: (i) the
safekeeping of the Borrower Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Borrower Collateral shall be borne by
Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and
hold the Lender-Related Persons and each Participant (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrowers' and their
Subsidiaries' compliance with the terms of the Loan Documents, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrowers shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
73
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Lender to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be (a) personally delivered, or (b) sent by (i) registered or certified
mail (postage prepaid, return receipt requested), (ii) nationally-recognized
overnight courier, (iii) electronic mail (at such email addresses as
Administrative Borrower or Lender, as applicable, may designate to each other in
accordance herewith), or (iv) telefacsimile with electronic receipt of delivery,
to Borrowers in care of Administrative Borrower or to Lender, as the case may
be, at its address set forth below:
If to Administrative
Borrower: ELXSI
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ and
▇▇▇▇▇▇▇▇'▇ FAMILY RESTAURANTS, INC.
▇▇▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Berlack Israels LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
74
If to Lender: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: SF Credit Manager--ELXSI Account
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Lender and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Lender in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on: (w) the date of actual receipt, if personally delivered; (x) three (3)
Business Days after the deposit thereof in the mail, if sent by registered or
certified mail, postage prepaid; (y) one (1) Business Day after deposit with a
nationally recognized overnight courier, if sent by nationally recognized
overnight courier; and (z) one (1) Business Day after sent by electronic mail or
telefacsimile if sent by electronic mail or telefacsimile. Each Borrower
acknowledges and agrees that notices sent by Lender in connection with the
exercise of enforcement rights against Borrower Collateral under the provisions
of the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any other
method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
75
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING
SUCH ACTION OR WHERE SUCH BORROWER COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWERS AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
BORROWERS AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
------------------------------
(a) Lender may assign and delegate to one or more assignees (each an
"Assignee") that are Eligible Transferees all, or any ratable part of all, of
the Obligations and the other rights and obligations of Lender hereunder and
under the other Loan Documents; provided, however, that Borrowers may continue
to deal solely and directly with Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses, and related information with respect to
the Assignee, have been given to Administrative Borrower by Lender and the
Assignee and (ii) Lender and its Assignee have delivered to Borrower an
appropriate assignment and acceptance agreement. Anything contained herein to
the contrary notwithstanding, the Assignee need not be an Eligible Transferee if
such assignment is in connection with any merger, consolidation, sale, transfer,
or other disposition of all or any substantial portion of the business or loan
portfolio of Lender.
(b) From and after the date that Lender provides Administrative
Borrower with such written notice and executed assignment and acceptance
agreement, (i) the Assignee thereunder shall be a party hereto and, to the
76
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment and acceptance agreement, shall have the rights and
obligations of Lender under the Loan Documents, and (ii) Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such assignment and acceptance agreement,
relinquish its rights (except with respect to Section 11.3 hereof) and be
released from any future obligations under this Agreement (and in the case of an
assignment and acceptance covering all or the remaining portion of Lender's
rights and obligations under this Agreement and the other Loan Documents, Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation between Borrowers and the Assignee; provided, however, that nothing
contained herein shall release Lender from obligations that survive the
termination of this Agreement, including Lender's obligations under Section 16.9
of this Agreement.
(c) Immediately upon Borrower's receipt of such fully executed
assignment and acceptance agreement, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the rights and duties of Lender
arising therefrom.
(d) Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Lender (a
"Participant") participating interests in Obligations and the other rights and
interests of Lender hereunder and under the other Loan Documents; provided,
however, that (i) Lender shall remain the "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations and the other rights and interests of
Lender hereunder shall not constitute a "Lender" hereunder or under the other
Loan Documents and Lender's obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible for the performance of
such obligations, (iii) Borrowers and Lender shall continue to deal solely and
directly with each other in connection with Lender's rights and obligations
under this Agreement and the other Loan Documents, (iv) Lender shall not
transfer or grant any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
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each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through Lender and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to Borrowers, the
Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by Lender.
(e) In connection with any such assignment or participation or
proposed assignment or participation, Lender may, subject to the provisions of
Section 16.9, disclose all documents and information which it now or hereafter
may have relating to Borrowers and their Subsidiaries and their respective
businesses.
(f) Any other provision in this Agreement notwithstanding, Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR ss.203.24, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without Lender's prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Lender shall release any
Borrower from its Obligations. Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 14.1 hereof and, except as expressly required pursuant to Section 14.1
hereof, no consent or approval by any Borrower is required in connection with
any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by Lender and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which was given.
15.2 No Waivers; Cumulative Remedies. No failure by Lender to exercise
any right, remedy, or option under this Agreement or, any other Loan Document,
or delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
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extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter (except to the extent of such waiver) to
require strict performance by Borrowers of any provision of this Agreement.
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrowers and Lender.
16.2 Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
16.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Borrowers, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
16.4 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
16.5 Withholding Taxes. All payments made by Borrowers hereunder or under
any note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured by or
based on the income or profits of Lender, or (ii) to the extent that such tax
results from a change in the circumstances of Lender, including a change in the
residence, place of organization, or principal place of business of Lender, or a
change in the branch or lending office of Lender participating in the
transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, each Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement, including any amount
paid pursuant to this Section 16.5 after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein;
provided, however, that Borrowers shall not be required to increase any such
amounts payable to Lender if the increase in such amount payable results from
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Lender's own willful misconduct or gross negligence. Borrowers will furnish to
Lender as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers.
16.6 Waivers of Noncompliance. Lender waives the Borrowers' noncompliance
with Section 2.1 of Supplement A to the Existing Loan Agreement for the periods
ending October 31, 2003, November 30, 2003, and December 31, 2003, and any
Events of Default relating thereto.
16.7 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.8 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or the transfer to Lender of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrowers automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
16.9 Confidentiality.
---------------
Lender agrees that material, non-public information regarding
Borrowers, their Subsidiaries, and/or ELXSI Corporation, their operations,
assets, and existing and contemplated business plans shall be treated by Lender
in a confidential manner, and shall not be disclosed by Lender to Persons who
are not parties to this Agreement, except: (a) to attorneys for and other
advisors, accountants, auditors, and consultants to Lender, (b) to Subsidiaries
and Affiliates of Lender (including the Bank Product Providers), provided that
any such Subsidiary or Affiliate shall have agreed to receive such information
hereunder subject to the terms of this Section 16.9, (c) as may be required by
statute, decision, or judicial or administrative order, rule, or regulation, (d)
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as may be agreed to in advance by Borrowers or their Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by
Lender), (f) in connection with any assignment, prospective assignment, sale,
prospective sale, participation or prospective participations, or pledge or
prospective pledge of Lender's interest under this Agreement, provided that any
such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, pledgee, or prospective pledgee shall have
agreed in writing to receive such information hereunder subject to the terms of
this Section, and (g) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section 16.9
shall survive for 2 years after the payment in full of the Obligations. Anything
contained herein or in any other Loan Document to the contrary notwithstanding,
the obligations of confidentiality contained herein and therein, as they relate
to the transactions contemplated hereby, shall not apply to the federal tax
structure or federal tax treatment of such transactions, and each party hereto
(and any employee, representative, or agent of any party hereto) may disclose to
any and all Persons, without limitation of any kind, the federal tax structure
and federal tax treatment of such transactions (including all written materials
related to such tax structure and tax treatment). The preceding sentence is
intended to cause the transactions contemplated hereby to not be treated as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of the
transactions contemplated hereby or any tax matter or tax idea related thereto.
16.10 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
16.11 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Lender shall have received prior written notice signed
by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Lender with all notices with respect to Term Loans, Advances and Letters of
Credit obtained for the benefit of any Borrower and all other notices and
instructions under this Agreement and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Term Loans,
Advances and Letters of Credit and to exercise such other powers as are
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reasonably incidental thereto to carry out the purposes of this Agreement. It is
understood that the handling of the Loan Account and Collateral of Borrowers in
a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender shall not incur liability to any Borrower as a result hereof.
Each Borrower expects to derive benefit, directly or indirectly, from the
handling of the Loan Account and the Collateral in a combined fashion since the
successful operation of each Borrower is dependent on the continued successful
performance of the integrated group. To induce Lender to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify Lender harmless against any and all liability, expense, loss or claim
of damage or injury, made against Lender by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) Lender's relying on
any instructions of the Administrative Borrower, or (c) any other action taken
by Lender hereunder or under the other Loan Documents, except that Borrowers
will have no liability to any Lender-Related Person under this Section 16.11
with respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Lender-Related Person.
16.12 Payment on a Non-Business Day. Notwithstanding anything to the
contrary in this Agreement, in the event that any payment due hereunder should
become due and payable on any day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and interest shall
be payable with respect to such extension and the failure to make any such
payment on a non-Business Day shall not constitute a Default or an Event of
Default under this Agreement.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ELXSI,
a California corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
ELXSI (NEW HAMPSHIRE), INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
▇▇▇▇▇▇▇▇'▇ RESTAURANTS, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
▇▇▇▇▇▇▇▇'▇ HOLDINGS COMPANY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
▇▇▇▇▇▇▇▇'▇ FAMILY RESTAURANTS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
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▇▇▇▇▇ FARGO FOOTHILL, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
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