CREDIT AGREEMENT between KFLG WATERTOWN, INC. as Borrower, and TD BANKNORTH, N.A., as Lender Dated as of May 27, 2005
Exhibit
10.27
Execution
Copy
$1,600,000
between
KFLG
WATERTOWN, INC.
as
Borrower,
and
TD
BANKNORTH, N.A.,
as
Lender
Dated
as
of May 27, 2005
TABLE
OF CONTENTS
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Page
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SECTION
1.
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DEFINITIONS
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1
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1.1
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Certain
Defined Terms.
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1
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1.2
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Other
Definitional Provisions.
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11
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SECTION
2.
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AMOUNT
AND TERMS OF COMMITMENTS
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12
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2.1
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Initial
Term Loan.
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12
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2.2
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Additional
Term Loans.
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12
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2.3
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Procedure
for Term Loan Borrowing.
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12
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2.4
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Fees.
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12
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2.5
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Repayment
of the Loans.
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13
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2.6
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Prepayment
Penalty.
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13
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2.7
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Mandatory
Prepayments.
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13
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2.8
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Interest
Rates and Payment Dates; Payments.
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14
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2.9
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Computation
of Interest and Fees.
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15
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2.10
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Requirements
of Law.
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15
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2.11
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Taxes.
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16
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2.12
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Indemnity.
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16
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SECTION
3.
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REPRESENTATIONS
AND WARRANTIES
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17
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3.1
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Financial
Condition.
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17
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3.2
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No
Change.
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17
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3.3
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Existence;
Compliance with Law.
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17
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3.4
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Power;
Authorization; Enforceable Obligations.
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17
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3.5
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No
Legal Bar.
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17
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3.6
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Litigation.
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18
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3.7
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No
Default.
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18
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3.8
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Ownership
of Property; Liens.
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18
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3.9
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Intellectual
Property; Licenses.
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18
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3.10
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Taxes.
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18
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3.11
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Federal
Regulations.
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18
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3.12
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ERISA.
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18
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3.13
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Investment
Company Act; Other Regulations.
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19
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3.14
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Subsidiaries.
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19
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3.15
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Use
of Proceeds.
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19
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3.16
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Environmental
Matters.
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19
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3.17
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Accuracy
of Information, etc.
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20
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3.18
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Security
Documents.
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21
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3.19
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Solvency.
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21
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3.20
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Regulation
H.
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21
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3.21
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Indebtedness
Outstanding.
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21
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3.22
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Anti-Terrorism
Laws.
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21
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3.23
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Depository
and Other Accounts.
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22
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3.24
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Obligations
to Seller.
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22
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SECTION
4.
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CONDITIONS
PRECEDENT
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22
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4.1
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Conditions
to Initial Extension of Credit.
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22
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4.2
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Conditions
to Each Extension of Credit.
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24
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SECTION
5.
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AFFIRMATIVE
COVENANTS
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24
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5.1
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Financial
Statements; Field Audits.
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24
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5.2
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Certificates;
Other Information.
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26
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5.3
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Payment
of Obligations.
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26
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5.4
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Maintenance
of Existence; Compliance.
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27
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5.5
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Maintenance
of Property; Insurance.
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27
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5.6
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Inspection
of Property; Books and Records; Discussions.
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27
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5.7
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Notices.
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27
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5.8
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Compliance
with Laws.
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28
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5.9
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Additional
Collateral; Subsidiaries; New Units.
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28
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5.10
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Depository
Accounts; Additional Accounts.
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28
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5.11
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Communications
with Accountants.
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28
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SECTION
6.
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NEGATIVE
COVENANTS
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28
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6.1
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Financial
Condition Covenants.
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29
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6.2
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Indebtedness.
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29
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6.3
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Liens.
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30
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6.4
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Fundamental
Changes.
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30
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6.5
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Disposition
of Property.
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30
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6.6
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Restricted
Payments.
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31
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6.7
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Stock.
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31
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6.8
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Investments.
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31
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6.9
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Modifications
of Certain Debt Instruments.
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31
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6.10
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Transactions
with Affiliates and Insiders.
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31
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6.11
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Sales
and Leasebacks.
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32
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6.12
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Changes
in Fiscal Periods.
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32
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6.13
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Negative
Pledge Clauses.
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32
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6.14
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Clauses
Restricting Subsidiary Distributions.
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32
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6.15
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Lines
of Business; Location of Business.
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32
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6.16
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Use
of Proceeds.
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32
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6.17
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Full
Funding.
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32
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SECTION
7.
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EVENTS
OF DEFAULT
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32
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SECTION
8.
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MISCELLANEOUS
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35
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8.1
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Amendments
and Waivers.
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35
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8.2
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Notices.
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35
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8.3
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No
Waiver; Cumulative Remedies.
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35
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8.4
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Survival
of Representations and Warranties.
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36
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8.5
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Payment
of Expenses and Taxes.
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36
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8.6
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Successors
and Assigns; Participations and Assignments.
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36
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8.7
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Adjustments;
Set-off.
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37
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8.8
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Counterparts.
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37
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-
ii -
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8.9
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Severability.
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37
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8.10
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Integration.
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37
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8.11
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Governing
Law.
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38
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8.12
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Submission
To Jurisdiction; Waivers.
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38
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8.13
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Acknowledgements.
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38
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8.14
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WAIVERS
OF JURY TRIAL.
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38
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8.15
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USA
Patriot Act Notice.
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38
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8.16
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Replacement
Note.
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39
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-
iii -
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3.4
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Consents,
Authorizations, Filings and Notices
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3.6
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Litigation
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3.14
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Subsidiaries
and Capital Stock
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3.18
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UCC
Filings
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3.21(a)
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Indebtedness
to Remain Outstanding
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3.21(b)
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Indebtedness
to be Paid
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3.21(c)
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Liens
to be Terminated
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3.21(d)
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Liens
to Remain Outstanding
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3.23
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Deposit
Accounts
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6.2(c)
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Existing
Indebtedness
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6.3(e)
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Existing
Liens
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EXHIBITS:
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A
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Form
of Security Agreement
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B
|
Form
of Guarantee and Security Agreement
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C
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Form
of Compliance Certificate
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D
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Form
of Closing Certificate
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E
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Form
of Term Note
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Form
of Subordination Agreement
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G
|
Form
of Notice of Borrowing
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CREDIT
AGREEMENT (this “Agreement”),
dated
as of May 27, 2005, between KFLG WATERTOWN, INC., a Massachusetts corporation
(the “Borrower”),
and
TD BANKNORTH, N.A., as lender (the “Lender”).
WHEREAS,
the Borrower and the Lender wish to enter into this Agreement to establish
the
credit facilities described herein, and to set forth the terms, conditions
and
covenants to apply to the Borrower and any subsidiary or subsidiaries the
Borrower may form or acquire after the date hereof,
NOW,
THEREFORE, the parties hereto hereby agree as follows:
SECTION
1. DEFINITIONS
1.1
Certain
Defined Terms. As
used
in this Agreement, the terms listed in this Section 1.1 shall have the
respective meanings set forth in this Section 1.1.
“Additional
Term Loans”:
as
defined in Section 2.2.
“Affiliate”:
as to
any Person, any other Person that, directly or indirectly (including through
any
Relative (as defined below)), is in control of, is controlled by, or is under
common control with, such Person and, in the case of a Person who is a natural
person, any spouse, child, grandparent, or grandchild (each, a “Relative”)
of
such Person. For purposes of this definition, “control” of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract
or
otherwise.
“Applicable
Margin”:
the
Applicable Margin will be determined pursuant to the table set forth
below:
|
Before
New Equity Date, as to Prime Rate Loans:
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1.5
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%
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||
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On
and after New Equity Date, as to Prime Rate Loans:
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0
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%
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||
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Before
New Equity Date, as to COF Loans:
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4.0
|
%
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||
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On
or after New Equity Date, as to COF Loans:
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2.5
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%
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Changes
in the Applicable Margin resulting from the contribution of the New Equity
shall
become effective on the date (the “Adjustment
Date”)
that
is three Business Days after the date on which financial statements are
delivered to the Lender reflecting such new cash equity.
“Asset
Purchase Agreements”:
the
Asset
Purchase Agreement dated as of August 11, 2004, by and among the Guarantor
and
the Seller, as assigned to Borrower by Guarantor as of August 11, 2004, and
the
Asset Purchase Agreement dated as of January 28, 2005 by and among the Guarantor
and the Seller, each as assigned to Borrower by Guarantor as of January 28,
2005.
“Board”:
the
Board of Governors of the Federal Reserve System of the United States (or any
successor).
“Borrowing
Date”:
any
Business Day specified by the Borrower in its Notice of Borrowing as a date
on
which such Borrower requests the Lender to make Loans hereunder.
“Business”:
as
defined in Section 3.16(b).
“Business
Day”:
a day
other than a Saturday, Sunday or other day on which commercial banks in Boston,
Massachusetts are authorized or required by law to close.
“Capital
Expenditures”:
for
any period, with respect to any Person, the aggregate of all expenditures by
such Person and its Subsidiaries for the acquisition, rental, construction,
use,
leasing (pursuant to a capital lease) of fixed or capital assets or additions
to
equipment (including replacements, capitalized repairs and improvements during
such period) that should be reflected in the category of property, plant or
equipment or intangibles under GAAP on a consolidated balance sheet of such
Person and its Subsidiaries, but excluding expenditures for equipment installed
at the site of, and leased to, any customer of such Person or any of such
Person’s Subsidiaries.
“Capital
Lease Obligations”:
as to
any Person, the obligations of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
“Capital
Stock”:
any
and all shares, interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and all equivalent ownership
interests in a Person other than a corporation and any and all warrants, rights
or options to purchase any of the foregoing.
“Cash
Equivalents”:
(a)
marketable direct obligations issued by, or unconditionally guaranteed by,
the
United States Government or issued by any agency thereof and backed by the
full
faith and credit of the United States, in each case maturing within one year
from the date of acquisition; (b) certificates of deposit, time deposits or
overnight bank deposits having maturities of six months or less from the date
of
acquisition issued by the Lender; (c) commercial paper of an issuer rated at
least A-1 by Standard & Poor’s Ratings Services (“S&P”)
or P-1
by ▇▇▇▇▇’▇ Investors Service, Inc. (“Moody’s”),
or
carrying an equivalent rating by a nationally recognized rating agency, if
both
of the two named rating agencies cease publishing ratings of commercial paper
issuers generally, and maturing within six months from the date of acquisition;
or (d) money market mutual or similar funds that invest exclusively in assets
satisfying the requirements of clauses (a) through (c) of this
definition.
“Change
of Control”:
the
occurrence of any of the following:
(a)
(i)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ directly and ▇▇▇ ▇▇▇▇▇ directly or indirectly
through Seller (which is controlled by ▇▇▇ ▇▇▇▇▇) shall cease to own,
beneficially and of record, in the aggregate not less than the shares such
individuals own on the Closing Date, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇ directly and ▇▇▇ ▇▇▇▇▇ directly or indirectly through Seller (which
is
controlled by ▇▇▇ ▇▇▇▇▇) shall cease to own not less than 40% of all of the
outstanding Capital Stock of the Guarantor entitled to vote for the Board of
Directors (or other major decision) on a fully diluted basis, or (ii) any Person
shall acquire a Lien on any Capital Stock of the Guarantor if a Change of
Control under the foregoing clause (i) would result from the ownership by such
Person of such Capital Stock;
-
2 -
(b)
during any period of up to 24 consecutive months, commencing after the date
of
this Agreement, individuals who at the beginning of such 24-month period were
directors of the Borrower or the Guarantor shall cease for any reason to
constitute a majority of the board of directors of the Borrower or the
Guarantor, as applicable; or
(c)
any
Person or two or more Persons acting in concert other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇ shall have acquired by contract or otherwise, or shall have ventured
into a contract or arrangement that, upon consummation, will result in its
or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Borrower or the
Guarantor or to control voting interests of the Borrower or the Guarantor
representing 30% or more of the combined voting power of all voting interests
of
the Borrower or the Guarantor; or
(d)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ shall cease to (i) exercise the primary management
functions of the Guarantor and the Borrower and (ii) make all significant
decisions for the Guarantor and the Borrower, each as determined by the Lender,
unless in the case of the death or permanent disability of either such
individual another individual satisfactory to Lender in writing has replaced
any
such individual; or
(e)
the
Guarantor shall fail to own 100% of the issued and outstanding Capital Stock
of
the Borrower, free and clear of all Liens (other than Liens of the Loan
Documents), or shall otherwise fail to control the Borrower.
“Closing
Date”:
the
date on which the conditions precedent set forth in Section 4.1 shall have
been
satisfied.
“Code”:
the
Internal Revenue Code of 1986, as amended from time to time.
“COF
Loan”:
any
Loan the interest on which is calculated by reference to the COF
Rate.
“COF
Rate”:
the
per annum rate of interest, as quoted and offered by the Lender to the Borrower
from time to time, which the Lender is required to pay, or is offering to pay,
for wholesale liabilities of the like tenor (including for any
regularly-scheduled principal amortization with respect thereto) for the
remaining term of the Loan, adjusted for reserve requirements and requirements
of such other local government and regulatory agencies, all as conclusively
determined by the Lender, as quoted and offered by the Lender to the Borrower
from time to time.
“Collateral”:
all
property, now owned or hereafter acquired, upon which a Lien is purported to
be
created by any Security Document.
“Commitment”:
the
Lender’s commitment to make the Initial Term Loan and the Additional Term Loans
in an aggregate principal amount not to exceed $1,600,000.
“Commonly
Controlled Entity”:
an
entity, whether or not incorporated, that is under common control with any
Borrower within the meaning of Section 4001 of ERISA or is part of a group
that
includes any Borrower and that is treated as a single employer under Section
414
of the Code.
“Compliance
Certificate”:
a
certificate duly executed by a Responsible Officer substantially in the form
of
Exhibit C.
-
3 -
“Consolidated
Capital Expenditures”:
for
any period, the consolidated Capital Expenditures of the Borrower and its
Subsidiaries for such period, determined in accordance with GAAP.
“Consolidated
Debt Service”:
for
any period, the sum (without duplication) of (a) all amounts paid or payable
in
respect of principal, interest and fees on Indebtedness (other than Subordinated
Debt) of the Borrower and its Subsidiaries during such period, on a consolidated
basis, and (b) Capitalized Lease Obligations of the Borrower and its
Subsidiaries for such period.
“Consolidated
Debt Service Coverage Ratio”:
at any
date, the ratio of (a) Consolidated Operating Cash Flow for the four-quarter
period ending on the last day of the fiscal quarter most recently ended to
(b)
Consolidated Debt Service for such period.
“Consolidated
EBITDA”:
for
any period, Consolidated Net Income for such period plus,
without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) income tax expense,
(b)
interest expense, (c) depreciation and amortization expense, (d) expenses
constituting Specified Consulting Fees paid to the Seller for consulting
services and, (e) to the extent approved by the Lender, extraordinary, unusual
or non-recurring expenses or losses, and mus,
to the
extent included in the statement of such Consolidated Net Income for such
period, the sum of (i) interest income, (ii) any extraordinary, unusual or
non-recurring income or gains (including, whether or not otherwise includable
as
a separate item in the statement of such Consolidated Net Income for such
period, gains on the sales of assets outside of the ordinary course of business)
and (iii) any other non-cash income, all as determined on a consolidated basis
in accordance with GAAP.
“Consolidated
Maintenance Capital Expenditures”:
for
any period, the Consolidated Capital Expenditures for the maintenance of
Existing Units.
“Consolidated
New Unit Capital Expenditures”:
for
any period, the Consolidated Capital Expenditures for the building or purchasing
or maintaining of new Units prior to their becoming Existing Units.
“Consolidated
Net Income”:
for
any period, the consolidated net income (or loss) of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided
that
there shall be excluded (a) the income (or deficit) of any Person accrued prior
to the date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a wholly-owned Subsidiary of the Borrower)
in
which the Borrower or any of its Subsidiaries has an ownership interest, except
to the extent that any such income is actually received by the Borrower or
such
Subsidiary in the form of dividends or other distributions and (c) the
undistributed earnings of any Subsidiary of the Borrower to the extent that
the
declaration or payment of dividends or other distributions by such Subsidiary
is
not at the time permitted by the terms of any Contractual Obligation (other
than
under any Loan Document) or Requirement of Law applicable to such
Subsidiary.
“Consolidated
Operating Cash Flow”:
for
any period, Consolidated EBITDA for such period minus,
the sum
of (i) cash taxes paid in such period, (ii) any Restricted Payments or loans
by
the Borrower to the Guarantor (except for those expressly permitted hereunder)
and (iii) Consolidated Maintenance Capital Expenditures for such
period.
“Consolidated
Senior Funded Debt”:
at any
date, the consolidated Indebtedness of the Borrower and its Subsidiaries less,
Subordinated Debt at such date and less at any date prior to September 30,
2006,
Consolidated Unrestricted Cash at such date.
-
4 -
“Consolidated
Senior Funded Debt to EBITDA Ratio”:
at any
date, the ratio of (a) the Consolidated Senior Funded Debt at such date to
(b)
Consolidated EBITDA for the four-quarter period ending on the last day of the
fiscal quarter most recently ended.
“Consolidated
Unrestricted Cash”:
all
cash and Cash Equivalents of the Borrower and the Guarantor, excluding any
cash
or Cash Equivalents subject to any Lien or other restriction or the use
thereof.
“Consulting
Agreements”:
the
Management Consulting Agreement dated as of August 11, 2004, by and among the
Borrower and the Seller and the Management Consulting Agreement dated as of
January 28, 2005 by and among the Guarantor and the Seller, as assigned to
Borrower by Guarantor as of January 28, 2005.
“Contractual
Obligation”:
as to
any Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party
or by
which it or any of its property is bound.
“Covered
Parties”:
the
Guarantor, the Borrower and any Subsidiaries of either thereof formed or
acquired by the Borrower after the date hereof. “Covered
Party”
shall
have a corresponding meaning.
“Default”:
any of
the events specified in Section 7, whether or not any requirement for the
giving of notice, the lapse of time, or both, has been satisfied.
“Disposition”:
with
respect to any property, any sale, lease, sale and leaseback, assignment,
conveyance, transfer or other disposition thereof. The terms “Dispose”
and
“Disposed
of”
shall
have corresponding meanings.
“Dollars”
and
“$”:
dollars in lawful currency of the United States.
“Drawdown
Period”:
within
one year of the Closing Date.
“Environmental
Laws”:
any
and all foreign, Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law (including common law)
regulating, relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any time
hereafter be in effect.
“ERISA”:
the
Employee Retirement Income Security Act of 1974, as amended from time to
time.
“Event
of Default”:
any of
the events specified in Section 7, provided
that any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
“Existing
Unit”:
any
Unit that has been operating for six months or more.
“Facility”:
each
of the Initial Term Loan and the Additional Term Loans made
thereunder.
-
5 -
“GAAP”:
generally accepted accounting principles in the United States as in effect
from
time to time, except that for purposes of Section 6.1, GAAP shall be determined
on the basis of such principles in effect on the date hereof and consistent
with
those used in the preparation of the most recent reviewed financial statements
referred to in Section 3.1. In the event that any accounting change shall occur
and such change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrower and the
Lender agree to enter into negotiations in order to amend such provisions of
this Agreement so as to reflect equitably such accounting changes with the
desired result that the criteria for evaluating the Borrower’s financial
condition shall be the same after such accounting changes as if such accounting
changes had not been made. Until such time as such an amendment shall have
been
executed and delivered by the Borrower and the Lender, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such accounting changes had not occurred
“Governmental
Authority”:
any
nation or government, any state or other political subdivision thereof, any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory
or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.
“Guarantee
and Security Agreement”:
the
Guaranty and Security Agreement, to be executed by the Guarantor, substantially
in the form of Exhibit B.
“Guarantee
Obligation”:
as to
any Person (the “guaranteeing
person”),
any
obligation of (a) the guaranteeing person or (b) another Person (including
any
bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “primary
obligations”)
of any
other third Person (the “primary
obligor”)
in any
manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided,
however,
that
the term Guarantee Obligation shall not include endorsements of instruments
for
deposit or collection in the ordinary course of business.
“Guarantor”:
Knowfat Franchise Company, Inc.
“Indebtedness”:
of any
Person at any date, without duplication, (a) all indebtedness of such Person
for
borrowed money, (b) all obligations of such Person for the deferred purchase
price of property or services (other than current trade payables incurred in
the
ordinary course of such Person’s business), (c) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in
the event of default are limited to repossession or sale of such property),
(e)
all Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party or applicant under or
in
respect of acceptances, letters of credit, surety bonds or similar arrangements,
(g) all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (f) above and (h) all obligations of
the
kind referred to in clauses (a) through (g) above secured by (or for which
the
holder of such obligation has an existing right, contingent or otherwise, to
be
secured by) any Lien on property (including accounts and contract rights) owned
by such Person, whether or not such Person has assumed or become liable for
the
payment of such obligation. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness expressly provide that
such
Person is not liable therefor.
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6 -
“Indebtedness
to be Paid”:
as
defined in Section 3.21.
“Initial
Term Loan”:
as
defined in Section 2.1.
“Insolvent”:
with
respect to any Multiemployer Plan, the condition that such Plan is insolvent
within the meaning of Section 4245 of ERISA, and “Insolvency”
shall
have a corresponding meaning.
“Intellectual
Property”:
all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including copyrights, copyright licenses, patents, patent licenses, trademarks,
trademark licenses, technology, know-how and processes, and all rights to ▇▇▇
at
law or in equity for any infringement or other impairment thereof, including
the
right to receive all proceeds and damages therefrom.
“Interest
Payment Date”:
as to
any Loan, the first day of each calendar month to occur while such Loan is
outstanding and the final maturity date of such Loan, and the date of any
repayment or prepayment made in respect thereof.
“Investments”:
as
defined in Section 6.8.
“Leased
Properties”:
the
real properties from time to time leased by the Covered Parties.
“Leasehold
Security Document”:
with
respect to any Leased Property, such leasehold mortgage, landlord consent and
waiver, leasehold assignment or similar document as the Lender may
require.
“Lien”:
any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind
or
nature whatsoever (including any conditional sale or other title retention
agreement and any capital lease having substantially the same economic effect
as
any of the foregoing).
“Liens
to be Terminated”:
as
defined in Section 3.21.
“Loan”:
as
defined in Section 2.2.
“Loan
Documents”:
this
Agreement, the Security Documents, the Subordination Agreement, any other
subordination agreement executed in connection with any Subordinated Debt,
the
Notes, any interest rate hedging agreement entered into by the Borrower and
the
Lender (or any Affiliate of the Lender) and each other certificate, document
or
instrument executed and delivered in connection with any of the
foregoing.
“Loan
Party”
or
“Loan
Parties”:
each
Covered Party or Affiliate thereof that is a party to a Loan Document, or all
of
them, as the case may be.
-
7 -
“Material
Adverse Effect”:
a
material adverse effect on (a) the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise), profits or
prospects of any Loan Party or (b) the validity or enforceability of this
Agreement or any of the other Loan Documents, the ability of any Loan Party
to
perform hereunder or thereunder, or the rights or remedies of the Lender
hereunder or thereunder.
“Materials
of Environmental Concern”:
any
gasoline or petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes, defined
or
regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
“Maturity
Date”:
the
fifth anniversary of the Closing Date.
“Mortgage”:
as
defined in Section 5.9.
“Multiemployer
Plan”:
a Plan
that is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Net
Cash Proceeds”:
(a) in
connection with any Recovery Event, the proceeds thereof in the form of cash
and
Cash Equivalents of such Recovery Event, net of amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted hereunder
on any asset that is the subject of such Recovery Event (other than any Lien
pursuant to a Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available
tax
credits or deductions and any tax sharing arrangements) and (b) in connection
with any incurrence of Indebtedness or issuance of any new equity or additional
capital contributions, the cash proceeds received from such incurrence or
issuance, net of attorneys’ fees, accountants’ fees, commissions and other
customary fees and expenses actually incurred in connection
therewith.
“New
Equity”:
new
equity of the Guarantor, consisting of either common or preferred stock, or
additional capital contributions, in either case resulting in the receipt by
the
Guarantor of unrestricted Net Cash Proceeds of at least $3,000,000.
“New
Equity Date”:
the
date on which the Borrower has received the Net Cash Proceeds of the New Equity
required by Section 6.1(a).
“Note”:
the
promissory note, in substantially the form of Exhibit E hereto evidencing the
Loans.
“Notice
of Borrowing”:
as
specified in Section 2.3.
“Obligations”:
the
unpaid principal of and interest on (including interest accruing after the
maturity of the Loans and interest accruing after the filing of any petition
in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing
or
post-petition interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Borrower to the Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal,
interest, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
-
8 -
“Operating
Account”:
the
Borrower’s operating account with the Lender as designated by the Lender,
established for the purpose of effecting Loans hereunder.
“Other
Taxes”:
as
defined in Section 2.11(b).
“PBGC”:
the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of
Title
IV of ERISA (or any successor).
“Person”:
an
individual, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
“Plan”:
at a
particular time, any employee benefit plan that is covered by ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.
“Prime
Rate”:
for
any day, the rate per annum established by the Lender from time to time as
its
“prime rate”. Any change in the Prime Rate shall be effective as of the opening
of business on the effective day of such change in the Prime Rate.
“Prime
Rate Loan”:
any
Loan the interest on which is calculated by reference to the Prime
Rate.
“Properties”:
as
defined in Section 3.16(a).
“Recovery
Event”:
any
settlement of or payment in respect of any property or casualty insurance claim
or any condemnation proceeding relating to any asset of any Covered
Party.
“Regulation
U”:
Regulation U of the Board as in effect from time to time.
“Reinvestment
Deferred Amount”:
with
respect to any Reinvestment Event, the aggregate Net Cash Proceeds received
by
any Covered Party in connection therewith that are not applied to prepay the
Loans as a result of the delivery of a Reinvestment Notice.
“Reinvestment
Event”:
any
Recovery Event in respect of which the Borrower has delivered a Reinvestment
Notice.
“Reinvestment
Notice”:
a
written notice executed by a Responsible Officer certifying that no Event of
Default has occurred and is continuing and that the Borrower intends and expects
to use all or a specified portion of the Net Cash Proceeds of a Recovery Event
to acquire or repair assets replacing or repairing those that were subject
to
the applicable Recovery Event.
“Reinvestment
Prepayment Amount”:
with
respect to any Reinvestment Event, the Reinvestment Deferred Amount relating
thereto less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire or repair assets useful in the applicable Covered Party’s
business.
“Reinvestment
Prepayment Date”:
with
respect to any Reinvestment Event, the earliest of (a) the date occurring 90
days after such Reinvestment Event, (b) any date on or following the date of
the
applicable Reinvestment Notice on which any Event of Default shall have occurred
and be continuing, designated as a Reinvestment Prepayment Date in a notice
by
the Lender to the Borrower, and (c) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire or repair the
assets subject to the applicable Recovery Event with all or any portion of
the
relevant Reinvestment Deferred Amount.
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9 -
“Reorganization”:
with
respect to any Multiemployer Plan, the condition that such plan is in
reorganization within the meaning of Section 4241 of ERISA.
“Reportable
Event”:
any of
the events set forth in Section 4043(c) of ERISA, other than those events as
to
which the thirty day notice period is waived under subsections .27, .28, .29,
.30, .31, .32, .34 or .35 of PBGC Reg. § 4043.
“Requirement
of Law”:
as to
any Person, the Certificate of Incorporation and By-Laws or other organizational
or governing documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority,
in
each case applicable to or binding upon such Person or any of its property
or to
which such Person or any of its property is subject.
“Responsible
Officer”:
a
Chief Executive Officer, Chief Financial Officer, President or Controller of
the
Borrower.
“Restricted
Payments”:
as
defined in Section 6.6.
“Satisfactory
Equity Commitment”:
a
commitment by a Person to purchase Capital Stock of the Guarantor, such
commitment (and the terms thereof) and Person to be in all respects satisfactory
to the Lender in its sole discretion.
“Security
Agreement”:
the
Security Agreement to be executed and delivered by the Borrower and the Lender,
substantially in the form of Exhibit A.
“Security
Documents”:
the
Security Agreement, the Guarantee and Security Agreement, any Mortgage, any
Leasehold Security Document, and all other security documents hereafter
delivered to the Lender granting a Lien on any property of any Person to secure
the obligations and liabilities of any Loan Party under any Loan Document,
collectively.
“Seller”:
Low
Fat No Fat Gourmet Café, Inc., a Massachusetts corporation.
“Seller
Debt”:
the
regularly scheduled payments owed by Borrower to Seller pursuant to the Asset
Purchase Agreements and the Consulting Agreements.
“Single
Employer Plan”:
any
Plan that is covered by Title IV of ERISA, but that is not a Multiemployer
Plan.
“Solvent”:
when
used with respect to any Person, means that, as of any date of determination,
(a) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person,
contingent or otherwise”, as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations
of
the insolvency of debtors, (b) the present fair saleable value of the assets
of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business, and
(d)
such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
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10 -
“Specified
Consulting Fees”:
amounts paid to the Seller under the Consulting Agreement that constitute
Subordinated Debt, as defined under the Subordination Agreement.
“Subordinated
Debt”:
Indebtedness of the Borrower approved by the Lender and subject to a written
subordination agreement in favor of, and in all respects satisfactory to, the
Lender, each in the sole discretion of the Lender, including without limitation
the Indebtedness owed to Seller subordinated pursuant to the Subordination
Agreement.
“Subordination
Agreement”:
shall
mean the subordination agreement to be executed by the Seller, the Borrower
and
the Lender, substantially in the form of Exhibit F.
“Subsidiary”:
as to
any Person, a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority
of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a “Subsidiary” or
to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower. Until the Borrower shall have any Subsidiaries, references
to
the Borrower and its Subsidiaries shall be construed as references to the
Borrower.
“Taxes”:
as
defined in Section 2.11(a).
“Unit”:
a
singular restaurant in which the Guarantor or the Borrower has any equity
interest direct or indirect.
“United
States”:
the
United States of America.
1.2
Other
Definitional Provisions.
(a)
Unless otherwise specified therein, all terms defined in this Agreement shall
have the defined meanings when used in the other Loan Documents or any
certificate or other document made or delivered pursuant hereto or
thereto.
(b)
As
used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting terms
relating to any Covered Party not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, (iii) the word “incur” shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
“incurred” and “incurrence” shall have correlative meanings), (iv) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer
to
such agreements or Contractual Obligations as amended, supplemented, restated
or
otherwise modified from time to time.
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11 -
(c)
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 provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d)
The
meanings given to terms defined herein shall be equally applicable to both
the
singular and plural forms of such terms.
SECTION
2. AMOUNT
AND TERMS OF COMMITMENTS
2.1
Initial
Term Loan. Subject
to the terms and conditions hereof, the Lender agrees to make a term loan in
the
principal amount of $1,000,000 on the Closing Date (the “Initial
Term Loan”).
2.2
Additional
Term Loans. Subject
to the terms and conditions hereof, the Lender agrees to lend to Borrower
additional term loans, in minimum increments of $100,000, in an amount not
to
exceed $600,000, which together with the Initial Term Loan does not exceed
the
Commitment (the “Additional
Term Loans”
and,
together with the Initial Term Loan, the “Loans”),
provided
that (i)
such Additional Term Loans shall be advanced only during the Drawdown Period;
(ii) the Borrower shall be in compliance with this Agreement before and after
the funding of the requested Additional Term Loan and shall have supplied the
Lender a certificate detailing such compliance; and (iii) if such Additional
Term Loan is requested prior to the [New Equity Date], the Borrower shall have
obtained Satisfactory Equity Commitments in an amount not less than ten times
the aggregate principal amount of all Additional Term Loans outstanding after
giving effect to the advancement of such Additional Term Loans.
2.3
Procedure
for Term Loan Borrowing. The
Borrower shall give the Lender irrevocable notice in the form of Exhibit G
(a
“Notice
of Borrowing”),
which
notice must be received by the Lender prior to 11:00 A.M., Boston time, on
the
Borrowing Date as to the Initial Term Loan or on the fifth Business Day prior
to
the Borrowing Date as to Additional Term Loans. The Notice of Borrowing will
specify the amount of Loan to be borrowed and the requested Borrowing
Date.
2.4
Fees.
(a)
The
Borrower agrees to pay to the Lender a closing fee of $15,000 on the Closing
Date. Such fee shall be earned in full when paid and shall not be refundable
under any circumstances.
(b)
On
any Borrowing Date in which Borrower requests that Lender make an Additional
Term Loan, Borrower shall pay an administrative fee of $250 upon the closing
of
such Additional Term Loan.
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12 -
(c)
The
Borrower agrees to pay a fee to the Lender on the seventh day after the New
Equity Date, calculated as follows based on the aggregate principal amount
of
Loans advanced prior to such date:
|
Total
Amount Borrowed
|
Fee
Owed to Lender
|
|||
|
$1,000,000
or less
|
$
|
0
|
||
|
$1,000,001
to $1,150,000
|
$
|
20,000
|
||
|
$1,150,001
to $1,300,000
|
$
|
40,000
|
||
|
$1,301,000
to $1,450,000
|
$
|
55,000
|
||
|
$1,451,000
to $1,600,000
|
$
|
70,000
|
||
Such
fee
shall be earned in full when paid and shall not be refundable under any
circumstances.
2.5
Repayment
of the Loans. The
Loans
shall be payable in consecutive monthly installments of $33,333.33 commencing
on
June 1, 2006 and on the first Business Day of each calendar month thereafter.
The remaining outstanding principal amount of the Loan shall be payable in
full
on the Maturity Date. Amounts paid or prepaid with respect to the Loans may
not
be reborrowed. The amount of any principal prepayment of the Loans shall be
applied to reduce the then remaining installments of the Loans in inverse order
of maturity.
2.6
Prepayment
Penalty. The
Borrower may at any time and from time to time prepay the Loans, in whole or
in
part, without premium or penalty except for any prepayment fee that may be
due
under the following sentence. Any such prepayment shall be made together with
all other amounts due and owing under the Loan Documents at the time of
prepayment (including, without limitation, any amounts owing pursuant to Section
2.12) and, if the date of such prepayment is on or before the second anniversary
of the date hereof, a prepayment fee in the amount of $80,000. Prepayments
shall
be made upon irrevocable notice by the Borrower delivered to the Lender no
later
than 11:00 A.M., Boston time, one Business Day prior thereto, which notice
shall
specify the date and amount of prepayment. If any such notice is given, the
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued and unpaid interest to such date on the amount
prepaid. Partial prepayments of any Loan shall be in an aggregate principal
amount of $100,000 or a whole multiple of $50,000 in excess thereof.
2.7
Mandatory
Prepayments.
(a)
Except for Indebtedness expressly permitted under Section 6.2, if any
Indebtedness described in clause (a) or (c) of the definition of “Indebtedness”
shall be issued or incurred by any Covered Party, then, an amount equal to
100%
of the Net Cash Proceeds thereof shall be applied on the date of such incurrence
toward the prepayment of the Loans.
(b)
If on
any date any Covered Party shall receive Net Cash Proceeds from any Recovery
Event then, unless (i) no Event of Default has occurred and is continuing and
(ii) a Reinvestment Notice shall be delivered in respect thereof, such Net
Cash
Proceeds shall be applied on such date toward the prepayment of the Loans.
In
addition, on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Loans.
(c)
If at
any time the aggregate outstanding principal amount of the Loans exceeds the
Commitment, the Borrower will immediately prepay or repay the Loans in an amount
necessary to cause the outstanding principal amount of the Loans not to exceed
the Commitment.
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13 -
(d)
Each
such prepayment of the Loans under this Section 2.6 shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid and all
amounts due and owing in respect thereof under Section 2.12.
(e)
Any
prepayment or repayment of COF Loans on any date other than the regularly
scheduled payments of principal thereof on the scheduled dates due hereunder
or
on the Maturity Date shall also be accompanied by a fee equal to the “Yield
Maintenance Fee” in an amount computed as follows:
The
current cost of funds, specifically the bond equivalent yield for United States
Treasury securities (bills on a discounted basis shall be converted to a bond
equivalent yield) with a maturity date closest to the remaining term of such
COF
Loans, shall be subtracted from the COF Rate, or default rate if applicable.
If
the result is zero or a negative number, there shall be no Yield Maintenance
Fee
due and payable. If the result is a positive number, then the resulting
percentage shall be multiplied by the scheduled outstanding principal balance
for each remaining monthly period of this note. Each resulting amount shall
be
divided by 360 and multiplied by the number of days in the monthly period.
Said
amounts shall be reduced to present values calculated by using the above
reference current costs of funds divided by 12 and the COF Loan’s remaining term
in months. The resulting sum of present values shall be the yield maintenance
fee due to the Lender upon prepayment of the principal of the COF Loans plus
any
accrued interest due as of the prepayment date.
Unless
the Lender expressly agrees otherwise, partial payments will not affect the
payment schedule required hereunder.
2.8
Interest
Rates and Payment Dates; Payments.
(a)
Until
the date on which the Loan is fully advanced, each Loan shall bear interest
at a
rate per annum equal to the Prime Rate plus the Applicable Margin. On and after
the date on which the Loan is fully advanced, interest on the unpaid principal
balance of the Loan shall accrue, at the Borrower’s option, at the Prime Rate
plus the Applicable Margin or at the COF Rate, plus the Applicable Margin,
in
any case as selected by the Borrower pursuant to a Notice of Conversion to
COF
Rate, provided such Notice of Conversion to COF Rate is delivered to the Lender
within 60 days after the date on which the Loan is fully advanced and provided
no Event of Default then exists hereunder.
(b)
If
any Event of Default shall have occurred and be continuing, all outstanding
Obligations (whether or not overdue) shall bear interest at a rate per annum
equal to the rate that would otherwise be applicable to the Loans pursuant
to
the foregoing provisions of this Section plus
5.00%
during the continuance of such Event of Default (both before and after
judgment).
(c)
Interest shall be payable in arrears on each Interest Payment Date, provided
that
interest accruing pursuant to paragraph (b) of this Section shall be payable
from time to time on demand.
(d)
The
Borrower hereby authorizes the Lender to charge, on each date on which any
amount is due hereunder, the Borrower’s Operating Account or any other deposit
accounts from time to time maintained by the Borrower with the Lender for the
purpose of effecting payments of amounts due to the Lender
hereunder.
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14 -
2.9
Computation
of Interest and Fees.
(a)
Interest and fees payable pursuant hereto shall be calculated on the basis
of a
360-day year. Any change in the interest rate on a Loan resulting from a change
in the Prime Rate shall become effective as of the opening of business on the
day on which such change becomes effective.
(b)
Each
determination of an interest rate by the Lender pursuant to any provision of
this Agreement shall be conclusive and binding on the Borrower in the absence
of
manifest error.
2.10
Requirements
of Law.
(a)
If
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority:
(i)
shall
subject the Lender to any tax of any kind whatsoever with respect to this
Agreement or any Loan made by it, or change the basis of taxation of payments
to
such Lender in respect thereof (except for Taxes covered by Section 2.11 and
changes in the rate of tax on the overall net income of such
Lender);
(ii)
shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of the Lender;
or
(iii)
shall impose on the Lender any other condition;
and
the
result of any of the foregoing is to increase the cost to the Lender of making,
converting into, continuing or maintaining Loans, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay the Lender, upon its demand, any additional amounts necessary
to compensate the Lender for such increased cost or reduced amount
receivable.
(b)
If
the Lender shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether
or
not having the force of law) from any Governmental Authority made subsequent
to
the date hereof shall have the effect of reducing the rate of return on the
Lender’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation could
have
achieved but for such adoption, change or compliance (taking into consideration
the Lender’s or such corporation’s policies with respect to capital adequacy),
then from time to time the Borrower shall pay to such Lender upon demand such
additional amount or amounts as will compensate the Lender or such corporation
for such reduction.
(c)
A
certificate as to any additional amounts payable pursuant to this Section
submitted by the Lender to the Borrower shall be conclusive in the absence
of
manifest error. The obligation of the Borrower pursuant to this Section shall
survive the termination of this Agreement and the payment of the Loans and
all
other amounts payable hereunder.
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15 -
2.11
Taxes.
(a)
Any
and all payments by the Borrower hereunder or under the other Loan Documents
shall be made free and clear of and without deduction for any and all present
or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes that are imposed on the
Lender’s overall net income by the United States and taxes that are imposed on
its overall net income (and franchise taxes imposed in lieu thereof) by the
state under the laws of which the Lender is organized (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the other Loan Documents being
hereinafter referred to as “Taxes”).
If
the Borrower shall be required by law to deduct any Taxes from or in respect
of
any sum payable hereunder or under any other Loan Document to the Lender,
(i) the sum payable by the Borrower shall be increased as may be necessary
so that after the Borrower has made all required deductions (including
deductions applicable to additional sums payable under this Section 2.11),
the Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make all such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable
law.
(b)
In
addition, the Borrower shall pay any present or future stamp, documentary,
excise, property or similar taxes, charges or levies that arise from any payment
made hereunder or under the other Loan Documents or from the execution, delivery
or registration of, performance under, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as “Other
Taxes”).
(c)
The
Borrower shall indemnify the Lender for and hold it harmless against the full
amount of Taxes and Other Taxes, and for the full amount of taxes of any kind
imposed by any jurisdiction on amounts payable under this Section 2.11,
imposed on or paid by the Lender and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 10 days from the date the
Lender makes written demand therefor.
(d)
Within 30 days after the date of any payment of Taxes, the Borrower shall
furnish to the Lender the original or a certified copy of a receipt evidencing
such payment.
(e)
The
agreements in this Section shall survive the termination of this Agreement
and
the payment of the Loans and all other amounts payable hereunder.
2.12
Indemnity.
The
Borrower agrees to indemnify the Lender for, and to hold the Lender harmless
from, any loss or expense that the Lender may sustain or incur as a consequence
of default by the Borrower in making any prepayment of Loans after the Borrower
has given a notice thereof in accordance with the provisions of this Agreement.
If the Lender elects to declare the Loans to be immediately due and payable,
then any amounts payable under this Section 2.12 shall become due and payable
in
the same manner as though the Borrower had exercised such right of prepayment.
A
certificate as to any amounts payable pursuant to this Section submitted to
the
Borrower by the Lender shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and the payment
of
the Loans and all other amounts payable hereunder.
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SECTION
3. REPRESENTATIONS
AND WARRANTIES
To
induce
the Lender to enter into this Agreement and to make the Loans, the Borrower
hereby represents and warrants to the Lender that:
3.1
Financial
Condition. The
consolidated balance sheet of the Guarantor as at December 31, 2004, and
the related consolidated statements of income and cash flows for the fiscal
year
ended on such date, reviewed and accompanied by a report in form and substance
satisfactory to the Lender from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, present fairly
the consolidated financial condition of the Guarantor as at such date, and
the
consolidated results of its operations and cash flows for the fiscal year then
ended. The unaudited consolidated balance sheets of each of the Guarantor and
the Borrower as at March 31, 2005, and, in each case, the related unaudited
consolidated statements of income and cash flows for the month ended on such
date, present fairly the consolidated financial condition the Guarantor and
the
Borrower, as applicable, as at such date, and the consolidated results of its
operations and its cash flows for the month then ended. All such financial
statements have been prepared in accordance with GAAP (subject to normal
year-end audit adjustments and the absence of footnotes) applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). The Borrower has no material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any long-term
leases or unusual forward or long-term commitments, including any interest
rate
or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, or other material obligations that are not reflected in the
most
recent financial statements referred to in this paragraph. During the period
from December 31, 2004 to and including the date hereof there has been no
Disposition by any Covered Party of any material part of its business or
property.
3.2
No
Change. Since
December 31, 2004, there have been no developments or events that, individually
or in the aggregate, have had or could reasonably be expected to have a Material
Adverse Effect.
3.3
Existence;
Compliance with Law. Each
Covered Party (a) is duly organized or formed, as the case may be, validly
existing and in good standing under the laws of the jurisdiction of its
organization or formation, (b) has the power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee
and
to conduct the business in which it is currently engaged, (c) is duly qualified
as a foreign corporation, partnership or limited liability company, as the
case
may be, and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements
of
Law, except to the extent that the failure to comply therewith could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.4
Power;
Authorization; Enforceable Obligations. Each
Loan
Party has the power and authority, and the legal right, to execute, deliver
and
perform the Loan Documents to which it is a party and, in the case of the
Borrower, to obtain extensions of credit hereunder. Each Loan Party has taken
all necessary organizational action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of
the
Borrower, to authorize the extensions of credit on the terms and conditions
of
this Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the Loans hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices
described in Schedule 3.4, which consents, authorizations, filings and notices
have been obtained or made and are in full force and effect and (ii) the filings
referred to in Section 3.18. Each Loan Document has been duly executed and
delivered on behalf of each Loan Party party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except
as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5
No
Legal Bar. The
execution, delivery and performance of this Agreement and the other Loan
Documents, the borrowings hereunder and the use of the proceeds thereof will
not
violate any Requirement of Law or any Contractual Obligation of any Loan Party
and will not result in, or require, the creation or imposition of any Lien
on
any of their respective properties or revenues pursuant to any Requirement
of
Law or any such Contractual Obligation (other than the Liens created by the
Security Documents). No Requirement of Law or Contractual Obligation applicable
to any Loan Party could reasonably be expected to have a Material Adverse
Effect.
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17 -
3.6
Litigation.
No
litigation, action, investigation or proceeding of or before any arbitrator
or
Governmental Authority is pending or, to the knowledge of the Borrower or the
Guarantor, threatened by or against any Loan Party or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) that could
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, all pending or, to the knowledge of the Borrower or the Guarantor,
threatened litigations, actions, investigations or proceedings by or against
any
Loan Party are listed on Schedule 3.6.
3.7
No
Default. No
Loan
Party is in default under or with respect to any of its Contractual Obligations
in any respect that could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is
continuing.
3.8
Ownership
of Property; Liens. Each
Covered Party has title in fee simple to, or a valid leasehold interest in,
all
its real property, and good title to, or a valid leasehold interest in, all
its
other property, including without limitation all assets covered by the Asset
Purchase Agreements. Borrower holds title to all such assets covered by the
Asset Purchase Agreements. None of such property is subject to any Lien except
as would be permitted by Section 6.3.
3.9
Intellectual
Property; Licenses. Each
Loan
Party owns, or is licensed to use, all Intellectual Property and other licenses
necessary for the conduct of its business as currently conducted. No material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does any Loan Party know of any valid basis for
any
such claim. The use of Intellectual Property by each Loan Party does not
infringe on the rights of any Person in any material respect.
3.10
Taxes. Each
Loan
Party has filed or caused to be filed all Federal, state and other material
tax
returns that are required to be filed and has paid all taxes shown to be due
and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of
its
property by any Governmental Authority; no tax Lien has been filed, and, to
the
knowledge of the Borrower or the Guarantor, no claim is being asserted, with
respect to any such tax, fee or other charge.
3.11
Federal
Regulations. No
part
of the proceeds of any Loans, and no other extensions of credit hereunder,
will
be used for “buying” or “carrying” any “margin stock” within the respective
meanings of each of the quoted terms under Regulation U as now and from time
to
time hereafter in effect or for any purpose that violates the provisions of
the
Regulations of the Board. If requested by the Lender, the Borrower will furnish
to the Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
3.12
ERISA.
Neither
a
Reportable Event nor an “accumulated funding deficiency” (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination
of
a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a
Plan
has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the
date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits by a material amount.
Neither the Borrower nor any Commonly Controlled Entity has had a complete
or
partial withdrawal from any Multiemployer Plan that has resulted or could
reasonably be expected to result in a material liability under ERISA, and
neither the Borrower nor any Commonly Controlled Entity would become subject
to
any material liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans
as of
the valuation date most closely preceding the date on which this representation
is made or deemed made. No such Multiemployer Plan is in Reorganization or
Insolvent.
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18 -
3.13
Investment
Company Act; Other Regulations. No
Loan
Party is (a) an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended or (b) a “holding company” as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935 or the Federal Power
Act,
as amended. No Loan Party is subject to regulation under any Requirement of
Law
(other than Regulation X of the Board) that limits its ability to incur
Indebtedness.
3.14
Subsidiaries.
(a)
(i)
The Borrower has no Subsidiaries, (ii) as of the date hereof, the authorized,
issued and outstanding Capital Stock of each of the Borrower and the Guarantor
is as set forth on, Schedule 3.14 and (ii) the ownership interests in the
Borrower and the Guarantor are duly authorized, validly issued, fully paid
and
nonassessable and, as of the date hereof, are owned beneficially and of record
by the Persons set forth on Schedule 3.14, free and clear of all Liens other
than Liens of the Security Documents.
(b)
Except as set forth on Schedule 3.14 or the issuance of New Equity contemplated
hereunder, no Covered Party has issued any securities convertible into, or
options or warrants for, any common or preferred equity securities thereof
and
there are no agreements, voting trusts or understandings binding upon any
Covered Party with respect to the voting securities of any Covered Party or
affecting in any manner the sale, pledge, assignment or other disposition
thereof, including any right of first refusal, option, redemption, call or
other
right with respect thereto, whether similar or dissimilar to any of the
foregoing.
(c)
The
organizational documents of each Covered Party that is:
(i)
a
corporation, business trust, joint stock company or similar Person, provide
that
all Capital Stock issued by it must be represented by a certificate;
or
(ii)
a
partnership or limited liability company, do not provide that any Capital Stock
issued by such Subsidiary constitutes a security governed by Article 8 of the
UCC.
3.15
Use
of
Proceeds. The
proceeds of the Initial Term Loan shall be used to pay the Indebtedness to
be
Paid and for general corporate purposes (excluding the building of any new
Units). The proceeds of the Additional Term Loans shall be used for general
corporate purposes (excluding the building of new Units other than one new
Unit)
and, to the extent permitted herein, to make loans to the
Guarantor.
3.16
Environmental
Matters.
(a)
The
facilities and properties owned, leased or operated by any Covered Party (the
“Properties”)
do not
contain, and have not previously contained, any Materials of Environmental
Concern in amounts or concentrations or under circumstances that constitute
or
constituted a violation of, or could give rise to liability under, any
Environmental Law;
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19 -
(b)
no
Loan Party has received or to the knowledge of Borrower or Guarantor is aware
of
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the business operated
by any Covered Party (the “Business”),
nor
does the Borrower or the Guarantor have knowledge or reason to believe that
any
such notice will be received or is being threatened;
(c)
Materials of Environmental Concern have not been transported or disposed of
from
the Properties in violation of, or in a manner or to a location that could
give
rise to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on
or
under any of the Properties in violation of, or in a manner that could give
rise
to liability under, any applicable Environmental Law;
(d)
no
judicial proceeding or governmental or administrative action is pending or,
to
the knowledge of the Borrower or the Guarantor, threatened, under any
Environmental Law to which any Covered Party is or will be named as a party
with
respect to the Properties or the Business, nor are there any consent decrees
or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental
Law
with respect to the Properties or the Business;
(e)
there
has been no release or threat of release of Materials of Environmental Concern
at or from the Properties, or arising from or related to the operations of
any
Covered Party in connection with the Properties or otherwise in connection
with
the Business, in violation of or in amounts or in a manner that could give
rise
to liability under Environmental Laws;
(f)
the
Properties and all operations at the Properties are in compliance, and have
in
the last five years been in compliance, with all applicable Environmental Laws,
and there is no contamination at, under or about the Properties or violation
of
any Environmental Law with respect to the Properties or the Business;
and
(g)
no
Covered Party has assumed any liability of any other Person under Environmental
Laws.
3.17
Accuracy
of Information, etc. No
statement or information contained in this Agreement, any other Loan Document
or
any other document, certificate or statement furnished by or on behalf of any
Loan Party to the Lender for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents contains or contained
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not misleading.
The
projections and pro forma financial information furnished to the Lender are
based upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Lender
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered
by
such financial information may differ from the projected results set forth
therein. There is no fact known to the Borrower or the Guarantor that could
reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents or in any other
documents, certificates and statements furnished to the Lender for use in
connection with the transactions contemplated hereby and by the other Loan
Documents.
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20 -
3.18
Security
Documents. Each
of
the Security Documents is effective to create in favor of the Lender a legal,
valid and enforceable security interest in the Collateral described therein
and
proceeds thereof. When financing statements in appropriate form are filed in
the
offices specified on Schedule 3.18, the Security Documents shall each
constitute a fully perfected Lien on, and security interest in, all right,
title
and interest of the Loan Parties in such Collateral and the proceeds thereof,
as
security for the Obligations, in each case prior and superior in right to any
other Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 6.3).
3.19
Solvency.
Each
Loan
Party is, and after giving effect to the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and
will
continue to be, Solvent.
3.20
Regulation
H. No
Leased
Property or property subject to any Mortgage involves improved real property
that is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which
flood
insurance has been made available under the National Flood Insurance Act
of 1968.
3.21
Indebtedness
Outstanding.
(a)
Set
forth on Schedule 3.21(a) hereto is a list and description of all
Indebtedness of the Borrower (other than the Loans) that will be outstanding
immediately after the Closing Date.
(b)
Set
forth on Schedule 3.21(b) hereto is a list and description of all
Indebtedness of the Borrower that will be repaid, defeased, transferred or
otherwise terminated on or prior to the Closing Date (the “Indebtedness
to Be Paid”).
(c)
Set
forth on Schedule 3.21(c) hereto is a list and description of all Liens of
the Borrower that will be repaid, defeased, transferred or otherwise terminated
on or prior to the Closing Date (the “Liens
to be Terminated”).
(d)
Set
forth on Schedule 3.21(d) hereto is a list and description of all Liens of
the
Borrower (other than the Liens of the Loan Documents) that will be outstanding
immediately after the Closing Date.
3.22
Anti-Terrorism
Laws.
(a)
No
Loan Party and, to the knowledge of the Borrower or the Guarantor, no Affiliate
of any Loan Party is in violation of any laws relating to terrorism or money
laundering (“Anti-Terrorism
Laws”),
including Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001 (the “Executive
Order”),
and
the Uniting and Strengthening America by Providing Appropriate Tools Required
to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.
(b)
No
Loan Party and, to the knowledge of the Borrower or the Guarantor, no Affiliate
of any Loan Party, and none of their respective brokers or other agents acting
or benefiting in any capacity in connection with the Loans, is any of the
following:
(i)
a
Person or entity that is listed in the annex to, or is otherwise subject to
the
provisions of, the Executive Order;
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21 -
(ii)
a
Person or entity owned or controlled by, or acting for or on behalf of, any
Person or entity that is listed in the annex to, or is otherwise subject to
the
provisions of, the Executive Order;
(iii)
a
Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;
(iv)
a
Person or entity that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order; or
(v)
a
Person or entity that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website or any replacement
website or other replacement official publication of such list.
(c)
No
Loan Party and, to the knowledge of the Borrower or the Guarantor, no Affiliate
of any Loan Party, and none of their respective brokers or other agents acting
in any capacity in connection with the Loans, (i) conducts any business or
engages in making or receiving any contribution of funds, goods or services
to
or for the benefit of any Person described in clause (b) above, (ii) deals
in,
or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order, or (iii) engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.
3.23
Depository
and Other Accounts. Schedule
3.23 attached hereto lists all banks and other financial institutions and
depositories at which the Covered Parties maintain or will maintain deposit
accounts, trust accounts, tax or trust receivable accounts or other accounts
of
any kind or nature into which funds of the Covered Parties (including funds
in
which any Covered Party maintains a contingent or residual interest) are from
time to time deposited, and such Schedule 3.23 correctly identifies the name
and
address of each depository, the name in which each account is held, the purpose
of the account and the complete account number.
3.24
Obligations
to Seller. Other
than the payment of the Seller Debt subordinated pursuant to the Subordination
Agreement, neither Borrower nor Guarantor owe any obligations or liabilities
to
Seller (other than in its capacity solely as a shareholder of Guarantor) and
all
other obligations of Borrower or Guarantor under the Asset Purchase Agreements
have been performed in full.
SECTION
4. CONDITIONS
PRECEDENT
4.1
Conditions
to Initial Extension of Credit. The
agreement of the Lender to make the Initial Term Loan requested to be made
by it
is subject to the satisfaction, prior to or concurrently with the making of
such
extension of credit on the Closing Date, of the following conditions
precedent:
(a)
Credit
Agreement and Other Loan Documents.
The
Lender shall have received (i) this Agreement, executed and delivered by
the Borrower, (ii) the Security Agreement, executed and delivered by the
Borrower and the Lender, (iii) the Guarantee and Security Agreement, executed
by
the Guarantor, (v) the Subordination Agreement, executed and delivered by the
Borrower and the Seller, and (vi) other documents required by the Lender as
listed on the closing agenda distributed by Lender's counsel in connection
therewith.
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22 -
(b)
Indebtedness
to be Paid.
The
Lender shall have received satisfactory evidence that the Indebtedness to be
Paid shall have been paid in full and that any related credit, loan or similar
agreements, together with any related guarantees and other documentation, shall
have been terminated, and arrangements satisfactory to the Lender shall have
been made for the termination of all Liens to be Terminated, including without
limitation all Liens granted in connection with the Indebtedness to be
Paid.
(c)
Insurance.
The
Lender shall have received insurance certificates satisfying the requirements
of
the Security Agreement and the Guarantee and Security Agreement.
(d)
Financial
Statements.
The
Lender shall have received (i) the financial statements referred to in Section
3.1, (ii) a monthly budget of the Borrower and its Subsidiaries for the fiscal
year ending December 31, 2005, (iii) satisfactory projections for the Borrower
through the 2010 fiscal year, and (iv) a pro forma Compliance Certificate.
The
pro forma Compliance Certificate referred to in clause (iv) above shall give
effect to the Initial Term Loan hereunder and the repayment of the Indebtedness
to be Paid. All materials furnished pursuant to this Section 4.1(d) shall be
satisfactory to the Lender.
(e)
Approvals.
All
governmental and material third party approvals necessary in connection with
the
continuing operations of the Covered Parties and the transactions contemplated
hereby shall have been obtained and be in full force and effect.
(f)
Lien
Searches.
The
Lender shall have received the results of a recent lien search in each of the
jurisdictions where assets of the Loan Parties are located and the jurisdiction
where each Loan Party is located under Article 9 of the UCC, and such search
shall reveal no liens on any of the assets of the Loan Parties except for Liens
to be Terminated and Liens that would be permitted by Section 6.3.
(g)
Fees.
The
Lender shall have received all fees required to be paid, and all expenses for
which invoices have been presented (including the reasonable fees and expenses
of legal counsel), on or before the Closing Date. All such amounts will be
paid
with proceeds of Loans made on the Closing Date and will be reflected in the
funding instructions given by the Borrower to the Lender on or before the
Closing Date.
(h)
Closing
Certificate; Certified Certificate of Incorporation; Good Standing
Certificates.
The
Lender shall have received (i) a certificate of the Borrower, dated the Closing
Date, substantially in the form of Exhibit D, with appropriate insertions and
attachments, including the certificate of incorporation of the Borrower,
certified by the relevant authority of the jurisdiction of organization of
such
Loan Party, and (ii) a good standing certificate for the Borrower from its
jurisdiction of organization and each jurisdiction where it is required to
be
qualified as a foreign corporation.
(i)
Legal
Opinions.
The
Lender shall have received a favorable legal opinion satisfactory to Lender,
from ▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, counsel to the Borrower and the
Guarantor.
(j)
Pledged
Stock; Stock Powers; Pledged Notes.
The
Lender shall have received (i) the certificates representing the shares of
Capital Stock (if any) pledged pursuant to the Security Agreement and pursuant
to the Guarantee and Security Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of
the
pledgor thereof and (ii) each promissory note (if any) pledged to the Lender
pursuant to the Security Agreement and pursuant to the Guarantee and Security
Agreement, endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.
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(k)
Filings,
Registrations and Recordings.
Each
document (including any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Lender to be filed, registered or recorded in order to create
in favor of the Lender a perfected Lien on the Collateral described therein,
prior and superior in right to any other Person (other than with respect to
Liens that would be expressly permitted by Section 6.3), shall be in proper
form
for filing, registration or recordation.
(l)
Solvency
Certificate.
The
Lender shall have received a satisfactory solvency certificate from a
Responsible Officer that shall demonstrate that, after giving effect to the
transactions contemplated hereby, the Borrower is Solvent.
(m)
Operating
Account.
The
Borrower shall have opened the Operating Account at the Lender. The Guarantor
shall have opened an operating account at the Lender.
4.2
Conditions
to Each Extension of Credit. The
agreement of the Lender to make any extension of credit requested to be made
by
it on any date (including its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
(a)
Representations
and Warranties.
Each of
the representations and warranties made by any Loan Party in or pursuant to
the
Loan Documents shall be true and correct in all material respects on and as
of
such date as if made on and as of such date.
(b)
No
Default.
No
Default or Event of Default shall have occurred and be continuing on such date
or after giving effect to the extensions of credit requested to be made on
such
date.
(c)
Compliance
Certificate.
The
Borrower shall have submitted to the Lender a Compliance Certificate showing
on
a pro forma
basis
the making of any Loans requested, in form required by the Lender.
Each
borrowing hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 4.2 have been satisfied.
SECTION
5. AFFIRMATIVE
COVENANTS
The
Borrower hereby agrees that, so long as any Loan or other amount is owing to
the
Lender hereunder, the Borrower shall and shall cause each of the other Covered
Parties to:
5.1
Financial
Statements; Field Audits.
(a)
Furnish to the Lender:
(i)
as
soon as available, but in any event within 120 days after
the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such year and the
related consolidated statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous
year, which shall be prepared by management and accompanied by a certificate
of
the chief financial officer, in form and substance reasonably satisfactory
to
the Lender;
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(ii)
as
soon as available, but in any event within 120 days after the end of each
fiscal year of the Guarantor, a copy of the consolidated balance sheet of the
Guarantor and its Subsidiaries as at the end of such year and the related
consolidated statements of income and of cash flows for such year, setting
forth
in each case in comparative form the figures for the previous year, audited
by
and accompanied by a report, in form and substance reasonably satisfactory
to
the Lender, from ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, or other independent
certified public accountants satisfactory to the Lender;
(iii)
as
soon as available, but in any event not later than 45 days after the end of
each
quarterly period of each fiscal year of the Borrower, the unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash flows
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year and the corresponding figures from the Borrower’s budget for such
period, in each case certified by a Responsible Officer as being fairly stated
in all material respects (subject to normal year-end audit adjustments);
(iv)
as
soon as available, but in any event not later than 45 days after the end of
each
quarterly period of each fiscal year of the Guarantor, the unaudited
consolidated balance sheet of the Guarantor and its Subsidiaries as at the
end
of such quarter and the related unaudited consolidated statements of income
and
of cash flows for such quarter and the portion of the fiscal year through the
end of such quarter, setting forth in each case in comparative form the figures
for the previous year and the corresponding figures from the Guarantor’s budget
for such period together with a report on franchisee royalties received with
respect to such quarter and a statement as to the number of franchise agreements
in effect and whether any of such franchise agreements are then in default,
in
each case certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments);
(v)
as
soon as available, but in any event within 120 days after the end of each fiscal
year of the Borrower and the Guarantor, a listing of the equity owners of the
Borrower and the Guarantor and their respective ownership
interests;
(vi)
as
soon as available, but in any event within 120 days after the end of each fiscal
year of the Borrower and the Guarantor, a copy of any additional leases (both
Capitalized Lease Obligations and operating leases) entered into by the Borrower
and the Guarantor during the fiscal year;
(vii)
as
soon as available, but in any event on or before April 15 of each fiscal year
of
the Borrower and the Guarantor (or such later date to which the filing thereof
has been extended), a copy of the filed tax returns of the Borrower and
Guarantor; and
(viii)
as
soon as available, but in any event within 15 days after the end of each month,
cash flow and income statements on a per Unit basis for the Borrower and the
Guarantor.
All
such
financial statements shall be complete and correct in all material respects
and
shall be prepared in reasonable detail and in accordance with GAAP applied
(except as approved by such accountants or officer, as the case may be, and
disclosed in reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.
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(b)
The
Covered Parties will permit the Lender to inspect and audit the books and
records and any of the properties or assets of the Covered Parties (in each
instance, at the Borrower’s expense).
5.2
Certificates;
Other Information. Furnish
to the Lender:
(a)
concurrently with the delivery of the financial statements referred to in
Section 5.1(a)(ii) and, if applicable, Section 5.1(a)(i), a certificate of
the
independent certified public accountants reviewing such financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b)
concurrently with the delivery of any financial statements pursuant to Section
5.1(a)(iii) and (iv), (i) a certificate of a Responsible Officer stating that,
to the best of each such Responsible Officer’s knowledge, each Loan Party during
such period has observed or performed all of its covenants and other agreements,
and satisfied every condition contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by
it,
and that such Responsible Officer has obtained no knowledge of any Default
or
Event of Default except as specified in such certificate and (ii) (x) a
Compliance Certificate containing all information and calculations necessary
for
determining compliance by each Covered Party with the provisions of this
Agreement and the Guarantee and Security Agreement referred to therein as of
the
last day of the month, fiscal quarter or fiscal year of the Borrower, as the
case may be, and (y) to the extent not previously disclosed to the Lender,
a
description of any change in the jurisdiction of organization of any Loan Party
(or, if such Loan Party is not a registered organization (as defined in Article
9 of the UCC as in effect in any applicable jurisdiction) its chief executive
office) and a list of any Intellectual Property acquired by any Loan Party
since
the date of the most recent report delivered pursuant to this clause (y) (or,
in
the case of the first such report so delivered, since the Closing
Date);
(c)
as
soon as available, and in any event no later than 30 days before the end of
each
fiscal year of the Borrower, a detailed monthly budget for the Borrower (with
Unit by Unit detail) in form and substance reasonably satisfactory to the Lender
for the following fiscal year (including a projected consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of the following fiscal
year,
the related consolidated statements of projected cash flow, projected changes
in
financial position and projected income and a description of the underlying
assumptions applicable thereto), and, as soon as available, significant
revisions, if any, of such budget;
(d)
promptly upon the effectiveness thereof, copies of any formal, material
modification to any business plan of the Borrower; and
(e)
promptly, such additional financial and other information as the Lender may
from
time to time reasonably request.
5.3
Payment
of Obligations. Pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the relevant Covered Party and except
where the failure to do so would not, individually or in the aggregate, have
a
Material Adverse Effect.
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5.4
Maintenance
of Existence; Compliance. Preserve,
renew and keep in full force and effect its organizational existence; maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business; and comply in all material respects with all
Contractual Obligations and Requirements of Law, except where the failure to
do
so would not, individually or in the aggregate, have a Material Adverse
Effect.
5.5
Maintenance
of Property; Insurance. (a) Keep
all material property useful and necessary in its business in good working
order
and condition, ordinary wear and tear excepted and (b) maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption)
as
are usually insured against in the same general area by companies engaged in
the
same or a similar business.
5.6
Inspection
of Property; Books and Records; Discussions. (a)
Keep
proper books of records and account in which full, true and correct entries
in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Covered Parties
with officers and employees of the Covered Parties and with their independent
certified public accountants.
5.7
Notices.
Promptly
give notice to the Lender of:
(a)
the
occurrence of any Default or Event of Default;
(b)
any
(i) material default or material event of default under any Contractual
Obligation of any Covered Party or (ii) material litigation, investigation
or
proceeding that may exist at any time between any Covered Party and any
Governmental Authority;
(c)
any
litigation or proceeding affecting any Covered Party (i) in which the uninsured
amount involved is $50,000 or more, (ii) in which injunctive or similar relief
is sought or (iii) which relates to any Loan Document;
(d)
the
following events, as soon as possible and in any event within 30 days after
any
Covered Party knows or has reason to know thereof: (i) the occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a
Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of,
any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any
other action by the PBGC, any Covered Party or any Commonly Controlled Entity
or
any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan;
(e)
the
occurrence of any event requiring a prepayment of the Loans;
(f)
the
acquisition of any real or personal property, or the acquisition or formation
of
any Subsidiary, requiring action under Section 5.9;
(g)
any
development or event that has had or could reasonably be expected to have a
Material Adverse Effect; or
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27 -
(h)
the
occurrence of any default under any franchise agreement or material lease or
other material agreement.
Each
notice pursuant to this Section 5.7 shall be accompanied by a statement of
a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the relevant Covered Party proposes to take with respect
thereto.
5.8
Compliance
with Laws. (a)
Comply in all material respects with all Requirements of Law, including without
limitation all applicable health, securities and franchise laws and regulations,
and all applicable restrictions imposed by all Governmental Authorities,
applicable to it and its property, (b) conform with and duly observe in all
material respects all laws, rules and regulations and all other valid
requirements of any regulatory authority with respect to the conduct of its
business; and (c) obtain and maintain all material licenses, permits,
certifications and approvals of all applicable Governmental Authorities as
are
required for the conduct of its business as currently conducted and herein
contemplated.
5.9
Additional
Collateral; Subsidiaries; New Units.
(a)
With
respect to any property (or leasehold interest therein) acquired after the
Closing Date by any Covered Party, execute and deliver any documentation (which,
in the case of any owned real property, may include a first priority mortgage,
in form and substance satisfactory to the Lender (a “Mortgage”))
as
the Lender may deem necessary or advisable to grant to the Lender a perfected
first priority security interest in such property (or leasehold
interest).
(b)
Not
form or acquire any direct or indirect Subsidiary, except the Borrower as a
wholly-owned Subsidiary of the Guarantor.
(c)
Use
its best efforts, before entering into any new lease with respect to any Leased
Properties, obtain from the landlord relating thereto a lien waiver and consent
in favor of the Lender, in form and substance satisfactory to the
Lender.
(d)
Insure that all Units opened after the date hereof are owned by the Borrower.
Any interest in any restaurant or Unit now or hereafter acquired by the
Guarantor shall be an asset owned directly by the Borrower.
5.10
Depository
Accounts; Additional Accounts. Commencing
on the 30th day after the Closing Date, maintain all operating, depository
and
disbursement bank accounts with the Lender, except as otherwise permitted by
Section 4(j) of the Security Agreement.
5.11
Communications
with Accountants. The
Borrower authorizes the Lender to communicate directly with the Borrower’s
independent certified public accountants and has instructed those accountants
in
writing to disclose to and discuss with the Lender any and all prepared
financial statements and all other supporting financial documents and schedules
delivered to the Lender by any Loan Party.
SECTION
6. NEGATIVE
COVENANTS
The
Borrower hereby agrees that, so long as any Loan or other amount is owing to
the
Lender hereunder, the Borrower shall not, and shall not permit any of the other
Covered Parties to, directly or indirectly:
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6.1
Financial
Condition Covenants.
(a)
Minimum
New Equity.
Fail to
cause the Guarantor to raise the New Equity by September 30, 2005.
(b)
Consolidated
Debt Service Coverage Ratio.
Commencing with the four-quarter period ending December 31, 2005 and for each
four-quarter period thereafter, permit the Consolidated Debt Service Coverage
Ratio at any time to be less than 1.25 to 1.0, tested on the last day of each
fiscal quarter of the Borrower.
(c)
Consolidated
Senior Funded Debt to EBITDA Ratio.
Permit
the Consolidated Senior Funded Debt to EBITDA Ratio (i) at any time during
the
period from December 31, 2005 to December 30, 2006 to be more than 2.5 to 1
and
(ii) at any time during the period after December 31, 2006 to be more than
2.0
to 1.0, tested, in each case, on the last day of each fiscal quarter of the
Borrower.
(d)
Consolidated
Maintenance Capital Expenditures.
Permit
the Consolidated Maintenance Capital Expenditures of the Borrower for any
four-quarter period to exceed the product of $20,000 times the number of
Existing Units as of the last day of such four-quarter period, tested on the
last day of such four-quarter period; provided, however, for the purposes of
this Section 6.1(d) there shall be excluded from the calculation of Consolidated
Maintenance Capital Expenditures (i) the aggregate amount thereof incurred
prior
to the date of this Agreement on the Existing Unit in Watertown, Massachusetts
and (ii) $50,000 per each Existing Unit existing as of the date of this
Agreement incurred in the fiscal year ending December 31, 2005.
(e)
Consolidated
New Unit Capital Expenditures.
Until
the New Equity Date, the Borrower will not make any Consolidated New Unit
Capital Expenditures. After the New Equity Date, the Borrower will not build,
purchase or otherwise acquire or develop new Units unless (i) all expenditures
in connection therewith are fully funded by Borrower in a manner reasonably
satisfactory to the Lender, (ii) both before and after giving effect to such
activity, no Default or Event of Default shall have occurred and be continuing
and (iii) prior to undertaking the same, the Borrower shall have supplied the
Lender with a certificate, executed by a Responsible Officer, detailing such
compliance.
6.2
Indebtedness.
Create,
issue, incur, assume, become liable in respect of or suffer to exist any
Indebtedness, except:
(a)
Indebtedness of any Loan Party pursuant to any Loan Document;
(b)
Indebtedness to the Borrower, provided
that the
aggregate principal amount of the Indebtedness of the Guarantor to the Borrower
shall not exceed the lesser of $400,000 or the aggregate amount of Additional
Term Loans, and the Guarantor shall have no Indebtedness to the Borrower prior
to the New Equity Date;
(c)
Indebtedness outstanding on the date hereof and listed on Schedule 6.2(c),
but
not any refinancings, refundings, renewals or extensions thereof;
(d)
Subordinated Debt;
(e)
the
Seller Debt, in an outstanding principal amount not exceeding the outstanding
principal amount otherwise due or to become due thereunder, as in effect on
the
date hereof; and
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(f)
Indebtedness (including, without limitation, Capital Lease Obligations) secured
by Liens permitted by Section 6.3(f) in an aggregate principal amount not to
exceed 100,000 at any one time outstanding with respect to Existing Units
existing as of the date hereof and $200,000 at any one time outstanding with
respect to new Units opening after the date hereof.
6.3
Liens.
Create,
incur, assume or suffer to exist any Lien upon any of its property, whether
now
owned or hereafter acquired, except:
(a)
Liens
for taxes not yet due or that are being contested in good faith by appropriate
proceedings, provided
that
adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;
(b)
carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business that are not overdue for a
period of more than 30 days or that are being contested in good faith by
appropriate proceedings;
(c)
pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation, other than any Lien imposed
by
ERISA;
(d)
deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e)
Liens
in existence on the date hereof listed on Schedule 6.3(e), securing Indebtedness
permitted by Section 6.2(c), provided
that no
such Lien is spread to cover any additional property after the Closing Date
and
that the amount of Indebtedness secured thereby is not increased;
(f)
Liens
securing Indebtedness of any Covered Party incurred as permitted under Section
6.2(f) to finance the acquisition of fixed or capital assets, provided
that (i)
such Liens shall be created substantially simultaneously with the acquisition
of
such fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, and (iii) the
amount of Indebtedness secured thereby is not increased; and
(g)
Liens
created pursuant to the Security Documents.
6.4
Fundamental
Changes. Enter
into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or Dispose of all
or
substantially all of its property or business.
6.5
Disposition
of Property. Dispose
of any of its property, whether now owned or hereafter acquired, or, in the
case
of any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock
to any Person, except:
(a)
the
Disposition of obsolete or worn out property in the ordinary course of business;
and
(b)
the
sale of inventory in the ordinary course of business.
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6.6
Restricted
Payments.
(a)
Without the prior written consent of the Lender, declare, make, or pay any
distribution of any kind whatsoever or dividend (other than dividends payable
solely in common stock (or equivalent interests) of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of any Covered Party,
whether now or hereafter outstanding; or
(b)
make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of any Covered Party
(collectively, “Restricted
Payments”),
except that any Subsidiary of the Borrower may make Restricted Payments to
the
Borrower.
6.7
Stock.
Issue
or
permit to be outstanding any Capital Stock not expressly provided for in its
certificate of incorporation as in effect on the Closing Date (or, in the case
of any Subsidiary, as approved by the Lender).
6.8
Investments.
Make
any
advance, loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other debt securities of, or any assets constituting a business unit of, or
make
any other investment in, any Person (all of the foregoing, “Investments”),
except:
(a)
extensions of trade credit in the ordinary course of business;
(b)
Investments in Cash Equivalents;
(c)
loans
and advances from the Guarantor to employees of Guarantor not to exceed $100,000
in the aggregate in the ordinary course of business (including for travel,
entertainment and relocation expenses) at any one time outstanding;
and
(d)
in
the case of the Borrower, loans to the Guarantor after the New Equity Date
to
the extent allowed under Section 6.2(b), provided
that the
aggregate principal amount of all loans extended by the Borrower to the
Guarantor shall be evidenced by demand promissory notes endorsed over to the
Lender as Collateral, in form and substance satisfactory to the Lender, and
shall not exceed the lesser of (i) $400,000 or (ii) the aggregate principal
amount of Additional Term Loans advanced hereunder.
6.9
Modifications
of Certain Debt Instruments. Amend,
modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of any
Indebtedness.
6.10
Transactions
with Affiliates and Insiders. Enter
into any transaction, including any purchase, sale, lease or exchange of
property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than the Borrower or the
Guarantor) of such Covered Party except:
(a)
normal and reasonable compensation of officers and other employees, and normal
and reasonable reimbursement of expenses and indemnification of officers and
directors;
(b)
any
consulting agreement with Seller, provided that such payments to Seller will
be
subordinated on the terms set forth in the Subordination Agreement;
and
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(c)
any
such other transaction not covered by subsection (a) or (b) above that is
(i) otherwise permitted under this Agreement, (ii) in the ordinary course
of business of the relevant Covered Party, and (iii) upon fair and
reasonable terms no less favorable, in the reasonable judgment of the Lender,
to
the relevant Covered Party than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate.
6.11
Sales
and Leasebacks. Enter
into any arrangement with any Person providing for the leasing by any Covered
Party of real or personal property that has been or is to be sold or transferred
by such Covered Party to such Person or to any other Person to whom funds have
been or are to be advanced by such Person on the security of such property
or
rental obligations of such Covered Party.
6.12
Changes
in Fiscal Periods. Permit
the fiscal year of the Borrower to end on a day other than December 31 or change
the Borrower’s method of determining fiscal quarters.
6.13
Negative
Pledge Clauses. Enter
into or suffer to exist or become effective any agreement that prohibits or
limits the ability of any Covered Party to create, incur, assume or suffer
to
exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, other than (a) this Agreement and the other Loan Documents
and (b) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation may only be effective against the assets financed
thereby).
6.14
Clauses
Restricting Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held
by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to, or other Investments in, the Borrower
or any other Subsidiary of the Borrower or (c) transfer any of its assets to
the
Borrower or any other Subsidiary of the Borrower, except for such encumbrances
or restrictions existing under or by reason of any restrictions existing under
the Loan Documents.
6.15
Lines
of Business; Location of Business. Enter
into any business, either directly or through any Subsidiary, except for those
businesses in such Covered Party is engaged on the date of this Agreement,
or
conduct any part of its business outside of the United States of
America.
6.16
Use
of
Proceeds. Use
the
proceeds of the Loans, whether directly or indirectly, and whether immediately,
incidentally or ultimately, to purchase or carry margin stock (within the
meaning of Regulation U of the Board) or to extend credit to others for the
purpose of purchasing or carrying margin stock or to refund indebtedness
originally incurred for such purpose.
6.17
Full
Funding. Fail
to
satisfy the conditions to draw down or fail to draw down the entire Commitment
by the last day of the Drawdown Period.
SECTION
7. EVENTS
OF
DEFAULT
If
any of
the following events shall occur and be continuing:
(a)
the
Borrower shall fail to pay any principal of or interest on any Loan when due
in
accordance with the terms hereof; or the Borrower shall fail to pay any other
amount payable hereunder or under any other Loan Document, within three Business
Days after any such other amount becomes due in accordance with the terms
hereof; or
(b)
any
representation or warranty made or deemed made by any Loan Party herein or
in
any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made;
or
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(c)
any
Loan Party shall default in the observance or performance of any agreement
contained in Section 5 or 6 of this Agreement or Section 4 of the Security
Agreement; or
(d)
any
Loan Party shall default in the observance or performance of any other agreement
contained in this Agreement or any other Loan Document (other than as provided
in paragraphs (a) through (c) of this Section), and such default shall continue
unremedied for a period of 15 days; or
(e)
any
Covered Party shall (i) default in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Loans)
on
the scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the period
of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance
of
any other agreement or condition relating to any such Indebtedness or contained
in any instrument or agreement evidencing, securing or relating thereto, or
any
other event shall occur or condition exist, the effect of which default or
other
event or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary)
to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided,
that a
default, event or condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of Default unless,
at
such time, one or more defaults, events or conditions of the type described
in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $25,000; or
(f)
(i)
any Covered Party shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating
to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Covered Party shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against any Covered Party any case, proceeding or other action of a nature
referred to in clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against any Covered Party any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets that results in the entry
of
an order for any such relief that shall not have been vacated, discharged,
or
stayed or bonded pending appeal within 60 days from the entry thereof; or (iv)
any Covered Party shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) any Covered Party shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts
as
they become due; or
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(g)
(i)
any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan or any Lien in favor of
the
PBGC or a Plan shall arise on the assets of any Covered Party or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee
is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any
Covered Party or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could,
in
the sole judgment of the Lender, reasonably be expected to have a Material
Adverse Effect; or
(h)
one
or more judgments or decrees shall be entered against any Covered Party
involving in the aggregate a liability (not paid or fully covered by insurance
as to which the relevant insurance company has acknowledged coverage) of $50,000
or more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days from the entry
thereof; or
(i)
any
of the Security Documents shall cease, for any reason, to be in full force
and
effect, or any Loan Party or any Affiliate of any Loan Party shall so assert,
or
any Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby;
or
(j)
the
guarantee contained in the Guarantee and Security Agreement or in any other
guarantee of the Obligations shall cease, for any reason, to be in full force
and effect or any Covered Party shall so assert; or
(k)
any
Change of Control shall occur; or
(l)
any
obligations subordinated pursuant to any Subordination Agreement or any other
subordination agreement executed in favor of the Lender shall cease, for any
reason, to be validly subordinated to the obligations of the Loan Parties under
the Loan Documents as provided in the applicable Subordination Agreement or
other subordination agreement or any Covered Party or Person who is a party
to
it shall so assert; or
(m)
the
Landlord under any real property lease for any Unit shall take any action to
terminate such lease, without the prior written consent of Lender;
then,
and
in any such event, (A) if such event is an Event of Default specified in clause
(i) or (ii) of paragraph (f) above with respect to the Borrower, automatically
the Loans shall immediately terminate (with accrued interest thereon) and all
other amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other Event
of
Default, either or both of the following actions may be taken: the Lender may,
by notice to the Borrower declare the Loans (with accrued interest thereon)
and
all other amounts owing under this Agreement and the other Loan Documents to
be
due and payable forthwith, whereupon the same shall immediately become due
and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived
by
the Borrower.
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SECTION
8. MISCELLANEOUS
8.1
Amendments
and Waivers. Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof may
be
amended, supplemented, waived or modified except by a writing duly executed
by
the Borrower and the Lender.
8.2
Notices.
All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made
when
delivered, or three Business Days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received, addressed as follows
in the case of the Borrower or the Lender, or to such other address as may
be
hereafter notified by the parties hereto:
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Borrower:
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KFLG
Watertown, Inc.
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▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇ ▇▇▇▇▇
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Telecopy:
▇▇▇-▇▇▇-▇▇▇▇
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Telephone:
▇▇▇-▇▇▇-▇▇▇▇
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Lender:
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TD
Banknorth, N.A.
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▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Telecopy:
▇▇▇-▇▇▇-▇▇▇▇
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Telephone:
▇▇▇-▇▇▇-▇▇▇▇
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With
a copy to:
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▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, LLP
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▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
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Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
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provided
that any
notice, request or demand to or upon the Lender shall not be effective until
received.
The
Lender or the Borrower may, in their discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant
to
procedures approved by it; provided
that
approval of such procedures may be limited to particular notices or
communications.
8.3
No
Waiver; Cumulative Remedies. No
failure to exercise and no delay in exercising on the part of the Lender any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise
of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative
and
not exclusive of any rights, remedies, powers and privileges provided by
law.
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8.4
Survival
of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents
and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit
hereunder.
8.5
Payment
of Expenses and Taxes. The
Borrower agrees (a) to pay or reimburse the Lender for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification
to,
this Agreement and the other Loan Documents and any other documents prepared
in
connection herewith or therewith, and the consummation and administration of
the
transactions contemplated hereby and thereby, including the reasonable fees
and
disbursements of counsel to the Lender and filing and recording fees and
expenses, with statements with respect to the foregoing to be submitted to
the
Borrower prior to the Closing Date (in the case of amounts to be paid on the
Closing Date) and from time to time thereafter on a quarterly basis or such
other periodic basis as the Lender shall deem appropriate, (b) to pay or
reimburse the Lender for all its costs and expenses incurred in connection
with
the enforcement or preservation of any rights under this Agreement, the other
Loan Documents and any such other documents, including the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to the Lender, (c) to pay, indemnify, and hold the Lender harmless
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, that may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any
of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and
hold
the Lender and its respective officers, directors, employees, affiliates, agents
and controlling persons (each, an “Indemnitee”)
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the negotiation, execution,
delivery, enforcement, performance and administration of this Agreement, the
other Loan Documents and any such other documents, including any of the
foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to
the
operations of any Covered Party or any of the Properties and the reasonable
fees
and expenses of legal counsel in connection with claims, actions or proceedings
by any Indemnitee against any Loan Party under any Loan Document (all the
foregoing in this clause (d), collectively, the “Indemnified
Liabilities”),
provided,
that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities are found
by a final and nonappealable decision of a court of competent jurisdiction
to
have resulted from the gross negligence or willful misconduct of such Indemnitee
under the Loan Documents. Without limiting the foregoing, and to the extent
permitted by applicable law, the Borrower agrees not to assert and to cause
its
Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under
or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 8.5 shall
be payable not later than 30 days after written demand therefor. The agreements
in this Section 8.5 shall survive repayment of the Loans and all other amounts
payable hereunder.
8.6
Successors
and Assigns; Participations and Assignments.
(a)
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns permitted hereby,
except that the Borrower may not assign or otherwise transfer any of their
respective rights or obligations hereunder without the prior written consent
of
the Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void).
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(b)
(i)
The Lender may assign to one or more assignees (each, an “Assignee”)
all or
a portion of its rights and obligations under this Agreement (including Loans
at
the time owing to it); provided, however in the event the Assignee is not a
financial institution and no Event of Default then exists hereunder, the Lender
shall obtain Borrower's consent to such Assignee (which consent shall not be
unreasonably withheld or delayed).
(ii)
The
Lender may sell participations to one or more participants (each, a
“Participant”),
all
or a portion of its rights and obligations under this Agreement. The Borrower
agrees that each Participant shall be entitled to the benefits of this Agreement
to the same extent as if it held its interest directly.
(c)
The
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of the Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of
a
security interest; provided
that no
such pledge or assignment of a security interest shall release the Lender from
any of its obligations hereunder or substitute any such pledgee or Assignee
for
the Lender as a party hereto. The Borrower, upon receipt of written notice
from
the Lender, agrees to issue Notes to the Lender to facilitate transactions
of
the type described in this Section.
8.7
Adjustments;
Set-off. In
addition to any rights and remedies of the Lender provided by law, the Lender
shall have the right, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent permitted by applicable
law, upon any amount becoming due and payable by the Borrower hereunder (whether
at the stated maturity, by acceleration or otherwise), to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender, any of its affiliates or any branch or agency of either
thereof to or for the credit or the account of any Covered Party, whether or
not
the Lender is otherwise fully secured. The Lender agrees promptly to notify
the
Borrower after any such setoff and application made by the Lender, provided
that the
failure to give such notice shall not affect the validity of such setoff and
application.
8.8
Counterparts.
This
Agreement may be executed by one or more of the parties to this Agreement on
any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an
executed signature page of this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
8.9
Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
8.10
Integration.
This
Agreement and the other Loan Documents represent the entire agreement of the
Borrower and the Lender with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
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8.11
Governing
Law. This
Agreement and the rights and obligations of the parties under this Agreement
shall be governed by, and construed and interpreted in accordance with, the
laws
of The Commonwealth of Massachusetts.
8.12
Submission
To Jurisdiction; Waivers. The
Borrower hereby irrevocably and unconditionally:
(a)
submits for itself and its property in any legal action or proceeding relating
to this Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of The Commonwealth of
Massachusetts, the courts of the United States for the District of
Massachusetts, and appellate courts from any thereof;
(b)
consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any
such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the
same;
(c)
agrees that service of process in any such action or proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Borrower at its address specified
hereunder;
(d)
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law or shall limit the right to ▇▇▇ in any
other jurisdiction; and
(e)
waives, to the maximum extent not prohibited by law, any right it may have
to
claim or recover in any legal action or proceeding referred to in this Section
any special, exemplary, punitive or consequential damages.
8.13
Acknowledgements.
The
Borrower hereby acknowledges that:
(a)
it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;
(b)
the
Lender has no fiduciary relationship with or duty to the Borrower or any other
Covered Party arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Lender, on one hand,
and
the Covered Parties, on the other hand, in connection herewith or therewith
is
solely that of debtor and creditor; and
(c)
no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among Covered Parties
and the Lender.
8.14
WAIVERS
OF JURY TRIAL. THE
BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15
USA
Patriot Act Notice. The
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of
the
Borrower and other information that will allow the Lender to identify the
Borrower in accordance with the Act.
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8.16
Replacement
Note. Upon
receipt of an appropriate and reasonably acceptable affidavit of an officer
of
the Lender as to the loss, theft, destruction or mutilation of any Note or
of
any other Loan Document which is not of public record and, in the case of any
such mutilation, upon surrender and cancellation of such Note or other Loan
Document and receipt of the indemnity described below, the Borrower will, and
will cause other Loan Parties to, issue, in lieu thereof, a replacement Note
or
other Loan Document in the same principal amount (as to any Note) and in any
event of like tenor and upon such issuance the original Note or other Loan
Document shall be deemed cancelled. In connection with any such issuance of
a
replacement Note or other Loan Document, the Lender shall issue a written
indemnification (which need not be secured) in favor of the Loan Parties with
respect to such lost, stolen or destroyed Note or other Loan Document in form
and substance reasonably satisfactory to the Loan Parties.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
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KFLG
WATERTOWN, INC.
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By:
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Name:
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Title:
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TD
BANKNORTH, N.A.
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By:
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Name:
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Title:
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