EXHIBIT 10(g)
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LOAN AND SECURITY AGREEMENT
by and among
PRANDIUM, INC.,
FRI-MRD CORPORATION,
CHI-CHI'S, INC.,
▇▇▇ ▇▇▇ ROO, INC.,
and certain of their subsidiaries,
THE LENDERS THAT ARE SIGNATORIES HERETO
and
FOOTHILL CAPITAL CORPORATION
Dated as of July 2, 2002
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION ................................................................ 1
1.1 Definitions ......................................................................... 1
1.2 Accounting Terms .................................................................... 23
1.3 Code ................................................................................ 23
1.4 Construction ........................................................................ 23
1.5 Schedules and Exhibits .............................................................. 23
2. LOAN AND TERMS OF PAYMENT ................................................................... 23
2.1 Advances ............................................................................ 23
2.2 [Intentionally omitted] ............................................................. 24
2.3 Borrowing Procedures and Settlements ................................................ 24
2.4 Payments ............................................................................ 31
2.5 Overadvances ........................................................................ 34
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations ......... 34
2.7 Collections ......................................................................... 35
2.8 Crediting Payments; Application of Collections ...................................... 36
2.9 Designated Account .................................................................. 36
2.10 Maintenance of Loan Account; Statements of Obligations .............................. 36
2.11 Fees ................................................................................ 37
2.12 Letters of Credit ................................................................... 37
2.13 [Intentionally omitted] ............................................................. 40
2.14 Capital Requirements ................................................................ 40
3. CONDITIONS; TERM OF AGREEMENT ............................................................... 41
3.1 Conditions Precedent to the Initial Advance or Initial Letter of Credit ............. 41
3.2 Conditions Subsequent to the Initial Extension of Credit ............................ 45
3.3 Conditions Precedent to all Advances and Letters of Credit .......................... 45
3.4 Term ................................................................................ 46
3.5 Effect of Termination ............................................................... 46
3.6 Early Termination by Borrowers ...................................................... 47
4. CREATION OF SECURITY INTEREST ............................................................... 47
4.1 Grant of Security Interest .......................................................... 47
4.2 Negotiable Collateral ............................................................... 47
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral .............. 48
4.4 Delivery of Additional Documentation Required ....................................... 48
4.5 Power of Attorney ................................................................... 48
4.6 Right to Inspect .................................................................... 49
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4.7 Control Agreements ......................................... 49
5. REPRESENTATIONS AND WARRANTIES ...................................... 49
5.1 No Encumbrances ............................................ 49
5.2 [Intentionally omitted] .................................... 50
5.3 [Intentionally omitted] .................................... 50
5.4 Equipment .................................................. 50
5.5 Location of Inventory and Equipment ........................ 50
5.6 Equipment Records .......................................... 50
5.7 Location of Chief Executive Office; FEIN ................... 50
5.8 Due Organization and Qualification; Subsidiaries ........... 50
5.9 Due Authorization; No Conflict ............................. 51
5.10 Litigation ................................................. 52
5.11 No Material Adverse Change ................................. 52
5.12 Fraudulent Transfer ........................................ 52
5.13 Employee Benefits .......................................... 53
5.14 Environmental Condition .................................... 53
5.15 Brokerage Fees ............................................. 53
5.16 Intellectual Property ...................................... 53
5.17 Leases ..................................................... 54
5.18 DDAs ....................................................... 54
5.19 Complete Disclosure ........................................ 54
5.20 Indebtedness ............................................... 54
5.21 Inactive Subsidiaries ...................................... 54
6. AFFIRMATIVE COVENANTS ............................................... 54
6.1 Accounting System .......................................... 55
6.2 Collateral and Operations Reporting ........................ 55
6.3 Financial Statements, Reports, Certificates ................ 55
6.4 Tax Returns ................................................ 57
6.5 [Intentionally omitted] .................................... 58
6.6 Maintenance of Properties .................................. 58
6.7 Taxes ...................................................... 58
6.8 Insurance .................................................. 58
6.9 Location of Inventory and Equipment ........................ 60
6.10 Compliance with Laws ....................................... 60
6.11 Leases ..................................................... 60
6.12 Brokerage Commissions ...................................... 60
6.13 Existence .................................................. 60
6.14 Environmental .............................................. 61
6.15 Disclosure Updates ......................................... 61
7. NEGATIVE COVENANTS .................................................. 61
7.1 Indebtedness ............................................... 61
7.2 Liens ...................................................... 62
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7.3 Restrictions on Fundamental Changes .............................................................. 62
7.4 Disposal of Assets ............................................................................... 63
7.5 Change Name ...................................................................................... 63
7.6 Guarantee ........................................................................................ 63
7.7 Nature of Business ............................................................................... 63
7.8 Prepayments and Amendments ....................................................................... 63
7.9 Change of Control ................................................................................ 63
7.10 [Intentionally omitted] .......................................................................... 63
7.11 Distributions .................................................................................... 64
7.12 Accounting Methods ............................................................................... 64
7.13 Investments ...................................................................................... 64
7.14 Transactions with Affiliates ..................................................................... 64
7.15 Suspension ....................................................................................... 64
7.16 [Intentionally omitted] .......................................................................... 64
7.17 Use of Proceeds .................................................................................. 64
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees ............... 65
7.19 Securities Accounts .............................................................................. 65
7.20 Financial Covenants .............................................................................. 65
7.21 Inactive Subsidiaries ............................................................................ 67
8. EVENTS OF DEFAULT. ........................................................................................ 67
9. THE LENDER GROUP'S RIGHTS AND REMEDIES .................................................................... 69
9.1 Rights and Remedies .............................................................................. 69
9.2 Remedies Cumulative .............................................................................. 71
10. TAXES AND EXPENSES ........................................................................................ 71
11. WAIVERS; INDEMNIFICATION .................................................................................. 72
11.1 Demand; Protest; etc ............................................................................. 72
11.2 The Lender Group's Liability for Collateral ...................................................... 72
11.3 Indemnification .................................................................................. 72
12. NOTICES ................................................................................................... 73
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER ................................................................ 74
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS ................................................................ 75
14.1 Assignments and Participations ................................................................... 75
14.2 Successors ....................................................................................... 78
15. AMENDMENTS; WAIVERS ....................................................................................... 78
15.1 Amendments and Waivers ........................................................................... 78
15.2 Replacement of Holdout Lender .................................................................... 79
15.3 No Waivers; Cumulative Remedies .................................................................. 79
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16. AGENT; THE LENDER GROUP ................................................................................................ 80
16.1 Appointment and Authorization of Agent ........................................................................ 80
16.2 Delegation of Duties .......................................................................................... 81
16.3 Liability of Agent ............................................................................................ 81
16.4 Reliance by Agent ............................................................................................. 81
16.5 Notice of Default or Event of Default ......................................................................... 81
16.6 Credit Decision ............................................................................................... 82
16.7 Costs and Expenses; Indemnification ........................................................................... 82
16.8 Agent in Individual Capacity .................................................................................. 83
16.9 Successor Agent ............................................................................................... 83
16.10 Lender in Individual Capacity ................................................................................. 84
16.11 Withholding Taxes ............................................................................................. 84
16.12 Collateral Matters ............................................................................................ 86
16.13 Restrictions on Actions by Lenders; Sharing of Payments ....................................................... 87
16.14 Agency for Perfection ......................................................................................... 88
16.15 Payments by Agent to the Lenders .............................................................................. 88
16.16 Concerning the Collateral and Related Loan Documents .......................................................... 88
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information ................................................................................................... 88
16.18 Several Obligations; No Liability ............................................................................. 89
16.19 Legal Representation of Agent ................................................................................. 90
17. GENERAL PROVISIONS ..................................................................................................... 90
17.1 Section Headings .............................................................................................. 90
17.2 Interpretation ................................................................................................ 90
17.3 Severability of Provisions .................................................................................... 90
17.4 Counterparts; Telefacsimile Execution ......................................................................... 90
17.5 Revival and Reinstatement of Obligations ...................................................................... 90
17.6 Integration ................................................................................................... 91
17.7 Confidentiality ............................................................................................... 91
17.8 Guarantors .................................................................................................... 91
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit 3.1(c)(i) Form of Concentration Account Agreement
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Eligible Real Property
Schedule H-1 HGI Subsidiaries
Schedule K-1 KKR Subsidiaries
Schedule P-1 Permitted Dispositions
Schedule P-2 Permitted Liens
Schedule P-3 Permitted Holders
Schedule R-1 Real Property Collateral
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office
Schedule 5.8(b) Capitalization of Prandium's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.21 Permitted Inactive Subsidiary Indebtedness
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Exhibit 10(G)
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of July 2, 2002, between and among, on the one hand, the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION,
a California corporation, as the arranger and administrative agent for the
Lenders ("Agent"), and, on the other hand, CHI-CHI'S, INC., a Delaware
corporation ("Chi-Chi's"), ▇▇▇ ▇▇▇ ROO, INC., a Delaware corporation ("KKR";
KKR, together with Chi-Chi's, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the
"Borrowers"), PRANDIUM, INC., a Delaware corporation ("Prandium"), FRI-MRD
CORPORATION, a Delaware corporation ("FRI-MRD"), FRI-ADMIN CORPORATION, a
Delaware corporation ("FRI-Admin"), CCMR OF TIMONIUM, INC., a Delaware
corporation, CCMR OF MARYLAND, INC., a Delaware corporation, CCMR OF
CATONSVILLE, INC., a Kentucky corporation, CCMR OF GREENBELT, INC., a Kentucky
corporation, CCMR OF ▇▇▇▇▇▇▇ HIGHWAY, INC., a Kentucky corporation, CCMR OF
CUMBERLAND, INC., a Kentucky corporation, CCMR OF HARFORD COUNTY, INC., a
Kentucky corporation, MAINTENANCE SUPPORT GROUP, INC., a Kentucky corporation,
CCMR OF ▇▇▇▇▇▇▇▇▇, INC., a Kentucky corporation, CHI-CHI'S OF WEST VIRGINIA,
INC., a Kentucky corporation, and THE HAMLET GROUP, INC., a California
corporation ("HGI").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"14% Notes" means the 14.0% senior secured discount notes issued
by FRI-MRD in the aggregate principal amount of $24,000,000.
"15% Notes" means the 15.0% senior unsecured discount notes
issued by FRI-MRD in the aggregate principal amount of approximately
$75,000,000.
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all currently existing and hereafter arising
accounts, contract rights, and other forms of obligations owing to a Person
arising out of the sale or lease of goods or the rendition of services by such
Person, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
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"Additional Documents" has the meaning set forth in Section
4.4.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of Section 7.14 hereof: (a) any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 10% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person, (b) each director (or comparable manager) of a
Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means the account identified on Schedule A-1.
"Agent Advance" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrowers or the
Guarantors to Agent for the benefit of the Lender Group under this Agreement or
the other Loan Documents.
"Agent-Related Persons" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Real Estate Advance Rate" shall mean, (i) during
the period of time from and including the Closing Date up to but not including
the date that is the first anniversary of the Closing Date, 80%; (ii) during the
period of time from and including the date that is the first anniversary of the
Closing Date up to but not including the date that is the second anniversary of
the Closing Date, 75%; (iii) during the period of time from and including the
date that is the second anniversary of the Closing Date up to but not including
the date that is the third anniversary of the Closing Date, 70%; and (iv) during
the period of time from and including the date that is the third anniversary of
the Closing Date up to the Maturity Date, 65%.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance
in the form of Exhibit A-1.
"Authorized Person" means (a) any officer of either Borrower,
or (b) any employee of any Borrower identified from time to time by an officer
of such Borrower in a writing delivered to Agent.
"Availability" means, as of any date of determination thereof,
if such date is a Business Day, and determined at the close of business on the
immediately preceding Business Day if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
sublimits and reserves applicable hereunder).
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base Rate" means the rate of interest announced within ▇▇▇▇▇
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 4.25 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Prandium or any Subsidiary or ERISA Affiliate
of Prandium has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Blockage Event" means (a) a Default under Section 8.1 or (b)
any Event of Default.
"Board of Directors" means the board of directors (or
comparable managers) of Prandium or any committee thereof duly authorized to act
on behalf of the board.
"Books" means all of a Person's books and records, including
records indicating, summarizing, or evidencing the Collateral or the Guarantor
Collateral and all computer programs, disk or tape files, printouts, runs, or
other computer prepared information relating to the foregoing.
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
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"Borrower Stock Pledge Agreement" means a stock pledge
agreement, in form and substance satisfactory to Agent, executed and delivered
by Borrowers to Agent with respect to the pledge of the Stock owned by Borrowers
(other than the Stock of the KKR Subsidiaries owned by KKR).
"Borrowing" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof that are
either (i) issued by any bank organized under the laws of the United States or
any state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) in an amount less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than
Permitted Holders, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 30% or more of the Stock of
Prandium, having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) any Obligor ceases to directly own and
control 100% of the outstanding capital Stock of each of its respective
Subsidiaries extant as of the Closing Date (other than directors' qualifying
shares, shares that were issued to third Persons in order to qualify the issuer
to acquire a liquor license, and other than shares of Stock sold or otherwise
disposed of pursuant to a Permitted Disposition).
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"Chi-Chi's" has the meaning set forth in the preamble to this
Agreement.
"Chi-Chi's Subsidiaries" means CCMR of Timonium, Inc., a Delaware
corporation, CCMR of Maryland, Inc., a Delaware corporation, CCMR of
Catonsville, Inc., a Kentucky corporation, CCMR of Greenbelt, Inc., a Kentucky
corporation, CCMR of ▇▇▇▇▇▇▇ Highway, Inc., a Kentucky corporation, CCMR of
Cumberland, Inc., a Kentucky corporation, CCMR of Harford County, Inc., a
Kentucky corporation, Maintenance Support Group, Inc., a Kentucky corporation,
CCMR of ▇▇▇▇▇▇▇▇▇, Inc., a Kentucky corporation, and Chi-Chi's of West Virginia,
Inc., a Kentucky corporation.
"Closing Date" means the date of the first to occur of the making
of the initial Advance or the issuance of the initial Letter of Credit.
"Closing Date Business Plan" means the set of Projections of
Prandium and its Subsidiaries, for the period from the Closing Date through
December 31, 2002 (on a month by month basis), on a consolidated basis and in
form and substance (including as to scope and underlying assumptions) reasonably
satisfactory to Agent.
"Code" means the California Uniform Commercial Code, as in effect
from time to time.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property, other than the Stock of HGI
owned by FRI-MRD,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) deposit accounts,
(j) any money or other assets of each such Borrower that
now or hereafter come into the possession, custody, or control of any member of
the Lender Group, and
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(k) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
"Collateral Access Agreement" means a landlord waiver, mortgagee
waiver, bailee letter, or acknowledgement agreement of any warehouseman,
processor, lessor, or other Person in possession of, having a Lien upon, or
having rights or interests in the Equipment or Inventory, in each case, in form
and substance reasonably satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of the Obligors.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, Letter of Credit Commitment, or Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, Letter
of Credit Commitments, or Total Commitments, as the context requires, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 or on the signature page of the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Prandium to
Agent.
"Concentration Account" means (a) in the case of Chi-Chi's,
account number 4296-911985 of Chi-Chi's maintained with the Concentration
Account Bank, (b) in the case of KKR, account number 4763-395365 of KKR
maintained with the Concentration Account Bank, (c) in the case of FRI-Admin,
account number 4296-912033 of FRI-Admin maintained with the Concentration
Account Bank, (d) in the case of HGI, account number 4296-912090 of HGI
maintained with the Concentration Account Bank; or, in each case, such other
account established and maintained with the Concentration Account Bank and
designated in writing from time to time by Borrowers to Agent upon 30 days or
more prior written notice.
"Concentration Account Bank" means (a) ▇▇▇▇▇ Fargo Bank, N.A.,
whose office is located in San Francisco, California and whose ABA number is
▇▇▇▇▇▇▇▇▇, or (b) any other domestic commercial bank that is reasonably
acceptable to Agent and is designated in writing from time to time by Borrowers
to Agent upon 30 days or more prior written notice, subject to the execution and
delivery of such concentration account agreements as are in form and substance
reasonably satisfactory to Agent.
"Confirmation Orders" means the confirmation orders entered by the
bankruptcy court pursuant to the Insolvency Proceedings of Prandium and FRI-MRD.
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"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Prandium on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Prandium (as such terms are used in Rule 14a-11 under
the Exchange Act), and whose initial assumption of office resulted from such
contest or the settlement thereof.
"Control Agreement" means a control agreement (a) for any
Securities Account or any deposit account, as applicable, which has a balance at
any time in excess of $10,000; and (b) which is in form and substance reasonably
satisfactory to Agent, among an Obligor, Agent, and the applicable securities
intermediary with respect to a Securities Account or a bank with respect to a
deposit account.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means that certain DDA of Borrowers
identified on Schedule D-1.
"Disbursement Letter" means an instructional letter executed and
delivered by each Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is reasonably
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period of a Person,
such Person's earnings (excluding extraordinary
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items (determined in accordance with GAAP), non-cash impairment charges relating
to goodwill, and any non-ordinary decreases in such Person's reserves for
self-insurance liabilities), plus (except to the extent attributable to
extraordinary items (determined in accordance with GAAP)) the amount of any
interest, taxes, depreciation, amortization and restructuring costs deducted in
arriving at such earnings, and, without duplication, plus losses and less gains
upon dispositions of properties added or deducted in arriving at such earnings.
With respect to any determination of EBITDA for any Subsidiaries of FRI-MRD,
such EBITDA shall be determined after the allocation of the expenses of Prandium
and FRI-MRD to such Subsidiaries in accordance with the historical practices of
Prandium and FRI-MRD.
"Eligible Real Property" means the fee simple parcels of Real
Property identified on Schedule E-1 that are and at all times continue to be
reasonably acceptable to Agent in all respects and that: (a) are owned by
Chi-Chi's or Prandium, (b) are the subject of a first priority perfected Lien in
favor of Agent pursuant to a Mortgage, and (c) are subject to no other Liens
other than Permitted Liens.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrowers,
and (f) during the continuation of an Event of Default, any other Person
approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Prandium or any of its Subsidiaries or any predecessor in
interest, (b) from adjoining properties or businesses, or (c) from or onto any
facilities which received Hazardous Materials generated by Prandium or any of
its Subsidiaries or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, or local statute, law, rule, regulation, ordinance, code, binding
and enforceable guideline, binding and enforceable written policy, or rule of
common law now or hereafter in effect and in each case as amended, or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Prandium or any of its Subsidiaries, relating to the environment, employee
health and safety, or Hazardous Materials, including CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 USC (S) 1251 et seq; the Toxic Substances
Control Act, 15 USC, (S) 2601 et seq; the Clean Air Act, 42
-8-
USC (S) 651 et seq.; the Safe Drinking Water Act, 42 USC (S) 3803 et seq.; the
Oil Pollution Act of 1990, 33 USC (S) 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 USC (S) 11001 et seq.; the Hazardous
Material Transportation Act, 49 USC (S) 1801 et seq.; and the Occupational
Safety and Health Act, 29 USC (S) 651 et seq. (to the extent it regulates
occupational exposure to Hazardous Materials); any state and local counterparts
or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of a Person's present and hereafter acquired
machinery, machine tools, equipment, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Prandium or any of its Subsidiaries under IRC Section 414(b), (b) any trade or
business subject to ERISA whose employees are treated as employed by the same
employer as the employees of Prandium or any of its Subsidiaries under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which Prandium or any of its Subsidiaries is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with Prandium or any of its Subsidiaries and whose employees are aggregated with
the employees of Prandium or any of its Subsidiaries under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of historical
levels with respect thereto and all book overdrafts in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute thereto.
"Existing Lender" means Foothill.
"Existing Loan Agreement" means that certain Amended and Restated Loan
and Security Agreement, dated as of July 19, 2000, by and among Prandium,
FRI-MRD, Chi-Chi's, each of their subsidiaries, and Foothill.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, among Borrowers and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"FRI-Admin" has the meaning set forth in the preamble to this
Agreement.
"FRI-MRD" has the meaning set forth in the preamble to this Agreement.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means all of a Person's present and future
general intangibles and other personal property (including contract rights,
rights arising under common law, statutes or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, the goodwill
symbolized by such trade names, trademarks, and servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than its goods, Accounts, Investment Property, and Negotiable
Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means any one or more of Prandium, FRI-MRD, FRI-Admin,
HGI, each of the Chi-Chi's Subsidiaries, and each of the other Subsidiaries of
Prandium from time to time party to the Guaranty.
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"Guarantor Collateral" means the properties and assets of the
Guarantors that are hypothecated by them in favor of Agent pursuant to the Loan
Documents.
"Guarantor Security Agreement" means that certain security agreement
executed and delivered by Guarantors in favor of Agent, for the benefit of the
Lender Group, in form and substance satisfactory to Agent.
"Guarantor Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Agent, executed and delivered by the
Guarantors to Agent with respect to the pledge of the Stock owned by the
Guarantors (other than the Stock of HGI).
"Guaranty" means that certain general continuing guaranty executed and
delivered by Guarantors in favor of Agent, for the benefit of the Lender Group,
in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Headquarters Property" means the Real Property of Prandium located at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
"HGI" shall have the meaning set forth in the preamble to this
Agreement.
"HGI Prepayment" means the "Hamlet Prepayment" as that term is defined
in Section 1.45 of the Plan of Reorganization.
"HGI Sale" means (a) the sale by FRI-MRD of all of the issued and
outstanding Stock owned by FRI-MRD of HGI, or (b) the sale of all or
substantially all of the assets of HGI and the HGI Subsidiaries.
"HGI Subsidiaries" means those Persons identified on Schedule H-1.
"Inactive Subsidiary" means (a) Inner Harbor, and (b) each of the KKR
Subsidiaries.
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"Indebtedness" means, with respect to any Person, (a) all obligations
for borrowed money, (b) all monetary obligations evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all monetary obligations under Capital Leases, (d)
all obligations of others secured by a Lien on any property or asset of such
Person, irrespective of whether such obligation is assumed, and (e) any
obligation guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse) any
Indebtedness of any other Person. The foregoing to the contrary notwithstanding,
the term "Indebtedness" shall not include (i) any liability of a Person for the
deferred purchase price of services or property incurred in the ordinary course
of business, and (ii) interest rate caps, collars, and other insurance-type
financial products. For purposes of this definition, if the obligation of any
other Person secured by a Lien in item (d) of this definition is not a monetary
obligation, then the amount of such obligation shall equal the lesser of the
value of the asset encumbered by such Lien and the reasonably estimated amount
of the secured obligation.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Inner Harbor" means CCMR of Inner Harbor, Inc., a Kentucky
corporation.
"Insolvency Event" means, with respect to any Person, the occurrence
of any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (b) such Person shall seek dissolution,
reorganization under the Bankruptcy Code or other insolvency law, or the
appointment of a receiver, trustee, custodian or liquidator for it or a
substantial portion of its property, assets or business or to effect a plan or
other arrangement generally with its creditors, (c) such Person shall make a
general assignment for the benefit of its creditors, or consent to or acquiesce
in the appointment of a receiver, trustee, custodian or liquidator for a
substantial portion of its property, assets or business, (d) such Person shall
file a voluntary petition under any bankruptcy, insolvency or similar law, or
(e) such Person, or a substantial portion of its property, assets or business
shall become the subject of an involuntary proceeding or petition for its
dissolution, reorganization, or the appointment of a receiver, trustee,
custodian or liquidator or shall become subject to any writ, judgment, warrant
of attachment, execution or similar process, and any such proceeding, petition,
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 30 days after commencement, filing or
levy, as the case may be, or any order for relief shall be entered in any such
proceeding.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, general assignments for the benefit of creditors,
moratoria, compositions, or extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
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"Inventory" means all present and future inventory in which a
Person has any interest, including goods held for sale or lease or to be
furnished under a contract of service, raw materials, work in process, or
materials, wherever located.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers, Prandium, FRI-MRD, FRI-Admin, the
Chi-Chi's Subsidiaries, the KKR Subsidiaries, HGI, the HGI Subsidiaries, Inner
Harbor, and Agent, the form and substance of which is reasonably satisfactory to
Agent.
"Investment Property" means all of a Person's present and future
"investment property" as that term is defined in the Code.
"Investments" means (a) the acquisition of securities (whether
debt or equity) of, or other ownership interests in, a Person, (b) loans,
advances, capital contributions, or transfers of property to a Person (other
than pursuant to a Permitted Disposition), or (c) the acquisition of all or
substantially all of the properties or assets of a Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Borrowers and with the consent of Agent agrees, in such Lender's sole
discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.
"KKR" shall have the meaning set forth in the preamble to this
Agreement.
"KKR Subsidiaries" means those Persons identified on Schedule K-1.
"L/C" means a letter of credit issued by the Issuing Lender.
"L/C Disbursement" means a payment made by Agent pursuant to a
Letter of Credit.
"L/C Undertaking" means the purchase of participations or
execution of indemnities or reimbursement obligations with respect to an L/C.
"Lender" and "Lenders" have the respective meanings set forth in
the preamble to this Agreement, and shall include any other Person made a party
to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes and insurance premiums) required to be paid by Prandium or its
Subsidiaries under any of the Loan Documents that are paid or incurred by the
Lender Group, (b) actual out-of-pocket fees
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or charges paid or incurred by Agent in connection with the Lender Group's
transactions with Prandium and its Subsidiaries, including, feesor charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office), filing, recording, publication,
appraisal (including periodic Collateral appraisals or business valuations to
the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement), real estate surveys, real estate title policies
and endorsements, and environmental audits, (c) actual out-of-pocket costs and
expenses incurred by Agent in the disbursement of funds to Borrowers (by wire
transfer or otherwise), (d) actual out-of-pocket charges paid or incurred by
Agent resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) actual out-of-pocket audit fees and expenses
of Agent related to audit examinations of the Books to the extent of the fees
and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with Prandium and its Subsidiaries
or any guarantor of the Obligations, (h) Agent's and each Lender's reasonable
fees and expenses (including attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable fees and expenses (including attorneys
fees) incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning any Borrower or in exercising rights or remedies under the
Loan Documents), or defending the Loan Documents, irrespective of whether suit
is brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires, issued for the benefit of any Borrower.
"Letter of Credit Commitment" means, with respect to each Lender,
its Letter of Credit Commitment, and, with respect to all Lenders, their Letter
of Credit Commitments, in each case as such Dollar amounts are set forth beside
such Lender's name under the applicable heading on Schedule C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.
"Letter of Credit Usage" means the sum of (a) the undrawn amount
of Letters of Credit, plus (b) the amount of unreimbursed drawings under Letters
of Credit.
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"Lien" means any interest in property securing an obligation owed
to, or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.
"Liquidity Reserve" means a reserve equal to $3,000,000; provided,
however, that, so long as no Event of Default has occurred and is continuing on
each such date, such reserve shall be reduced to (a) $2,000,000 on the date that
is 90 days after the Closing Date; (b) $1,000,000 on the date that is 180 days
after the Closing Date; and (c) $0 on the date that is 270 days after the
Closing Date.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Control Agreements, the
Disbursement Letter, the Fee Letter, the Guarantor Security Agreement, the
Guaranty, the Intercompany Subordination Agreement, the Letters of Credit, the
Mortgages, the Borrower Stock Pledge Agreement, the Guarantor Stock Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by
Borrowers in connection with this Agreement and payable to a member of the
Lender Group, and any other agreement entered into, now or in the future, in
connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of any Borrower, or (b) a material
impairment of Prandium's or its Subsidiaries' ability to perform their
obligations under the Loan Documents to which they are parties or of the Lender
Group's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Agent's Liens
with respect to the Collateral as a result of an action or failure to act on the
part of any Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Amount" means $15,000,000.
"Maximum Revolver Amount" means $4,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Chi-Chi's or Prandium in
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favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.
"Negotiable Collateral" means all of a Person's present and future
letters of credit, notes, drafts, instruments, documents, and personal property
leases (wherein such Person is the lessor), and chattel paper and Books relating
to any of the foregoing.
"New FRI-MRD Notes" means the "New FRI-MRD Notes", as that term is
defined in Section 1.57 of the Plan of Reorganization, and any "PIK Notes" (as
defined in the New FRI-MRD Notes) issued in connection therewith.
"Obligations" means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations owing to the
Lender Group under any outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to the Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by Borrowers to Lender Group of any kind
and description pursuant to the Loan Documents. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all amendments,
changes, extensions, modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.
"Obligor" means any Borrower or Guarantor.
"Orderly Liquidation Value" means, with respect to any Real
Property, the orderly liquidation value of such Real Property as determined from
time to time by a qualified appraisal company selected by Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 14.1(e).
"Permitted Discretion" means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
any Borrower or its Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete in the ordinary course of business, (b) sales by any
Borrower or its Subsidiaries of Inventory to buyers in the ordinary course of
business, (c) the transfer of Equipment or Inventory in the ordinary course of
business from (i) a Borrower to another Borrower, (ii) Chi-Chi's to a Chi-Chi's
Subsidiary, (iii) a Chi-Chi's Subsidiary to Chi-Chi's or another Chi-Chi's
Subsidiary,
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(d) the use or transfer of money or Cash Equivalents by Prandium or its
Subsidiaries in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents (including, without limitation, as permitted by
Section 7.8(a)(iv)), (e) the licensing by any Borrower or its Subsidiaries, on a
non-exclusive basis (or on an exclusive basis so long as the license relates to
a market segment different than the market segments in which Prandium and its
Subsidiaries are conducting business), of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of business, (f) the
HGI Sale so long as (i) the HGI Sale is consummated in accordance with the
applicable provisions of the Plan of Reorganization, (ii) the net proceeds of
the HGI Sale are first used to repay in full in cash any Permitted Intercompany
Advances owed by HGI or the HGI Subsidiaries to any of the Obligors (other than
HGI), and (iii) the net proceeds of the HGI Sale are next used to pay the HGI
Prepayment before such net proceeds are used for any other purpose, (g) the
dissolution of the Inactive Subsidiaries, (h) the sale or other disposition of
the properties set forth on Schedule P-1 for the applicable amount identified to
such property on the schedule, and (i) so long as no Event of Default has
occurred and is continuing, the sale or other disposition, pursuant to a
condemnation or the threat of a condemnation, of Borrowers' restaurant located
at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇.
"Permitted Holders" means the Persons identified on Schedule P-3.
"Permitted Intercompany Advances" means loans or advances (a) from
a Borrower to another Borrower, (b) from a Borrower to HGI or one or more of the
HGI Subsidiaries, so long as the aggregate amount of all such loans or advances
outstanding to HGI and the HGI Subsidiaries, collectively, does not exceed
$10,000 per year, (c) from a Borrower to any of the Chi-Chi's Subsidiaries, from
any of the Chi-Chi's Subsidiaries to a Borrower, or from any of the Chi-Chi's
Subsidiaries to any of the other Chi-Chi's Subsidiaries, or (d) from a Borrower
to any of the Inactive Subsidiaries, so long as the aggregate amount of all such
loans or advances outstanding to all Inactive Subsidiaries, collectively, does
not exceed $10,000 per year.
"Permitted Investments" means (a) Investments in Cash Equivalents,
(b) Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Permitted Intercompany Advances, (e) Permitted Parent
Distributions, and (f) Investments by any Obligor in any other Obligor that is a
wholly-owned Subsidiary of the Person making the Investment.
"Permitted Liens" means: (a) Liens held by Agent for the benefit
of Agent and the Lenders under the Loan Documents, (b) Liens for unpaid taxes
that either (i) are not yet delinquent or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) Liens set forth
on Schedule P-2, (d) the interests of lessors under operating leases and
interests of licensees or franchisees in any Borrower's intellectual property,
and (e) purchase money Liens or the interests of lessors under Capital Leases to
the extent that such Liens or interests secure Permitted Purchase Money
Indebtedness and so long as such Lien attaches only to the asset purchased or
acquired and the proceeds thereof,
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(f) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business of Prandium and its Subsidiaries and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, (ii) are the subject of Permitted Protests, or (iii) in the
aggregate are de minimis in amount, (g) Liens arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(h) Liens or deposits to secure performance of bids, tenders or leases, incurred
in the ordinary course of business of Prandium and its Subsidiaries and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, (k) Liens with respect to the Real Property Collateral,
that are exceptions to the commitments for title insurance issued in connection
with the Mortgages as accepted by Agent, (l) with respect to any Real Property
that is not part of the Real Property Collateral, easements, rights of way and
zoning restrictions that do not materially interfere with or impair the use or
operation thereof by Prandium or its Subsidiaries, (m) other Liens imposed by
operation of law that do not materially affect Prandium's or its Subsidiaries'
ability to perform their respective obligations under the Loan Documents, (n)
Liens arising from the security deposit made with ▇▇▇▇▇ Fargo in the amount of
$500,000, and (o) the pledge of the Stock of HGI owned by FRI-MRD in accordance
with the applicable provisions of the New FRI-MRD Notes.
"Permitted Parent Distributions" means (a) so long as no
Triggering Event exists and is continuing at the time of such payment or would
result therefrom, loans by a Borrower, or the declaration and payments of
dividends or other distributions in cash by a Borrower, to FRI-MRD or FRI-Admin
to enable FRI-MRD or FRI-Admin to make loans to or declare and pay dividends or
other distributions in cash to Prandium to make payment of its general and
administrative operating expenses and federal, state, local, and foreign taxes
and other assessments of a similar nature (whether imposed directly or through
withholding) then due and owing, in each case, as determined in good faith by
the Board of Directors and to the extent arising from or directly related to
Prandium's ownership interest in FRI-MRD and its Subsidiaries, if and so long as
FRI-MRD, FRI-Admin, and Prandium each promptly uses the proceeds of such loans,
dividends, or other distributions solely for such purposes; and (b) so long as
no Blockage Event exists and is continuing at the time of such payment or would
result therefrom, and so long as the aggregate amount of all loans, dividends,
or distributions made under this clause do not exceed $2,000,000 in any fiscal
year, loans by a Borrower, or the declaration and payments of dividends or other
distributions in cash by a Borrower, to FRI-MRD or FRI-Admin to enable FRI-MRD
or FRI-Admin to make loans to or declare and pay dividends or other
distributions in cash to Prandium to redeem shares of Stock of Prandium held by
its officers, directors, or employees or its former officers, directors, or
employees (or their estates or beneficiaries under their estates) that were
issued pursuant to any stock option plan, restricted stock plan, or similar
arrangement, upon the death, disability, retirement, termination of employment,
or pursuant to the terms under which such shares of Stock were issued, if and so
long as FRI-MRD, FRI-Admin, and Prandium each promptly uses the proceeds of such
loans, dividends, or other distributions solely for such purposes.
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"Permitted Protest" means the right of Prandium or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) if
required under GAAP, a reserve with respect to such obligation is established on
the books of Prandium or any of its Subsidiaries, as applicable under the
circumstances, (b) any such protest is promptly instituted and diligently
prosecuted by Prandium or any of its Subsidiaries, as applicable, in good faith,
and (c) Agent is reasonably satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred (i) to finance the
acquisition of Equipment after the Closing Date, in an aggregate principal
amount outstanding at any one time not in excess of $5,000,000, and (ii) to
finance the acquisition of Real Property (and related improvements) after the
Closing Date, in an aggregate principal amount outstanding at any one time not
in excess of $2,000,000.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by Prandium or its Subsidiaries or with respect to
which it may incur liability.
"Plan of Reorganization" means a joint plan of reorganization to
be filed by each of Prandium and FRI-MRD pursuant to their voluntary
pre-negotiated or prepackaged insolvency proceedings under Chapter 11 of the
Bankruptcy Code, which plan shall be in form and substance satisfactory to
Agent.
"Prandium" has the meaning set forth in the preamble to this
Agreement.
"Projections" means Prandium's and its Subsidiaries' forecasted
(a) balance sheets, (b) profit and loss statements, and (c) cash flow
statements, all prepared on a basis consistent with Prandium's and its
Subsidiaries' historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances
and receive payments of principal, interest, fees, costs, and expenses with
respect thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
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(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, the percentage obtained by dividing (i) such Lender's
Letter of Credit Commitment, by (ii) the aggregate Letter of Credit Commitments
of all Lenders, and
(c) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of
Total Commitments of all Lenders; provided, however, that, in each case, in the
event all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any real property fee estates or leasehold
interests now owned or hereafter acquired by Prandium or its Subsidiaries.
"Real Property Collateral" means the parcels of Real Property and
the related improvements thereto identified on Schedule R-1 and any Real
Property fee estates hereafter acquired by any Obligor.
"Record" means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"▇▇▇▇▇▇ Employment Agreement" means the Second Amended and
Restated Employment Agreement, dated as of July 13, 2000, by and among Prandium
and certain of its Subsidiaries and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $500,000.
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"Required Lenders" means, at any time, (a) Agent, and (b) Lenders
whose Pro Rata Shares aggregate 51% of the Total Commitments, or if the
Commitments have been terminated irrevocably, 51% of the Obligations then
outstanding.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, on the date any determination thereof is to
be made, the sum of (a) the outstanding amount of the Advances, plus (b) the
Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor Federal agency having similar powers.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other Person in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or other comparable managers) of such
corporation, partnership, limited liability company, or other Person.
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"Swing Lender" means Foothill or any other Lender that, at the
request of Borrowers and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11(e).
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Total Debt" means, as of any date of determination, all outstanding
Indebtedness of Prandium and any of its Subsidiaries, determined on a
consolidated basis, after eliminating intercompany items, in accordance with
GAAP.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower, each Guarantor, and Agent, the form and
substance of which is satisfactory to Agent.
"Triggering Event" means any of (a) the occurrence and continuation
of an Event of Default under Section 8.1, or (b) the occurrence of an Insolvency
Event relative to any Obligor.
"UCC Filing Authorization Letter" means a letter duly executed by
each Obligor authorizing the Agent to file appropriate financing statements on
Form UCC-1 without the signature of such Obligor in such office or offices as
may be necessary or, in the opinion of the Agent, desirable to perfect the
security interests purported to be created by this Loan Agreement, the Guarantor
Security Agreement, the Borrower Stock Pledge Agreement, the Guarantor Stock
Pledge Agreement, or each Mortgage.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of any Borrower.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
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1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever a
particular Person is identified with respect to a financial covenant or a
related definition, it shall be understood to mean such Person and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Agent. Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the other Loan Documents to any agreement, instrument, or
document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the least of (i) the Maximum
Revolver Amount less the Liquidity Reserve, (ii) the Maximum Amount less the
amount of the Letter of Credit Usage in excess of $11,000,000, or (iii) the
Borrowing Base less the Letter of Credit Usage. For purposes of this Agreement,
"Borrowing Base," as of any date of determination, shall mean the result of:
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(x) the lesser of
(i) the Applicable Real Estate Advance
Rate times the Orderly Liquidation Value
of Eligible Real Property,
(ii) as of any date of determination on
and after June 30, 2002 (A) the EBITDA of
Prandium and its Subsidiaries (other than
HGI and the HGI Subsidiaries) on a
consolidated basis for the period of 12
consecutive months ending with the last day
of the second consecutive month preceding
such date of determination, times (B) 2.5,
minus
(z) the sum of (i) the Liquidity Reserve and
(ii) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that any Obligor is required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
any Obligor to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral, which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral, other than Permitted Liens.
(c) The Lenders with Revolver Commitments shall have
no obligation to make additional Advances hereunder to the extent that such
additional Advances and any concurrent requests for Letters of Credit would
cause the outstanding Obligations to exceed the Maximum Amount.
(d) Amounts borrowed pursuant to this Section may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement, without penalty.
2.2 [Intentionally omitted].
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be
made by an irrevocable written request by an Authorized Person delivered to
Agent (which notice must
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be received by Agent no later than 10:00 a.m. (California time) on the Business
Day prior to the date that is the requested Funding Date in the case of a
request for an Advance specifying (i) the amount of such Borrowing, which amount
shall be a multiple of $100,000 equal to or greater than $500,000, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for a Swing Loan in an amount of $1,000,000 or less,
such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding
Date specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in
Section 2.3(b), then promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders,
not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing available to Agent
in immediately available funds, to Agent's Account, not later than
10:00 a.m. (California time) on the Funding Date applicable thereto.
After Agent's receipt of the proceeds of such Advances, upon
satisfaction of the applicable conditions precedent set forth in
Section 3 hereof, Agent shall make the proceeds thereof available to
Borrowers on the applicable Funding Date by transferring immediately
available funds equal to such proceeds received by Agent to the
Designated Account; provided, however, that, subject to the provisions
of Section 2.3(i), Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any Advance if Agent shall
have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed
the Availability on such Funding Date.
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(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the
date of such Borrowing, that such Lender will not make available
as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender's Pro Rata Share of the
Borrowing, Agent may assume that each Lender has made or will
make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so
required), in reliance upon such assumption, make available to
Borrowers on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available
to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that
Lender shall on the Business Day following such Funding Date
make such amount available to Agent, together with interest at
the Defaulting Lender Rate for each day during such period. A
notice submitted by Agent to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest
error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is
not made available to Agent on the Business Day following the
Funding Date, Agent will notify Borrowers of such failure to
fund and, upon demand by Agent, Borrowers shall pay such amount
to Agent for Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such
Funding Date, but no Lender shall be responsible for the failure
of any other Lender to make the Advance to be made by such other
Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for
the Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any such
payments to each other non-Defaulting Lender member of the
Lender Group ratably in accordance with their Commitments (but
only to the extent that such Defaulting Lender's Advance was
funded by the other members of the Lender Group) or, if so
directed by Borrowers and if no Default or Event of Default had
occurred and is continuing (and to the extent such Defaulting
Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrowers as if such Defaulting Lender
had made Advances to Borrowers. Subject to the foregoing, Agent
may hold and, in its Permitted Discretion, re-lend to Borrowers
for the account of such Defaulting Lender the amount of all such
payments received and retained by it for the account of such
Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such
Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitments
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shall be deemed to be zero. This Section shall remain effective
with respect to such Lender until (x) the Obligations under
this Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and Borrowers shall have waived such Defaulting Lender's
default in writing, or (z) the Defaulting Lender makes its Pro
Rata Share of the applicable Advance and pays to Agent all
amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitments of any Lender, to relieve or
excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve
or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the Lenders other than
such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Borrowers
at their option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitments of such Defaulting
Lender, such substitute Lender to be reasonably acceptable to
Agent. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to
be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance Agreement in favor
of the substitute Lender (and agrees that it shall be deemed to
have executed and delivered such document if it fails to do so)
subject only to being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or
penalty of any kind whatsoever; provided further, however, that
any such assumption of the Commitments of such Defaulting
Lender shall not be deemed to constitute a waiver of any of the
Lender Group's or Borrowers' rights or remedies against any
such Defaulting Lender arising out of or in relation to such
failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of
Swing Lender, as a Lender, to have the terms of this Section
2.3(d) apply to a requested Borrowing as described in Section
2.3(b), Swing Lender as a Lender shall make such Advance in the
amount of such Borrowing (any such Advance made solely by Swing
Lender as a Lender pursuant to this Section 2.3(d) being
referred to as a "Swing Loan" and such Advances being referred
to collectively as "Swing Loans") available to Borrowers on the
Funding Date applicable thereto by transferring immediately
available funds to the Designated Account. Each Swing Loan is
an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that all
payments on any Swing Loan shall be payable to Swing Lender as
a Lender solely for its own account (and for the account of the
holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.3(i), Agent shall
not request Swing Lender as a Lender
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to make, and Swing Lender as a Lender shall not make, any Swing
Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable
Borrowing unless such condition has been waived, or (ii) the
requested Borrowing would exceed the Availability on such Funding
Date. Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set forth in
Section 3 have been satisfied on the Funding Date applicable
thereto prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, upon
receipt by Agent of a request for an Advance (delivered in
accordance with Section 2.3(a)) and (1) after the occurrence and
during the continuance of a Default or an Event of Default, or (2)
at any time that any of the other applicable conditions precedent
set forth in Section 3 have not been satisfied, to make an Advance
to Borrowers on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (A) to preserve or protect
the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations, or (C) to pay any
other amount chargeable to Borrowers pursuant to the terms of this
Agreement, including Lender Group Expenses and the costs, fees,
and expenses described in Section 10 (any Advance described in
this Section 2.3(e) shall be referred to as an "Agent Advance").
Each Agent Advance is an Advance hereunder and shall be subject to
all the terms and conditions applicable to other Advances, except
that all payments thereon shall be payable to Agent solely for its
own account (and for the account of the holder of any
participation interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to time
to Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded
portion of the Advances is intended by the Lenders to equal, at all times, such
Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
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Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement ("Settlement") with
the Lenders on a weekly basis, or on a more frequent basis if
so determined by Agent, (1) on behalf of Swing Lender, with
respect to each outstanding Swing Loan, (2) for itself, with
respect to each Agent Advance, and (3) with respect to
Collections received, as to each by notifying the Lenders by
telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. (California
time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested
Settlement being the "Settlement Date"). Such notice of a
Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Agent
Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein
(including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such
Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, then Agent shall, by
no later than 12:00 p.m. (California time) on the Settlement
Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such
that each such Lender shall, upon receipt of such amount, have
as of the Settlement Date, its Pro Rata Share of the Advances,
Swing Loans, and Agent Advances, and (z) if a Lender's balance
of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, such Lender shall no
later than 12:00 p.m. (California time) on the Settlement Date
transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause
(z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or
Agent Advance representing Swing Lender's Pro Rata Share
thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on
the Settlement Date applicable thereto to the extent required
by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Date, Agent shall, as part of the relevant Settlement, apply
to such balance the portion of payments actually received in
immediately
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available funds by Agent with respect to principal, interest,
fees payable by Borrowers and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a
net amount is owed to any such Lender after such application,
such net amount shall be distributed by Agent to that Lender
as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no
Agent Advances or Swing Loans are outstanding, may pay over to
Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing
Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing
Lender shall pay to Agent for the accounts of the Lenders, and
Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During
the period between Settlement Dates, Swing Lender with respect
to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect of letter agreements between
Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Agent Advances, shall be entitled
to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing
Lender, Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the
principal amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the interests
therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(h) Lenders' Failure to Perform. All Advances (other
than Swing Loans and Agent Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of
this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing
Lender, as
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applicable, and Agent or Swing Lender, as applicable, may, but is not obligated
to, knowingly and intentionally, continue to make Advances (including Swing
Loans) to Borrowers, notwithstanding that an Overadvance exists or thereby would
be created, so long as (i) after giving effect to such Advances (including Swing
Loans), the outstanding Revolver Usage does not exceed the Borrowing Base by
more than $400,000, (ii) after giving effect to such Advances (including Swing
Loans), the outstanding Revolver Usage (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) does not
exceed the Maximum Amount, and (iii) at the time of the making of any such
Advance (including Swing Loans), Agent does not believe, in good faith, that the
Overadvance created by such Advance will be outstanding for more than 90 days.
The Advances and Swing Loans, as applicable, that are made pursuant to this
Section 2.3(i) shall be subject to the same terms and conditions as any other
Advance or Swing Loan, as applicable, except that the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to
making any (or any additional) intentional Overadvances (except for
and excluding amounts charged to the Loan Account for interest,
fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its
value), and the Lenders with Revolver Commitments thereupon shall,
together with Agent, jointly determine the terms of arrangements
that shall be implemented with the applicable Borrower, intended to
reduce, within a reasonable time, the outstanding principal amount
of the Advances, to the applicable Borrower, to an amount permitted
by the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be
implemented according to the determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall be obligated
to settle with Agent as provided in Section 2.3(f) for the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made as
permitted under this Section 2.3(i), and any Overadvances resulting
from the charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the
account of the Lender
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Group and shall be made in immediately available funds, no later
than 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California time)
shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue until
such following Business Day.
(ii) Unless Agent receives notice from Borrowers prior to the
date on which any payment is due to the Lenders that Borrowers will
not make such payment in full as and when required, Agent may assume
that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but
shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrowers do not
make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender
Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal balance
of the Obligations to which such payments relate held by each
Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect
to any letter agreements between Agent and individual Lenders) shall
be apportioned ratably among the Lenders having a Pro Rata Share of
the type of Commitment or Obligation to which a particular fee
relates. All payments shall be remitted to Agent and all such
payments (other than payments received while no Event of Default has
occurred and is continuing and which relate to the payment of
principal or interest of specific Obligations or which relate to the
payment of specific fees), and all proceeds of Accounts or other
Collateral received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis, until
paid in full,
(C) third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan Documents
until paid in full,
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(D) fourth, to pay any fees then due to any or all of the Lenders
(after giving effect to any letter agreements between Agent and
individual Lenders) under the Loan Documents, on a ratable basis,
until paid in full,
(E) fifth, to pay interest due in respect of all Agent Advances,
until paid in full,
(F) sixth, ratably to pay interest due in respect of the Advances
(other than Agent Advances) and the Swing Loans until paid in full,
(G) seventh, to pay the principal of all Agent Advances until
paid in full,
(H) eighth, to pay the principal of all Swing Loans until paid in
full,
(I) ninth, ratably to pay the principal of all Advances until
paid in full,
(J) tenth, if an Event of Default has occurred and is continuing,
to Agent, to be held by Agent, for the ratable benefit of Issuing
Lender and those Lenders having a Letter of Credit Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
(K) eleventh, to pay any other Obligations until paid in full,
and
(L) twelfth, to Borrowers (to be wired to the Designated Account)
or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(f).
(iii) In each instance, so long as no Event of Default has occurred
and is continuing, Section 2.4(b) shall not be deemed to apply to any
payment by Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and
specifically including interest accrued after the commencement of any
Insolvency Proceeding), default interest, interest on interest, and expense
reimbursements,
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whether or not the same would be or is allowed or disallowed in whole
or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
2.5 Overadvances
If, at any time or for any reason, the amount of Obligations owed by
Borrowers to the Lender Group pursuant to Sections 2.1 and 2.12 is greater than
either the Dollar or percentage limitations set forth in Sections 2.1 or 2.12,
(an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the
amount of such excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full to the Lender Group as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to the Base Rate plus the Base Rate
Margin.
(b) Letter of Credit Fee. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Letter of Credit Commitment, subject to
any letter agreement between Agent and individual Lenders), a Letter of Credit
fee (in addition to the charges, commissions, fees, and costs set forth in
Section 2.12(e)) which shall accrue at a rate equal to 8.0% per annum times the
average Daily Balance of the undrawn amount of all outstanding Letters of
Credit.
(c) Default Rate. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit) that
have been charged to the Loan Account pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per annum rate
equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and
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(ii) the Letter of Credit fees provided for above shall be
increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrowers
hereby authorize Agent, from time to time without prior notice to Borrowers to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in Section 2.12(e) (as
and when accrued or incurred), the fees and costs provided for in Section 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document to the Loan Account, which amounts thereafter
shall constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances hereunder. Any interest not paid when due shall be
compounded by being charged to the Loan Account and shall thereafter constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 Collections. Each Borrower shall at all times maintain its respective
Concentration Account and agrees that all Collections shall be deposited into
its Concentration Account or into a deposit account of such Borrower the
proceeds of which are remitted no less frequently than has been its past
practice to its Concentration Account. Each Borrower, Agent, and the
Concentration Account Bank shall enter into an agreement that, among other
things, shall provide that, from and after the giving of notice by Agent to such
Concentration Account Bank, the Concentration Account Bank shall remit all
proceeds received in such Concentration Account to an account (the "Agent
Account") maintained by
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Agent at a depositary selected by Agent. Agent agrees that it will not give such
notice to the Concentration Account Bank unless a Triggering Event has occurred
and is continuing. No arrangement contemplated hereby shall be modified by
either Borrower without the prior written consent of Agent. Upon the occurrence
and during the continuance of a Triggering Event, Agent may elect to notify the
Concentration Account Bank to remit all amounts received in the Concentration
Account to the Agent Account.
2.8 Crediting Payments; Application of Collections. The receipt of any
Collections of Borrowers by Agent (whether from transfers to Agent by the
Concentration Account Bank or otherwise) immediately shall be applied
provisionally to reduce the Advances outstanding under Section 2.1, but shall
not be considered a payment on account unless such Collection item is a wire
transfer of immediately available federal funds and is made to the Agent's
Account or unless and until such Collection item is honored when presented for
payment. Should any Collection item not be honored when presented for payment,
then the applicable Borrower shall be deemed not to have made such payment, and
interest shall be recalculated accordingly. Anything to the contrary contained
herein notwithstanding, any Collection item shall be deemed received by Agent
only if it is received into the Agent's Account on a Business Day on or before
11:00 a.m. (California time). If any Collection item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9 Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Borrowers agree to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Borrowers, any Advance, Agent Advance, or
Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder
shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with all Advances (including Agent Advances
and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for
Borrowers' account, the Letters of Credit issued by Issuing Lender for
Borrowers' account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any
Concentration Account Bank. Agent shall render statements, in accordance with
its customary practices in respect of rendering statements to its customers,
regarding the Loan Account to Borrowers, including principal, interest, fees,
and including an itemization of all charges and expenses constituting Lender
Group Expenses owing, and such statements shall
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(absent manifest error) be conclusively presumed to be correct and accurate and
constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Borrowers, Borrowers shall deliver to
Agent by registered or certified mail or overnight courier at its address
specified in Section 12, written objection thereto describing the error or
errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Fee Letter Fees. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the
Fee Letter, and
(b) Audit, Appraisal, and Valuation Charges. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Prandium and its Subsidiaries performed by personnel employed
by Agent, (ii) a fee of $1,500 per day per appraiser, plus out-of-pocket
expenses, for each appraisal of the Collateral performed by personnel employed
by Agent, and (iii) without duplication, the actual charges paid or incurred by
Agent if it elects to employ the services of one or more third Persons to
perform financial audits of Prandium or its Subsidiaries, to appraise the
Collateral, or any portion thereof, or to assess Prandium or its Subsidiaries'
business valuation.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue L/Cs or L/C Undertakings for the account of
Borrowers; provided, however, that such L/Cs or L/C Undertakings shall be used
(i) to support Prandium's and its Subsidiaries' workers compensation insurance,
(ii) to support the ▇▇▇▇▇▇ Employment Agreement, and (iii) for other corporate
purposes of Prandium and its Subsidiaries. To request the issuance of an L/C or
an L/C Undertaking (or the amendment, renewal, or extension of an outstanding
L/C or L/C Undertaking), the applicable Borrower shall hand deliver or telecopy
(or transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or the beneficiary of the Underlying
Letter of Credit, as applicable), and such other information as shall be
necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, the applicable Borrower also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C
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Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Revolver Usage would exceed $15,000,000, or
(ii) the Letter of Credit Usage would exceed (A) the Borrowing
Base; less (B) the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit will be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. Letters of Credit outstanding under the Existing Agreement as of the
Closing Date shall remain outstanding after the Closing Date and be treated as
Letters of Credit under this Agreement.
If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrowers shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrowers prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day following the
Business Day on which Borrowers receive such notice, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6. To
the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrowers pursuant to this paragraph, Agent shall distribute such payment
to the Issuing Lender or, to the extent that Lenders have made payments pursuant
to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Letter of Credit Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if a Borrower had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Letter of Credit Commitments, the Issuing Lender shall be deemed to have granted
to each Lender with a Letter of Credit Commitment, and each Lender with a Letter
of Credit Commitment shall be deemed to have purchased, a participation in each
Letter of Credit, in
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an amount equal to its Pro Rata Share of the Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Letter of Credit Commitment
hereby absolutely and unconditionally agrees to pay to Agent, for the account of
the Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made
by the Issuing Lender and not reimbursed by Borrowers on the date due as
provided in clause (a) of this Section, or of any reimbursement payment required
to be refunded to Borrowers for any reason. Each Lender with a Letter of Credit
Commitment acknowledges and agrees that its obligation to deliver to Agent, for
the account of the Issuing Lender, an amount equal to its respective Pro Rata
Share pursuant to this Section 2.12(b) shall be absolute and unconditional and
such remittance shall be made notwithstanding the occurrence or continuation of
an Event of Default or Default or the failure to satisfy any condition set forth
in Section 3 hereof. If any such Lender fails to make available to Agent the
amount of such Lender's Pro Rata Share of any payments made by the Issuing
Lender in respect of such Letter of Credit as provided in this Section, Agent
(for the account of the Issuing Lender) shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence, bad faith, or willful misconduct of the
Issuing Lender or any other member of the Lender Group. Each Borrower agrees to
be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C
issued by Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following any
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by a Borrower
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence, bad faith, or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit
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and to accept and rely upon the Issuing Lender's instructions with respect to
all matters arising in connection with such Underlying Letter of Credit and the
related application; provided, that Issuing Lender agrees to consider Borrowers'
reasonable requests with respect to waivers of discrepancies and amendments with
respect thereto.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period (not to exceed 90 days) after the additional cost is incurred or the
amount received is reduced, notify Borrowers, and Borrowers shall pay on demand
such amounts as Agent may specify to be necessary to compensate the Lender Group
for such additional cost or reduced receipt, together with interest on such
amount from the date of such demand until payment in full thereof at the rate
then applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 [Intentionally omitted].
2.14 Capital Requirements. If, after the date hereof, any Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital
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requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with any guideline, request, or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender's or such holding company's capital
as a consequence of such Lender's Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
such Lender to be material, then such Lender may notify Borrowers and Agent
thereof. Following receipt of such notice, Borrowers agree to pay such Lender on
demand the amount of such reduction of return of capital as and when such
reduction is determined (but in no event for a period of more than 90 days prior
to the date of written notice), payable within 90 days after presentation by
such Lender of a statement in the amount and setting forth in reasonable detail
such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable
averaging and attribution methods. The foregoing notwithstanding, in the event
that payments to any Lender are required to be made hereunder as a result of
such additional costs, Borrowers shall be entitled to substitute for such Lender
any other bank or financial institution reasonably acceptable to Agent, and such
Lender shall have no right to refuse to be replaced hereunder.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance or Initial Letter of
Credit. The obligation of the Lender Group (or any member thereof) to make the
initial Advance or to issue the initial Letter of Credit, is subject to the
fulfillment, to the satisfaction of Agent, of each of the conditions precedent
set forth below:
(a) the Closing Date shall occur on or before July 8, 2002;
(b) Agent shall have received a UCC Filing Authorization
Letter, duly executed by each Obligor, together with appropriate financing
statements on Form UCC-1 duly filed in such office or offices as may be
necessary or, in the opinion of the Agent, desirable to perfect the security
interests purported to be created by this Agreement, the Guarantor Security
Agreement, the Borrower Stock Pledge Agreement, the Guarantor Stock Pledge
Agreement, and each Mortgage, and Agent shall have received searches reflecting
the filing of all such financing statements;
(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) the agreements contemplated hereby with the Concentration
Account Bank, in substantially the form of Exhibit 3.1(c)(i),
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(ii) a Control Agreement for all deposit accounts at ▇▇▇▇▇
Fargo,
(iii) the Disbursement Letter,
(iv) the Fee Letter,
(v) the Guaranty,
(vi) the Guarantor Security Agreement,
(vii) the Intercompany Subordination Agreement,
(viii) the Mortgages,
(ix) the Borrower Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged
thereunder, as well as Stock powers with respect thereto
endorsed in blank,
(x) the Guarantor Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged
thereunder, as well as Stock powers with respect thereto
endorsed in blank, and
(xi) the Trademark Security Agreement;
(d) Agent shall have received a certificate from the
Secretary of each Borrower attesting to the resolutions of such Borrower's board
of directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same;
(e) Agent shall have received copies of each Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower and other than for
Arizona, Washington, D.C., Kansas, Missouri, Nebraska, North Carolina, North
Dakota, Oregon, South Dakota, and Washington) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
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(h) Agent shall have received a certificate from the
Secretary of each Guarantor attesting to the resolutions of such Guarantor's
board of directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantor is a party and authorizing specific
officers of such Guarantor to execute the same;
(i) Agent shall have received copies of each Guarantor's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with
respect to each Guarantor, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor, which certificate shall indicate that such
Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of status with
respect to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor and other than for
Arizona, Washington, D.C., Kansas, Missouri, Nebraska, North Carolina, North
Dakota, Oregon, South Dakota, and Washington) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be reasonably satisfactory to Agent and its
counsel;
(m) Agent shall have received an opinion of Borrowers' and
Guarantors' counsel in form and substance reasonably satisfactory to Agent;
(n) Agent shall have received satisfactory evidence
(including a certificate of the chief financial officer of Prandium) that all
tax returns required to be filed by Prandium and its Subsidiaries have been
timely filed and all taxes upon Prandium and its Subsidiaries or their
properties, assets, income, and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(o) Agent shall have received the Plan of Reorganization,
certified as being true, correct, and complete by the Secretary of Prandium and
the Plan of Reorganization shall have become effective;
(p) Agent shall have received the Confirmation Orders which
shall be in form and substance reasonably satisfactory to Agent, in full force
and effect, final and non-appealable;
(q) Prandium and its Subsidiaries shall have the Required
Availability after giving effect to the initial extensions of credit hereunder;
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(r) Agent shall have completed its business, legal, and
collateral due diligence, including a collateral audit (including an updated
audit) and review of the Obligor's books and records and verification of the
Obligors' representations and warranties to the Lender Group, the results of
which shall be reasonably satisfactory to Agent;
(s) Agent shall have received completed reference checks
with respect to Borrowers' and their Subsidiaries' senior management, the
results of which are satisfactory to Agent in its sole discretion;
(t) Agent shall have received the Closing Date Business
Plan;
(u) Borrowers shall pay all Lender Group Expenses incurred
in connection with the transactions evidenced by this Agreement;
(v) Agent shall have received (i) appraisals of the Real
Property Collateral reasonably satisfactory to Agent, and (ii) mortgagee title
insurance policies (or marked commitments to issue the same) for the Real
Property Collateral issued by a title insurance company reasonably satisfactory
to Agent (each a "Mortgage Policy" and, collectively, the "Mortgage Policies")
in amounts reasonably satisfactory to Agent assuring Agent that the Mortgages on
such Real Property Collateral are valid and enforceable first priority mortgage
Liens on such Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and the Mortgage Policies otherwise shall
be in form and substance reasonably satisfactory to Agent;
(w) Agent shall have received a phase-I environmental report
and a real estate survey with respect to each of the following parcels of Real
Property Collateral listed on Schedule R-1: (1) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, (2) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇, (3) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇,
▇▇▇▇▇▇, ▇▇▇▇, (4) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, (5) ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, (6) ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, (7) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, (8) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇, (9) ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, (10)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇. The environmental consultants and
surveyors retained for such reports or surveys, the scope of the reports or
surveys, and the results thereof shall be reasonably acceptable to Agent;
(x) no Material Adverse Change shall have occurred;
(y) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby; and
(z) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance reasonably satisfactory
to Agent.
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3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, Borrowers shall deliver
to Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be reasonably satisfactory to Agent and its counsel;
(b) within 30 days of the Closing Date, Obligors shall deliver
to Agent the Control Agreements;
(c) Obligors shall use their reasonable best efforts to amend
in a manner satisfactory to Agent the collateral descriptions in (i) the
Security Agreement, dated as of December 5, 1994, by and between KKR and
Crossroads Alliance L.P., and (ii) that certain financing statement filed
against KKR in favor of Crossroads Alliance L.P. (and assigned to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and further assigned to Auto Orange), and shall provide Agent evidence
satisfactory to Agent of such amendments promptly upon the effectiveness
thereof;
(d) within 30 days of the Closing Date, Obligors shall provide
Agent evidence satisfactory to Agent that the following financing statements
have been terminated: (i) financing statement, dated April 20, 2001, in favor of
A&B Company against Prandium Inc., (ii) financing statement, dated March 26,
1998, in favor of State of Connecticut Department of Labor Employment Security
Division, and (iii) financing statement, dated August 7, 1997, in favor of the
State of California Board of Equalization; and
(e) within 30 days of the Closing Date, Obligors shall provide
Agent with evidence satisfactory to Agent that all defects and encumbrances
(including without limitation tax liens, mechanics liens, and judgment liens)
reflected in the preliminary title reports issued by Chicago Title with respect
to the Real Property Collateral have been removed.
3.3 Conditions Precedent to all Advances and Letters of Credit. The
obligation of the Lender Group (or any member thereof) to make all Advances and
to extend all Letters of Credit hereunder shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
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(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates, and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall continue in full force and effect for a
term ending on July 2, 2006 (the "Maturity Date"), provided, however, that the
Maturity Date shall be January 1, 2005 in the event that, on or before January
1, 2005, the maturity date of the New FRI-MRD Notes has not been extended to
October 2, 2006 or later or the New FRI-MRD Notes have not been refinanced with
securities which have a maturity date of October 2, 2006 or later. The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default. Concurrent with the consummation of the HGI Sale in
accordance with the applicable provisions of this Agreement, HGI shall be
released from all Obligations and shall no longer be a party to the Loan
Agreement and any other Loan Document to which HGI is a party.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand (including either (i) providing cash collateral
to be held by Agent for the benefit of those Lenders with a Letter of Credit
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, or (iii) providing a standby letter of credit (containing terms and
conditions, and from an issuer, satisfactory to Agent) to support all of the
Obligations in respect of outstanding Letters of Credit and L/C Undertakings).
No termination of this Agreement, however, shall relieve or discharge Borrowers
of their duties, Obligations, or covenants hereunder and the Agent's Liens in
the Collateral shall remain in effect until all Obligations have been fully and
finally discharged (or secured or supported as provided above) and the Lender
Group's obligations to provide additional credit hereunder have been terminated.
When this Agreement has been terminated and all of the Obligations have been
fully and finally discharged (or secured or supported as provided above) and the
Lender Group's obligations to provide additional credit under the Loan Documents
have been terminated irrevocably, Agent will, at Borrowers' sole expense,
execute and deliver any UCC termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent's Liens
and all notices of security interests and liens previously filed by Agent with
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respect to the Obligations and Agent will return to Borrowers all Collateral in
Agent's possession.
3.6 Early Termination by Borrowers. Borrowers have the option, at any
time upon 10 Business Days prior written notice to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the
Obligations (including either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Letter of Credit Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender or (iii)
providing a standby letter of credit (containing terms and conditions, and from
an issuer, satisfactory to Agent) to support all of the Obligations in respect
of outstanding Letters of Credit and L/C Undertakings), in full (to be allocated
based upon letter agreements between Agent and individual Lenders). If Borrowers
have sent a notice of termination pursuant to the provisions of this Section,
then the Commitments shall terminate as of the date specified as the date of
termination of this Agreement in such notice and Borrowers shall be obligated to
repay the Obligations (including either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Letter of Credit Commitment in
an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender or
(iii) providing a standby letter of credit (containing terms and conditions, and
from an issuer, satisfactory to Agent) to support all of the Obligations in
respect of outstanding Letters of Credit and L/C Undertakings), in full, on the
date set forth as the date of termination of this Agreement in such notice.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent, for
the benefit of the Lender Group, a continuing security interest in all of its
right, title, and interest in all currently existing and hereafter acquired or
arising Personal Property Collateral in order to secure prompt repayment of any
and all of the Obligations in accordance with the terms and conditions of the
Loan Documents and in order to secure prompt performance by the Obligors of each
of their covenants and duties under the Loan Documents. The Agent's Liens in and
to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or Borrowers. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Personal Property
Collateral or the Real Property Collateral. Concurrent with the consummation of
any Permitted Disposition, if requested by an Obligor, Agent agrees to release
its Liens on the subject property or asset.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral (other than
Collections items that are received by any Borrower in the ordinary course of
business and that are deposited in accordance with Section 2.7), and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower,
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promptly upon the request of Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Concentration Account Bank in their original form as received by such
Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance reasonably satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, each Borrower
authorizes Agent to execute any such Additional Documents in such Borrower's
name and authorizes Agent to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as Agent shall
reasonably require, each Borrower shall (a) provide Agent with a report of all
new material patentable, copyrightable, or trademarkable materials acquired or
generated by such Borrower during the prior period, (b) cause all material
patents, copyrights, and trademarks acquired or generated by Borrower that are
not already the subject of a registration with the appropriate filing office (or
an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Borrower's ownership thereof, and (c) cause to be prepared, executed,
and delivered to Agent supplemental schedules to the applicable Loan Documents
to identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or ▇▇▇▇ of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) at any time that an Event of Default has
occurred and is continuing, send requests for verification of Accounts, (d)
endorse such Borrower's name on any
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Collection item that may come into the Lender Group's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed (in accordance
with the provisions for termination hereof) and the Lender Group's obligations
to extend credit hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter during normal business hours to inspect the Books and to check,
test, and, subject to Section 6.2(d), appraise the Collateral in order to verify
Borrowers' financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral.
4.7 Control Agreements. Each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of such Borrower, Agent,
and the substitute securities intermediary have entered into a Control
Agreement. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by any Borrower without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Triggering Event, Agent may notify
any securities intermediary to liquidate the applicable Securities Account or
any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
each of the Obligors makes the following representations and warranties to the
Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance or issuance of each Letter of Credit thereafter, as
though made on and as of the date of such Advance or Letter of Credit (except to
the extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 No Encumbrances. Each Borrower has good and marketable title to the
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens. Each of the Guarantors has good and marketable title to the Guarantor
Collateral hypothecated by
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them under the Loan Documents to which they are parties, free and clear of Liens
except for Permitted Liens.
5.2 [Intentionally omitted].
5.3 [Intentionally omitted].
5.4 Equipment. All of the Equipment is used or held for use in
Prandium's and its Subsidiaries' business and is fit for such purposes, ordinary
wear and tear excepted, and except for Equipment which becomes obsolete in the
ordinary course of business.
5.5 Location of Inventory and Equipment. The Inventory and Equipment of
Prandium and its Subsidiaries are not stored with a bailee, warehouseman, or
similar party of which Agent has not been given written notice and are located
only at the locations identified on Schedule 5.5; provided, however, that
Borrowers may amend Schedule 5.5 to identify new locations so long as such new
location is within the continental United States.
5.6 Equipment Records. Each Borrower keeps records which are correct and
accurate in all material respects itemizing and describing the type, quality,
and quantity of its Equipment and such Borrower's cost therefor.
5.7 Location of Chief Executive Office; FEIN. As of the date hereof, the
chief executive office of each Borrower and each Guarantor is located at the
address indicated in Schedule 5.7. Chi-Chi's FEIN is ▇▇-▇▇▇▇▇▇▇ and KKR's FEIN
is ▇▇-▇▇▇▇▇▇▇.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Prandium and each of its Subsidiaries is duly organized
and existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to be
so qualified reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
list of Prandium's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Prandium. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.
(c) Except as set forth on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Prandium's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Prandium nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Prandium or its
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any
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such capital Stock. The Borrowers may amend Schedule 5.8 to reflect the sale or
dissolution of any Subsidiaries of Prandium so long as such sale or dissolution
is permitted under this Agreement.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by each Borrower
of this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower.
(b) The execution, delivery, and performance by each Borrower
of this Agreement and the Loan Documents to which it is a party do not and will
not (i) violate, in any material respect, any provision of federal, state, or
local law or regulation applicable to such Borrower, the Governing Documents of
such Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on such Borrower, (ii) conflict with, result in a
material breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of such Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of such Borrower, other than Permitted Liens, or
(iv) require any approval of such Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of such Borrower
(other than any which have been obtained).
(c) Other than the filing of financing statements, fixture
filings, and the Mortgages, and other than the recordation of the Trademark
Security Agreement with the United States Patent and Trademark Office, the
recordation of appropriate evidence of Agent's lien in registrations and
applications for intellectual property acquired by an Obligor after the date
hereof, the registration of unregistered copyrights in the United States
Copyright Office, and the taking of actions necessary to perfect Agent's lien in
intellectual property applications and registrations filed in registrars outside
the United States, and other than the Plan of Reorganization becoming effective,
the execution, delivery, and performance by each Borrower of this Agreement and
the Loan Documents to which such Borrower is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to which each
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.
(e) Upon the recordation of the Mortgages and the filing of the
financing statements, the Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
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(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate, in
any material respect, any provision of federal, state, or local law or
regulation applicable to such Guarantor, the Governing Documents of such
Guarantor, or any order, judgment, or decree of any court or other Governmental
Authority binding on such Guarantor, (ii) conflict with, result in a material
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of such Guarantor, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of such Guarantor, other than Permitted Liens, or (iv)
require any approval of such Guarantor's interestholders or any approval or
consent of any Person under any material contractual obligation of such
Guarantor (other than any which have been obtained).
(h) Other than the filing of financing statements, fixture
filings and the Mortgages, and other than the Plan of Reorganization becoming
effective, the execution, delivery, and performance by each Guarantor of the
Loan Documents to which such Guarantor is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
each of the Obligors, threatened against Prandium or its Subsidiaries, except
for (a) matters that are fully covered by insurance (subject to customary
deductibles), or (b) matters arising after the Closing Date that reasonably
could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Prandium and its Subsidiaries that have been delivered by Prandium or Borrowers
to the Lender Group have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and present fairly in all material
respects, Prandium's and its Subsidiaries' financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Prandium and its Subsidiaries, taken
as a whole, since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12 Fraudulent Transfer.
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(a) Prandium and each of its Subsidiaries is Solvent.
(b) No transfer of property is being made by Prandium or
any of its Subsidiaries and no obligation is being incurred by Prandium or any
of its Subsidiaries in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Prandium or its Subsidiaries.
5.13 Employee Benefits. Neither Prandium nor any of its Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
to each of the Obligors' knowledge, none of Prandium's or any of its
Subsidiaries' assets has ever been used by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law in a manner that could reasonably be expected to result in a
Material Adverse Change, (b) to each of the Obligors' knowledge, none of
Prandium's or any of its Subsidiaries' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) neither Prandium nor any of
its Subsidiaries have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Prandium or any of its Subsidiaries, and (d) neither Prandium nor
any of its Subsidiaries have received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Prandium or any of its
Subsidiaries resulting in the releasing or disposing of Hazardous Materials into
the environment that could reasonably be expected to result in a Material
Adverse Change.
5.15 Brokerage Fees. Neither Prandium nor any of its Subsidiaries has
utilized the services of any broker or finder in connection with Borrowers'
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Prandium or any of its Subsidiaries in
connection herewith.
5.16 Intellectual Property. Prandium and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of their business as currently
conducted. Attached hereto as Schedule 5.16 is a true, correct, and complete
listing of all material patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which Prandium or
any of its Subsidiaries are the owner or are exclusive licensees. The Borrowers
may amend Schedule 5.16 to include patents, patent applications, trademarks,
trademark applications, copyrights, or copyright registrations as to which
Prandium or any of its Subsidiaries become the owner after the Closing Date
provided that, in connection with such amendment, Agent obtains a first priority
perfected Lien on such intellectual property.
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5.17 Leases. Prandium and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to the business of Prandium and
its Subsidiaries and to which any of them are a party or under which any of them
are a party. All of such leases are valid and subsisting and no material default
by Prandium or any of its Subsidiaries exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Prandium's and its
Subsidiaries' DDAs, including, with respect to each depository (i) the name and
address of such depository, and (ii) the account numbers of the accounts
maintained with such depository. The Borrowers may amend Schedule 5.18 to
include DDAs as to which Prandium or any of its Subsidiaries become the account
holder after the Closing Date provided that, in connection with such amendment,
Agent obtains a first priority perfected Lien on such DDA.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Prandium and its Subsidiaries in writing to Agent
or any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Prandium and its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Prandium's and its Subsidiaries'
good faith best estimate of their future performance for the periods covered
thereby (it being understood that both the Closing Date Projections and such
additional Projections are subject to inherent contingencies and uncertainties
beyond the control of Prandium and its Subsidiaries, and that no assurance can
be given that such Projections will be realized).
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Prandium and its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately reflects the aggregate principal
amount of such Indebtedness.
5.21 Inactive Subsidiaries. The Inactive Subsidiaries do not own any
material assets and do not engage in any material business activity.
6. AFFIRMATIVE COVENANTS.
Each of the Obligors, jointly and severally, covenants and agrees
that, so long as any credit hereunder shall be available and until full and
final payment of the Obligations (in accordance with the provisions for
termination hereof), and, unless Agent shall otherwise consent in writing, each
of the Obligors will, and will cause each of its respective Subsidiaries to, do
all of the following:
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6.1 Accounting System. Maintain a standard system of accounting that
enables each of them to produce financial statements in accordance with GAAP and
also maintain records pertaining to the Collateral and the Guarantor Collateral
that contain information as from time to time may reasonably be requested by
Agent.
6.2 Collateral and Operations Reporting. Provide Agent, with a copy to
each Lender, with the following documents at the following times in form
satisfactory to Agent:
(a) on a quarterly basis, and in any event, by no later
than the 30th day following the end of each quarter during the term of this
Agreement, a listing of each Borrower's and each Guarantor's currently operating
restaurants,
(b) on a quarterly basis, and in any event, by no later
than the 30th day following the end of each quarter during the term of this
Agreement, a listing of each of the restaurants of Borrowers and the Guarantors
that have been closed during such quarter,
(c) on a quarterly basis, and in any event, by no later
than the 30th day following the end of each quarter during the term of this
Agreement, a detailed listing of the properties or assets that have been sold or
otherwise disposed of since the Closing Date (other than Permitted Dispositions)
and a statement of the Net Proceeds received by FRI-MRD and any of its
Subsidiaries from each such sale or other disposition,
(d) upon Agent's request (but, so long as no Event of
Default has occurred or is continuing, no more frequently than one time per
year), an updated appraisal of the Orderly Liquidation Value of the Eligible
Real Property, and
(e) such other reports as to the Collateral and the
Guarantor Collateral or the financial condition of Prandium or its Subsidiaries
as Agent may reasonably request from time to time.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent,
with copies to each Lender:
(a) as soon as available, but in any event within 30 days
(45 days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Prandium's
fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Prandium's and its
Subsidiaries' operations during such period,
(ii) a summary aging, by vendor, of each of Prandium's and
its Subsidiaries' accounts payable and any book overdraft,
(b) as soon as available, but in any event within 45 days
after the end of each of Prandium's fiscal quarters,
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(i) a certificate signed by the chief financial officer of
Prandium to the effect that:
(A) the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of footnotes
and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of
Prandium and its Subsidiaries,
(B) to such officer's best knowledge, the representations
and warranties of the Obligors contained in this Agreement and the
other Loan Documents are true and correct in all material respects
on and as of the date of such certificate, as though made on and
as of such date (except to the extent that such representations
and warranties relate solely to an earlier date), and
(C) to such officer's best knowledge, there does not exist
any condition or event that constitutes a Default or Event of
Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what
action the Obligors have taken, are taking, or propose to take
with respect thereto), and
(ii) a Compliance Certificate demonstrating, in reasonable
detail, compliance at the end of such period with the applicable
financial covenants contained in Section 7.20, and
(c) as soon as available, but in any event within 90 days after
the end of each of Prandium's fiscal years,
(i) financial statements of Prandium and its Subsidiaries
for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in accordance
with GAAP (such audited financial statements to include a balance sheet,
income statement, and statement of cash flow and, if prepared, such
accountants' letter to management),
(ii) beginning with fiscal year 2002, a certificate of such
accountants addressed to Agent and the Lenders stating that such
accountants do not have knowledge of the existence of any Default or
Event of Default under Section 7.20,
(d) as soon as available, but in any event within 10 days
prior to the start of each of Prandium's fiscal years, copies of the
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming
3 years, year by year, and for the forthcoming fiscal year,
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month by month, certified by the chief financial officer of Prandium as being
such officer's good faith best estimate of the financial performance of Prandium
and its Subsidiaries during the period covered thereby,
(e) if and when filed by any Borrower or any Guarantor,
(i) Form 10-Q quarterly reports, Form 10-K annual reports,
and Form 8-K current reports,
(ii) any other filings made by any Borrower or any Guarantor
with the SEC, and
(iii) any other information that is provided by any Borrower
or any Guarantor to its shareholders generally,
(f) if and when filed by any Obligor and as requested by
Agent, satisfactory evidence of payment of applicable excise taxes in each
jurisdiction in which (i) any Obligor conducts business or is required to pay
any such excise tax, (ii) where any Obligor's failure to pay any such applicable
excise tax would result in a Lien on the properties or assets of such Obligor,
or (iii) where any Obligor's failure to pay any such applicable excise tax
reasonably could be expected to result in a Material Adverse Change,
(g) as soon as any Obligor has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that the Obligors propose to take with
respect thereto, and
(h) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Prandium and its Subsidiaries.
In addition to the financial statements referred to above,
Prandium agrees to deliver financial statements prepared on both a consolidated
and consolidating basis and agrees that no Subsidiary of Prandium will have a
fiscal year different from that of Prandium. Prandium and its Subsidiaries agree
that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Prandium and its Subsidiaries Agent reasonably may request. Prandium
and its Subsidiaries waive the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any information requested by Agent pursuant to or in accordance with this
Agreement, and agrees that Agent may contact directly any such accounting firm
or service bureau in order to obtain such information; provided, however, that,
so long as no Event of Default has occurred and is continuing, Agent agrees to
endeavor to provide Prandium with prior notice of any such contact and agrees
that Prandium may participate in any such discussions.
6.4 Tax Returns. Upon Agent's request, make available to Agent at
Prandium's chief executive office, copies of each of Prandium's federal income
tax returns and all amendments thereto.
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6.5 [Intentionally omitted].
6.6 Maintenance of Properties. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
so as to prevent any loss or forfeiture thereof or thereunder; provided,
however, that the foregoing shall not be deemed to prevent Permitted
Dispositions to the extent otherwise permitted hereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Prandium,
any of its Subsidiaries, or any of their assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Prandium and its Subsidiaries will make timely payment or
deposit of all material tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Prandium and its
Subsidiaries have made such payments or deposits.
6.8 Insurance.
(a) At Prandium's and its Subsidiaries' expense, maintain
insurance respecting its assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Prandium and its Subsidiaries also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Prandium and its Subsidiaries shall deliver
copies of all such policies to Agent with a satisfactory lender's loss payable
endorsement naming Agent as sole loss payee or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give (i) not less than 10 days prior written notice to
Agent in the event of cancellation of the policy due to non-payment of premium,
and (ii) not less than 20 days prior written notice to Agent in the event of
cancellation of the policy for any other reason. Agent agrees that Prandium or
its Subsidiaries may self-insure for workers compensation insurance, general
liability insurance, auto liability insurance, and health insurance, in each
case, consistent with past practices and for not more than $500,000 per
occurrence.
(b) Prandium and its Subsidiaries shall give Agent prompt
notice of any loss in excess of $100,000 covered by property insurance;
provided, however, that if the aggregate amount of the losses that do not exceed
$100,000 is greater than $250,000, then Prandium and its Subsidiaries shall give
Agent prompt notice of all such losses in excess of $50,000. With the exception
of insurance policies covering the property or assets of HGI and the HGI
Subsidiaries (as to which Agent shall not have the right to adjust losses), upon
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the occurrence and during the continuation of an Event of Default, Agent shall
have the exclusive right to adjust any losses payable under any such insurance
policies, without any liability to Prandium or its Subsidiaries whatsoever in
respect of such adjustments. Any monies received as payment for any loss or
damage to Prandium's or its Subsidiaries' properties and assets by fire,
lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle damage,
earthquake, elevator collision, or other risks included under an "extended
coverage" endorsement under the applicable insurance policy (exclusive of any
casualty loss wherein the insurance proceeds are less than $50,000 and excluding
insurance proceeds received with respect to the assets or properties of HGI),
shall be paid over to Agent, and Prandium and its Subsidiaries shall have the
right to designate in writing to Agent within 45 days of such payment whether
such payment shall be (i) applied to the prepayment of the Obligations without
premium, in such order or manner as Agent may elect, or (ii) disbursed to
Prandium or any of its Subsidiaries, as applicable, under staged payment terms
satisfactory to Agent for application to the cost of repairs, replacements, or
restorations and subject to the conditions set forth in this Section 6.8(b). In
the event Agent fails to receive timely such written designation or the
conditions set forth in the following sentence are not satisfied, the payment
shall be applied in the manner set forth in clause (i) of the immediately
preceding sentence. If Prandium and its Subsidiaries elect to cause Agent to
disburse any monies received as payment for any loss pursuant to this Section
6.8(b), Agent only shall be obligated to disburse such money for the repair,
replacement or restoration of the affected property or assets if all of the
following conditions are satisfied: (A) no Default or Event of Default has
occurred and is continuing or would result from the disbursement or application
of such monies; (B) Borrowers have cash, cash equivalents, Availability, and/or
business interruption insurance proceeds in amounts sufficient, in Agent's
reasonable judgment, to ensure that Borrowers will be able to make payment as
and when due of each of their direct Obligations that will be payable during the
period of such repair, replacement, or restoration; (C) Agent is reasonably
satisfied that the amount of such cash, cash equivalents, borrowing
availability, and/or insurance proceeds will be sufficient fully to repair,
replace, or restore the affected property or assets; (D) construction,
completion of the repair, replacement, or restoration of the affected property
or assets shall be completed in accordance with plans, specifications, and
drawings submitted to and approved by Agent, which approval shall not be
unreasonably withheld or delayed; (E) all construction and completion of the
repair, replacement, or restoration shall be effected with reasonable promptness
and shall be of a value (the "Replaced Value") (i) at least equal to the
replacement value (the "Destroyed Value") of such items of property destroyed or
condemned prior to such destruction or condemnation, or (ii) less than the
Destroyed Value so long as the difference between the Destroyed Value and the
Replaced Value is applied to the prepayment of the Obligations without premium,
in such order or manner as Agent may elect; and (F) all monies paid by Prandium
or its Subsidiaries to Agent may be commingled with other funds of the Lender
Group and will not bear interest pending disbursement hereunder. Anything in the
foregoing sentence to the contrary notwithstanding, if any lease for any Real
Property or Personal Property leased by Prandium or any of its Subsidiaries
requires that monies received as payment for any loss or damage to such property
under an applicable insurance policy be applied to the cost of repairs,
replacements, or restorations of such property, any such monies shall be paid
over to Agent and disbursed to Prandium or any of its Subsidiaries, as
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applicable, under staged payment terms satisfactory to Agent
for application to such costs, regardless of whether the conditions set forth in
clauses (A) through (F) above have been satisfied. Upon the occurrence and
during the continuance of an Event of Default, Agent shall have the right to
apply all prepaid premiums to the payment of the Obligations in such order or
form as Agent shall determine.
(c) Neither Prandium nor any of its Subsidiaries will take
out separate insurance concurrent in form or contributing in the event of loss
with that required to be maintained under this Section 6.8, unless Agent is
included thereon as named or additional insured with, in the event Agent is a
named insured, the loss payable to Agent under a lender's loss payable
endorsement or its equivalent. Prandium and its Subsidiaries immediately shall
notify Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and copies of such policies promptly shall be provided to Agent.
6.9 Location of Inventory and Equipment. Keep the Inventory and
Equipment only at, or in transit between, the locations identified on Schedule
5.5; provided, however, that Borrowers may amend Schedule 5.5 so long as such
amendment occurs by written notice to Agent prior to the date on which Inventory
or Equipment is moved to such new location, so long as such new location is
within the continental United States, and so long as, at the time of such
written notification, Borrowers provide any financing statements or fixture
filings necessary to perfect and continue perfected the Agent's Liens on such
assets and also provides to Agent a Collateral Access Agreement, if reasonably
requested by Agent.
6.10 Compliance with Laws. Comply in all material respects with the
requirements of all applicable laws, rules, regulations, and orders of any
Governmental Authority, including the Fair Labor Standards Act and the Americans
With Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
material leases to which Prandium or any of its Subsidiaries is a party or by
which Prandium's or any of its Subsidiaries' properties and assets are bound,
unless such payments are the subject of a Permitted Protest.
6.12 Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Each Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers, and each Borrower agrees to
indemnify, defend, and hold Agent and the Lender Group harmless from and against
any claim of any broker or finder arising out of Borrowers' obtaining financing
from the Lender Group under this Agreement.
6.13 Existence. At all times preserve and keep in full force and effect
Prandium's and its Subsidiaries' valid existence and good standing and any
rights and franchises material
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to Prandium's and its Subsidiaries' businesses (except that no Obligor shall be
required to maintain the existence and good standing of any of their
Subsidiaries that they are permitted to sell, dissolve, merge, or consolidate
pursuant to the provisions of this Agreement).
6.14 Environmental.
(a) Keep any property either owned or operated by Prandium or
any of its Subsidiaries free of any Environmental Liens or post bonds or other
financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Prandium or any of its Subsidiaries and take any Remedial Actions
required to ▇▇▇▇▇ said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly provide Agent with written notice
within 10 days of the receipt of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Prandium or any of its Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Prandium or
any of its Subsidiaries, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
7. NEGATIVE COVENANTS.
Each of the Obligors, jointly and severally, covenants and agrees
that, so long as any credit hereunder shall be available and until full and
final payment of the Obligations (in accordance with the provisions for
termination hereof), each of the Obligors will not, and will not permit any of
their Subsidiaries to, do any of the following without Agent's prior written
consent:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
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(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by Prandium and its
Subsidiaries or materially impair Prandium and its Subsidiaries'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of the Indebtedness so refinanced,
renewed, or extended (except to the extent of accrued interest and fees on such
Indebtedness and fees incurred in connection with any such refinancing, renewal
or extension), (iii) such refinancings, renewals, or extensions do not result in
a shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to Prandium and its
Subsidiaries, and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness,
(e) Indebtedness composing Permitted Investments,
(f) Indebtedness relating to insurance premium financing
incurred in the ordinary course of business, and
(g) Indebtedness relating to Prandium's and its Subsidiaries'
controlled disbursement accounts or in respect of overdrafts of zero balance
bank accounts so long as such Indebtedness is outstanding for not more than 2
Business Days at any one time.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock; provided, that any Subsidiary of
FRI-MRD that is not a Borrower may be merged or consolidated with a Borrower (so
long as a Borrower is the survivor of such merger or consolidation) or with any
other Subsidiary of FRI-MRD that is not a Borrower.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution); provided, that if all of the assets of any
Subsidiary of Prandium are sold,
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transferred or otherwise disposed of in accordance with this Agreement, such
Subsidiary may be liquidated, wound up, or dissolved; provided further, however,
that Inner Harbor may be dissolved.
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets other than pursuant to a Permitted Disposition.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Prandium's or
its Subsidiaries' assets.
7.5 Change Name. Change its name, FEIN, corporate structure, or identity,
or add any new fictitious name; provided, however, that Prandium and any of its
Subsidiaries may change its name or add fictitious names upon at least 30 days
prior written notice to Agent of such change and so long as, at the time of such
written notification, Prandium, or its Subsidiary, as applicable, provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person (other than any Subsidiary of
FRI-MRD) except by endorsement of instruments or items of payment for deposit to
the account of Prandium or its Subsidiaries or which are transmitted or turned
over to Agent.
7.7 Nature of Business. Make any change in the principal nature of its
business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Obligor, other than (i) the Obligations in accordance with this
Agreement, (ii) the 15% Notes pursuant to the provisions of the Plan of
Reorganization, (iii) the 14% Notes pursuant to the provisions of the Plan of
Reorganization, and (iv) the New FRI-MRD Notes with the cash flow from HGI
pursuant to Section 5.12 of that certain "FRI-MRD Corporation Note Agreement,
dated as of July 2, 2002 Re: Up to $80,000,000 12.0% Senior Secured Notes due
January 31, 2005" (without giving effect to any amendments thereto).
(b) Except in connection with (i) a refinancing permitted by
Section 7.1(d) or (ii) the Plan of Reorganization, directly or indirectly,
amend, modify, alter, increase, or change any of the terms or conditions of any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Sections 7.1(b) or (c).
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 [Intentionally omitted].
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7.11 Distributions
(a) Make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Prandium's or any of its Subsidiaries' Stock, of any
class, whether now or hereafter outstanding; provided, that (i) any Subsidiary
of a Borrower may make distributions or declare or pay dividends to its
immediate parent, and (ii) Borrowers may make Permitted Parent Distributions.
7.12 Accounting Methods. Modify or change its method of accounting (other
than as may be required or permitted to conform to GAAP) or enter into, modify,
or terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Prandium's or its Subsidiaries' accounting records without said
accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or Prandium's or its Subsidiaries' financial condition.
7.13 Investments. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Prandium and its Subsidiaries shall not have Permitted Investments (other than
in the Concentration Accounts) in deposit accounts or Securities Accounts in
excess of $250,000 outstanding at any one time unless Prandium or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements governing such Permitted Investments, as
Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Prandium or its
Subsidiaries except for transactions that are in the ordinary course of their
business, upon fair and reasonable terms, that are fully disclosed to Agent, and
that are no less favorable to Prandium or its Subsidiaries than would be
obtained in an arm's length transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 [Intentionally omitted].
7.17 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender (other than any Letters of Credit which will be deemed Letters of Credit
supported by L/C Undertakings issued under this Agreement), and (ii) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
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7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. Relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to Agent and so long as, at
the time of such written notification, Prandium or its Subsidiary, as
applicable, provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location, if reasonably
requested by Agent. Other than Inventory and Equipment of the Obligors with a
fair market value of less than $500,000 in the aggregate or unless subject to a
Collateral Access Agreement, the Inventory and Equipment of the Obligors shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Neither Prandium nor any of its Subsidiaries shall transfer
assets out of any Securities Account; provided, however, that, so long as no
Triggering Event has occurred and is continuing or would result therefrom,
Prandium and its Subsidiaries may use such assets (and the proceeds thereof) to
the extent not prohibited by this Agreement.
7.20 Financial Covenants.
(a) EBITDA - Prandium. In the case of Prandium, fail to maintain
EBITDA measured on a fiscal quarter-end basis, of not less than the required
amount set forth in the following table for the applicable period set forth
opposite thereto:
---------------------------------------------------------------------------
Applicable Amount Applicable Period
---------------------------------------------------------------------------
$6,710,000 For the 9 month period
ending September 29, 2002
---------------------------------------------------------------------------
$9,545,000 For the 12 month period
ending each fiscal quarter thereafter
---------------------------------------------------------------------------
(b) EBITDA - Chi-Chi's. In the case of Chi-Chi's, fail to
maintain EBITDA measured on a fiscal quarter-end basis, of not less than the
required amount set forth in the following table for the applicable period set
forth opposite thereto:
---------------------------------------------------------------------------
Applicable Amount Applicable Period
---------------------------------------------------------------------------
$6,006,000 For the 9 month period
ending September 29, 2002
---------------------------------------------------------------------------
$8,515,000 For the 12 month period
---------------------------------------------------------------------------
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ending each fiscal quarter thereafter
---------------------------------------------------------------------------
(c) EBITDA - KKR. In the case of KKR, fail to maintain EBITDA
measured on a fiscal quarter-end basis, of not less than the required amount set
forth in the following table for the applicable period set forth opposite
thereto:
---------------------------------------------------------------------------
Applicable Amount Applicable Period
---------------------------------------------------------------------------
$ 739,000 For the 9 month period
ending September 29, 2002
---------------------------------------------------------------------------
$1,044,000 For the 12 month period
ending each fiscal quarter thereafter
---------------------------------------------------------------------------
(d) Indebtedness to EBITDA. A ratio of (a) Total Debt to (b)
EBITDA of Prandium and its Subsidiaries, on a consolidated basis, of not greater
than the ratio set forth in the following table for the applicable period set
forth opposite thereto:
---------------------------------------------------------------------------
Applicable Ratio Applicable Date
---------------------------------------------------------------------------
12.06:1.00 As of September 29, 2002
---------------------------------------------------------------------------
8.56:1.00 As of December 29, 2002
---------------------------------------------------------------------------
9.03:1.00 As of March 30, 2003
---------------------------------------------------------------------------
9.02:1.00 As of June 29, 2003
---------------------------------------------------------------------------
9.41:1.00 As of September 28, 2003
---------------------------------------------------------------------------
9.40:1.00 As of December 28, 2003
---------------------------------------------------------------------------
9.81:1.00 As of March 29, 2004
---------------------------------------------------------------------------
9.81:1.00 As of June 28, 2004
---------------------------------------------------------------------------
10.25:1.00 As of September 27, 2004
---------------------------------------------------------------------------
10.24:1.00 As of December 27, 2004
---------------------------------------------------------------------------
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---------------------------------------------------------------------------
10.71:1.00 As of March 28, 2005
---------------------------------------------------------------------------
7.21 Inactive Subsidiaries. Permit, except as set forth on Schedule 7.21,
any Inactive Subsidiary to (a) own any material assets, or (b) engage in any
material business activity.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If any Borrower fails to pay when due and payable, or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations); provided, however, that in the case of Overadvances that are
caused by the charging of interest, fees, or Lender Group Expenses to Borrowers'
Loan Account, such event shall not constitute an Event of Default if, within 3
Business Days prior telephonic notice of such Overadvance, Borrower prepays, or
otherwise eliminates, such Overadvance;
8.2 If (a) Prandium or any of its Subsidiaries fails to perform, keep, or
observe in any material respect any term, provision, covenant, or agreement
contained in Sections 6.1 (Accounting System), 6.2 (Collateral Reports), 6.4
(Tax Returns), 6.5 (Title to Equipment), 6.6 (Maintenance of Equipment), 6.10
(Locations of Inventory and Equipment), 6.11 (Compliance with Laws), or 6.12
(Employee Benefits) of this Agreement and such failure continues for a period of
15 days from the date on which any of Prandium or its Subsidiaries first had
knowledge or reasonably should have had knowledge of such failure or neglect, or
(b) Prandium or any of its Subsidiaries fails or neglects to perform, keep, or
observe, in any material respect, any other term, provision, covenant, or
agreement contained in this Agreement or any of the other Loan Documents (other
than any such term, provision, covenant, or agreement that is the subject of
another provision of this Section 8), and, in each such instance, after giving
effect to any notice, grace, or cure periods provided for in such Loan
Documents;
8.3 If any material portion of Prandium's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person and the same is not
discharged or bonded before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by Prandium or such Subsidiary, as applicable;
8.4 If an Insolvency Proceeding is commenced by Prandium or any of its
Subsidiaries;
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8.5 If an Insolvency Proceeding is commenced against Prandium or any of
its Subsidiaries, and any of the following events occur: (a) Prandium or the
applicable Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligations to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
Prandium or any of its Subsidiaries, or (e) an order for relief shall have been
entered therein;
8.6 If Prandium or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs and such injunction, restraining order, or other
court order is not stayed within 30 days of the date on which it first arises;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Prandium's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or if any taxes
or debts owing at any time hereafter to any one or more of such entities becomes
a Lien, whether ▇▇▇▇▇▇ or otherwise, upon any of Prandium's or any of its
Subsidiaries' assets and the same is not paid before such payment is delinquent;
8.8 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Prandium's or any of its Subsidiaries' properties or assets by
any state, county, municipal, or other non-federal governmental agency, or if
any taxes or debts owing for an amount in excess of $250,000 at any time
hereafter to any one or more of such entities becomes a Lien, whether ▇▇▇▇▇▇ or
otherwise, upon any of Prandium's or any of its Subsidiaries' properties or
assets and, in any such case, such taxes or debts are not the subject of a
Permitted Protest, and the Lien is not released, discharged, or bonded against
before the earlier of 30 days of the date it first arises or 5 days of the date
when such property or asset is subject to being forfeited;
8.9 If a notice of Lien, levy, or assessment is filed of record with
respect to the Headquarters Property by any state, county, municipal, or other
non-federal governmental agency, or if any Real Property taxes owing for an
amount in excess of $250,000 at any time hereafter to any one or more of such
entities becomes a Lien, whether ▇▇▇▇▇▇ or otherwise, upon the Headquarters
Property and, in any such case, such taxes are not the subject of a Permitted
Protest, and the Lien is not released, discharged, or bonded against before the
earlier of 30 days of the date it first arises or 5 days of the date when the
Headquarters Property is subject to being forfeited;
8.10 If there is a default in one or more agreements relating to
Indebtedness of Prandium or any of its Subsidiaries involving an aggregate
amount of $250,000, or more, and such default (a) occurs at the final maturity
of the obligations thereunder, or (b) results in a
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right by the other parties thereto, irrespective of whether exercised, to
accelerate the maturity of Prandium's or its Subsidiaries' obligations
thereunder;
8.11 If Prandium or any of its Subsidiaries makes any payment on account
of Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;
8.12 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by Prandium, any of its Subsidiaries, or any officer, employee,
agent, or director of Prandium or any of its Subsidiaries;
8.13 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by any such Guarantor thereunder;
8.14 If this Agreement or any other Loan Document that purports to create
a Lien, shall, as a result of any act or failure to act by Prandium or any of
its Subsidiaries, fail or cease to create a valid and perfected and, except to
the extent permitted by the terms hereof or thereof, first priority Lien on or
security interest in the Collateral covered hereby or thereby; or
8.15 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by Prandium or any of its Subsidiaries, or a proceeding shall be
commenced by Prandium or any of its Subsidiaries, or by any Governmental
Authority having jurisdiction over Prandium and its Subsidiaries, seeking to
establish the invalidity or unenforceability thereof, or Prandium or any of its
Subsidiaries shall deny that Prandium or any of its Subsidiaries has any
liability or obligation purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by Prandium
and Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
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(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) [Intentionally omitted];
(e) [Intentionally omitted];
(f) Without notice to or demand upon Borrowers or any
Guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Borrowers agree
to assemble the Personal Property Collateral if Agent so requires, and to make
the Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Borrowers authorize
Agent to enter the premises where the Personal Property Collateral is located,
to take and maintain possession of the Personal Property Collateral, or any part
of it, and to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge Borrowers' Loan Account therefor.
With respect to any Obligor's owned or leased premises, each Obligor hereby
grants Agent a license (to the maximum extent permitted by law and the terms of
the applicable lease) to enter into possession of such premises and to occupy
the same, without charge, for up to 120 days in order to exercise any of the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) [Intentionally omitted];
(h) [Intentionally omitted];
(i) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Each Borrower hereby grants to Agent a
license or other right to use, without charge, such Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and such Borrower's rights under
all licenses and all franchise agreements shall inure to the Lender Group's
benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including each Obligor's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
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(i) Agent shall give Borrowers a notice in writing of the
time and place of public sale, or, if the sale is a private sale
or some other disposition other than a public sale is to be made
of the Personal Property Collateral, the time on or after which
the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrowers as provided in Section 12, at
least 10 days before the earliest time of disposition set forth
in the notice; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral
that is perishable or threatens to decline speedily in value or
that is of a type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group, may credit bid
and purchase at any public sale; and
(m) The Lender Groupshall have all other rights and
remedies available at law or in equity or pursuant to any other Loan Document;
and
(n) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid promptly (and in any
event within 2 Business Days) by the Guarantors (pursuant to the Guaranty) and
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Borrowers.
9.2 Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Prandium or any of its Subsidiaries fails to pay any monies
(whether taxes, assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then, to
the extent that Agent determines that such failure by Prandium or any of its
Subsidiaries could reasonably be expected to result in a Material Adverse Change
with respect to the Collateral, without prior notice to Prandium or any of its
Subsidiaries, Agent may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves in the Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with Section 6.8 hereof,
obtain and maintain insurance policies of the type described in Section 6.8 and
take any action with respect to such policies as Agent reasonably deems prudent.
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Any such amounts paid by Agent shall constitute Lender Group Expenses and any
such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of
Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing. Agent agrees to endeavor in good faith promptly
to provide notice to Prandium or Borrowers of any action taken by Agent under
this Section 10, but the failure of Agent to do so (except if such failure is
the result of Agent's bad faith) shall not create any liability whatsoever on
the part of Agent.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each of the Obligors waives, to the extent
permitted by law, all demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which such Obligor may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification. Each of the Obligors, jointly and severally, shall
pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons with respect to each Lender, each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). No
Obligor shall have any obligation to any Indemnified Person under this Section
11.3: (a) with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person; (b) with respect to any
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settlement in excess of $250,000 made without Borrowers' consent (which shall
not be unreasonably withheld, conditioned, or delayed and which consent need not
be obtained if any Obligor is in default of its obligations under this Section
11.3); or (c) without Borrowers' consent (which shall not be unreasonably
withheld, conditioned, or delayed and which consent need not be obtained if any
Obligor is in default of its obligations under this Section 11.3), for fees and
disbursements of more than one separate firm of attorneys for all Indemnified
Persons relative to a particular Indemnified Liability. This provision shall
survive the termination of this Agreement and the repayment of the Obligations
for a period of 2 years (and shall continue thereafter with respect to claims
made or asserted during such period).
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrowers or Agent, as applicable, may designate to each
other in accordance herewith), or telefacsimile to the Obligors or Agent, as the
case may be, at its address set forth below:
If to any Obligor: PRANDIUM, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Agent: FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
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with copies to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
Agent and the Obligors may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each of the Obligors acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
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(c) EACH OF THE OBLIGORS AND THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF THE OBLIGORS AND THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent (provided
that no written consent of Agent shall be required in connection with any
assignment and delegation by a Lender to an Eligible Transferee unless required
under clause (e) or (f) of the definition thereof)), assign and delegate to one
or more assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000;
provided, however, that the Obligors and Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Borrowers and Agent by such Lender and the Assignee, (ii)
such Lender and its Assignee have delivered to Borrowers and Agent an Assignment
and Acceptance in form and substance satisfactory to Agent, and (iii) the
assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrowers) that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the
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case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement and the
other Loan Documents, such Lender shall cease to be a party hereto and thereto),
and such assignment shall affect a novation between the Obligors and the
Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Prandium or its Subsidiaries or the performance or observance by the Obligors of
any of their respective obligations under this Agreement or any other Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (4) such Assignee will,
independently and without reliance upon Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement, (5) such Assignee appoints and
authorizes Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with such
powers as are reasonably incidental thereto, and (6) such Assignee agrees that
it will perform all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee (unless required under clause (e) or (f) of the definition thereof));
provided, however, that (i) the Originating Lender shall remain a "Lender" for
all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating
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interest in the Obligations, the Commitments, and the other rights and interests
of the Originating Lender hereunder shall not constitute a "Lender" hereunder or
under the other Loan Documents and the Originating Lender's obligations under
this Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Obligors,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
the Obligors, the Collections, the Collateral, the Guarantor Collateral, or
otherwise in respect of the Obligations. No Participant shall have the right to
participate directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to the Obligors or the
Obligors' businesses if the potential Assignee or Participant agrees to be bound
by Section 17.7.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
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14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that no Obligor may assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release the Obligors from their respective Obligations. A Lender may assign this
Agreement and the other Loan Documents and its rights and duties hereunder and
thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by the Obligors is
required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by any Obligor therefrom, shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by Agent at the written
request of the Required Lenders) and each Obligor and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders affected
thereby, and each Obligor, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or any Guarantor from any
obligation for the payment of money, or
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(j) change the definitions of Borrowing Base, Maximum
Revolver Amount, Liquidity Reserve, or Maximum Amount, or change Section 2.1(b),
or
(k) amend any of the provisions of Section 16,
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
the Obligors, shall not require consent by or the agreement of any Obligor.
15.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders reasonably acceptable to Borrowers
(each, a "Replacement Lender"), and the Holdout Lender shall have no right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance Agreement, subject only to the Holdout Lender being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance Agreement prior to the
effective date of such replacement, the Holdout Lender shall be deemed to have
executed and delivered such Assignment and Acceptance Agreement. The replacement
of any Holdout Lender shall be made in accordance with the terms of Section
14.1. Until such time as the Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances
and to purchase a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the
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extent specifically stated. No waiver by Agent or any Lender on any occasion
shall affect or diminish Agent's and each Lender's rights thereafter to require
strict performance by the Obligors of any provision of this Agreement. Agent's
and each Lender's rights under this Agreement and the other Loan Documents will
be cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent and the
Lenders, and no Borrower shall have any rights as a third party beneficiary of
any of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
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such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Obligor, or any officer or
director thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Books or properties of
the Obligors.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be
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paid to Agent for the account of the Lenders and except with respect to Events
of Default of which Agent has actual knowledge, unless Agent shall have received
written notice from a Lender, or any Obligor referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a
"notice of default." Agent promptly will notify the Lenders of its receipt of
any such notice or of any Event of Default of which Agent has actual knowledge.
If any Lender obtains actual knowledge of any Event of Default, such Lender
promptly shall notify the other Lenders and Agent of such Event of Default. Each
Lender shall be solely responsible for giving any notices to its Participants,
if any. Subject to Section 16.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that unless and until Agent has
received any such request, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of the
Obligors, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document. Except
for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not any Obligor is obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
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Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of any Obligor and without limiting the obligation of any Obligor
to do so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
the Obligors. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding the
Obligors or any of their Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material
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provision of this Agreement or of applicable law, the Required Lenders may agree
in writing to remove and replace Agent with a successor Agent from among the
Lenders. In any such event, upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers,
and duties of the retiring Agent and the term "Agent" shall mean such successor
Agent and the retiring Agent's appointment, powers, and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 16 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with any of
the Obligors or their Subsidiaries or Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents as though such Lender were
not a Lender hereunder without notice to or consent of the other members of the
Lender Group. The other members of the Lender Group acknowledge that, pursuant
to such activities, such Lender and its respective Affiliates may receive
information regarding the Obligors or their Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of the Obligors or such other Person and
that prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Borrowers:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
or (III) a controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed
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IRS Form W-8BEN, before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Borrowers;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Borrowers;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form
W-8ECI before the first payment of any interest is due under this
Agreement and at any other time reasonably requested by Agent or
Borrowers;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys
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fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrowers hereunder or under any note
will be made without setoff, counterclaim, or other defense, except as required
by applicable law other than for Taxes (as defined below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than of the United States) with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of a Lender, or (ii) to the extent that such tax
results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, Borrowers agree to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrowers shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this Section 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Borrowers will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by Borrowers.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if
Borrowers certify to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which no Borrower owned any interest at the time the
security interest was granted or at any time thereafter, or (iv) constituting
property leased to any Borrower under a lease that has expired or is terminated
in a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or substantially all
of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders.
Upon request by
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Agent or Borrowers at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens have
been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this
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Agreement, or (2) purchase, without recourse or warranty, an undivided interest
and participation in the Obligations owed to the other Lenders so that such
excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Prandium and its Subsidiaries and will rely significantly upon the Books, as
well as on representations of Prandium's and its Subsidiaries' personnel, and
(d) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Agent,
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by the Obligors to Agent that has not been contemporaneously
provided by the Obligors to such Lender, and, upon receipt of such request,
Agent promptly shall provide a copy of same to such Lender, (y) to the extent
that Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from the Obligors, any Lender may, from time
to time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of the Obligors
the additional reports or information reasonably specified by such Lender, and,
upon receipt thereof from the Obligors, Agent promptly shall provide a copy of
same to such Lender, and (z) any time that Agent renders to Borrowers a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts
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of any other member of the Lender Group. No Lender shall be responsible to any
Obligor or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.
16.19 Legal Representation of Agent. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇▇") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that ▇▇▇▇▇▇▇ does not represent it in connection with any
such matters.
17. GENERAL PROVISIONS.
17.1 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.2 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or any Obligor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.3 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.4 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.5 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrowers or any Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of
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money or transfers of property (collectively, a "Voidable Transfer"), and if the
Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of any Borrower or any Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.6 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.7 Confidentiality. The Lender Group agrees that material, non-public
information regarding Prandium and its Subsidiaries, their operations, assets,
and existing and contemplated business plans shall be treated by each member of
the Lender Group in a confidential manner, and shall not be disclosed by it to
Persons who are not parties to this Agreement, except: (a) to counsel for and
other advisors, accountants, and auditors to any member of the Lender Group, (b)
as may be required by statute, decision, or judicial or administrative order,
rule, or regulation, (c) as may be agreed to in advance by Borrowers, (d) as to
any such information that is or becomes generally available to the public (other
than as a result of prohibited disclosure by the Lender Group), and (e) in
connection with any assignment, prospective assignment, sale, prospective sale,
participation or prospective participations, or pledge or prospective pledge of
any Lender's interest under this Agreement, provided that any such counsel,
advisors, accountants, auditors and any such assignee, prospective assignee,
purchaser, prospective purchaser, participant, prospective participant, pledgee,
or prospective pledgee shall have agreed in writing to take its interest
hereunder subject to the terms hereof. The provisions of this Section 17.9 shall
survive for 2 years after the full and final repayment of the Obligations.
17.8 Guarantors. By its execution and delivery of this Agreement, each
Guarantor hereby agrees to be bound by each of the provisions hereof applicable
to such Guarantor or the assets and properties thereof and hereby agrees to
guaranty the Obligations, as more particularly set forth in the Guaranty to
which it is a party and whose terms and conditions are by this reference
incorporated herein mutatis mutandis.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
CHI-CHI'S, INC.,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
▇▇▇ ▇▇▇ ROO, INC.,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
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Acknowledgement and Agreement
of Guarantors under Section
17.8 of the Agreement:
PRANDIUM, INC.,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: EVP/CFO
FRI-MRD CORPORATION,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
FRI-ADMIN CORPORATION,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
CCMR OF TIMONIUM, INC.,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
CCMR OF MARYLAND, INC.,
a Delaware corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
-93-
CCMR OF CATONSVILLE, INC.,
a Kentucky corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Secretary
CCMR OF GREENBELT, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
CCMR OF ▇▇▇▇▇▇▇ HIGHWAY, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
CCMR OF CUMBERLAND, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
CCMR OF HARFORD COUNTY, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
-94-
MAINTENANCE SUPPORT GROUP, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
CCMR OF ▇▇▇▇▇▇▇▇▇, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
CHI-CHI'S OF WEST VIRGINIA, INC.,
a Kentucky corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
THE HAMLET GROUP, INC.,
a California corporation
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: VP & Treasurer
-95-
