Exhibit 10.6
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LOAN AGREEMENT
Dated as of April 28, 1998
Between
U.S. FRANCHISE SYSTEMS, INC.
(the Borrower)
and
NATIONSBANK, N.A.
(the Lender)
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TABLE OF CONTENTS1
ARTICLE 1 - DEFINITIONS.......................................................1
SECTION 1.1 DEFINITIONS......................................................1
SECTION 1.2 OTHER REFERENTIAL PROVISIONS.....................................9
SECTION 1.3 EXHIBITS AND SCHEDULES..........................................10
ARTICLE 2 - THE LOAN.........................................................10
SECTION 2.1 TERM LOAN.......................................................10
SECTION 2.2 MANNER OF BORROWING AND DISBURSING TERM LOAN....................10
SECTION 2.3 REPAYMENT OF LOAN...............................................10
SECTION 2.4 TERM NOTE.......................................................11
SECTION 2.5 PREPAYMENT OF TERM LOAN.........................................11
ARTICLE 3 - GENERAL LOAN PROVISIONS..........................................11
SECTION 3.1 INTEREST........................................................11
SECTION 3.2 FEES............................................................12
SECTION 3.3 CHANGED CIRCUMSTANCES...........................................12
SECTION 3.4 INCREASED COSTS AND REDUCED RETURNS.............................13
SECTION 3.5 MANNER OF PAYMENT...............................................13
SECTION 3.6 TERMINATION OF AGREEMENT........................................13
ARTICLE 4 - CONDITIONS PRECEDENT.............................................13
SECTION 4.1 CONDITIONS PRECEDENT TO INITIAL LOAN............................13
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER...................15
SECTION 5.1 REPRESENTATIONS AND WARRANTIES..................................15
SECTION 5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.................19
ARTICLE 6 - AFFIRMATIVE COVENANTS............................................19
SECTION 6.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS.........19
SECTION 6.2 COMPLIANCE WITH APPLICABLE LAW..................................19
SECTION 6.3 CONDUCT OF BUSINESS.............................................20
SECTION 6.4 PAYMENT OF TAXES AND CLAIMS.....................................20
SECTION 6.5 ACCOUNTING METHODS AND FINANCIAL RECORDS........................20
SECTION 6.6 USE OF PROCEEDS.................................................20
SECTION 6.7 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL REQUIREMENTS......20
SECTION 6.8 ACCURACY OF INFORMATION.........................................20
SECTION 6.9 LOAN TO STOCK RATIO.............................................20
SECTION 6.10 INSURANCE......................................................21
SECTION 6.11 INSPECTION.....................................................21
SECTION 6.12 YEAR 2000 COMPLIANCE...........................................21
ARTICLE 7 - INFORMATION......................................................21
SECTION 7.1 FINANCIAL STATEMENTS............................................21
SECTION 7.2 DISCUSSIONS WITH ACCOUNTANTS....................................22
SECTION 7.3 OFFICER'S CERTIFICATE...........................................22
SECTION 7.4 COPIES OF OTHER REPORTS.........................................22
SECTION 7.5 NOTICE OF LITIGATION AND OTHER MATTERS..........................23
SECTION 7.6 ERISA...........................................................23
ARTICLE 8 - NEGATIVE COVENANTS...............................................24
SECTION 8.1 INVESTMENTS.....................................................24
SECTION 8.2 MERGER, CONSOLIDATION AND SALE OF ASSETS........................24
SECTION 8.3 TRANSACTIONS WITH AFFILIATES....................................24
SECTION 8.4 LIENS...........................................................24
SECTION 8.5 RESTRICTED DISTRIBUTIONS AND PAYMENTS, ETC......................24
SECTION 8.6 BENEFIT PLANS...................................................24
SECTION 8.7 AMENDMENTS OF OTHER AGREEMENTS..................................24
SECTION 8.8 TAG-ALONG/PIGGY BACK RIGHTS....................................24
ARTICLE 9 - DEFAULT..........................................................24
SECTION 9.1 EVENTS OF DEFAULT...............................................25
SECTION 9.2 REMEDIES........................................................27
SECTION 9.3 APPLICATION OF PROCEEDS.........................................28
SECTION 9.4 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES....................28
ARTICLE 10 - MISCELLANEOUS...................................................29
SECTION 10.1 NOTICES........................................................29
SECTION 10.2 EXPENSES.......................................................29
SECTION 10.3 STAMP AND OTHER TAXES..........................................30
SECTION 10.4 SETOFF.........................................................30
SECTION 10.5 MANDATORY ARBITRATION; LITIGATION..............................30
SECTION 10.6 REVERSAL OF PAYMENTS...........................................32
SECTION 10.8 ACCOUNTING MATTERS............................................32
SECTION 10.9 ASSIGNMENT; PARTICIPATION......................................32
SECTION 10.10 AMENDMENTS....................................................32
SECTION 10.11 PERFORMANCE OF BORROWER'S DUTIES..............................32
SECTION 10.12 INDEMNIFICATION...............................................33
SECTION 10.13 ALL POWERS COUPLED WITH INTEREST..............................33
SECTION 10.14 SURVIVAL......................................................33
SECTION 10.15 SEVERABILITY OF PROVISIONS....................................33
SECTION 10.16 GOVERNING LAW.................................................33
SECTION 10.17 COUNTERPARTS..................................................33
SECTION 10.18 REPRODUCTION OF DOCUMENTS.....................................33
SECTION 10.19 FINAL AGREEMENT..............................................34
EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF TERM NOTE
SCHEDULE 5.1(a) Material Jurisdictions in Which Borrower is Qualified as a
Foreign Corporation
SCHEDULE 5.1(b) Borrower's Subsidiaries
SCHEDULE 5.1(e) Borrower's Business
SCHEDULE 5.1(f) Exceptions to Governmental Approvals
SCHEDULE 5.1(g) Non Lien Title Exceptions and Defects and Property Disposed
of Out of Ordinary Course of Business
SCHEDULE 5.1(h) Liens
SCHEDULE 5.1(i) Indebtedness for Money Borrowed and Guaranties
SCHEDULE 5.1(j) Litigation
SCHEDULE 5.1(k) Tax Returns and Payments
SCHEDULE 5.1(o) ERISA
SCHEDULE 5.1(t) Employee Relations
SCHEDULE 5.1(x) Tag-Along Rights
SCHEDULE 6.6 Use of Proceeds
SCHEDULE 8.3 Certain Affiliated Transactions
1 This Table of contents is included for reference purposes only and does not
constitute part of the Loan and Security Agreement.
LOAN AGREEMENT
Dated as of April 28, 1998
U.S. FRANCHISE SYSTEMS, INC., a Delaware corporation, and NATIONSBANK,
N.A., a national banking association, agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement:
"Acquire", as applied to any Investment, means the acquisition of such
Investment by purchase, exchange, issuance of stock or other securities, or by
merger, reorganization or any other method.
"Affiliate" means, with respect to a Person, (a) any officer, director,
employee or managing agent of such Person, and (b) any other Person that, (i)
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with such given Person, (ii) directly
or indirectly beneficially owns or holds 10% or more of any class of voting
stock or partnership or other interest of such Person or any Subsidiary of such
Person, or (iii) 10% or more of the voting stock or partnership or other
interest of which is directly or indirectly beneficially owned or held by such
Person or a Subsidiary of such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities or partnership or other interests, by contract or otherwise.
"Agreement" means this Agreement, including the Exhibits and Schedules
hereto, and all amendments, modifications and supplements hereto and thereto and
restatements hereof and thereof.
"Agreement Date" means the date as of which this Agreement is dated.
"Alpine Ventures" means Alpine Hospitality Ventures, LLC, a Delaware
limited liability company.
"Alpine Ventures Loan Documents" means, collectively, the Alpine Ventures
Note and the Alpine Ventures Note Purchase Agreement.
"Alpine Ventures Note" means the Senior Subordinated Promissory Note, dated
as of the Effective Date, in the principal amount of $15,000,000, executed by
Alpine Ventures and payable to the order of the Borrower.
"Alpine Ventures Note Purchase Agreement" means the Senior Subordinated
Note Purchase Agreement, dated as of the Effective Date, between the Borrower,
as lender, and Alpine Ventures, as borrower, together with all amendments,
modifications and supplements thereto (including the Supplemental Letter
Agreement, as defined therein).
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"▇▇▇▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Benefit Plan" means an employee benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which a Person or any
Related Company is, or within the immediately preceding 6 years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
"Borrower" means U.S. Franchise Systems, Inc., a Delaware corporation, and
its successors and assigns.
"Business Day" means (a) any day other than a Saturday, Sunday or other day
on which banks in Atlanta, Georgia are authorized to close, and (b) in respect
of any determination with respect to a LIBOR Loan, any day referred to in clause
(a) that is also a day on which tradings are conducted in the London interbank
eurodollar market.
"Business Unit" means the assets constituting the business, or a division
or operating unit thereof, of any Person.
"Capitalized Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all property and assets serving as collateral for the
Obligations, including any collateral under the Collateral Assignment of Loan
Documents, the Collateral Assignment of Deposit Account, and the Stock Pledge
Agreements.
"Collateral Assignment of Deposit Account" means the Escrow and Security
Agreement, dated as of the Effective Date, executed by the Borrower in favor of
the Lender, pursuant to which the Borrower pledges $185,156.25 to the Lender as
collateral for the Obligations.
"Collateral Assignment of Loan Documents" means the Collateral Assignment
of Loan Documents, dated as of the Effective Date, executed by the Borrower in
favor of the Lender with respect to the Alpine Ventures Loan Documents.
"Default" means any of the events specified in Section 9.1 that, with the
passage of time or giving of notice or both, would constitute an Event of
Default.
"Default Margin" means 2%.
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"Dollar" and "$" means freely transferable United States dollars.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in
effect from time to time, and any successor statute.
"Effective Date" means the later of (a) the Agreement Date, and (b) the
first date on which all of the conditions set forth in Section 4.1 shall have
been fulfilled or waived by the Lender.
"Environmental Laws" means all federal, state, local and foreign laws now
or hereafter in effect relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder.
"Event of Default" means any of the events specified in Section 9.1.
"GAAP" means generally accepted accounting principles consistently applied
and maintained throughout the period indicated and consistent with the prior
financial practice of the Person referred to.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
governmental bodies, whether federal, state, local, foreign national or
provincial, and all agencies thereof.
"Governmental Authority" means any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Guaranty", "Guaranteed" or to "Guarantee," as applied to any obligation of
another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of such obligation of such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and whether
or not constituting a guaranty, the practical effect of which is to assure the
payment or performance (or payment of damages in the event of nonperformance) of
any part or all of such obligation of such other Person whether by (i) the
purchase of securities or obligations, (ii) the purchase, sale or lease (as
lessee or lessor) of property or the purchase or sale of services primarily for
the purpose of enabling the obligor with respect to such obligation to make any
payment or performance (or payment of damages in the event of nonperformance) of
or on account of any part or all of such obligation or to assure the owner of
such obligation against loss,
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(iii) the supplying of funds to, or in any other manner investing in, the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries of letters of credit, or (v) the supplying of funds to or
investing in a Person on account of all or any part of such Person's obligation
under a guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligation.
"Indebtedness" of any Person means (a) all obligations for money borrowed
or for the deferred purchase price of property or services (other than trade
payables incurred in the ordinary course of business) or in respect of
reimbursement obligations (whether or not due) under letters of credit, (b) all
obligations represented by bonds, debentures, notes and accepted drafts that
represent extensions of credit, (c) Capitalized Lease Obligations, (d) all
obligations (including, during the non-cancellable term of any lease in the
nature of a title retention agreement, all future payment obligations under such
lease discounted to their present value in accordance with GAAP) secured by any
Lien to which any property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed by such
Person, (e) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person, (f) all amounts payable under interest rate
protection products, takeout commitments, or purchase contracts, and (g) all
other amounts considered by rating agencies as indebtedness.
"Intellectual Property" means, as to any Person, all of such Person's then
owned existing and future acquired or arising patents, patent rights,
copyrights, works which are the subject of copyrights, trademarks, service
marks, trade names, trade styles, patent, trademark and service ▇▇▇▇
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to ▇▇▇ for past, present and future infringements of any of the
foregoing.
"Interbank Offered Rate" means, as such rate changes each day, the rate per
annum appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in United States dollars at approximately
11:00 a.m. (London time) for a thirty-day period, with the applicable Interbank
Offered Rate for each day being the Interbank Offered Rate that appeared, as
aforesaid, two Business Days prior to such day. If for any reason such rate is
not available, the term "Interbank Offered Rate" shall mean, as such rate
changes each day, without notice, the rate per annum appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in United States
dollars at approximately 11:00 a.m. (London time) for a thirty-day period, with
the applicable Interbank Offered Rate for each day being the Interbank Offered
Rate that appeared, as aforesaid, two Business Days prior to such day; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Interest Payment Date" means the first day of each calendar month
commencing on May 1, 1998.
"Investment" means, with respect to any Person: (a) the direct or indirect
purchase or acquisition of any beneficial interest in, any share of capital
stock of, evidence of Indebtedness of or other security issued by any other
Person, (b) any loan, advance or extension of credit to, or contribution to the
capital
5
of, any other Person, excluding advances to employees in the ordinary course of
business for business expenses, (c) any Guaranty of the obligations of any other
Person, or (d) the direct or indirect purchase or Acquisition of any Business
Unit.
"Lender" means NationsBank, N.A., a national banking association, and its
successors and assigns.
"Lender's Office" means the office of the Lender specified in or determined
in accordance with the provisions of Section 10.1(c).
"LIBOR" means, as of any date of determination, a simple per annum interest
rate determined pursuant to the following formula:
LIBOR = Interbank Offered Rate
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1 - LIBOR Reserve Percentage
LIBOR shall be adjusted automatically as of the effective date of any change in
the LIBOR Reserve Percentage.
"LIBOR Loan" means the Loan at any time that it bears interest with
reference to LIBOR.
"LIBOR Reserve Percentage" means, for any day, that percentage (expressed
as a decimal) which is in effect from time to time under Regulation D of the
Board of Governors of the Federal Reserve System, as such regulation may be
amended from time to time, or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental, emergency,
special or marginal reserves) applicable to any member bank with respect to
Eurocurrency liabilities as that term is defined in Regulation D (or against any
other category of liabilities that includes deposits by reference to which the
interest rate of any LIBOR Loan is determined), whether or not the Lender has
any Eurocurrency liabilities subject to such reserve requirement at that time.
The LIBOR Loan shall be deemed to constitute Eurocurrency liabilities and as
such shall be deemed subject to reserve requirements without the benefit of
credits for proration, exceptions or offsets that may be available from time to
time to Lender.
"Lien" as applied to the property of any Person means: (a) any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge, lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person or upon the income or profits
therefrom, (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person, and (c) the filing of, or any agreement to give, any financing
statement under the UCC or its equivalent in any jurisdiction.
"Loan" means the loan made to the Borrower pursuant to Section 2.1.
"Loan Documents" means, collectively, this Agreement, the Note, the
Security Documents and
6
each other instrument, agreement and document executed and delivered by the
Borrower or any other Obligor in connection with this Agreement and each other
instrument, agreement or document referred to herein or contemplated hereby.
"Loan to Stock Ratio" means, as of any date of determination, the ratio of
(a) the outstanding principal balance of the Loan, to (b) the Stock Value. As
used herein, "Stock Value" means the sum of any cash collateral and letters of
credit held by the Lender pursuant to Section 6.9(ii) (it being understood that
the $185,156.25 of cash collateral subject to the Collateral Assignment of
Deposit Account shall not be included in the Stock Value) plus the product of
the (i) share price of the Borrower's Class A common stock as of the close of
trading on such date of determination, as set forth in the Wall Street Journal
or any comparable source chosen by the Lender, multiplied by (ii) the number of
shares of the Borrower's Class B common stock subject to the Lender's first
priority perfected Security Interest pursuant to the Stock Pledge Agreements.
"Materially Adverse Effect" means any act, omission, event or undertaking
which would, singly or in the aggregate, have a materially adverse effect upon
(a) the business, assets, properties, liabilities, condition (financial or
otherwise), results of operations or business prospects of the Borrower and of
its Subsidiaries, taken as a whole, (b) upon the ability of the Borrower or any
other Obligor to perform any obligations under this Agreement or any other Loan
Document to which it is a party, or (c) the legality, validity, binding effect,
enforceability or admissibility into evidence of any Loan Document or the
ability of Lender to enforce any rights or remedies under or in connection with
any Loan Document; in any case, whether resulting from any single act, omission,
situation, status, event, or undertaking, together with other such acts,
omissions, situations, statuses, events, or undertakings .
"Maturity Date" means April 28, 2000 or such earlier date as the
Obligations shall have been accelerated pursuant to the provisions of Section
9.2.
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness for
money borrowed, (b) Indebtedness, whether or not in any such case the same was
for money borrowed, (i) represented by notes payable and drafts accepted, that
represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid (other than trade Indebtedness) or that was issued
or assumed as full or partial payment for property, (c) Indebtedness that
constitutes a Capitalized Lease Obligation, and (d) Indebtedness that is such by
virtue of clause (e) of the definition thereof, but only to the extent that the
obligations Guaranteed are obligations that would constitute Indebtedness for
Money Borrowed.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or a Related Company is required to
contribute or has contributed within the immediately preceding 6 years.
"Note" means the Term Note made by the Borrower payable to the order of the
Lender evidencing the obligation of the Borrower to pay the aggregate unpaid
principal amount of the Loan made to it by the Lender (and any promissory note
or notes that may be issued from time to time in substitution, renewal,
extension, replacement or exchange therefor), substantially in the form of
Exhibit A hereto, with all blanks
7
properly completed.
"Obligations" means, in each case whether now in existence or hereafter
arising, the principal of and interest and premium, if any, on the Loan, and all
other amounts due under this Loan Agreement and the other Loan Documents.
"Obligor" means the Borrower, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Leven and ▇▇▇▇▇▇ ▇▇▇▇▇.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Permitted Investments" means (a) Investments of the Borrower in: (i)
negotiable certificates of deposit, time deposits and banker's acceptances
issued by the Lender or any Affiliate of the Lender or by any United States bank
or trust company having capital, surplus and undivided profits in excess of
$250,000,000, (ii) any direct obligation of the United States of America or any
agency or instrumentality thereof which has a remaining maturity at the time of
purchase of not more than one year and repurchase agreements relating to the
same, (iii) commercial paper of a domestic issuer rated A-1 by S&P and P-1 by
▇▇▇▇▇'▇ and maturing not more than 270 days after the date of Acquisition, (iv)
sales on credit in the ordinary course of business on terms customary in the
industry, and (v) notes, accepted in the ordinary course of business, evidencing
overdue accounts receivable arising in the ordinary course of business, (b)
Investments existing as of the Agreement Date, (c) Investments in Persons
engaged in substantially the same business as the Borrower and its Subsidiaries
made after the Agreement Date, and (d) other Investments made after the
Agreement Date in an aggregate amount not in excess of $5,000,000.
"Permitted Liens" means: (a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien imposed pursuant to any of
the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals, or other
similar liens, incurred in the ordinary course of business, but in all cases,
only if payment shall not at the time be required to be made in accordance with
Section 6.4; (b) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation or
under surety or performance bonds, or other obligations of a like nature, in
each case arising in the ordinary course of business; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of the Borrower's real estate, which do not
materially detract from the value of such real estate or impair the use thereof
in the business of the Borrower; (d) Purchase Money Liens securing Permitted
Purchase Money Indebtedness; (e) Liens of the Lender arising under the Security
Documents; (f) Liens arising out of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Borrower is fully protected by insurance or in
respect of which the Borrower shall at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of which a stay of execution
pending such appeal or proceeding for review shall have been secured, and as to
which appropriate reserves have been established on the books of the Borrower;
(g) Liens existing on the date hereof; and (h) Liens securing Indebtedness which
is incurred to refinance Indebtedness secured by a permitted Lien, provided such
Lien does not extend to any property or assets of the Borrower not securing the
Indebtedness so refinanced.
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"Permitted Purchase Money Indebtedness" means Purchase Money Indebtedness
secured only by Purchase Money Liens and Capitalized Lease Obligations.
"Person" means an individual, corporation, partnership, association, trust
or unincorporated organization or a government or any agency or political
subdivision thereof.
"Piggy Back Rights" means rights of any Person to register shares of common
stock of the Borrower in connection with the registration of any other shares of
common stock of the Borrower.
"Prime Rate" means, on any date, the rate of interest per annum then most
recently established by the Lender as its "prime rate." Any such rate is a
general reference rate of interest, may not be related to any other rate, and
may not be the lowest or best rate actually charged by the Lender to any
customer or a favored rate and may not correspond with future increases or
decreases in interest rates charged by other lenders of market rates in general.
"Prime Rate Loan" means the Loan at any time that it bears interest with
reference to the Prime Rate.
"Purchase Money Indebtedness" means Indebtedness created to finance the
payment of all or any part of the purchase price (not in excess of the fair
market value thereof) of any tangible asset (other than inventory) and incurred
at the time of or within 10 days prior to or after the acquisition of such
tangible asset.
"Purchase Money Lien" means any Lien securing Purchase Money Indebtedness,
but only if such Lien shall at all times be confined solely to the tangible
asset (other than inventory) the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
"Related Company" means, as to any Person, any (a) corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in clause (a) above or any partnership,
trade or business described in clause (b) above.
"Restricted Distribution" by any Person means (a) its retirement,
redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or partnership interests, (c) any loan or advance by such Person
to, or other investment by such Person in, the holder of any of such securities
or partnership interests, excluding however the $15,000,000 loan made by the
Borrower to Alpine Ventures pursuant to the Alpine Ventures Loan Documents and
(d) any other payment by such Person in respect of such securities or
partnership interests.
"Restricted Payment" means (a) any redemption, repurchase or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or
9
amortization payment with respect thereto, of any Indebtedness of a Person
(other than the Obligations and trade debt), and (b) the payment by any Person
of the principal amount of or interest on any Indebtedness (other than trade
debt) owing to an Affiliate of such Person.
"Security Documents" means the Collateral Assignment of Loan Documents,
Collateral Assignment of Deposit Account, the Stock Pledge Agreements, and each
other writing executed and delivered by any Person securing the Obligations or
evidencing such security.
"Security Interest" means the Liens of the Lender on and in the Collateral
effected hereby or by any of the Security Documents or pursuant to the terms
hereof or thereof.
"Stock Pledge Agreements" means the Stock Pledge Agreements, dated the
Effective Date, executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ in favor of
the Lender, pursuant to which ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ pledge
certain shares of the Borrower's Class B common stock to the Lender.
"Subsidiary" when used to determine the relationship of a Person to another
Person, means a Person of which an aggregate of 50% or more of the stock of any
class or classes or 50% or more of other ownership interests is owned of record
or beneficially by such other Person or by one or more Subsidiaries of such
other Person or by such other Person and one or more Subsidiaries of such
Person, (i) if the holders of such stock or other ownership interests (A) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of such other
ownership interests, if such ownership interests constitute a majority voting
interest; excluding however RSVP-BI OPCO LLC, a Delaware limited liability
company, and RSVP-ABI REALCO LLC, a Delaware limited liability company.
"Tag-Along Rights" means rights of any Person, in connection with any
transfer by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Leven or ▇▇▇▇▇▇▇ ▇▇▇▇▇ of shares of common stock of
the Borrower, to participate in such transfer.
"Termination Event" means (a) a "Reportable Event" as defined in Section
4043(b) of ERISA, but excluding any such event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations, (b) the filing
of a notice of intent to terminate a Benefit Plan or the treatment of a Benefit
Plan amendment as a termination under Section 4041 of ERISA, or (c) the
institution of proceedings to terminate a Benefit Plan by the PBGC under Section
4042 of ERISA or the appointment of a trustee to administer any Benefit Plan.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Georgia.
"Unfunded Vested Accrued Benefits" means, with respect to any Benefit Plan
at any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Benefit Plan
10
exceeds (b) the fair market value of all Benefit Plan assets allocable to such
benefits, as determined using such reasonable actuarial assumptions and methods
as are specified in the Schedule B (Actuarial Information) to the most recent
Annual Report (Form 5500) filed with respect to such Benefit Plan.
"Waivers" means the waivers, in form acceptable to the Lender in its
discretion, from each of Alpine Hospitality Equities LLC, a Delaware limited
liability company, H Suites Associates, an Illinois joint venture, and HSA
Properties, Inc., a Delaware corporation (collectively, the "Investors"),
pursuant to which each of the Investors waives any and all (a) Tag-Along Rights
such Investor may now or hereafter possess in connection with any liquidation by
the Lender of the common stock of the Borrower (whether Class A or Class B) now
or hereafter subject to the Stock Pledge Agreements, and (b) Piggy Back Rights
such Investor may now or hereafter possess in connection with any registration
of such common stock by the Lender pursuant to the Registration Rights
Agreement.
Section 1.2 Other Referential Provisions.
(a) All terms in this Agreement, the Exhibits and Schedules hereto shall
have the same defined meanings when used in any other Loan Documents, unless the
context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms not
specifically defined or specified herein shall have the meanings generally
attributed to such terms under GAAP including, without limitation, applicable
statements and interpretations issued by the Financial Accounting Standards
Board and bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for convenience
only, do not constitute part of this Agreement and neither limit nor amplify the
provisions of this Agreement, and all references in this Agreement to Articles,
Sections, Subsections, paragraphs, clauses, subclauses, Schedules or Exhibits
shall refer to the corresponding Article, Section, Subsection, paragraph, clause
or subclause of, or Schedule or Exhibit attached to, this Agreement, unless
specific reference is made to the articles, sec tions or other subdivisions or
divisions of, or to schedules or exhibits to, another document or instrument.
(f) Each definition of a document in this Agreement shall include such
document as amended, modified, supplemented or restated from time to time in
accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to a Loan
Document includes that party and its successors and assigns permitted hereunder
or under such Loan Document.
11
(h) Unless otherwise specifically stated, whenever a time is referred to in
this Agreement or in any other Loan Document, such time shall be the local time
in the city in which the principal office of Lender is located.
(i) Whenever the phrase "to the knowledge of the Borrower" or words of
similar import relating to the knowledge of the Borrower are used herein, such
phrase shall mean and refer to (i) the actual knowledge of the President or
chief financial officer or (ii) the knowledge that such officers would have
obtained if they had engaged in good faith in the diligent performance of their
duties, including the making of such reasonable specific inquiries as may be
necessary of the appropriate persons in a good faith attempt to ascertain the
accuracy of the matter to which such phrase relates.
(j) All certificates to be delivered by officers of the Borrower hereunder
shall be made by such officers on behalf of the Borrower in their capacity as
officers and not in their individual capacity.
Section 1.3 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
ARTICLE 2 - THE LOAN
Section 2.1 Term Loan. Upon the terms and subject to the conditions of, and
in reliance upon the representations and warranties made under, this Agreement,
the Lender agrees to make the Loan to the Borrower on the Effective Date in the
amount of $10,000,000.
Section 2.2 Manner of Borrowing and Disbursing Term Loan. On the Effective
Date, upon satisfaction of the applicable conditions set forth in Section 4.1,
the Lender will disburse the Loan in same day funds in accordance with the terms
of the written instructions from the Borrower to the Lender.
Section 2.3 Repayment of Loan. The Loan is due and payable and shall be
repaid in full by the Borrower on the Maturity Date; provided that the Borrower
shall make monthly principal payments of $75,000 each on the 1st day of each
calendar month commencing on November 1, 1998 if the Loan is not paid in full on
or before October 28, 1998. In the event the Borrower is required to make
monthly principal payments, the remaining unpaid principal balance of the Loan
shall be due and payable and shall be repaid in full by the Borrower on the
Maturity Date.
Section 2.4 Term Note. The Loan and the obligation of the Borrower to repay
such Loan shall be evidenced by a single Note payable to the order of the
Lender. Such Note shall be dated the Effective Date and be duly and validly
executed and delivered by the Borrower.
Section 2.5 Prepayment of Term Loan. The Borrower shall have the right at
any time and from time to time, to prepay the Loan in whole or in part on any
Business Day without premium or penalty. Each partial prepayment of the Loan
shall be applied to the principal installments of the Loan in the inverse order
of their maturities.
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ARTICLE 3 - GENERAL LOAN PROVISIONS
Section 3.1 Interest.
(a) (i) LIBOR Loan. Except as set forth in Sections 3.1(c) and 3.3, the
Borrower will pay interest on the Loan at a rate per annum equal to the sum
of the Applicable Margin plus LIBOR, payable in arrears on each Interest
Payment Date and on the Maturity Date. LIBOR shall be adjusted on a daily
basis without notice as set forth in the definition of "Interbank Offered
Rate".
(ii) Prime Rate Loan. If at any time the Loan no longer bears interest
based on LIBOR as a result of the provisions of Section 3.3, the Borrower
will pay interest on the unpaid principal amount of the Loan at a rate per
annum equal to the sum of the Applicable Margin plus the Prime Rate,
payable monthly in arrears on each Interest Payment Date and on the
Maturity Date. The Prime Rate shall be adjusted from time to time as set
forth in the definition of "Prime Rate".
(iii) Applicable Margin. As used herein, "Applicable Margin" means,
(A) in the case of the LIBOR Loan, 1.75%, and (B) in the case of the Prime
Rate Loan, 0%; provided that, in each case, the Applicable Margin shall be
increased by 25 basis points on the 28th day of each July, October, January
and April, commencing on July 28, 1998.
(b) The Borrower shall pay interest on the unpaid principal amount of each
Obligation other than the Loan for each day from the day such Obligation becomes
due and payable until such Obligation is paid at the rate per annum applicable
to the Prime Rate Loan, payable on demand.
(c) From and after the occurrence of an Event of Default, the unpaid
principal amount of each Obligation shall bear interest until paid in full (or,
if earlier, until such Event of Default is cured or waived in writing by the
Lender) at a rate per annum equal to the Default Margin plus the sum of the
Prime Rate plus the Applicable Margin. The interest rate provided for in this
Section 3.1(c) shall to the extent permitted by applicable law apply to and
accrue on the amount of any judgment entered with respect to any Obligation and
shall continue to accrue at such rate during any proceeding described in Section
9.1(g) or (h).
(d) The interest rates provided for in Sections 3.1(a), (b) and (c) shall
be computed on the basis of a year of 360 days and the actual number of days
elapsed.
(e) It is not intended by the Lender, and nothing contained in this
Agreement or the Note shall be deemed, to establish or require the payment of a
rate of interest in excess of the maximum rate permitted by applicable law (the
"Maximum Rate"). In the event the Lender receives, collects or applies as
interest any sum in excess of the Maximum Rate, such excess amount shall be
applied to the reduction of the principal balance of the applicable Obligation,
and, if no such principal is then outstanding, such excess or part thereof
remaining shall be paid to the Borrower.
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Section 3.2 Fees.
(a) Closing Fee. On the Effective Date, the Borrower shall pay to the
Lender a closing fee in the amount of $100,000 (less the $10,000 deposit) in
consideration of the making of Loan under this Agreement and in order to
compensate the Lender for the costs associated with structuring, processing,
approving and closing the Loan, but excluding expenses for which the Borrower
has agreed elsewhere in this Agreement to reimburse the Lender.
(b) Facility Fee. The Borrower shall pay the Lender a facility fee of
$100,000 during the first year of the Loan and $200,000 during the second year
of the Loan, such fees to be due on the dates set forth below; provided that, if
the Obligations are paid in full on or before October 28, 1998, no such fees
shall be due. In the event the Obligations are not paid in full on or before
October 28, 1998, the $100,000 facility fee shall be due on the earlier of (a)
April 28, 1999 and (b) the earlier of the acceleration of the Obligations
pursuant to Section 9.2 and the date on which the Obligations are paid in full;
provided that, if the Borrower voluntarily pays the Obligations in full prior to
April 28, 1999, such fee shall be pro rated by multiplying $100,000 by the ratio
of (A) the number of days elapsed from October 28, 1998 to the date of
prepayment to (B) 183. In the event the Obligations are not paid in full on or
before April 28, 1999, the $200,000 facility fee shall be due and payable on the
earlier of the acceleration of the Obligations pursuant to Section 9.2, the
Maturity Date, and the date on which the Obligations are paid in full; provided
that, if the Borrower voluntarily pays the Obligations in full prior to April
28, 2000, such fee shall be pro rated by multiplying $200,000 by the ratio of
(A) the number of days elapsed from April 28, 1999 to the date of prepayment to
(B) 365.
(c) General. All fees shall be fully earned by the Lender when due and
payable and, except as otherwise set forth herein, shall not be subject to
refund or rebate. All fees are for compensation for services and are not, and
shall not be deemed to be, interest or a charge for the use of money.
Section 3.3 Changed Circumstances.
(a) If the introduction of or any change in or in the interpretation of (in
each case, after the date hereof) any law or regulation makes it unlawful, or
any Governmental Authority asserts, after the date hereof, that it is unlawful,
for the Lender to perform its obligations hereunder to make or maintain the
LIBOR Loan, the Lender shall notify the Borrower of such event, and until the
Lender shall notify the Borrower that such circumstances no longer exist, the
Loan shall thereafter bear interest based on the Prime Rate as set forth in
Section 3.1(a)(ii).
(b) If the Lender shall notify the Borrower that LIBOR will not adequately
reflect the cost to the Lender of making or funding the LIBOR Loan or that the
Interbank Offered Rate is not determinable from any interest rate reporting
service of recognized standing, then until the Lender shall notify the Borrower
that such circumstances no longer exist, the Loan shall thereafter bear interest
based on the Prime Rate as set forth in Section 3.1(a)(ii).
Section 3.4 Increased Costs and Reduced Returns. The Borrower agrees that
if any law now or hereafter in effect and whether or not presently applicable to
the Lender or any request, guideline or
14
directive of any Governmental Authority (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) or the
interpretation or administration thereof by any Governmental Authority, shall
either (a)(i) impose, affect, modify or deem applicable any reserve (other than
the LIBOR Reserve Percentage), special deposit, capital maintenance or similar
requirement against the LIBOR Loan, (ii) impose on the Lender any other
condition regarding the LIBOR Loan or (iii) result in any requirement regarding
capital adequacy (including any risk-based capital guidelines) affecting the
Lender being imposed or modified or deemed applicable to the Lender with respect
to the LIBOR Loan, or (b) subject the Lender to any taxes on the recording,
registration, notarization or other formalization of the Loan or the Note, and
the result of any event referred to in clause (a) or (b) above shall be to
increase the cost to the Lender of making, funding or maintaining the Loan or to
reduce the amount of any sum receivable by the Lender or the Lender's rate of
return on capital with respect to the Loan to a level below that which the
Lender could have achieved but for such imposition, modification or deemed
applicability (taking into consideration the Lender's policies with respect to
capital adequacy) by an amount deemed by Lender (in the exercise of its
discretion) to be material, then, upon demand by the Lender, the Borrower shall
within 10 days pay to the Lender additional amounts which shall be sufficient to
compensate the Lender for such increased cost, tax or reduced rate of return. A
certificate of the Lender to the Borrower claiming compensation under this
Section 3.4 shall be final, conclusive and binding on all parties for all
purposes in the absence of manifest error. Such certificate shall set forth the
nature of the occurrence giving rise to such compensation, the additional amount
or amounts to be paid to it hereunder, and the method by which such amounts were
determined. In determining such amount, the Lender may use any reasonable
averaging and attribution methods.
Section 3.5 Manner of Payment. (a) Each payment (including prepayments) by
the Borrower on account of the principal of or interest on the Loan or of any
fee or other amounts payable to the Lender under this Agreement or the Note
shall be made not later than 1:30 p.m. on the date specified for payment under
this Agreement (or if such day is not a Business Day, the next succeeding
Business Day) to the Lender at the Lender's Office, in Dollars, in immediately
available funds and shall be made without any setoff, counterclaim or deduction
whatsoever.
(b) The Borrower hereby irrevocably authorizes the Lender and each
Affiliate of the Lender to charge any account of the Borrower maintained with
the Lender or such Affiliate with such amounts as may be necessary from time to
time to pay any Obligations which are not paid when due.
Section 3.6 Termination of Agreement. On the Maturity Date, the Borrower
shall pay to the Lender, in same day funds, an amount equal to the aggregate
amount of the Loan outstanding on such date, together with accrued interest
thereon, all fees payable pursuant to Section 3.2, any amounts payable to the
Lender pursuant to the other provisions of this Agreement, including, without
limitation, Sections 3.4, 9.2, 10.11 and 10.12, and any and all other
Obligations then outstanding.
ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Loan. Notwithstanding any other
provision of this Agreement, the Lender's obligation to make the Loan is subject
to the fulfillment of each of the following conditions prior to or
contemporaneously with the making of the Loan:
15
(a) Closing Documents. The Lender shall have received each of the following
documents, all of which shall be reasonably satisfactory in form and substance
to the Lender and its counsel:
(1) this Agreement, duly executed and delivered by the Borrower;
(2) the Note, dated the Effective Date and duly executed and delivered
by the Bor rower;
(3) the Collateral Assignment of Deposit Account, duly executed and
delivered by the Borrower;
(4) the Collateral Assignment of Loan Documents, together with the
original of the Alpine Ventures Note, such Collateral Assignment to be duly
executed and delivered by the Borrower and such Alpine Ventures Note to be
duly endorsed to the Lender;
(5) the Stock Pledge Agreements and accompanying blank stock powers,
duly executed and delivered by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Leven and ▇▇▇▇▇▇▇ ▇▇▇▇▇,
together with the corresponding stock certificates (representing at least
$14,300,000 of the Borrower's common stock as of the close of trading on
the Business Day immediately preceding the Effective Date, based on the
price of the Borrower's Class A common stock reflected in the Wall Street
Journal) and appropriate Form U-1s.
(6) certified copies of the articles of incorporation and by-laws of
the Borrower as in effect on the Effective Date;
(7) certified copies of all corporate action, including stockholder
approval, if necessary, taken by the Borrower to authorize the execution,
delivery and performance of this Agreement and the other Loan Documents and
the borrowings under this Agreement;
(8) certificates of incumbency and specimen signatures with respect to
each of the officers of the Borrower who is authorized to execute and
deliver this Agreement or any other Loan Document on behalf of the Borrower
or any document, certificate or instrument to be delivered in connection
with this Agreement or the other Loan Documents;
(9) certificates evidencing the good standing of the Borrower in
Georgia and Delaware;
(10) with respect to Alpine Ventures, such items corresponding to
those set forth in clauses (6) - (9) above as the Lender may request;
(11) a letter from the Borrower to the Lender requesting the Loan and
specifying the method of disbursement;
(12) copies of all the financial statements referred to in Section
5.1(m) and meeting
16
the requirements thereof;
(13) a certificate of the President of the Borrower stating that, to
the best of his knowledge and based on an examination sufficient to enable
him to make an informed statement, (a) all of the representations and
warranties made or deemed to be made under this Agreement are true and
correct as of the Effective Date, both with and without giving effect to
the Loan to be made at such time and the application of the proceeds
thereof, and (b) no Default or Event of Default exists;
(14) a signed opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the Borrower, and such local counsel as the Lender shall deem
necessary or desirable, opining as to such matters in connection with this
Agreement as the Lender or its counsel may reasonably request;
(15) the Registration Rights Agreement, duly executed by the Borrower;
and
(16) copies of each of the other Loan Documents duly executed by the
parties thereto with evidence satisfactory to the Lender and its counsel of
the due authorization, binding effect and enforceability of each such Loan
Document on each such party and such other documents and instruments as the
Lender may reasonably request.
(b) No Injunctions, Etc. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit
or to obtain substantial damages in respect of or which is related to or arises
out of this Agreement or the consummation of the transactions contemplated
hereby or which, in the Lender's sole discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement.
(c) Material Adverse Change. As of the Effective Date, there shall not have
occurred any change which has had or could reasonably be expected to have a
Materially Adverse Effect as compared to the condition of the Borrower presented
by the most recent financial statements of the Borrower described in Section
5.1(m).
(d) Accuracy of Representations and Warranties. All of the representations
and warranties made or deemed to be made under this Agreement shall be true and
correct at such time both with and without giving effect to the Loan to be made
at such time and the application of the proceeds thereof.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 5.1 Representations and Warranties. The Borrower represents and
warrants to the Lender as follows:
(a) Organization; Power; Qualification. The Borrower is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate
17
power and authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted and is duly qualified and
authorized to do business in each jurisdiction in which failure to be so
qualified and authorized could reasonably be expected to have a Materially
Adverse Effect, which jurisdictions are listed on Schedule 5.1(a).
(b) Subsidiaries and Ownership of the Borrower. Except as set forth on
Schedule 5.1(b), the Borrower has no Subsidiaries. The outstanding stock of the
Borrower has been duly and validly issued and is fully paid and nonassessable.
(c) Authorization of Agreement, Note, Loan Documents and Borrowing. The
Borrower has the right and power and has taken all necessary action to authorize
it to execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms and
to borrow hereunder. This Agreement and each of the other Loan Documents to
which it is a party have been duly executed and delivered by the duly authorized
officers of the Borrower and each is, or when executed and delivered in
accordance with this Agreement will be, a legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, and other
similar laws relating to or affecting creditor's rights generally, general
equitable principles and an implied covenant of good faith and fair dealing.
(d) Compliance of Agreement, Note, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance of this Agreement and each of the
other Loan Documents to which the Borrower is a party in accordance with their
respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any applicable law
relating to the Borrower or any of its Affiliates,
(ii) conflict with, result in a breach of or constitute a default
under (A) the articles or certificate of incorporation or by-laws of the
Borrower, (B) any indenture, agreement or other instrument to which the
Borrower is a party or by which any of its property may be bound or (C) any
Governmental Approval relating to the Borrower, or,
(iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by the
Borrower other than the Security Interest.
(e) Business. The Borrower is engaged principally in the business described
on Schedule 5.1(e).
(f) Compliance with Law; Governmental Approvals. Except as set forth in
Schedule 5.1(f), the Borrower (i) has all Governmental Approvals, including
permits relating to federal, state and local Environmental Laws, ordinances and
regulations required by any applicable law for it to conduct its business, each
of which is in full force and effect, is final and not subject to review on
appeal and is not the subject of any pending or, to the knowledge of the
Borrower, threatened attack by direct or collateral proceeding, and (ii) is in
compliance with each Governmental Approval applicable to it and in compliance
18
with all other applicable laws relating to it, including, without being limited
to, all Environmental Laws and all occupational health and safety laws
applicable to the Borrower or its properties, except for any failure under
clause (i) or any noncompliance under clause (ii) which would not, singly or in
the aggregate, cause a Default or Event of Default or have a Materially Adverse
Effect and in respect of which adequate reserves have been established on the
books of the Borrower.
(g) Titles to Properties. Except as set forth in Schedule 5.1(g), the
Borrower has good and marketable title to or a valid leasehold interest in all
its real estate and valid and legal title to or a valid leasehold interest in
all personal property and assets used in or necessary to the conduct of the
Borrower's business, including, but not limited to, those reflected on the
balance sheet of the Borrower delivered pursuant to Section 5.1(m).
(h) Liens. Except as set forth in Schedule 5.1(h), none of the properties
and assets of the Borrower is subject to any Lien, except Permitted Liens.
(i) Indebtedness and Guaranties. Set forth on Schedule 5.1(i) is a complete
and correct listing of all of the Borrower's (i) Indebtedness for Money Borrowed
and (ii) Guaranties. The Borrower is not in default of any material provision of
any agreement evidencing or relating to such any such Indebtedness or Guaranty
the principal amount of which exceeds $1,000,000.
(j) Litigation. Except as set forth on Schedule 5.1(j), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or in any other way relating adversely to or affecting the
Borrower or any of its property in any court or before any arbitrator of any
kind or before or by any governmental body.
(k) Tax Returns and Payments. Except as set forth on Schedule 5.1(k), all
United States federal, state and local and foreign national, provincial and
local and all other tax returns of the Borrower required by applicable law to be
filed have been duly filed, or appropriate requests for extensions have been
made, and all United States federal, state and local and foreign national,
provincial and local and all other taxes, assessments and other governmental
charges or levies upon the Borrower and its property, income, profits and assets
which are due and payable have been paid, except any such nonpayment which is at
the time permitted under Section 6.4. The charges, accruals and reserves on the
books of the Borrower in respect of United States federal, state and local taxes
and foreign national, provincial and local taxes for all fiscal years and
portions thereof since the organization of the Borrower are in the judgment of
the Borrower adequate, and the Borrower knows of no reason to anticipate any
additional assessments for any of such years which, singly or in the aggregate,
could reasonably be expected to have a Materially Adverse Effect.
(l) Burdensome Provisions. The Borrower is not a party to any indenture,
agreement, lease or other instrument, or subject to any charter or corporate
restriction, Governmental Approval or applicable law, compliance with the terms
of which could reasonably be expected to have a Materially Adverse Effect.
(m) Financial Statements. The Borrower has furnished to the Lender a copy
of its audited
19
balance sheet as at December 31, 1997, and the related statements of income,
cash flow and retained earnings for the twelve-month period then ended. Such
financial statements are complete and correct and present fairly and in all
material respects in accordance with GAAP, the financial position of the
Borrower as at the dates thereof and the results of operations of the Borrower
for the periods then ended. Except as disclosed or reflected in such financial
statements, the Borrower had no material liabilities, contingent or otherwise,
and there were no material unrealized or anticipated losses of the Borrower as
of the date of such financial statements.
(n) Adverse Change. Since the date of the financial statements described in
Section 5.1(m), (i) no change in the business, assets, liabilities, condition
(financial or otherwise), results of operations or business prospects of the
Borrower has occurred that has had, or could reasonably be expected to have, a
Materially Adverse Effect, and (ii) no event has occurred or failed to occur
which has had, or could reasonably be expected to have, a Materially Adverse
Effect.
(o) ERISA. Neither the Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on Schedule 5.1(o). Each
Benefit Plan is in substantial compliance with ERISA, and neither the Borrower
nor any Related Company has received any notice asserting that a Benefit Plan is
not in compliance with ERISA. No material liability to the PBGC or to a
Multiemployer Plan has been, or is expected by the Borrower to be, incurred by
the Borrower or any Related Company.
(p) Absence of Defaults. The Borrower is not in default under its articles
or certificate of incorporation or by-laws, and no event has occurred which has
not been remedied, cured or waived (i) that constitutes a Default or an Event of
Default or (ii) that constitutes or that, with the passage of time or giving of
notice, or both, would constitute a default or event of default by the Borrower
under any material agreement (other than this Agreement) or judgment, decree or
order to which the Borrower is a party or by which the Borrower or any of its
properties may be bound or which would require the Borrower to make any payment
thereunder prior to the scheduled maturity date therefor.
(q) Accuracy and Completeness of Information. To the best of the Borrower's
knowledge, all written information, reports and other papers and data produced
by or on behalf of the Borrower and furnished to the Lender were, at the time
the same were so furnished, complete and correct in all material respects to the
extent necessary to give the recipient a true and accurate knowledge of the
subject matter. No document furnished or written statement made to the Lender by
the Borrower in connection with the negotiation, preparation or execution of
this Agreement or any of the Loan Documents contains or will contain any untrue
statement of a fact material, in the light of the circumstances, to the
creditworthiness of the Borrower or omits or will omit to state a material fact,
in light of the circumstances, necessary in order to make the statements
contained therein not misleading.
(r) Federal Regulations. The Borrower is not engaged, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" (as each of the quoted terms is
defined or used in Regulations G and U of the Board of Governors of the Federal
Reserve System).
(s) Investment Company Act. The Borrower is not an "investment company" or
a company
20
"controlled" by an "investment company" (as each of the quoted terms is defined
or used in the Investment Company Act of 1940, as amended).
(t) Employee Relations. The Borrower is not, except as set forth on
Schedule 5.1(t), party to any collective bargaining agreement nor has any labor
union been recognized as the representative of the Borrower's employees; the
Borrower knows of no pending, threatened or contemplated strikes, work stoppage
or other labor disputes involving its employees or those of its Subsidiaries.
(u) Intellectual Property. The Borrower owns or possesses all Intellectual
Property required to conduct its business as now and presently planned to be
conducted without, to its knowledge, conflict with the rights of others.
(v) Secondary Equity Offering. The Borrower filed a registration statement
with the Securities Exchange Commission on April 16, 1998 relating to a public
offering of 4,500,000 shares of the Borrower's Class A common stock, a copy of
which has been made available to the Lender.
(w) Perfection of Security Interests. Each of the Security Interests
granted under the Security Documents has been, or on the Effective Date shall
be, perfected in accordance with all applicable laws.
(x) Tag-Along/Piggy Back Rights. Except as set forth on Schedule 5.1(x), no
Person has any Tag-Along Rights or Piggy Back Rights. Schedule 5.1(x) sets forth
the name of each Person who has Tag-Along Rights and/or Piggy Back Rights, the
number of shares of common stock of the Borrower held by such Person, and the
number of such shares subject to Tag-Along Rights and/or Piggy Back Rights.
(y) Year 2000 Compliance. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its Subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. The Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its Subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure
to do so could not reasonably be expected to have a Materially Adverse Effect.
(z) Stock Pledge Agreements. The pledge of the Pledged Collateral under and
as such term is defined in the Stock Pledge Agreements does not violate any
agreement or law to which Borrower is subject, the violation of which could
reasonably be expected to have a Materially Adverse Effect.
Section 5.2 Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article 5 and all statements
contained in any certificate, financial statement or other instrument delivered
by or on behalf of the Borrower pursuant to or in connection with this
21
Agreement or any of the Loan Documents (including, but not limited to, any such
representation, warranty or statement made in or in connection with any
amendment thereto) shall constitute representations and warranties made under
this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Agreement Date and at and as
of the Effective Date, except that representations and warranties which, by
their terms are applicable only to one such date shall be deemed to be made only
at and as of such date. All representations and warranties made or deemed to be
made under this Agreement shall survive and not be waived by the execution and
delivery of this Agreement, any investigation made by or on behalf of the Lender
or any borrowing hereunder.
ARTICLE 6 - AFFIRMATIVE COVENANTS
Until all the Obligations have been paid in full, unless the Lender shall
otherwise consent in the manner provided for in Section 12.11, the Borrower
will, and will cause each of its Subsidiaries to:
Section 6.1 Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the failure to be qualified could reasonably be expected
to have a Materially Adverse Effect; provided the foregoing shall not prohibit
the merger of any Subsidiary of the Borrower into the Borrower or a wholly-owned
Subsidiary of the Borrower.
Section 6.2 Compliance with Applicable Law. Comply in all material respects
with all applicable laws relating to it.
Section 6.3 Conduct of Business. Engage only in businesses in substantially
the same fields as the businesses conducted on the Effective Date.
Section 6.4 Payment of Taxes and Claims. Pay or discharge when due (a) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any properties belonging to it, and (b) all lawful
claims of materialmen, mechanics, carriers, warehousemen and landlords for
labor, materials, supplies and rentals which, if unpaid, might become a Lien on
any properties of the Borrower or such Subsidiary, except that this Section 6.4
shall not require the payment or discharge of any such tax, assessment, charge,
levy or claim which is being contested in good faith by appropriate proceedings
and for which adequate reserves have been established on the appropriate books.
Section 6.5 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP consistently applied.
Section 6.6 Use of Proceeds. (a) Use the proceeds of the Loan to pay the
amounts indicated in Schedule 6.6 to the Persons indicated therein, and
(b) not use any part of such proceeds to purchase or carry, or to reduce or
retire or refinance
22
any credit incurred to purchase or carry, any margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System) or for
any other purpose which would involve a violation of such Regulation U or
Regulation T or X of such Board of Governors or for any other purpose prohibited
by law or by the terms and conditions of this Agreement.
Section 6.7 Hazardous Waste and Substances; Environmental Requirements. In
addition to, and not in derogation of, the requirements of Section 6.2 and of
the Security Documents, comply in all material respects with all material laws,
governmental standards and regulations applicable to the Borrower or to any of
its assets in respect of occupational health and safety laws, rules and
regulations and Environmental Laws, promptly notify the Lender of its receipt of
any notice of a violation of any such law, rule, standard or regulation and
indemnify and hold the Lender harmless from all loss, cost, damage, liability,
claim and expense incurred by or imposed upon the Lender on account of the
Borrower's failure to perform its obligations under this Section 6.7.
Section 6.8 Accuracy of Information. To the best of the Borrower's
knowledge, all written information, reports, statements and other papers and
data furnished to the Lender, whether pursuant to Article 7 or any other
provision of this Agreement or any of the other Loan Documents, shall be, at the
time the same is so furnished, complete and correct in all material respects to
the extent necessary to give the Lender true and accurate knowledge of the
subject matter.
Section 6.9 Loan to Stock Ratio. In the event that the Loan to Stock Ratio
(a) shall, for a period of five consecutive Business Days, exceed 75%, or (b)
shall, as of the last day of any calendar quarter, exceed 70%, the Borrower
shall, within one Business Day, (i) cause ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Leven and/or ▇▇▇▇▇▇▇
▇▇▇▇▇ to subject to the perfected first-priority Security Interest of the Stock
Pledge Agreements such additional shares of the Borrower's common stock (subject
to no restrictions on transfer or the Lender's exercise of remedies thereunder
other than as set forth in the Stock Pledge Agreements) as shall be necessary to
cause the Loan to Stock Ratio to be equal to or less than 70%, (ii) deliver to
the Lender cash collateral, in addition to the cash subject to the Collateral
Assignment of Deposit Account, which cash collateral shall be segregated in a
cash collateral account at the Lender, or deliver to the Lender a letter of
credit from an issuing bank acceptable to the Lender, and in form and substance
acceptable to the Lender, naming the Lender as beneficiary, in either case in
amount equal to or greater than the amount necessary to cause the Loan to Stock
Ratio to be equal to or less than 70%, and/or (iii) make a principal prepayment
on the Loan in amount equal to or greater than the amount necessary to cause the
Loan to Stock Ratio to be equal to or less than 70%; provided, that, if the
Borrower does not deliver all of the duly executed Waivers to the Lender on or
before the 90th day after the Agreement Date, each reference in this Section to
"75%" and "70%", respectively, shall without any further action be deemed to
read "65%" and "60%", respectively, as of the 91st day after the Agreement Date.
Section 6.10 Insurance. The Borrower shall at all times maintain insurance
with responsible insurance companies against such risks and in such amounts as
is customarily maintained by similar businesses or as may be required by
applicable law, including such public liability, products liability, third party
property damage and business interruption insurance as is consistent with
reasonable business practices, and from time to time deliver to the Lender upon
its request a detailed list of the insurance then in effect, stating the names
of the insurance companies, the amounts and rates of the insurance, the dates
23
of the expiration thereof and the properties and risks covered thereby.
Section 6.11 Inspection. The Lender (by any of its officers, employees or
agents) shall have the right, to the extent that the exercise of such right
shall be within the control of the Borrower, at any time or times to (a) visit
the properties of the Borrower, inspect the assets of the Borrower and its
Subsidiaries and inspect and make extracts from the books and records of the
Borrower and its Subsidiaries, including, but not limited to, management letters
prepared by independent accountants, all during customary business hours at such
premises, and (b) discuss the Borrower's business, assets, liabilities,
financial condition, results of operations and business prospects, insofar as
the same are reasonably related to the rights of the Lender hereunder or under
any of the Loan Documents, with the Borrower's and its Subsidiaries' (i)
principal officers, (ii) independent accountants and other professionals
providing services to the Borrower, and (iii) any other Person (except that any
such discussion with any third parties shall be conducted only in accordance
with the Lender's standard operating procedures relating to the maintenance of
confidentiality of confidential information of borrowers). The Borrower will
deliver to the Lender any instrument necessary to authorize an independent
accountant or other professional to have discussions of the type outlined above
with the Lender or for the Lender to obtain records from any service bureau
maintaining records on behalf of the Borrower.
Section 6.12 Year 2000 Compliance. The Borrower will promptly notify the
Lender in the event the Borrower discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
its or any of its Subsidiaries' business and operations will not be Year 2000
compliant on a timely basis, except to the extent that such failure could not
reasonably be expected to have a Materially Adverse Effect.
ARTICLE 7 - INFORMATION
Until all the Obligations have been paid in full, unless the Lender shall
otherwise consent in the manner set forth in Section 10.10, the Borrower will
furnish to the Lender at the Lender's Office:
Section 7.1 Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any event
within 90 days after the end of each fiscal year of the Borrower, copies of the
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such fiscal year and the related consolidated statements of
income, shareholders' equity and cash flow for such fiscal year, in each case
setting forth in comparative form the figures for the previous year of the
Borrower and its consolidated Subsidiaries and reported on, without
qualification, by Deloitte & Touche LLP or other independent certified public
accountants selected by the Borrower and reasonably acceptable to the Lender.
(b) Quarterly Financial Statements. As soon as available, but in any event
within 45 days after the end of each accounting quarter (other than the fourth
fiscal quarter of each fiscal year) of the Borrower, copies of the unaudited
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated income
statement for the Borrower and its consolidated Subsidiaries for such quarter
and for the portion of the fiscal year of the Borrower through
24
such quarter, certified by the chief financial officer of the Borrower to the
best of his knowledge as presenting fairly the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries as at the date
thereof and for the periods ended on such date, subject to normal year end
adjustments.
All such financial statements shall be complete and correct in all material
respects and all such financial statements shall be prepared in accordance with
GAAP (except, with respect to interim financial statements, for the omission of
footnotes) applied consistently throughout the periods reflected therein.
Section 7.2 Discussions with Accountants . The Borrower authorizes the
Lender to discuss the financial condition of the Borrower with the Borrower's
independent certified public accountants and agrees that such discussion or
communication shall be without liability to either the Lender or the Borrower's
independent certified public accountants. The Borrower shall, upon Lender's
request, deliver a letter addressed to such accountants authorizing them to
comply with the provisions of this Section 7.2.
Section 7.3 Officer's Certificate. Together with each delivery of financial
statements required by Section 7.1(a) and (b), a certificate of the Borrower's
President or chief financial officer, stating that, based on an examination
sufficient to enable him to make an informed statement, no Default or Event of
Default exists or, if such is not the case, specifying such Default or Event of
Default and its nature, when it occurred, whether it is continuing and the steps
being taken by the Borrower with respect to such Default or Event of Default.
Section 7.4 Copies of Other Reports. (a) Promptly upon receipt thereof,
copies of all reports, if any, submitted to the Borrower or its Board of
Directors by its independent public accountants, including, without limitation,
all management reports from such accountants.
(b) As soon as practicable, copies of (i) all financial statements and
reports that the Borrower shall send to its shareholders generally, (ii) all
registration statements and all regular or periodic reports which the Borrower
shall file with the Securities and Exchange Commission or any successor
commission, and (iii) all press releases issued by or on behalf of the Borrower.
(c) From time to time and promptly upon each request, such forecasts, data,
certificates, documents or further information regarding the business, assets,
liabilities, financial condition, results of operations or business prospects of
the Borrower as the Lender may reasonably request. The rights of the Lender
under this Section 7.4(c) are in addition to and not in derogation of its rights
under any other provi sion of this Agreement or any Loan Document.
(d) If requested by the Lender, statements in conformity with the
requirements of Federal Reserve Form G-1 or U-1 referred to in Regulations G and
U, respectively, of the Board of Governors of the Federal Reserve System.
(e) Within 15 days after the last day of each calendar quarter and promptly
after any request by the Lender, a statement showing all outstanding amounts on
the Alpine Ventures Note, categorizing such amounts as principal, interest, or
other amounts due.
25
Section 7.5 Notice of Litigation and Other Matters. Prompt notice of:
(a) the commencement, to the extent the Borrower is aware of the same, of
all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating adversely to, or adversely
affecting, the Borrower or any Affiliate of the Borrower or any of their
respective property, assets or businesses which might, singly or in the
aggregate, cause a Default or an Event of Default or have a Materially Adverse
Effect,
(b) any amendment of the articles of incorporation or by-laws of the
Borrower,
(c) any change in the business, assets, liabilities, financial condition or
results of operations of the Borrower or any Affiliate of the Borrower which has
had or could reasonably be expected to have any Materially Adverse Effect and
any change in the Chief Executive Officer or Chief Financial Officer of the
Borrower,
(d) any (i) Default or Event of Default, or (ii) event that constitutes or
that, with the passage of time or giving of notice or both, would constitute a
default or event of default by the Borrower under any material agreement (other
than this Agreement) to which the Borrower is a party or by which the Borrower
or any of its property may be bound if the exercise of remedies thereunder by
the other party to such agreement would have, either individually or in the
aggregate, a Materially Adverse Effect, and
(e) the occurrence of any default or event of default under the Alpine
Ventures Loan Documents of which the Borrower is aware.
Section 7.6 ERISA. As soon as possible and in any event within 30 days
after the Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Benefit Plan has occurred or
will occur,
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all Plans has increased to an amount in excess of $0, or
(c) the Borrower is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan required by reason of
its complete or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan,
a certificate of the President or the chief financial officer of the Borrower
setting forth the details of such of the events described in clauses (a) through
(c) as applicable and the action which is proposed to be taken with respect
thereto and, simultaneously with the filing thereof, copies of any notice or
filing which may be required by the PBGC or other agency of the United States
government with respect to such of the events described in clauses (a) through
(c) as applicable.
ARTICLE 8- NEGATIVE COVENANTS
26
Until all the Obligations have been paid in full, unless the Lender shall
otherwise consent in the manner set forth in Section 10.10, the Borrower and its
Subsidiaries will not, directly or indirectly:
Section 8.1 Investments. Acquire, after the Agreement Date, any Investment
or, after such date, permit any Investment to be outstanding, other than
Permitted Investments.
Section 8.2 Merger, Consolidation and Sale of Assets. Merge or consolidate
with any other Person or sell, lease or transfer or otherwise dispose of all or
a substantial portion of its assets to any Person; provided the foregoing shall
not prohibit the merger of any Subsidiary of the Borrower into the Borrower or a
wholly-owned Subsidiary of the Borrower.
Section 8.3 Transactions with Affiliates. Effect any transaction with any
Affiliate (other than a wholly-owned Subsidiary) on a basis less favorable to
the Borrower than would be the case if such transaction had been effected with a
Person not an Affiliate, provided the foregoing shall not prohibit the
transactions described on Schedule 8.3.
Section 8.4 Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the property or assets of the Borrower,
real, personal or mixed, tangible or intangible, except for Permitted Liens.
Section 8.5 Restricted Distributions and Payments, Etc. Declare or make any
Restricted Distribution or Restricted Payment, other than any Restricted
Distribution or Restricted Payment from a Subsidiary of the Borrower to the
Borrower.
Section 8.6 Benefit Plans. Permit, or take any action which would result
in, the aggregate present value of the Unfunded Vested Accrued Benefits under
all Benefit Plans of the Borrower to exceed $0.
Section 8.7 Amendments of Other Agreements. Amend in any way the provisions
of the Borrower's articles of incorporation relating to the relative rights of
the Borrower's Class A and Class B common stock, or enter into any other
agreement the effect of which is to adversely affect the Lender's rights to
foreclose upon or dispose of the Collateral subject to the Stock Pledge
Agreements.
Section 8.8 Tag-Along/Piggy Back Rights. Enter into any registration rights
or other agreement pursuant to which any Person receives Tag-Along Rights and/or
Piggy Back Rights, unless such Person executes and delivers to the Lender a
waiver, in form acceptable to the Lender in its discretion, pursuant to which
such Person waives, in the case of Tag-Along Rights, any and all Tag-Along
Rights such Person may possess in connection with any liquidation by the Lender
of the common stock of the Borrower (whether Class A or Class B) now or
hereafter subject to the Stock Pledge Agreements, and, in the case of Piggy Back
Rights, any and all Piggy Back Rights such Person may possess in connection with
any registration of such common stock by the Lender pursuant to the Registration
Rights Agreement.
ARTICLE 9 - DEFAULT
27
Section 9.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
(a) Default in Payment of Loan. The Borrower shall default in any payment
of principal of, or interest on, the Loan or Note when and as due (whether at
maturity, by reason of acceleration or otherwise), and in the case of a default
in the payment of interest, such default shall continue for five days after
written notice thereof has been given to the Borrower by the Lender.
(b) Other Payment Default. The Borrower shall default in the payment, as
and when due, of any other Obligation, and such default shall continue for five
days after written notice thereof has been given to the Borrower by the Lender.
(c) Misrepresentation. Any representation or warranty made by the Borrower
under this Agree ment or any other Loan Document or any amendment hereto or
thereto shall at any time prove to have been incorrect or misleading in any
material respect when made.
(d) Default in Performance. The Borrower shall default:
(i) in the performance or observance of any term, covenant, condition
or agreement contained in Section 6.6, 6.9, 6.11 or 7.2, or in Article 8;
or
(ii) in the performance or observance of any term, covenant, condition
or agreement contained in Section 7.1, 7.3, 7.4, 7.5 or 7.6 and such
default shall continue for a period of 10 days after the earlier of the
date on which ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇ becomes aware of such default and
the date on which written notice thereof has been given to the Borrower by
the Lender; or
(iii) in the performance or observance of any term, covenant,
condition or agreement contained in any other provision of this Agreement
(other than as specifically provided for otherwise in this Section 9.1) and
such default shall continue for a period of 30 days after the earlier of
the date on which ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇ becomes aware of such default
and the date on which written notice thereof has been given to the Borrower
by the Lender.
(e) Indebtedness Cross-Default. (i) The Borrower shall fail to pay when due
and payable the principal of or interest on any Indebtedness (other than the
Loan or Note) where the principal amount of such Indebtedness is in excess of
$10,000,000, or (ii) the maturity of any such Indebtedness shall have (A) been
accelerated in accordance with the provisions of any indenture, contract or
instrument providing for the creation of or concerning such Indebtedness, or (B)
been required to be prepaid in full prior to the stated maturity thereof, or
(iii) any event shall have occurred and be continuing which, with or without the
passage of time or the giving of notice, or both, would permit any holder or
holders of such Indebtedness, any trustee or agent acting on behalf of such
holder or holders or any other Person so to accelerate such maturity.
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(f) Other Cross-Defaults. The Borrower shall default in the payment when
due or in the performance or observance of any material obligation or condition
of any agreement, contract or lease (other than the Security Documents or any
such agreement, contract or lease relating to Indebtedness), if the other party
thereto has commenced the exercise of remedies thereunder and such exercise of
remedies could reasonably be expected to have a Materially Adverse Effect.
(g) Voluntary Bankruptcy Proceeding. Any Obligor shall (i) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against any Obligor in any court of competent jurisdiction seeking (i)
relief under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of any Obligor or of all or
any substantial part of the assets, domestic or foreign, of any Obligor, and
such case or proceeding shall continue undismissed or unstayed for a period of
60 consecutive calendar days, or an order granting the relief requested in such
case or proceeding against any Obligor (including, but not limited to, an order
for relief under such federal bankruptcy laws) shall be entered.
(i) Loan Documents. Any event of default under any other Loan Document
shall occur or any Obligor shall default in the performance or observance of any
material term, covenant, condition or agree ment contained in, or the payment of
any other sum covenanted to be paid by any Obligor under, any such Loan
Document, and such default shall not be cured within the applicable grace
period, if any; or any provision of this Agreement, or of any other Loan
Document after delivery thereof hereunder, shall for any reason cease to be
valid and binding, other than a nonmaterial provision rendered unenforceable by
operation of law, or any Obligor or other party thereto (other than the Lender)
shall so state in writing; or any Loan Document, after delivery thereof
hereunder, shall for any reason (other than any action taken independently by
the Lender and except to the extent permitted by the terms thereof) cease to
create a valid, perfected and, except as otherwise expressly permitted herein,
first priority Lien on, or security interest in, any of the Collateral purported
to be covered thereby.
(j) Judgment. A judgment or order for the payment of money which exceeds
$1,000,000 in amount in excess of undisputed insurance coverage shall be entered
against any Obligor by any court and such judgment or order shall continue
undischarged or unstayed for 30 days.
(k) Attachment. A warrant or writ of attachment or execution or similar
process which exceeds
29
$1,000,000 in value shall be issued against any property of any Obligor and such
warrant or process shall continue undischarged or unstayed for 30 days.
(l) ERISA. (i) Any Termination Event with respect to a Benefit Plan shall
occur that, after taking into account the excess, if any, of (A) the fair market
value of the assets of any other Benefit Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess is the property of the Borrower) over (B) the present value on such day
of all vested nonforfeitable benefits under such other Benefit Plan, results in
an Unfunded Vested Accrued Benefit in excess of $0, (ii) any Benefit Plan shall
incur an "accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA) for which a waiver has not been obtained in accordance
with the applicable provisions of the Code and ERISA, or (iii) the Borrower is
in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from the Borrower's complete or
partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan.
(m) Material Adverse Change. There occurs any act, omission, event,
undertaking or circumstance or series of acts, omissions, events, undertakings
or circumstances which have, or could reasonably be expected to have, either
individually or in the aggregate, a Materially Adverse Effect.
(n) Change in Management. ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall for any reason cease to be
the Chief Executive Officer of the Borrower and ▇▇▇▇▇▇▇ shall for any reason
cease to be the Chief Financial Officer of the Borrower.
Section 9.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 9.1(g) or (h), the
principal of and the interest on the Loan and the Note at the time outstanding,
and all other amounts owed to the Lender under this Agreement or any of the Loan
Documents and all other Obligations, shall thereupon become due and payable
without presentment, demand, protest or other notice of any kind, all of which
are expressly waived, anything in this Agreement or any of the Loan Documents to
the contrary notwithstanding.
(b) Other Remedies. If any Event of Default (other than as specified in
Section 9.1(g) or (h)) shall have occurred and be continuing, the Lender, in its
sole and absolute discretion, may declare the principal of and interest on the
Loan and the Note at the time outstanding, and all other amounts owed to the
Lender under this Agreement or any of the Loan Documents and all other
Obligations, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or the Loan Documents to the contrary notwithstanding.
(c) Further Remedies. If any Event of Default shall have occurred and be
continuing, the Lender, in its sole and absolute discretion, may do any of the
following:
(i) exercise any and all of its rights under this Agreement, the other
Loan Documents, and any and all of the Security Documents;
30
(ii) apply any cash Collateral to the payment of the Obligations in
any order in which the Lender may elect or use such cash in connection with
the exercise of any of its other rights hereunder or under any of the
Security Documents; and
(iii) exercise all of the rights and remedies of a secured party under
the UCC (whether or not the UCC is applicable) and under any other
applicable law, including, without limitation, the right, without notice
except as specified below and with or without taking the possession
thereof, to sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any location chosen by the Lender, for cash,
on credit or for future delivery and at such price or prices and upon such
other terms as the Lender may deem commercially reasonable. The Borrower
agrees that, to the extent notice of sale shall be required by law, at
least 10 days' notice to the Borrower of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notice, but notice given in any other reasonable
manner or at any other reasonable time shall also constitute reasonable
notification. The Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Lender may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
Section 9.3 Application of Proceeds. All proceeds from each sale of, or
other realization upon, all or any part of the Collateral following an Event
of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in connection
with such sale or other realization, including attorneys' fees,
(b) Second: to the payment of the Obligations (with the Borrower remaining
liable for any deficiency) in any order which the Lender may elect, and
(c) Third: the balance (if any) of such proceeds shall be paid to the
Borrower or, subject to any duty imposed by law or otherwise, to whomsoever
is entitled thereto.
The Borrower shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Obligations, together with interest thereon at a
rate per annum equal to the highest rate then payable hereunder on such
Obligations, which interest shall constitute part of the Obligations.
Section 9.4 Miscellaneous Provisions Concerning Remedies .
(a) Rights Cumulative. The rights and remedies of the Lender under this
Agreement, the Note and each of the Loan Documents shall be cumulative and not
exclusive of any rights or remedies which it or they would otherwise have. In
exercising such rights and remedies, the Lender may be selective and no failure
or delay by the Lender in exercising any right shall operate as a waiver of such
right nor shall any single or partial exercise of any power or right preclude
its other or further exercise or the exercise of any other power or right.
31
(b) Waiver of Marshalling. The Borrower hereby waives any right to require
any marshalling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this Article 9 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Lender or any agent or designee of the Lender to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by it or to present or file any claim or notice or take any
action with respect to any Collateral or the moneys due or to become due
thereunder or in connection therewith or to take any steps necessary to preserve
any rights against prior parties, and neither the Lender nor any of its agents
or designees shall have any liability to the Borrower for actions taken pursuant
to this Article 9, any other provision of this Agreement or any of the Loan
Documents, so long as the Lender or such agent or designee shall act reasonably
and in good faith.
(d) Appointment of Receiver. In any action under this Article 9, the Lender
shall be entitled to the appointment of a receiver, without notice of any kind
whatsoever, to take possession of all or any portion of the Collateral and to
exercise such power as the court shall confer upon such receiver.
ARTICLE 10 - MISCELLANEOUS
Section 10.1 Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone subsequently
confirmed in writing. Notices in writing shall be delivered personally or sent
by overnight courier service, by certified or registered mail, postage pre-paid,
or by facsimile transmission and shall be deemed received, in the case of
personal delivery, when delivered, in the case of overnight courier service, on
the next Business Day after delivery to such service, in the case of mailing, on
the third day after mailing (or, if such day is a day on which deliveries of
mail are not made, on the next succeeding day on which deliveries of mail are
made) and, in the case of facsimile transmission, upon transmittal; provided
that in the case of notices to the Lender, the Lender shall be charged with
knowledge of the contents thereof only when such notice is actually received by
the Lender.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other parties are
notified in writing.
If to the Borrower: U.S. Franchise Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender: NationsBank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Lender's Office. The Lender hereby designates its office located at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrower, as the office to which payments due are to be made and at which the
Loan will be disbursed.
Section 10.2 Expenses. The Borrower agrees to pay or reimburse on demand
all costs and expenses incurred by the Lender, including, without limitation,
the reasonable fees and disbursements of counsel, in connection with (a) the
negotiation, preparation, execution, delivery, administration, enforcement and
termination of this Agreement and each of the other Loan Documents, whenever the
same shall be executed and delivered, including, without limitation, (i) the
out-of-pocket costs and expenses incurred in connection with the administration
and interpretation of this Agreement and the other Loan Documents, (ii) the
costs and expenses of taking actions to perfect, protect, and continue the
Security Interest; (b) the preparation, execution and delivery of any waiver,
amendment, supplement or consent by the Lender relating to this Agreement or any
of the Loan Documents; (c) sums paid or obligations incurred in connection with
the payment of any amount or taking any action required of the Borrower under
the Loan Documents that the Borrower fails to pay or take; (d) costs and
expenses of preserving and protecting the Collateral; and (e) costs and expenses
paid or incurred to obtain payment of the Obligations, enforce the Security
Interest, sell or otherwise realize upon the Collateral, and otherwise enforce
the provisions of the Loan Documents, or to prosecute or defend any claim in any
way arising out of, related to or connected with, this Agreement or any of the
Loan Documents, which expenses shall include the reason able fees and
disbursements of counsel and of experts and other consultants retained by the
Lender. The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the Borrower.
Section 10.3 Stamp and Other Taxes. The Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Lender against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the Loan Documents or the perfection of any rights or security interest
thereunder.
Section 10.4 Setoff. In addition to any rights now or hereafter granted
under applicable law, and not by way of limitation of any such rights, upon and
after the occurrence of any Event of Default, the Lender and any participant
with the Lender in the Loan are hereby authorized by the Borrower at any time
33
or from time to time, without notice to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Lender or any participant to or for the credit or the account of the
Borrower against and on account of the Obligations irrespective or whether or
not (a) the Lender shall have made any demand under this Agreement or any of the
Loan Documents, or (b) the Lender shall have declared any or all of the
Obligations to be due and payable as permitted by Section 9.2 and although such
Obligations shall be contingent or unmatured.
Section 10.5 Mandatory Arbitration; Litigation.
(a) ANY CONTROVERSY OR CLAIM BETWEEN THE BORROWER AND THE LENDER INCLUDING
BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN
ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE
RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
ENDISPUTE, INC., DOING BUSINESS AS J.A.M.S./ENDISPUTE ("J.A.M.S."), AS AMENDED
FROM TIME TO TIME, AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN ATLANTA, GEORGIA
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF
SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATIONS OF RIGHTS. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT
STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER (A) TO EXERCISE SELF HELP
REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY
REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL
OR ANCILLARY REMEDIES SUCH AS (BUT NOT
34
LIMITED TO) INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
(b) THE BORROWER AND THE LENDER HEREBY AGREE THAT THE FEDERAL COURT OF THE
NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE LENDER, ANY COURT IN WHICH
THE LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY AND WHICH SITS IN A
JURISDICTION IN WHICH THE BORROWER TRANSACTS BUSINESS SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWER
AND THE LENDER, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE LOAN
DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. THE BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
IN SUCH COURTS, HEREBY WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR
OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS
AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO THE BORROWER AT THE ADDRESS SET FORTH IN SECTION 10.1(b),
WHICH SERVICE SHALL BE DEEMED MADE UPON RECEIPT THEREOF. THE NON-EXCLUSIVE
CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION.
Section 10.6 Reversal of Payments. To the extent the Borrower makes a
payment or payments to the Lender or the Lender receives any payment or proceeds
of the Collateral for the Borrower's benefit, which payment(s) or proceeds or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, the Lender shall have the continuing and exclusive right
to apply, reverse and re-apply any and all payments to any portion of the
Obligations, and, to the extent of such payment or proceeds received, the
Obligations or part thereof intended to be satisfied shall be revived and
continued in full force and effect, as if such payment or proceeds had not been
received by the Lender.
Section 10.7 Accounting Matters. All financial and accounting calculations,
measurements and computations made for any purpose relating to this Agreement,
including, without limitation, all computations utilized by the Borrower to
determine whether it is in compliance with any covenant
35
contained herein, shall, unless there is an express written direction or consent
by the Lender to the contrary, be performed in accordance with GAAP.
Section 10.8 Assignment; Participation. This Agreement shall be binding
upon the Borrower, and the Borrower's heirs, devisees, representatives,
successors and assigns, and shall inure to the benefit of Lender and its
successors and assigns; provided, however, that the Borrower shall not assign or
encumber any interest of the Borrower hereunder without the prior written
consent of the Lender. The Lender may, from time to time, sell or offer to sell
the Loan, or interests therein, to one or more assignees or participants
(provided that the Lender will not, unless an Event of Default exists, assign
the Loan to a non-Affiliate without the Borrower's prior consent, such consent
not to be unreasonably withheld) and is hereby authorized to disseminate any
information it now has or hereafter obtains pertaining to the Loan, including,
without limitation, any security for the Loan and credit or other information on
the Borrower and its Affiliates, any of its principals and any guarantor, to any
assignee or participant or prospective assignee or prospective participant, to
the Lender's affiliates, including without limitation NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC, to any regulatory body having jurisdiction over the Lender and
to any other parties as necessary or appropriate in the Lender's reasonable
judgment. The Borrower shall execute, acknowledge and deliver any and all
instruments reasonably requested by the Lender in connection therewith and to
the extent, if any, specified in any such assignment or participation, such
companies, assignees or participants shall have the rights and benefits with
respect to the Loan Documents as such persons would have if such persons were
the Lender hereunder.
Section 10.9 Amendments. Any term, covenant, agreement or condition of this
Agreement or any of the other Loan Documents may be amended or waived and any
departure therefrom may be consented to if, but only if, such amendment, waiver
or consent is in writing signed by the Lender and, in the case of an amendment,
by the Borrower. Unless otherwise specified in such waiver or consent, a waiver
or consent given hereunder shall be effective only in the specific instance and
for the specific purpose for which given.
Section 10.10 Performance of Borrower's Duties. The Borrower's obligations
under this Agreement and each of the Loan Documents shall be performed by the
Borrower at its sole cost and expense. If the Borrower shall fail to do any act
or thing which it has covenanted to do under this Agree ment or any of the Loan
Documents, the Lender may (but shall not be obligated to) do the same or cause
it to be done either in the name of the Lender or in the name and on behalf of
the Borrower, and the Borrower hereby irrevocably authorizes the Lender so to
act.
Section 10.11 Indemnification. The Borrower agrees to reimburse the Lender
and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC (the "Arranger") for all reasonable
costs and expenses, including counsel fees and disbursements, incurred and to
indemnify and hold the Lender, the Arranger and each of their officers, agents,
attorneys and Affiliates (collectively the "Indemnitees") harmless from and
against all losses suffered by any Indemnitee, other than losses resulting from
such Indemnitees' gross negligence or willful misconduct, in connection with (a)
the exercise by the Lender of any right or remedy granted to it under this
Agreement or any of the Loan Documents, (b) any claim, and the prosecution or
defense thereof, arising out of or in any way connected with this Agreement or
any of the Loan Documents, except in the case of a dispute between the Borrower
and such Indemnitee in which the Borrower prevails in a final
36
unappealed or unappealable judgment, and (c) the collection or enforcement of
the Obligations or any of them.
Section 10.12 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement or any of the Loan Documents
shall be deemed coupled with an interest and shall be irrevocable so long as any
of the Obligations remain unpaid.
Section 10.13 Survival. Notwithstanding any termination of this Agreement,
(a) until all Obligations have been paid in full, the Lender shall retain its
Security Interest and shall retain all rights under this Agreement and each of
the Security Documents with respect to the Collateral as fully as though this
Agreement had not been terminated, and (b) the indemnities to which the
Indemnitees are entitled under the provisions of this Article 10 and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Indemnitees against events arising after such
termination as well as before.
Section 10.14 Severability of Provisions. Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 10.15 Governing Law. This Agreement and the Note shall be construed
in accordance with and governed by the law of the State of Georgia.
Section 10.16 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
Section 10.17 Reproduction of Documents. This Agreement, each of the Loan
Documents and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Lender, and (c) financial statements, certificates and
other information previously or hereafter furnished to the Lender, may be
reproduced by the Lender by any photographic, photostatic, microcard, microfilm,
miniature photographic or other similar process, and the Lender may destroy any
original document so reproduced. Each party hereto stipulates that, to the
extent permitted by applicable laws any such reproduction shall be as admissible
in evidence as the original itself in any judicial or administrative proceeding
(whether or not the original shall be in existence and whether or not such
reproduction was made by such Lender in the regular course of business), and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 10.18 Final Agreement. This Agreement and the other Loan Documents
are intended by the parties hereto as the final, complete and exclusive
expression of the agreement among them with
37
respect to the subject matter hereof and thereof. This Agreement and the other
Loan Documents supersede any and all prior oral or written agreements between
the parties hereto relating to the subject matter hereof and thereof.
[Remainder of page intentionally left blank]
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Atlanta, Georgia by their duly authorized officers in several
counterparts all as of the day and year first written above.
BORROWER:
U.S. FRANCHISE SYSTEMS, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
LENDER:
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
39
EXHIBIT "A"
TERM NOTE
$10,000,000 Date: April 28, 1998
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
NATIONSBANK, N.A. (together with any holder hereof, called "Holder") with
offices located in Atlanta, Georgia, the principal sum of $10,000,000 at the
offices of Holder at Atlanta, Georgia, or at any other place designated by
Holder, in lawful money of the United States, together with interest, said
principal sum being payable as set forth in the below-described Loan Agreement,
and said interest on the unpaid principal balance being due at the rate and
times provided in the Loan and Security Agreement between the undersigned and
NationsBank, N.A. of even date (the "Loan Agreement").
This Note is subject to the terms and conditions of, and entitled to
the benefits of the Collateral described in, the Loan Agreement. Capitalized
terms not defined herein shall have the meanings given in the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder, under the Loan Agreement, the Security Documents or
at law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy. Principal and interest on this Note shall be payable and paid in lawful
money of the United States of America.
The undersigned and all endorsers waive presentment, notice of
dishonor and protest.
Time is of the essence of this Note and, in case this Note is
collected by law or through an attorney at law, or under advice therefrom, the
undersigned agrees to pay all costs of collection, including reasonable
attorneys' fees if collected by or through an attorney.
40
The provisions of this Note shall be construed and interpreted and
all rights and obligations of the parties hereunder determined in accordance
with the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed, sealed and delivered in Atlanta, Georgia, in its corporate name, by
and through its respective duly authorized officers, as of the day and year
first above written.
U.S. FRANCHISE SYSTEMS, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Executive Vice President
[CORPORATE SEAL]