EXHIBIT 10.73
AMENDED AND RESTATED LOAN AGREEMENT
This AMENDED AND RESTATED LOAN AGREEMENT dated as of February 28, 1998
(this "Agreement"), is entered into between ▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC.,
a Delaware corporation (the "Borrower"), whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇, and LASALLE NATIONAL BANK, a national
banking association (the "Bank"), whose address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
In consideration of the mutual agreements hereinafter set forth, the
Borrower and the Bank hereby agree as follows:
ARTICLE 1. DEFINITIONS.
For the purposes of this Agreement, the following capitalized words
and phrases shall have the meanings set forth below.
"Accounting Firm" shall mean any of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, Coopers &
▇▇▇▇▇▇▇ L.L.P., Deloitte & Touche LLP, Ernst & Young LLP, KPMG Peat Marwick LLP
and Price Waterhouse LLP or any of their successor firms, or any other
accounting firm approved by the Bank.
"Acquired Indebtedness" shall mean, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified Person,
excluding, however, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any assets acquired by such specified Person.
AAcquisition@ shall have the meaning ascribed to it in Section 11.11.
AAdditional Notes@ shall have the meaning ascribed to it in Section
11.11.
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of ten percent (10%) or more of the
voting securities of a Person shall be deemed to be control. Notwithstanding the
foregoing, the Bank shall not be deemed to be an Affiliate of the Borrower.
"Asset Sale" shall have the meaning ascribed to it in the Indenture.
"Business Day" shall mean any day other than a Saturday, Sunday or a
legal holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in Chicago, Illinois, except that with
respect to LIBOR Loans, each such day shall also be a day upon which LIBOR
transactions may be carried out in the London interbank market.
ACapital Expenditures@ shall mean, as to any Person for any period,
payments which are made by such Person for the lease, purchase, improvement,
construction or use of any property, the value or cost of which under GAAP are
required to be capitalized and appear on such Person=s balance sheet in the
category of property, plant or equipment, without regard to the manner in which
such payments or the instrument pursuant to which they are made are
characterized by such Person or any other Person, and shall include, without
limitation, payments for the installment purchase of property and payments under
Capital Lease Obligations.
"Capital Lease Obligation" shall mean, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" shall mean (i) United States dollars, (ii)securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) marketable direct
obligations issued by any State of the United States or any local government or
other political subdivision thereof rated (at the time of the acquisition of
such security) at least "AA" by Standard & Poor's Ratings Service, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. (AS&P@) or the equivalent thereof by ▇▇▇▇▇'▇
Investors Service, Inc. (AMoody's@) and having the maturities of not more than
one year from the acquisition of such security, (iv) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case, with any domestic commercial bank having
capital and surplus in excess of $500,000,000 and a ▇▇▇▇▇ Bank Watch Rating of
"B" or better or with any registered broker-dealer whose commercial paper is
rated at least "A-1" by S&P or the equivalent thereof by Moody's, (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iv) above entered into with any
financial institution meeting the qualifications specified in clause (iv) above,
(vi)commercial paper rated at least "A-1" by S&P or the equivalent thereof by
Moody's and, in each case, maturing within six months after the date of
acquisition, and (vii) investments in money market funds all of whose assets
consist of securities described in clauses (ii) through (vi) above.
"Code" shall mean the United States Bankruptcy Code, as now existing or
hereafter amended.
"Collateral" shall mean any and all collateral from time to time
securing the Obligations to the Bank.
"Collateral Agency Agreement" shall mean that certain Amended and
Restated Collateral Agency Agreement by and among the Borrower, the Bank and the
Collateral Agent, dated as of January 31, 1997.
"Collateral Agent" shall mean, initially, The Bank of New York in its
capacity as collateral agent under the Security Documents, and any successor
thereto.
AConsolidated Cash Flow@ shall mean, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent and in the same proportion that the
net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Borrower by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof that is a
Guarantor, (ii) the Net Income of any Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Copyright Security Agreement" shall mean that certain Copyright
Security Agreement, dated as of September 18, 1996, by and among ▇▇▇. ▇▇▇▇▇▇
Cookies Australia, a Utah corporation, as successor in interest to ▇▇▇. ▇▇▇▇▇▇'
Other Names, Inc., a Delaware corporation, and Fairfield Foods, Inc., a New
Jersey corporation, in favor of the Collateral Agent, as amended by that certain
Amendment to Copyright Security Agreement by and among the Borrower, ▇▇▇.
▇▇▇▇▇▇' Other Names, Inc., a Delaware corporation, Fairfield Foods, Inc., a New
Jersey corporation, and the Collateral Agent, dated January 31, 1997.
"Credit Facility" shall mean, with respect to the Borrower, one or more
debt facilities (including, without limitation, the debt facility provided by
this Agreement) or commercial paper facilities with banks or other institutional
lenders (including any related notes, guaranties, collateral documents,
instruments and agreements executed in connection therewith) providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit up to a
maximum aggregate amount of not more than $15,000,000, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
ADebt Service Coverage Ratio@ shall mean, as to any Person for any
period, (i) Free Cash Flow of such Person and its Subsidiaries for such period,
divided by (ii) the aggregate of all payments required to be made (including
interest expense whether paid or accrued) with respect to Indebtedness of such
Person and its Subsidiaries for such period, plus all mandatory redemptions or
acquisitions of Equity Interests of such Person and its Subsidiaries for such
period, whether or not actually made, plus all optional redemptions or
acquisitions of Equity Interest of such Person and its Subsidiaries actually
made for such period.
"Default" shall mean any condition, circumstance or event which, with
the lapse of time, the giving of notice, or both, would become an Event of
Default.
"Default Rate" shall mean the rate of interest set forth in Section
2.1(b)(i) hereof plus two percent (2%) per annum.
ADisqualified Stock@ shall have the meaning ascribed to such term in
the Indenture, as in effect on the date of this Agreement.
"Environmental Laws shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to the Borrower's business or
facilities owned or operated by the Borrower, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes in the environment (including, without limitation, ambient air,
surface water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Equity Interests" shall mean Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Event of Default" shall mean any of the events or conditions set forth
in Article 14 hereof.
"Existing Indebtedness" shall mean Indebtedness of the Borrower and its
Subsidiaries (including preferred stock of Pretzel Time outstanding on November
26, 1997 but excluding any Indebtedness of the Borrower or any of its
Subsidiaries under any Credit Facility existing on November 26, 1997) in
existence on November 26, 1997, until such amounts are repaid.
"Existing Pledge Agreement" shall mean that certain Pledge Agreement,
dated as of September 18, 1996, by the Borrower in favor of the Collateral
Agent, as amended by that certain Amendment to Pledge Agreement by and between
the Borrower and the Collateral Agent, dated January 31, 1997.
"Existing Security Agreement" shall mean that certain Security
Agreement, dated as of September 18, 1996, by and among ▇▇▇. ▇▇▇▇▇▇ Cookies
Australia, a Utah corporation, ▇▇▇. ▇▇▇▇▇▇' Other Names, Inc., a Delaware
corporation, and Fairfield Foods, Inc., a New Jersey corporation, in favor of
the Collateral Agent, as amended by that certain Amendment to Security Agreement
by and among the Borrower, ▇▇▇. ▇▇▇▇▇▇' Other Names, Inc., a Delaware
corporation, Fairfield Foods, Inc., a New Jersey corporation, and the Collateral
Agent, dated January 31, 1997.
"Fixed Charges" shall mean, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), (ii) the consolidated
interest expense of such Person and its Subsidiaries that was capitalized during
such period, (iii) any interest expense on Indebtedness of another Person that
is guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries (whether or not such guaranty
or Lien is called upon), and (iv) the product of (A) all dividend payments,
whether or not in cash, on any series of preferred stock of such Person or any
of its Subsidiaries, other than dividend payments on Equity Interests payable
solely in Equity Interests of the Borrower, times (B) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" shall mean with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Borrower or any of its Subsidiaries incurs, assumes, guaranties or redeems
any Indebtedness (other than revolving credit borrowings) or issues preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guaranty or redemption
of Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Borrower or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, (ii) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the referent Person or any of its
Subsidiaries following the Calculation Date, and (iv) the financial information
of the Borrower with respect to any portion of the four fiscal quarters prior to
November 26, 1997 may be adjusted to eliminate certain historical expenses that
are not expected to recur after the consummation of the Pretzel Contributions so
long as such adjustments are not deemed to be contrary to the requirements of
Regulation S-X under the Securities Act of 1933 (the ASecurities Act@) by an
Accounting Firm. In calculating the Fixed Charge Coverage Ratio for any period,
to the extent that the proceeds from the incurrence of any Indebtedness are to
be used to fund the acquisition of Equity Interests or assets of a Permitted
Business, the Borrower may include any pro forma adjustments permitted by
Regulation S-X under the Securities Act in its calculation of the amount of
Consolidated Cash Flow that relate solely to such acquisition, so long as such
pro forma adjustments are not deemed to be contrary to the requirements of Rule
11-02 of Regulation S-X under the Securities Act in writing by an Accounting
Firm.
"Free Cash Flow" shall mean, with respect to any Person for any period,
Consolidated Cash Flow of such Person for such period, minus (a) Capital
Expenditures of such Person and its Subsidiaries on a consolidated basis for
such period to the extent paid for in cash and not financed (other than with
proceeds of the Revolving Loans), minus (b) distributions and dividends made
with respect to Capital Stock and Equity Interests of such Person and its
Subsidiaries on a consolidated basis for such period, and minus (c) payments for
taxes on the income of such Person and its Subsidiaries on a consolidated basis
for such period.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any Indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner, including, without limitation, any obligation or arrangement of
such Person:
(a) to purchase or repurchase any such primary obligation;
(b) to advance or supply funds (i) for the purchase or payment
of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet condition of the primary
obligor;
(c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary
obligation; or
(d) to indemnify the owner of such primary obligation against
loss in respect thereof;
but excluding from Guaranteed Indebtedness any continuing obligations with
respect to any store lease or equipment leases for equipment in a particular
store from and after the date upon which such store has been sold or sublet to a
third party which is not an Affiliate of the Borrower and such party has agreed
to assume such store lease and equipment lease obligations.
"Guarantors" shall mean (i) The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc., a Delaware
corporation, and (i) any other Subsidiary of the Borrower that executes and
delivers a Guaranty in accordance with the provisions of this Agreement, and
their respective successors and assigns.
"Guaranty" or AGuaranties@ shall mean the Guaranty of each Guarantor,
and all such Guaranties, each substantially in the form attached hereto as
Exhibit C.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials or wastes that are or become regulated under any Environmental Law
(including without limitation, any that are or become classified as hazardous or
toxic under any Environmental Law).
AHedging Obligations@ shall mean, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or foreign currency exchange rates.
"Indebtedness" shall mean, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the guaranty by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indemnified Party" and "Indemnified Parties" shall mean, respectively,
each of the Bank and any parent corporations, affiliated corporations or
subsidiaries of the Bank, and each of their respective officers, directors,
employees, attorneys and agents, and all of such parties and entities.
AIndenture@ shall mean that certain Indenture regarding the issuance of
Series A and Series B 10 1/8% Senior Notes, due 2004, by and among the Borrower,
as issuer, The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc., as guarantor, and The Bank of New York,
as Trustee.
AIntellectual Property Security Agreement@ shall mean that certain
Intellectual Property Security Agreement, of even date herewith, by and between
Borrower and Bank.
"Interest Period" shall mean, with regard to any LIBOR Loan, successive
one-, two-, three- or six-month periods as selected from time to time by the
Borrower by notice given to the Bank not less than three (3) Business Days prior
to the first day of each respective Interest Period; provided, however, that:
(i) each such Interest Period occurring after the initial Interest Period of any
LIBOR Loan shall commence on the day following the day on which the preceding
Interest Period for such LIBOR Loan expires, (ii) whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, however, that if such extension would cause
the last day of such Interest Period to occur in the next following calendar
month, then the last day of such Interest Period shall occur on the immediately
preceding Business Day; (iii) whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial calendar
month by the number of months equal to the number of months in such Interest
Period, such Interest Period shall end on the last Business Day of such
succeeding calendar month; and (iv) no Interest Period shall have an expiration
date which occurs after the Revolving Loan Maturity Date.
AInvestment@ shall mean, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guaranties of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
provided that an acquisition of assets, Equity Interests or other securities by
the Borrower for consideration consisting of common stock of the Borrower shall
not be deemed to be an Investment. If the Borrower or any Subsidiary of the
Borrower sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Borrower such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Borrower, the
Borrower shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in
Section 11.1 hereof.
"Letter of Credit" and "Letters of Credit" shall mean, respectively, a
letter of credit and all such letters of credit issued by the Bank, in its sole
discretion, upon the execution and delivery by the Borrower and the acceptance
by the Bank of any application for a Letter of Credit, as contemplated by
Section 2.4 of this Agreement.
"Letter of Credit Obligations" shall mean, at any time, an amount equal to
the aggregate of the original face amounts of all Letters of Credit minus the
sum of (i) the amount of any reductions in the original face amount of such
Letters of Credit which did not result from a draw thereunder, (ii) the amount
of any payments made by the Bank with respect to any draws made under any
Letters of Credit for which the Borrower has reimbursed the Bank, (iii) the
amount of any payments made by the Bank with respect to any draws made under any
such Letters of Credit which have been converted to a Revolving Loan as set
forth in Section 2.4, and (iv) the portion of any issued but expired Letter of
Credit which has not been drawn by the beneficiary thereunder. For purposes of
determining the outstanding Letter of Credit Obligations at any time, the Bank's
acceptance of a draft drawn on the Bank pursuant to a Letter of Credit shall
constitute a draw on the applicable Letter of Credit at the time of such
acceptance.
"LIBOR" shall mean a rate of interest equal to the per annum rate of
interest at which U.S. dollar deposits in an amount comparable to the amount of
the relevant LIBOR Loan and for a period equal to the relevant Interest Period
are offered generally to the Lender (rounded upward if necessary, to the nearest
1/16 of 1.00%) in the London Interbank Eurodollar market at 11:00 a.m. (London
time) two (2) Business Days prior to the commencement of each Interest Period,
or as LIBOR is otherwise determined by the Bank in its sole and absolute
discretion, such rate to remain fixed for such Interest Period. The Bank's
determination of LIBOR as provided above shall be conclusive, absent manifest
error.
"LIBOR Loan" or "LIBOR Loans" shall mean that portion, and collectively
those portions, of the aggregate outstanding principal balance of the Loans that
will bear interest at an interest rate determined with reference to LIBOR.
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction),
provided that the definition of "Lien" shall not include any option, call or
similar right relating to treasury shares of the Borrower to the extent that
such option, call or right is granted (i) under any employee stock option plan,
employee stock ownership plan or similar plan or arrangement of the Borrower or
its Subsidiaries or (ii) in connection with the issuance of Indebtedness
permitted to be incurred pursuant to Section 11.3 hereof.
"Loans" shall mean, collectively, all Revolving Loans (whether Prime Loans
or LIBOR Loans) made by the Bank to the Borrower and all Letters of Credit
issued by the Bank for the benefit of the Borrower under and pursuant to this
Agreement.
"Loan Documents" shall have the meaning set forth in Section 3.1.
"Mandatory Prepayment" shall have the meaning set forth in Section 2.1(c).
"Maximum Letter of Credit Obligation" shall mean the lesser of (i) the
Revolving Loan Commitment minus the aggregate amount of all Revolving Loans
outstanding at any time, or (ii) $500,000.
"MFH" shall mean ▇▇▇. ▇▇▇▇▇▇= Holding Company, Inc., a Delaware
corporation.
"Net Income" shall mean, with respect to any Person for any period, the
consolidated net income (loss) of such Person, determined in accordance with
GAAP and before any reduction in respect of preferred stock dividends,
excluding, however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with (A)
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions), or (B) the disposition of any securities by such Person
or any of its Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Subsidiaries, and (ii)any extraordinary or nonrecurring
gain (but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" shall mean the aggregate cash proceeds received by the
Borrower or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale but only as and when
received), net of the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the permanent repayment of, or permanent reduction in availability or
commitment under, Indebtedness secured by a Lien on the asset or assets that
were the subject of such Asset Sale and any reserve for adjustment in respect of
the sale price of such asset or assets established in accordance with GAAP.
"Non-Core Stores" shall mean the stores listed on Exhibit G to the
Indenture, as in effect on the date of this Agreement.
ANotes@ shall have the meaning ascribed to such term in the Indenture,
as in effect on the date of this Agreement.
"Obligations" shall mean the Loans, as evidenced by the Revolving Note,
all interest accrued thereon, any fees due the Bank under this Agreement or any
other Loan Document, any expenses incurred by the Bank under this Agreement or
any other Loan Document and any and all other liabilities and obligations of the
Borrower (and of any partnership in which the Borrower is or may be a partner)
to the Bank, howsoever created, arising or evidenced, and howsoever owned, held
or acquired, whether now or hereafter existing, whether now due or to become
due, direct or indirect, absolute or contingent, and whether several, joint or
joint and several.
AOfficers= Certificate@ shall have the meaning ascribed to such term in
the Indenture, as in effect on the date of this Agreement.
"Permitted Business" shall mean the same or a similar line of business
as the Borrower and its Subsidiaries were engaged in on November 26, 1997,
including, without limitation, the specialty retail snack-food business.
"Permitted Indebtedness" shall have the meaning ascribed to such term
in Section 11.3 of this Agreement.
"Permitted Investment" shall mean (a) any Investment in the Borrower or
in a Wholly Owned Subsidiary of the Borrower that is a Guarantor and that is
engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c) any
Investment by the Borrower or any Subsidiary of the Borrower in a Person, if as
a result of such Investment (i) such Person becomes a Wholly Owned Subsidiary of
the Borrower and becomes a Guarantor that is engaged in a Permitted Business or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Borrower or a Wholly Owned Subsidiary of the Borrower that is a Guarantor
and that is engaged in a Permitted Business; (d) any Restricted Investment made
as a result of the receipt of non-cash consideration from an Asset Sale that was
made pursuant to and in compliance with Section 11.4 hereof; (e) any acquisition
of assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Borrower; (f) any Investments in accounts and notes
receivable acquired in the ordinary course of business; (g) any Investments in
notes of employees, officers, directors and their transferees and Affiliates
issued to the Borrower representing payment of the exercise price of options to
purchase common stock of the Borrower; (h) any Investments by the Borrower in
Hedging Obligations otherwise permitted to be incurred under the Indenture; (i)
any Investments existing on November 26, 1997 (including, without limitation, a
$500,000 loan to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ outstanding as of November 26, 1997) and
(j) any purchase of any and all remaining common stock of Pretzel Time.
"Permitted Liens" shall mean (i) Liens securing Indebtedness under a
Credit Facility that was permitted by the terms of this Agreement to be
incurred; (ii) Liens in favor of the Borrower; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Borrower or any Subsidiary of the Borrower, provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Borrower, provided further that such merger or consolidation is
permitted by this Agreement; (iv) Liens on property existing at the time of
acquisition thereof by the Borrower or any Subsidiary of the Borrower, provided
that such Liens were in existence prior to the contemplation of such acquisition
and do not extend to any assets of the Borrower other than the property so
acquired; (v) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clauses (iii) and (x) of
Section 11.3(b) hereof, provided that, in the case of Indebtedness permitted by
such clause (iii), covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the date of this Agreement and set forth on Schedule 1.1
hereto; (viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; and (ix) Liens incurred in
the ordinary course of business of the Borrower or any Subsidiary of the
Borrower that (A) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than trade credit in the ordinary
course of business) and (B) do not in the aggregate materially detract from the
value of the property or materially impair the use thereof in the operation of
business by the Borrower or such Subsidiary.
"Permitted Refinancing Indebtedness" shall mean any Indebtedness of the
Borrower or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Borrower or any of its Subsidiaries, provided that (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith), (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded, (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Loans or the Obligations, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Loans or the
Obligations on terms at least as favorable to the Bank as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, and (iv) such Indebtedness is incurred either by
the Borrower or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Pledge and Security Agreement" shall mean that certain Pledge and
Security Agreement, of even date herewith, by and between the Borrower and Bank.
"Pretzel Contributions" shall mean the contribution from MFH to the
Borrower of the pretzel business formerly owned by H&M Concepts Ltd. Co., an
Idaho liability company, and its subsidiaries, and the common stock of Pretzel
Time.
"Pretzel Time" shall mean Pretzel Time, Inc., a Pennsylvania
corporation.
"Prime Loan" or "Prime Loans" shall mean that portion, and
collectively, those portions of the aggregate outstanding principal balance of
the Loans that will bear interest at an interest rate determined with reference
to the Prime Rate.
"Prime Rate" shall mean the rate of interest per annum in effect from
time to time as set by the Bank and called its Prime Rate. The effective date of
any change in the Prime Rate shall for purposes hereof be the date the rate is
changed by the Bank. The Bank shall not be obligated to give notice of any
change in the Prime Rate.
"Regulatory Change" shall mean the introduction of, or any change in
any applicable law, treaty, rule, regulation or guideline or in the
interpretation or administration thereof by any governmental authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over the Bank or its lending office.
"Restricted Investment" shall mean any Investment other than a
Permitted Investment.
"Revolving Loan" or "Revolving Loans" shall mean, respectively, each
direct advance and the aggregate of all such direct advances, from time to time
in the form of either Prime Loans and/or LIBOR Loans, made by the Bank to the
Borrower under and pursuant to this Agreement, as set forth in Section 2.1 and
Section 2.4 of this Agreement.
"Revolving Loan Availability" shall mean at any time, the Revolving
Loan Commitment less the Letter of Credit Obligations.
"Revolving Loan Commitment" shall mean fifteen million and 00/100
Dollars ($15,000,000.00).
"Revolving Loan Maturity Date" shall mean March 31, 2001, or unless the
Bank earlier terminates this Agreement or otherwise accelerates the maturity of
the Obligations pursuant to the terms hereof, in which case Revolving Loan
Maturity Date shall mean such earlier date.
"Revolving Note" and "Revolving Notes" shall have the meanings set
forth in Section 4.1 hereof.
"Security Documents" shall mean, collectively, the Intellectual
Property Security Agreement, the Pledge and Security Agreement, the Guaranties,
and each financing statement or other instrument or document executed and
delivered pursuant to any of such agreements, or any other document creating
Liens to secure the Obligations.
"Stated Maturity" shall mean with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (A) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (B) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Trademark Security Agreement" shall mean that certain Trademark
Security Agreement, dated as of September 18, 1996, by and among ▇▇▇. ▇▇▇▇▇▇
Cookies Australia, a Utah corporation, ▇▇▇. ▇▇▇▇▇▇' Other Names, Inc., a
Delaware corporation, and Fairfield Foods, Inc., a New Jersey corporation, in
favor of the Collateral Agent, as amended by that certain Amendment to Trademark
Security Agreement by and among the Borrower, ▇▇▇. ▇▇▇▇▇▇' Other Names, Inc., a
Delaware corporation, Fairfield Foods, Inc., a New Jersey corporation, and the
Collateral Agent.
"Trustee" shall mean The Bank of New York, in its capacity as trustee
under the Indenture, or any successor trustee under the Indenture.
"UCC" shall mean the Uniform Commercial Code in effect in Illinois from
time to time.
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (A) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (B) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person shall mean a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to such terms as of the date
hereof in the UCC, or as the context may otherwise require. References to
"Sections", "subsections", "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. Any of the terms defined in Article 1 may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference. In this Agreement, "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a whole and not
merely to the specific section, paragraph or clause in which the respective word
appears; words importing any gender include the other gender; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to agreements, documents, instruments and other contractual
arrangements shall be deemed to include subsequent amendments, restatements,
assignments, and other modifications thereto, but only to the extent such
amendments, restatements, assignments and other modifications are not prohibited
by the terms of this Agreement or any other Loan Document; references to Persons
include their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
ARTICLE 2. COMMITMENT OF THE BANK.
Section 2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and conditions of
this Agreement and the other Loan Documents, and in reliance upon the
representations and warranties of the Borrower set forth herein and in the other
Loan Documents, the Bank agrees to make Revolving Loans at such times as the
Borrower may from time to time request until, but not including, the Revolving
Loan Maturity Date, and in such amounts as the Borrower may from time to time
request, provided, however, that the aggregate principal balance of all
Revolving Loans outstanding at any time shall not exceed the Revolving Loan
Availability. Revolving Loans made by the Bank may be repaid and, subject to the
terms and conditions hereof, borrowed again up to, but not including the
Revolving Loan Maturity Date unless the Revolving Loan Commitment is otherwise
terminated as provided in this Agreement. The Revolving Loans shall be used by
the Borrower for the purpose of general working capital needs of the Borrower
and general corporate purposes, including, but not limited to, Capital
Expenditures and Acquisitions.
(b) Revolving Loan Interest and Payments. Except as otherwise provided
in this Section 2.1(b), the principal amount of the Revolving Loans outstanding
from time to time shall bear interest, at the Borrower's option, at either
(i) the Prime Rate per annum, or
(ii) LIBOR plus two percent (2%) per annum.
All interest shall be calculated on the basis of a year consisting of 365 or 366
days, as applicable, and the actual number of days elapsed. Accrued and unpaid
interest on the unpaid principal balance of all Revolving Loans outstanding from
time to time which are Prime Loans shall be due and payable monthly in arrears
on the last day of each month, commencing on February 28, 1998, on the Revolving
Loan Maturity Date, and after maturity, on demand. Accrued and unpaid interest
on the unpaid principal balance of each Revolving Loan outstanding from time to
time which is a LIBOR Loan shall be payable on the last day of the Interest
Period applicable to such LIBOR Loan, but in no event shall be paid less often
than quarterly, and shall be paid on the date of any principal repayment of a
LIBOR Loan, and on the Revolving Loan Maturity Date, and after maturity, on
demand. Any amount of principal or interest on the Revolving Loans which is not
paid when due, whether at stated maturity, by acceleration or otherwise, shall
bear interest payable on demand at the Default Rate.
(c) Revolving Loan Principal Repayments.
(i) Mandatory Principal Prepayments. All Revolving Loans
hereunder shall be repaid by the Borrower on the Revolving Loan
Maturity Date, unless payable sooner pursuant to the provisions of this
Agreement. In the event that, at any time, the aggregate outstanding
principal balance of all Revolving Loans hereunder exceeds Revolving
Loan Availability at such time, the Borrower shall, upon the earlier of
actual knowledge thereof or written notice thereof from the Bank,
promptly make such repayments of the Revolving Loans as shall be
necessary to eliminate such excess. In addition, in the event that, at
any time, the aggregate outstanding principal balance of all Revolving
Loans plus outstanding Letter of Credit Obligations hereunder exceeds
the Revolving Loan Commitment then in effect, the Borrower shall, upon
the earlier of actual knowledge thereof or written notice thereof from
the Bank, promptly make such repayments of the Revolving Loans or take
such other actions as shall be necessary to eliminate such excess.
Also, each Revolving Loan which is a LIBOR Loan shall be due and
payable at the end of its Interest Period, without further demand,
presentment, protest or notice of any kind (all of which are hereby
waived by the Borrower) but, subject to the terms and conditions
hereof, may be reborrowed as a new LIBOR Loan with a new Interest
Period or as a Prime Loan upon the maturity of such LIBOR Loan at the
end of its Interest Period.
(ii) Optional Prepayments. In addition to Mandatory
Prepayments described above, the Borrower may from time to time prepay
Revolving Loans which are Prime Loans, in whole or in part, without any
prepayment penalty whatsoever.
Section 2.2 Additional LIBOR Loan Provisions.
(a) LIBOR Loan Prepayments. Notwithstanding anything to the contrary
contained herein, without the consent of the Bank, the principal balance of any
LIBOR Loan may not be repaid in whole or in part at any time except on the last
day of the Interest Period relating to such LIBOR Loan unless the Loans have
been accelerated pursuant to an Event of Default. If, for any reason, a LIBOR
Loan is paid prior to the last day of any Interest Period, whether upon
acceleration of the Loans or otherwise, the Borrower agrees to indemnify the
Bank against any actual loss, cost or expense incurred by the Bank as a result
of such prepayment, provided that any request by the Bank for any
indemnification pursuant to this Section 2.2(a) shall be accompanied by a brief
written description of such actual loss, cost or expense and the calculation
thereof.
(b) LIBOR Unavailability. If the Bank determines in good faith (which
determination shall be conclusive, absent manifest error) prior to the
commencement of any Interest Period that (i) U.S. dollar deposits of sufficient
amount and maturity for funding any LIBOR Loan are not available to the Bank in
the London Interbank Eurodollar market in the ordinary course of business, or
(ii) by reason of circumstances affecting the London Interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the rate of
interest to be applicable to the relevant LIBOR Loan, the Bank shall promptly
notify the Borrower thereof and, so long as the foregoing conditions continue,
Loans may not be advanced as LIBOR Loans thereafter. In addition, each existing
LIBOR Loan shall be (i) converted to a Prime Loan on the last day of the
Interest Period applicable, or (ii) due and payable on the last day of such
Interest Period, without further demand, presentment, protest or notice of any
kind, all of which are hereby waived by the Borrower.
(c) Regulatory Change. In addition, if, after the date hereof, a
Regulatory Change shall, in the reasonable determination of the Bank, make it
unlawful for the Bank to make or maintain LIBOR Loans, then the Bank shall
promptly notify the Borrower and Loans may not be advanced as LIBOR Loans
thereafter. In addition, at the Bank=s option, each existing LIBOR Loan shall be
(i) due and payable on the last day of the then existing Interest Period or on
such earlier date as required by law, all without further demand, presentment,
protest or notice of any kind, all of which are hereby waived by the Borrower,
and (ii) reborrowed as a Prime Loan on such day (provided that the Borrower may
then reborrow such amount as a Prime Rate Loan hereunder).
(d) LIBOR Loan Indemnity. If any Regulatory Change (whether or not
having the force of law) shall:
(i) impose, modify or deem applicable any assessment, reserve,
special deposit or similar requirement against assets held by, or
deposits in or for the account of or loans by, or any other acquisition
of funds or disbursements by, the Bank;
(ii) subject the Bank or any LIBOR Loan to any tax, duty,
charge, stamp tax or fee or change the basis of taxation of payments to
the Bank of principal or interest due from the Borrower to the Bank
hereunder (other than a change in the taxation of the overall net
income of the Bank); or
(iii) impose on the Bank any other condition regarding such
LIBOR Loan or the Bank's funding thereof;
and the Bank shall determine (which determination shall be conclusive, absent
manifest error) that the result of the foregoing is to increase the cost to the
Bank of making or maintaining such LIBOR Loan or to reduce the amount of
principal or interest received by the Bank hereunder, then the Borrower shall
pay to the Bank, on demand, such additional amounts as the Bank shall, from time
to time, determine are sufficient to compensate and indemnify the Bank for such
increased cost or reduced amount. Notwithstanding the foregoing, the Borrower
shall not be required to make any payments to the Bank with respect to periods
of time more than sixty (60) days prior to the date upon which the Bank has
delivered a written statement to the Borrower making a claim for payment under
this Section 2.2(d), which written statement shall set forth, in reasonable
detail, the Regulatory Change which entitles the Bank to make a claim for
payment pursuant to this Section 2.2(d) and the calculations in support of the
amount of such payment requested by the Bank.
(e) Maximum Number of Interest Periods. Notwithstanding anything else
contained herein, no Revolving Loan may be borrowed as a LIBOR Loan if such
borrowing would cause there to be in effect more than six (6) different Interest
Periods at such time.
Principal payments submitted in funds not immediately available shall
continue to bear interest until collected. If any payment to be made by the
Borrower hereunder or under the Revolving Note shall become due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day (except as otherwise set forth with respect to LIBOR Loans in clause (ii) of
the definition of Interest Period, which provides that if such extension would
cause the last day of such Interest Period to occur in the next following
calendar month, then the last day of such Interest Period shall occur on the
immediately preceding Business Day) and such extension of time shall be included
in computing any interest in respect of such payment.
Subject to the terms and conditions of this Agreement and upon the
execution and delivery by the Borrower and the acceptance by the Bank, in its
sole and absolute discretion, of an application for letter of credit, the Bank
agrees to issue for the account of the Borrower out of the Revolving Loan
Commitment, Letters of Credit in the standard form of the Bank and otherwise in
form and substance acceptable to the Bank, from time to time during the term of
this Agreement, provided that the Letter of Credit Obligations may not at any
time exceed the Maximum Letter of Credit Obligation, and provided, further, that
no Letter of Credit shall have an expiration date later than the Revolving Loan
Maturity Date then in effect. The amount of any payments made by the Bank with
respect to draws made by a beneficiary under a Letter of Credit for which the
Borrower has failed to reimburse the Bank upon the earlier of (i) the Bank's
demand for repayment, or (ii) five (5) days from the date of such payment to
such beneficiary by the Bank, shall be deemed to have been converted to a
Revolving Loan (which Revolving Loan shall be a Prime Loan) as of the date such
payment was made by the Bank to such beneficiary.
ARTICLE 3. CONDITIONS OF BORROWING.
The obligation of the Bank to make the initial Revolving Loan
hereunder is subject to the satisfaction of each of the following conditions on
or before the date of borrowing of the initial Revolving Loan:
(a) Loan Documents. The Borrower shall have executed and
delivered, or delivered, as the case may be, to the Bank the following
Loan Documents (collectively, the "Loan Documents"), all of which must
be satisfactory to the Bank and the Bank's counsel in form, substance
and execution:
(i) Loan Agreement. Two copies of this Agreement duly
executed by the Borrower.
(ii) Revolving Note. A Revolving Note, duly executed by the
Borrower, in substantially the form attached hereto as
Exhibit A.
(iii)Security Documents. The Intellectual Property Security
Agreement and the Pledge and Security Agreement, all of
which shall be effective to create a security interest
in and a Lien upon all the assets of the Borrower in
favor of the Bank, and shall remain in full force and
effect as to the remaining parties thereto. The Bank
shall also have received (i) all Guaranties, duly
executed by the Guarantors, (ii) evidence of the filing
of UCC financing statements in form acceptable to the
Bank in each of the jurisdictions identified on
Schedule 3.1 hereto, in order to perfect and protect
the Liens created by the Security Documents, (iii)
tri-party agreements, in form and substance
satisfactory to the Bank, by and among the Borrower,
the Bank and any other financial institutions with
which the Borrower has invested funds or opened
investment or other permitted accounts, each duly
executed by each party thereto, and (iv) all
certificates for Capital Stock and other securities
pledged under the Pledge Agreement, endorsed in blank
or accompanied by duly executed stock powers and/or
other endorsements in form and substance satisfactory
to the Bank.
(iv) Searches. The Bank shall have received searches, by a
Person satisfactory to the Bank, of the Uniform
Commercial Code, judgment and tax lien filings which
may have been filed with respect to any property of the
Borrower and each Guarantor in the jurisdictions
identified on Schedule 3.1 hereto, confirming that all
such property is subject to no Liens except Permitted
Liens.
(v) Insurance. The Bank shall have received satisfactory
evidence that valid policies of insurance are in full
force and effect in accordance with the requirements of
this Agreement and the other Loan Documents, naming the
Bank as loss payee of each casualty or property damage
policy and as additional insured under each liability
policy.
(vi) Opinion of Counsel. The Bank shall have received from
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) and one
or more of its Affiliates, as counsel to the Borrower,
a legal opinion addressed to the Bank covering such
matters incident to the matters herein contemplated as
the Bank may reasonably request and otherwise in form
and substance satisfactory to the Bank.
(b) Representations and Warranties. The representations and
warranties of the Borrower contained in this Agreement and in the other
Loan Documents shall be true and correct in all material respects on
and as of the date of the initial Revolving Loan with the same effect
as if such representations and warranties had been made on and as of
the date of the initial Revolving Loan (except that any such
representation or warranty which is expressly made only as of a
specified date need be true only as of such date).
(c) Performance of Obligations. The Borrower shall have
performed all material covenants and undertakings on its part required
to be performed under this Agreement and the other Loan Documents on or
prior to the date of the initial Revolving Loan.
(d) No Defaults. There shall not then exist any Default or
Event of Default, and no Default or Event of Default could reasonably
be expected to arise from borrowing of the initial Revolving Loan.
(e) Indenture. The Bank shall have received from the Borrower,
duly certified by its corporate secretary or another officer familiar
therewith, a copy of the Indenture and each other instrument, agreement
or document executed and delivered in connection therewith.
(f) No Proceedings. There shall not be pending or, to the
knowledge of the Borrower, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the
Borrower or any of its Subsidiaries or the respective assets or
property of any of such Persons which seeks to enjoin or restrain any
of the transactions contemplated hereby or, other than matters
disclosed on Schedule 10.8 hereto, which has had or is reasonably
likely to have a material adverse effect on the business and affairs or
financial condition of the Borrower or on the transactions contemplated
by this Agreement, and there shall not have occurred, after the date of
this Agreement, any development with respect to any of the matters
disclosed in Schedule 10.8 which the Bank reasonably believes has or
will have a material adverse effect on the business and affairs or
financial condition of the Borrower or on the transactions contemplated
by this Agreement.
(g) No Adverse Changes. The Bank, in its sole discretion,
shall be satisfied that there shall not have been, since January 3,
1998, any material adverse change in the financial condition or affairs
of the Borrower.
(h) Officer's Certificate. The Borrower shall have delivered
to the Bank a certificate of the chief financial officer of the
Borrower, dated the date of the initial Revolving Loan, as to due
satisfaction of each of the conditions specified in clauses (b), (c),
(d) and (f) of this Section 3.1.
(i) Proceedings Satisfactory. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Bank and its
counsel, and the Bank shall have received the following:
(i) certificates, dated as of a recent date, as to
the good standing of the Borrower from the Secretary of State
of Delaware and from the appropriate governmental authority in
each other jurisdiction in which Borrower is authorized to do
business as a foreign corporation;
(ii) a copy of the certificate of incorporation of
the Borrower, with all amendments thereto, duly certified by
the Borrower's corporate secretary;
(iii) a copy of the Borrower's by-laws, with all
amendments thereto, duly certified by the Borrower's corporate
secretary;
(iv) a copy of resolutions of the Board of Directors
of the Borrower (the ABoard of Directors@) authorizing the
execution, delivery and performance of this Agreement, the
Revolving Note and the other Loan Documents to which its is a
party, duly certified by the Borrower's corporate secretary;
(v) a certificate as to the incumbency and signature
of each of the officers of the Borrower who shall execute this
Agreement or the Revolving Note or any other Loan Document on
behalf of the Borrower.
(j) Fees Payable at Closing. The Bank shall have received the
Closing Fee referred in Article 8 hereof and the Borrower shall have
paid the reasonable fees and expenses of the Bank's counsel incurred in
connection with the negotiation and documentation of the transaction
contemplated hereby.
(k) Termination of Collateral Agency. The Bank shall have
received evidence of the termination of the Collateral Agency
Agreement, the Copyright Security Agreement, the Trademark Security
Agreement, the Existing Pledge Agreement and the Existing Security
Agreement, and shall have received all of the Collateral in possession
of the Collateral Agent and its agents.
(l) Additional Documents. The Bank shall have received such
other certificates, financial statements, schedules and other documents
which are provided for hereunder or which the Bank shall reasonably
require.
In addition to the requirements of Section 3.1 hereof, the obligation
of the Bank to make any edit. Revolving Loan or to issue any Letter of Credit
shall be subject to the satisfaction, on or before the date of such Revolving
Loan or the date of issuance of such Letter of Credit (as the case may be), of
the following additional conditions:
(a) Request for Advance. The Bank shall have received a
borrowing request from the Borrower with respect to such Revolving Loan
in accordance with the provisions of Article 5 hereof or shall have
received a proper request for the issuance of a Letter of Credit in
accordance with the provisions of Section 2.4 hereof (as the case may
be).
(b) No Material Adverse Change. Since January 3, 1998, no
change or changes shall have occurred to the business, operations,
properties, assets, income, prospects or condition, financial or
otherwise, of Borrower and its Subsidiaries, taken as a whole, which
the Bank reasonably believes in good faith has or is reasonably likely
to have a material adverse effect on the business and affairs or
financial condition of the Borrower.
(c) No Default or Event of Default. On the date of such
Revolving Loan or the issuance of such Letter of Credit (as the case
may be), both immediately before and immediately after giving effect
thereto, no Default or Event of Default shall have occurred and be
continuing or would result from such Revolving Loan or issue of such
Letter of Credit.
(d) Legal Prohibitions. Such Revolving Loan or the issuance of
such Letter of Credit (as the case may be) shall not violate any order
of any court, arbitrator or governmental body or any statute or law or
any rule or regulation of any governmental body at the time applicable
to the Bank or the Borrower.
Each request by the Borrower for a Revolving Loan or for the issuance of any
Letter of Credit shall be deemed to be a representation and warranty by the
Borrower on the date of such Revolving Loan or issuance of such Letter of Credit
(as the case may be) as to each of the conditions specified in clauses (b), (c)
and (d) of this Section 3.2.
ARTICLE 4. NOTE EVIDENCING LOANS.
The Revolving Loans and the Letter of Credit Obligations shall be
evidenced by a single Amended and Restated Revolving Note (together with any and
all renewal, extension, modification or replacement notes executed by the
Borrower and delivered to the Bank and given in substitution therefor or in
restatement thereof, the "Revolving Note") in substantially the form of Exhibit
A attached hereto, duly executed by the Borrower and payable to the order of the
Bank. At the time of the initial disbursement of a Revolving Loan and at each
time an additional Revolving Loan shall be requested hereunder or a repayment
made in whole or in part thereon, an appropriate notation thereof shall be made
on the books and records of the Bank. All amounts recorded shall be, absent
demonstrable error, conclusive and binding evidence of (i) the principal amount
of the Revolving Loans advanced hereunder and the amount of all Letter of Credit
Obligations, (ii) any unpaid interest owing on the Revolving Loans, and (iii)
all amounts repaid on the Revolving Loans or the Letter of Credit Obligations.
The failure to record any such amount or any error in recording such amounts
shall not, however, limit or otherwise affect the obligations of the Borrower
under the Revolving Note to repay the principal amount of the Revolving Loans,
together with all interest accruing thereon.
ARTICLE 5. MANNER OF BORROWING.
Each Revolving Loan shall be made available to the Borrower upon its
written request in substantially the form of Exhibit B hereto, duly completed.
Subject to the terms of Section 2.2 hereof, each Revolving Loan may be advanced
either as a Prime Loan or a LIBOR Loan, provided, however, that at any time and
from time to time, the Borrower may identify no more than six (6) Revolving
Loans which may be LIBOR Loans. A request for a Prime Loan must be (a) received
by no later than 11:00 a.m. Chicago, Illinois time, on the day it is to be
funded, and (b) in an amount equal to $10,000.00 or a higher integral multiple
of $5,000.00. A request for a LIBOR Loan must be (c) received by no later than
11:00 a.m. Chicago, Illinois time, three days before the day it is to be funded,
and (d) in an amount equal to $500,000.00 or a higher integral multiple of
$500,000.00. If for any reason the Borrower shall fail to select timely an
Interest Period for a LIBOR Loan, then such LIBOR Loan shall be funded as a
Prime Loan, subject to the Borrower's right, to the extent permitted hereby, to
repay such Loan and reborrow it as a LIBOR Loan. The proceeds of each Prime Loan
or LIBOR Loan shall be made available at the office of the Bank by credit to the
account of the Borrower or by other means requested by the Borrower and
acceptable to the Bank.
Each Letter of Credit shall be issued by the Bank upon the execution by
the Borrower and the acceptance by the Bank, in its sole discretion, of the
Bank's standard application therefor. All standby Letters of Credit issued under
and pursuant to this Agreement shall bear an annual fee equal to two percent
(2.0%) of the face amount of such standby Letter of Credit, which fee, along
with any other applicable fees or interest, shall be payable monthly in arrears
on the last day of each month. All Letters of Credit other than standby Letters
of Credit shall bear such fees and interest and contain such other terms as are
agreed upon by the Borrower and the Bank from time to time.
The Bank is authorized to rely on the telephonic, telecopy or
telegraphic loan requests which the Bank believes in its reasonable good faith
judgment to emanate from a properly authorized representative of the Borrower,
whether or not that is in fact the case. The Borrower does hereby irrevocably
confirm, ratify and approve all such advances by the Bank and does hereby
indemnify the Bank against losses and expenses (including court costs,
attorneys' and paralegals' fees) and shall hold the Bank harmless with respect
thereto.
ARTICLE 6. SECURITY FOR THE OBLIGATIONS.
As security for the payment of the Obligations, the Borrower has
granted the liens and security interests in favor of the Bank provided for in
the Security Documents.
Until an Event of Default has occurred and is continuing hereunder,
the Borrower shall be entitled to possession or use of the Collateral except as
otherwise set forth in the Security Documents.
The Borrower shall, at the Bank's request, at any time and from time
to time, execute and deliver to the Bank such financing statements and other
documents and do such acts as the Bank deems necessary in order to establish and
maintain valid, attached and perfected first security interests in the
Collateral in favor of the Bank, free and clear of all liens, claims and rights
of third parties whatsoever (except as otherwise permitted by Section 11.2
hereof).
ARTICLE 7. NON-UTILIZATION FEE.
The Borrower agrees to pay to the Bank a commitment fee in the amount
of one quarter of one percent (1/4 of 1%) per annum (calculated using a year of
360 days and actual days elapsed) of the unused portion of the Revolving Loan
Commitment, payable at the Revolving Loan Maturity Date, and prior to such date,
quarterly in arrears, on March 31st, June 30th, September 30th and December 31st
of each year; provided that the first such quarterly payment shall be based upon
the period from the date of this Agreement to and including March 31, 1998.
ARTICLE 8. CLOSING FEE.
The Borrower agrees to pay to the Bank a closing fee of $75,000 on the
date of execution of this Agreement.
ARTICLE 9. BANKING RELATIONSHIP.
The Borrower covenants and agrees, at all times during the term of this
Agreement and so long as any Loans or Letters of Credit remain outstanding, to
utilize the Bank as its primary bank of account and depository for all financial
services, including all receipts, disbursements and related services. Schedule 9
hereto lists all depository, investment or other accounts of Borrower.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES.
As an inducement to the Bank to enter into this Agreement and make
Loans to and issue Letters of Credit on behalf of the Borrower, the Borrower
hereby represents and warrants to the Bank (which representations and warranties
shall survive the execution of this Agreement and continue until this Agreement
has been terminated and all Obligations hereunder have been satisfied) as
follows:
Section 10.1 Organization; Qualification. The Borrower is a corporation
duly organized, existing and in good standing under the laws of the State of
Delaware, with full corporate power to carry on and conduct its business as
presently conducted and to enter into and perform its obligations under this
Agreement and the other Loan Documents. The Borrower is duly licensed or
qualified in all foreign jurisdictions wherein the failure to be so qualified
would have a material adverse effect on the Borrower or its business and affairs
or financial condition, including, without limitation, each jurisdiction
identified on Schedule 3.1 hereto.
Section 10.2 Authorization; Validity. The Borrower has full right, power
and authority to enter into this Agreement, to make the borrowings and execute
and deliver the Loan Documents as provided herein and to perform all of its
duties and obligations under this Agreement and the Loan Documents. The
execution and delivery of this Agreement and the Loan Documents will not, nor
will the observance or performance of any of the matters and things herein or
therein set forth, violate or contravene any provision of law or of the articles
of incorporation or bylaws of the Borrower. All necessary corporate action has
been taken on the part of the Borrower to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents. This Agreement and
the other Loan Documents are valid and binding agreements of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
except as such enforcement shall be limited by bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors= rights generally.
Section 10.3 Comliance With Laws. The nature and transaction of the
Borrower's business and operations and the use of its properties and assets,
including, but not limited to, the Collateral or any real estate owned or
occupied by the Borrower, do not and during the term of the Loans will not,
violate or conflict with any material applicable law, statute, ordinance, rule,
regulation or order of any kind or nature.
Section 10.4 Environmental Laws and Hazardous Substances. Except as set
forth on Schedule 10.4 hereto, (i) the Borrower has not generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off any of the premises of the Borrower (whether or
not owned by it) in any manner which for any continued period of time violates,
in a material respect, any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder, (ii) the operations
of the Borrower comply in all material respects with all Environmental Laws and
all licenses, permits certificates, approvals and similar authorizations
thereunder, (iii) there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
Person or entity, nor is any pending or, to the best of the Borrower's
knowledge, threatened, and the Borrower shall promptly notify the Bank upon
becoming aware of any such investigation, proceeding, complaint, order,
directive, claim, citation or notice, and shall take prompt and appropriate
actions to respond thereto, with respect to any material non-compliance with, or
material violation of, the requirements of any Environmental Law by the Borrower
or the material release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material or any
other environmental, health or safety matter, which materially affects the
Borrower or its business, operations or assets or any properties at which the
Borrower has transported, stored or disposed of any Hazardous Materials, (iv)
the Borrower has no material liability, contingent or otherwise, in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material; and (v)
without limiting the generality of the foregoing, the Borrower shall, following
the reasonable determination by the Bank that there is non-compliance, or any
condition which requires any action by or on behalf of the Borrower in order to
avoid any non-compliance, with any Environmental Law, at the Borrower's sole
expense, cause an independent environmental engineer acceptable to the Bank to
conduct such test of the relevant site as are appropriate, and prepare and
deliver a report setting forth the results of such tests, a proposed plan for
remediation and an estimate of the costs thereof, and shall take any action
pursuant thereto necessary to comply with Section 12.11.
Section 10.5 Absence of Breach. The execution, delivery and performance by
the Borrower of this Agreement, the Loan Documents and any other documents or
instruments to be executed and delivered by the Borrower in connection with the
Loans does not and will not:
(a) violate any provisions of law or any applicable
regulation, order, writ, injunction or decree of any court or
governmental authority, or
(b) conflict with, be inconsistent with, or result in any
breach or default of any of the material terms, covenants, conditions,
or provisions of any material indenture, mortgage, deed of trust,
instrument, document, agreement or contract of any kind to which the
Borrower is a party.
Section 10.6 Collateral Representations. The Borrower is the sole owner of
the Collateral, free from any lien, security interest or encumbrance of any
kind, other than the liens and security interests in favor of the Bank and other
Permitted Liens existing on the date hereof.
Section 10.7 Financial Statements. All financial statements submitted to
the Bank have been prepared in accordance with GAAP, consistently applied,
except for the absence of footnote disclosure in interim financial statements
and except that interim financial statements are subject to normal year-end
adjustments. Since January 3, 1998, there has been no material adverse change in
the financial condition or in the assets or liabilities of the Borrower, or any
other changes except those occurring in the ordinary course of business.
Section 10.8 Litigation and Taxes. Except as set forth on Schedule 10.8
hereto, there is no litigation or governmental proceeding pending, or to the
knowledge of the Borrower after due inquiry, threatened, against the Borrower,
which, if determined adversely to the Borrower, could reasonably be expected to
result in any material adverse change in the financial condition or properties,
business or operations of the Borrower. The Borrower has duly filed all
applicable income and other tax returns and has paid all income and other taxes
when due. There is no controversy or objection pending, or to the knowledge of
the Borrower after due inquiry, threatened in respect of any tax returns of the
Borrower.
Section 10.9 Event of Default. No Default or Event of Default has occurred
and is continuing under this Agreement or any of the other Loan Documents and
the Borrower is not in default (without regard to grace or cure periods) under
any contract or agreement to which it is a party, the effect of which default
could reasonably be expected to have a material adverse effect on the
performance by the Borrower of its obligations pursuant to and as contemplated
by the terms and provisions of this Agreement or on the financial condition or
properties, business or operations of the Borrower.
Section 10.10 ERISA Obligations. The Borrower has promptly paid and
discharged all obligations and liabilities arising under the Employee Retirement
Income Security Act of 1974 ("ERISA") of a character which if unpaid or
unperformed might result in the imposition of a lien against any of its
properties or assets.
Section 10.11 Adverse Circumstances. No condition, circumstance, event,
agreement, document, instrument, restriction, litigation or proceeding (or
threatened litigation or proceeding or basis therefor) exists (i) which could
adversely affect the validity or priority of the liens and security interests
granted in favor of the Bank under the Security Documents, (ii) which could
materially adversely affect the ability of the Borrower to perform its
obligations under the Loan Documents, or (iii) which would constitute a Default
or an Event of Default under any of the Loan Documents.
Section 10.12 Lending Relationship. The Borrower acknowledges and agrees
that the relationship hereby created with the Bank is and has been conducted on
an open and arm's length basis in which no fiduciary relationship exists and
that the Borrower has not relied and is not relying on any such fiduciary
relationship in executing this Agreement and in consummating the Loans. The Bank
represents that it will receive the Revolving Note payable to its order as
evidence of a bank loan.
Section 10.13 Business Loan. The Loans, including interest rate, fees and
charges as contemplated hereby, (i) are business loans within the purview of 815
ILCS 205/4(1)(c), as amended from time to time, and (ii) do not, and when
disbursed will not, violate any applicable laws in any material respect.
Section 10.14 Compliance with Regulations G,T,U and X. No portion of the
proceeds of the Loans nor any Letter of Credit will be used by the Borrower, or
any Affiliates of the Borrower, either directly or indirectly, for the purpose
of purchasing or carrying any margin stock, within the meaning of Regulation G,
T, U and X as adopted by the Board of Governors of the Federal Reserve System.
Section 10.15 Place of Business. The principal place of business of the
Borrower is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇. The Borrower's
other locations are set forth on Schedule 10.15 hereto. All items of Collateral
are and will be located at the Borrower's principal place of Business or at such
other locations.
ARTICLE 11. NEGATIVE COVENANTS.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Borrower's or any of its Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Borrower) or to the direct or indirect
holders of the Borrower's or any of its Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Borrower or dividends or
distributions payable to the Borrower or any Wholly Owned Subsidiary of the
Borrower that is a Guarantor); (ii) purchase, redeem or otherwise acquire or
retire for value (including without limitation, in connection with any merger or
consolidation involving the Borrower) any Equity Interests of the Borrower or
any direct or indirect parent of the Borrower or other Affiliate of the Borrower
(other than any such Equity Interests owned by the Borrower or any Wholly Owned
Subsidiary of the Borrower); (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Loans, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (v) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof;
(b) the Borrower would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if
such Restricted Payment had been made at the beginning
of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 11.3(a) hereof; and
(c) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the
Borrower and its Subsidiaries after November 26, 1997
(excluding Restricted Payments permitted by clause
(ii), (iii) or (iv) of the next succeeding paragraph),
is less than the sum of (i) 50% of the Consolidated Net
Income of the Borrower for the period (taken as one
accounting period) from the beginning of the first
fiscal quarter commencing after November 26, 1997 to
the end of the Borrower's most recently ended fiscal
quarter for which internal financial statements are
available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (ii) 100% of
the aggregate net cash proceeds (other than any
proceeds referred to in the proviso to the first
sentence of the definition of "Investments") received
by the Borrower from the issue or sale since November
26, 1997 of Equity Interests of the Borrower (other
than Disqualified Stock) or of Disqualified Stock or
debt securities of the Borrower that have been
converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Borrower and
other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified
Stock), plus (ii) to the extent that any Restricted
Investment that was made after November 26, 1997 is
sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such
Restricted Investment.
The foregoing provisions will not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at
said date of declaration such payment would have complied with the
provisions of this Agreement; (ii) the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated
Indebtedness or Equity Interests of the Borrower in exchange for, or
out of the net cash proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Borrower) of, other Equity Interests
of the Borrower (other than any Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph; (iii)
the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence
of Permitted Refinancing Indebtedness; (iv) the payment of any dividend
by a Subsidiary of the Borrower to the holders of any Equity Interests
on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the
Borrower or any Subsidiary of the Borrower held by any member of the
Borrower's (or any of its Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement;
provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed, during
any twelve-month period, an aggregate amount equal to the sum of
$250,000, plus the amount of cash proceeds received by the Borrower
from any reissuance of Equity Interests by the Borrower to members of
management of the Borrower or its Subsidiaries during such period,
which aggregate amount shall in no event exceed $500,000 in any such
period, and no Default or Event of Default shall have occurred and be
continuing immediately after such transaction; (vi) payments to MFH
pursuant to the Tax Sharing Agreement (as defined in the Indenture);
(vii) payments pursuant to the Pretzel Time Employment Agreement (as
defined in the Indenture) and the Pretzel Time Management Agreement (as
defined in the Indenture); and (viii) the redemption or repurchase of
preferred stock of Pretzel Time outstanding on November 26, 1997.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Borrower or
such Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any non-cash Restricted Payment shall
be determined by the Board of Directors whose resolution with respect
thereto shall be delivered to the Bank, such determination to be based
upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value
exceeds $2,000,000. Not later than the date of making any Restricted
Payment, the Borrower shall deliver to the Bank an Officers'
Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this
Section 11.1 were computed, together with a copy of any fairness
opinion or appraisal required by this Agreement.
Section 11.2 Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to:
(a)(i) pay dividends or make any other distributions to the
Borrower or any of its Subsidiaries (A) on its Capital
Stock or (B) with respect to any other interest or
participation in, or measured by, its profits or (ii)
pay any Indebtedness owed to the Borrower or any of its
Subsidiaries;
(b) make loans or advances to the Borrower or any of its
Subsidiaries; or
(c) transfer any of its properties or assets to the
Borrower or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by
reasons of:
(i) Existing Indebtedness as in effect on the date
of this Agreement;
(ii) this Agreement;
(iii) applicable law;
(iv) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Borrower or any of its
Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Agreement to
be incurred;
(v) by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business and
consistent with past practices;
(vi) purchase money obligations or Capital Lease
Obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in
clause (iv) above on the property so acquired;
(vii) Permitted Refinancing Indebtedness, provided
that the restrictions contained in the agreements governing
such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing
the Indebtedness being refinanced;
(viii) customary restrictions imposed on the transfer
of copyrighted or patented materials and customary provisions
in agreements that restrict the assignees of such agreements
or any rights thereunder;
(ix) restrictions with respect to a Subsidiary of the
Borrower imposed pursuant to a binding agreement relating to
the sale or disposition of all or substantially all of the
Capital Stock or assets or such Subsidiary; or
(x) the Indenture, as in effect on the date of this
Agreement or as may hereafter be amended, restated, modified
or supplemented with the consent of the Bank.
Section 11.3 Incurrence of Indebtedness and Issuance of Disqualified
Stock. The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, issue, assume, guaranty or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Indebtedness) and
the Borrower shall not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to issue any shares of preferred stock; provided, however, that
the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock if:
(a) the Fixed Charge Coverage Ratio for the Borrower's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least (A) from November 26, 1997 to December
31, 1999, 2.25 to 1 and (B) thereafter, 2.5 to 1, determined on a pro
forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period; and
(b) the Weighted Average Life to Maturity of such Indebtedness
is equal to or greater than the remaining Weighted Average Life to
Maturity of the Notes, provided that this clause (b) shall not apply in
the case of Acquired Indebtedness.
The provisions of the first paragraph of this Section 11.3 shall not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Indebtedness"):
(i) the incurrence by the Borrower and its Subsidiaries of
the Existing Indebtedness other than the Notes;
(ii) the incurrence by the Borrower of Indebtedness
represented by the Notes in an aggregate principal
amount not to exceed $100,000,000 and the Guaranties
thereof by the Guarantors existing on the date of this
Agreement or required by the terms of the Indenture (as
in effect on the date of this Agreement or as may
hereafter be amended, restated, modified or
supplemented with the consent of the Bank) to be issued
after the date of this Agreement;
(iii)the incurrence by the Borrower of Indebtedness created
pursuant to and in accordance with Section 11.11, and
represented by the Additional Notes, in an aggregate
principal amount not to exceed $60,000,000;
(iv) the incurrence by the Borrower or any of its
Subsidiaries of Indebtedness represented by Capital
Lease Obligations, mortgage financings or purchase
money obligations, in each case, incurred for the
purpose of financing all or any part of the purchase
price or cost of construction or improvement of
property, plant or equipment used in the business of
the Borrower or such Subsidiary, in an aggregate
principal amount not to exceed $5,000,000 at any time
outstanding;
(v) the incurrence by the Borrower or any of its
Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to
refund, refinance or replace Indebtedness that was
permitted by this Agreement to be incurred;
(vi) the incurrence by the Borrower or any of its
Subsidiaries of intercompany Indebtedness between or
among the Borrower and any of its Wholly Owned
Subsidiaries, provided that (A) if the Borrower is the
obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in
cash of all Obligations and (B)(1) any subsequent
issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other
than the Borrower or a Wholly Owned Subsidiary and (2)
any sale or other transfer of any such Indebtedness to
a Person that is not either the Borrower or a Wholly
Owned Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the
Borrower or such Subsidiary, as the case may be;
(vii)the incurrence by the Borrower of Hedging Obligations
in the ordinary course of business;
(viii) the incurrence of Indebtedness (other than
Indebtedness under this Agreement) in connection with
one or more standby letters of credit, guaranties,
performance or surety bonds or other reimbursement
obligations, in each case, issued in the ordinary
course of business and not in connection with the
borrowing of money or the obtaining of advances or
credit (other than (A) advances or credit on open
account, includible in current liabilities, for goods
and services in the ordinary course of business and on
terms and conditions customary in a Permitted Business
and (B) the extension of credit represented by such
letter of credit, guaranty, bond or other obligations
itself), provided that any draw under or call upon any
of the foregoing is repaid in full within 45 days, and
provided further that the aggregate amount of all
Indebtedness incurred pursuant to this clause (vii)
shall not exceed $500,000 at any time outstanding;
(ix) the incurrence of Indebtedness arising from agreements
of the Borrower or a Subsidiary providing for
indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed
in connection with the disposition of any business,
assets or Subsidiary (other than guaranties of
Indebtedness incurred by any Person acquiring all or a
portion of such business, assets or Subsidiary for the
purpose of financing such acquisition), provided that
the maximum aggregate liability of all such
Indebtedness shall at no time exceed 50% of the gross
proceeds actually received by the Borrower or such
Subsidiary in connection with such disposition;
(x) the guaranty by the Borrower or any of the Guarantors
of Indebtedness of the Borrower or a Subsidiary of the
Borrower that is a Guarantor that was permitted to be
incurred by another provision of this Section 11.3;
(xi) the incurrence by Pretzel Time of Indebtedness under a
working capital facility, provided that the aggregate
principal amount of all Indebtedness (with letters of
credit being deemed to have a principal amount equal to
the maximum potential liability of Pretzel Time
thereunder) outstanding thereunder after giving effect
to such incurrence, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause
(x), does not exceed an amount equal to $1,000,000;
(xii)the incurrence by the Borrower of Indebtedness under
this Agreement;
(xiii) the incurrence by the Borrower or any of its
subsidiaries of Acquired Indebtedness in connection
with an Acquisition which is otherwise permitted by
Section 11.11 hereof and in an aggregate amount not to
exceed $5,000,000 at any time outstanding;
(xiv)the guaranty by the Borrower or any of its
Subsidiaries (other than The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc.)
of operating store lease obligations of the Borrower or
any of its Subsidiaries or any franchisee of the
Borrower or any of its Subsidiaries in the ordinary
course of business and consistent with past practice;
(xv) the guaranty by any Subsidiary of the Borrower of
Indebtedness of the Borrower under this Agreement or
Indebtedness under any other Credit Facility otherwise
permitted to be incurred under this Agreement;
(xvi)the incurrence by the Borrower of Indebtedness in the
form of notes issued in connection with the repurchase,
redemption, acquisition or retirement of Equity
Interests of the Borrower or any Subsidiary of the
Borrower in an amount not to exceed $500,000 at any
time outstanding and subordinated in right of payment
to the Obligations; and
(xvii) the incurrence by the Borrower of Indebtedness or the
guaranty by the Borrower of Indebtedness incurred by
franchisees in connection with the cost of purchasing a
franchise and the cost of equipment in connection with
the set-up of a franchise, provided that such
Indebtedness or guaranty does not exceed $3,000,000 at
any time outstanding.
For purposes of determining compliance with this Section 11.3, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Permitted Indebtedness described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the first paragraph of this Section 11.3,
the Borrower shall, in its sole discretion, classify such item of Indebtedness
in any manner that complies with this Section 11.3 and such item of Indebtedness
will be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Accrual of interest and the accretion of
accreted value shall not be deemed to be an incurrence of Indebtedness for
purposes of this Section 11.3.
Section 11.4 Asset Sales. The Borrower shall not, and shall not permit any
of its Subsidiaries to, consummate an Asset Sale unless:
(i) the Borrower (or the Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to
the fair market value (in the case of an Asset Sale or Asset Sales
aggregating $10,000 or more, evidenced by an Officers' Certificate
delivered to the Bank and, in the case of any Asset Sale having a fair
market value or resulting in net proceeds in excess of $5,000,000,
evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Bank) of the assets or Equity
Interests issued or sold or otherwise disposed of;
(ii) at least 75% of the consideration therefor received by
the Borrower or such Subsidiary is in the form of cash, provided that
the amount of (x) any liabilities (as shown on the Borrower's or such
Subsidiary's most recent balance sheet) of the Borrower or any
Subsidiary (other than contingent liabilities and liabilities that are
by their terms subordinated to the Obligations or any guaranty thereof)
that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Borrower or such
Subsidiary from further liability and (y) any securities, notes or
other obligations received by the Borrower or any such Subsidiary from
such transferee that are immediately converted by the Borrower or such
Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
Section 11.5 Limitation on Redemption and Repayment of Notes.
Notwithstanding any other provision in this Agreement to the contrary, the
Borrower shall not repay or redeem all or any portion of the outstanding
principal Indebtedness under the Notes, or take any action which shall cause or
require the Borrower to become obligated to purchase, redeem, defease or
otherwise acquire or retire for value any of the Notes (except a payment of
interest or principal at Stated Maturity), until the repayment in full of the
Borrower=s Obligations and the termination of this Agreement.
Section 11.6 Transactions with Affiliates. The Borrower shall not, and
shall not permit any of its Subsidiaries to make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make any transaction, contract,
agreement, understanding, loan, advance or guaranty with, or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(a)such Affiliate Transaction is on terms that are no less favorable to the
Borrower or the relevant Subsidiary than those that would have been obtained in
a comparable transaction by the Borrower or such Subsidiary with an unrelated
Person and (b) the Borrower delivers to the Trustee (i) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1,000,000, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (a) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (ii) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5,000,000, an opinion as to the fairness to the holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided, however, that (u)
payments to MFH pursuant to the Tax Sharing Agreement, (v) any employment
agreement entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business and consistent with the past practice of the
Borrower or such Subsidiary, (w) transactions between or among the Borrower
and/or its Subsidiaries, (x) Restricted Payments that are permitted under
Section 11.1 hereof, (y) the payment of reasonable fees, expense reimbursements
and customary indemnification, advances and other similar arrangements to
directors and officers of the Borrower and its Subsidiaries and (z) reasonable
loans or advances to employees of the Borrower and its Subsidiaries in the
ordinary course of business of the Borrower or such Subsidiary, in each case,
shall not be deemed Affiliate Transactions.
Section 11.7 Limitation on Liens. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
Section 11.8 Line of Business. The Borrower shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than a Permitted
Business, except to such extent as would not be material to the Borrower and its
Subsidiaries taken as a whole. In addition: (a) the Borrower shall not engage in
any Asset Sale involving The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc.; (b) neither the Borrower
nor The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc. will engage in any Asset Sale involving the
"▇▇▇. ▇▇▇▇▇▇" or "Pretzel Time" trademark and/or brand name; (c) the Borrower
shall not create or acquire, or permit any Subsidiary to create or acquire, any
new Subsidiaries except for Wholly Owned Subsidiaries that concurrently become
Guarantors, and (d) for so long as The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc. is a Subsidiary
of the Borrower, The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc. shall not incur any Indebtedness
(other than its Guaranty of the Loans and its existing guaranty of Indebtedness
under the Indenture) nor engage in any Asset Sale with any party which is not a
direct or indirect Subsidiary of the Borrower which is also, or concurrently
becomes, a Guarantor. Notwithstanding anything in this Agreement to the
contrary, nothing in this Agreement shall be deemed to prohibit Borrower and its
Subsidiaries from entering into licensing and/or franchising arrangements with
third-parties with respect to the AMrs. Fields@ or the APretzel Time@ brand,
name and/or logo, provided that, Borrower and Subsidiaries retain all requisite
rights, without requirement to pay royalties or the like, to operate their
respective businesses as currently operated.
The Borrower: Limitations on Issuances and Sales of Capital Stock of Wholly
Owned Subsidiaries.
(a) shall not, and shall not permit any Wholly Owned
Subsidiary of the Borrower to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary
of the Borrower to any Person (other than the Borrower or a Wholly
Owned Subsidiary of the Borrower), unless (i) such transfer,
conveyance, sale, lease or other disposition is of all the Capital
Stock of a Wholly Owned Subsidiary (other than The ▇▇▇. ▇▇▇▇▇▇= Brand,
Inc.) and (ii) such transaction does not violate or conflict with the
restriction contained in Section 11.5 hereof;
(b) shall not permit any Wholly Owned Subsidiary of the
Borrower to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to the Borrower or a Wholly
Owned Subsidiary of the Borrower; and
(c) shall not permit or consent to the occurrence of a AChange
of Control@ (as defined in the Indenture), a takeover, a
recapitalization, or any other similar event, of the Borrower or any of
its Wholly Owned Subsidiaries without the prior written consent of the
Bank, provided, that Borrower shall pay Bank the outstanding principal
and any interest accrued and owing on the Loans if any Change of
Control, takeover, recapitalization, or the like, occurs, whether with
or without the consent of the Borrower.
Section 11.10 Limitations on Issuances of Guaranties of Indebtedness.
The Borrower shall not permit any Subsidiary, directly or indirectly, to
guaranty or pledge any assets to secure the payment of (other than as a result
of a Permitted Lien), any Indebtedness of the Borrower or any Subsidiary of the
Borrower (other than Indebtedness under this Agreement and the Guaranties),
unless such Subsidiary simultaneously executes and delivers a Guaranty of the
payment of the Loans by such Subsidiary, which Guaranty shall be senior to or
pari passu with such Subsidiary's guaranty of or pledge to secure such other
Indebtedness. Notwithstanding the foregoing, any such Guaranty by a Subsidiary
of the Loans shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person not an Affiliate of the Borrower, of all of the Borrower's stock in,
or all or substantially all the assets of, such Subsidiary, which sale, exchange
or transfer is made in compliance with the applicable provisions of this
Agreement.
Section 11.11 Limitations on Acquisitions by Borrower. The Borrower
shall not, and shall not permit its Subsidiaries to, purchase or acquire,
whether through merger, consolidation or otherwise, all of the issued and
outstanding Capital Stock in, nor all, nor substantially all, of the assets of,
any Person (other than another Person which is already a direct or indirect
Subsidiary of the Borrower), provided that the Borrower and its Wholly Owned
Subsidiaries may make such acquisitions if (AAcquisitions@):
(a) No Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof;
(b) the consideration from the Borrower or its Wholly Owned
Subsidiary, as the case may be, for the Capital Stock
or assets of such Persons being acquired does not
exceed $7,500,000 in respect of any particular
acquisition;
(c) except to the extent prohibited by existing agreements
of such Persons being acquired, if such agreements
continue in effect following such acquisition, the Bank
shall be granted liens on all of the assets of such
Persons being acquired, and the Bank shall be satisfied
that such liens are fully perfected and provide the
Bank with a first priority security interest;
(d) such Persons being acquired are formed under the laws
of the United States and are located in the United
States;
(e) such Persons being acquired are in a Permitted
Business;
(f) such Persons concurrently become Guarantors of the
Loans; and
(g) on a pro forma basis (taking into account the financial
performance of such Person and of the Borrower for the
four fiscal quarters most recently ended, but, with
respect to any store or stores of Borrower which have
been open for less than the full period of such four
fiscal quarters, using annualized earnings for such
store(s) based upon actual earnings and the portion of
such period during which such store(s) was/were
actually open for business), the Borrower shall be in
compliance with the financial covenants listed in
Article 13 for such four fiscal quarters most recently
ended (with determination thereof to be made in
accordance with the provisions of Sections 13.1 and
13.2 hereof, provided that with respect to any store or
stores of Borrower which have been open for less than
the full period of such four fiscal quarters, Borrower
shall use annualized earnings for such store(s) based
upon actual earnings and the portion of such period
during which such store(s) was/were actually open for
business), and on a projected basis giving effect to
such proposed acquisition (using such historical
financial information for the Borrower (determined in
accordance with Sections 13.1 and 13.2, subject to any
adjustments, with respect to any portion of such four
fiscal quarters, to eliminate certain historical
expenses that are not expected to recur after the
consummation of the acquisition so long as such
adjustments are not deemed to be contrary to the
requirements of Regulation S-X under the Securities Act
by an Accounting Firm, and subject to the proviso set
forth above contained in this sentence) and such Person
and the Borrower=s most recent projections prepared in
good faith and certified by a financial officer of the
Borrower as reflecting the Borrower=s best estimate of
its projected financial performance of the forthcoming
four fiscal quarters, and projections for such Person
to be acquired for the forthcoming four fiscal
quarters, also certified by a financial officer of the
Borrower as being Borrower=s best estimate of such
Person=s projected financial performance for such four
fiscal quarter period), the Borrower is projected to be
in compliance with the financial covenants set forth in
Article 13 hereof as of the end of each of the next
four fiscal quarters. In connection with any such
proposed acquisition, the Borrower shall deliver to the
Bank, at least five (5) Business Days prior to the
proposed closing date of such acquisition, a
certificate of a financial officer of the Borrower in
form and substance reasonably satisfactory to the Bank
and certifying as to the matters required by this
clause (g) compliance and accompanied by the financial
information and projections referred to above.
Notwithstanding the foregoing in this Section 11.11, AAcquisition@ shall also
mean Borrower=s acquisition of 100% of the issued and outstanding Capital Stock
of Great American Cookie Company, Inc., a Delaware corporation (AGACC@), and of
all, or substantially all, of the assets of Deblin Corporation and of Chocolate
Chip Cookies of Texas, Inc., provided that (i) such acquisition is consummated
by July 31, 1998; (ii) such acquisition is consummated for a total purchase
price (including transaction costs and expenses) not to exceed an amount equal
to $79,000,000; (iii) the Borrower pledges 100% of the Capital Stock of GACC and
its Subsidiaries as Collateral for the Obligations (provided that such entities
are Subsidiaries of the Borrower, and are not merged or consolidated into the
Borrower); and (iv) no more than $60,000,000 of Additional Notes (as defined in
the Indenture) are issued in connection with, or to facilitate consummation of,
such acquisition.
Section 11.12 Operating Lease Obligations. The Borrower shall not, and
shall not suffer or permit any of its Subsidiaries to, create or suffer to exist
any obligations for the payment of rent for any property under lease or
agreement to lease (other than Capital Lease Obligations) if the aggregate
annual rental payments for all such operating leases shall exceed in any fiscal
year of the Borrower $40,000,000 (or, if the acquisitions of GACC and the assets
of Deblin Corporation and Chocolate Chip Cookies of Texas, Inc. are consummated,
$53,000,000). All of Borrower=s operating leases are listed on Schedule 11.12
hereto.
Section 11.13 Accounting Changes. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of the Borrower or of any of its consolidated
Subsidiaries.
Section 11.14 Amendments to Indenture. The Borrower shall not, and
shall not agree to, amend, restate, modify, supplement, waive or otherwise
modify any provision of the Indenture without the prior written consent of the
Bank. The Borrower will give the Bank not less than ten (10) Business Days'
advance written notice of any proposed amendment, restatement, supplement or
modification of the Indenture or any of the Notes thereunder, which notice shall
include a copy of any proposed amendment or other agreement or a detailed
description of the action proposed to be taken. The Borrower shall give prompt
written notice to the Bank of any amendment, modification, supplement or waiver
of the Indenture which is made without the Borrower=s consent and control, upon
Borrower first obtaining knowledge of the same. In the event that the Bank
determines that any such action taken, or to be taken, is materially adverse to
the Bank, the Borrower shall be obligated to pay in full the outstanding
principal and any interest accrued and owing on the Loans.
Neither the Borrower nor any Affiliate of the Borrower, shall use any
portion of the proceeds of the Loans nor have any Letter of Credit issued,
either directly or indirectly, for the purpose of (i) purchasing any securities
underwritten or privately placed by ABN AMRO Securities (USA) Inc. ("AASI"), an
Affiliate of the Bank, (ii) purchasing from AASI any securities in which AASI
makes a market, or (iii) refinancing or making payments of principal, interest
or dividends on any securities issued by the Borrower or any Affiliate of the
Borrower, and underwritten, privately placed or dealt in by AASI.
The Borrower will not change the address of its principal place of
business without giving the Bank not less than thirty (30) days' prior written
notice of such change in such location. Except as otherwise permitted in this
Agreement, the Borrower will not, and will not permit any of its Subsidiaries
to, remove or permit any material portions of the Collateral to be removed from
any location set forth on Schedule 10.15 hereto, without the prior written
consent of the Bank.
ARTICLE 12. AFFIRMATIVE COVENANTS.
Section 12.1 Compliance with Bank Regulatory Requirements. Upon demand by
the Bank, the Borrower shall reimburse the Bank for the Bank's actual additional
costs and/or reductions in the amount of principal or interest received or
receivable by the Bank if at any time after the date of this Agreement there is
any Regulatory Change (whether or not having the force of law) which shall
impose, modify or deem applicable any reserve (except reserve requirements taken
into account in calculating the Interest Rate) and/or special deposit
requirement against or in respect of assets held by or deposits in or for the
account of the Loans by the Bank or impose on the Bank any other condition with
respect to this Agreement or the Loans, the result of which is to either
increase the cost to the Bank of making or maintaining the Loans or to reduce
the amount of principal or interest received or receivable by the Bank with
respect to such Loans. Said additional costs and/or reductions will be those
which directly result from the imposition of such requirement or condition on
the making or maintaining of such Loans. Notwithstanding the foregoing, (i) the
Borrower shall not be required to make any payments to the Bank with respect to
periods of time more than 60 days prior to the date upon which the Bank has
delivered a written statement to the Borrower making a claim for payment under
this Section 12.1, which written statement shall set forth, in reasonable
detail, the Regulatory Change which entitles the Bank to make a claim for
payment pursuant to this Section 12.1 and the calculations in support of the
amount of such payment requested by the Bank, and (ii) the Borrower shall not be
required to pay any such additional costs which could have otherwise been
avoided by the Bank with the exercise of reasonable conduct and diligence.
Section 12.2 Fiancial Statements, Notices, Reports, Etc. The Borrower shall
provide to the Bank; (i) within ninety (90) days of the Borrower=s fiscal year
end, annual audited financial statements on a consolidated basis for the
Borrower and its Subsidiaries, prepared in accordance with GAAP by an accounting
firm acceptable to the Bank and consolidating unaudited financial statements for
the Borrower and each of its Subsidiaries, prepared in accordance with GAAP by
the Borrower and certified as in accordance with GAAP (other than as to the
absence of footnote disclosure) by the Borrower=s chief financial officer; (ii)
within thirty (30) days of the last day of each month, internally prepared
monthly financial statements for the Borrower and its Subsidiaries, on a
consolidated basis; (iii) on a quarterly basis, certificates signed by a
financial officer of the Borrower showing compliance by the Borrower with the
financial covenants contained in this Agreement; (iv) within thirty (30) days of
the Borrower=s fiscal year end, an annual budget of the Borrower for the
then-current fiscal year; and (v) copies of all statements, reports,
resolutions, opinions, appraisals, filings, certificates and the like, whether
financial or otherwise, required to be provided to the Trustee or received from
the Trustee, in the same form and substance, and at the same times, as they are
provided to or received from the Trustee.
The financial officers and managers of the Borrower shall use reasonable
good faith in producing all financial projections for the Borrower.
Section 12.3 Reporting of Dispositions of Stores. The Borrower will provide
to the Bank, as often as may be reasonably requested by the Bank and in form
reasonably acceptable to the Bank, a written report summarizing dispositions of
Non-Core Stores from time to time, which list will include information as to the
amount and duration of each Non-Core Store lease and equipment lease and other
obligations relating to such dispositions and as to which the Borrower remains
as an obligor, contingent or otherwise, even if the primary obligations of
performance of such store leases and/or equipment leases have been assumed by
third parties.
Section 12.4 Additional Subsidiary Guaranties. If (i) the Borrower or any
of its Subsidiaries shall acquire or create another domestic Wholly Owned
Subsidiary after November 26, 1997 having assets (A) with a fair market value in
excess of $100,000 or (B) consisting of one or more stores, or (ii) the Borrower
acquires all remaining common stock of Pretzel Time, then such newly acquired or
created Subsidiary or Pretzel Time, as the case may be, shall become a Guarantor
by executing a Guaranty and delivering an opinion of counsel to the Bank to the
effect that such Guaranty has been duly authorized, executed and delivered by
such Subsidiary and constitutes a valid and binding obligation of such
Subsidiary, enforceable against such Subsidiary in accordance with its terms
(subject to customary exceptions).
Section 12.5 INTENTIONALLY OMITTED.
Section 12.6 Notices. The Borrower shall notify the Bank of any of the
following, promptly (and in no event later than three (3) Business Days after
the Borrower's becoming aware thereof):
(a) the occurrence or existence of any Default or Event of
Default;
(b) any dispute, litigation, investigation, proceeding or
suspension which may exist at any time between the
Borrower or any of its Subsidiaries and any
governmental authority (including environmental matters
and ERISA matters) which could result in a material
adverse effect to Borrower=s business or assets; and
(c) any labor controversy resulting in or threatening to
result in any strike, work stoppage, boycott, shutdown
or other labor disruption against or involving the
Borrower or any of its Subsidiaries if the same could
reasonably be expected to have a material adverse
effect on the Borrower or its assets.
Each notice pursuant to this Section 12.6 shall be accompanied by a written
statement by an officer of the Borrower setting forth details of the occurrence
referred to therein, and stating what action the Borrower proposes to take with
respect thereto and at what time. Each notice under Section 12.6(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or the other Loan Document that have been breached or violated.
Section 12.7 Preservation of Corporate Existence, Etc. The Borrower shall,
and shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of
its state or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal
conduct of its business;
(c) preserve its business organization and preserve the
goodwill and business of the customers, suppliers and
others having material business relations with it; and
(d) preserve or renew all of its registered trademarks,
trade names and service marks.
Section 12.8 Maintenance of Property. The Borrower shall maintain, and
shall cause each of its Subsidiaries to maintain, and preserve all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted and make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a material adverse effect on the Borrower=s
business or assets.
Section 12.9 Insurance. The Borrower shall maintain, and shall cause
each of its Subsidiaries to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons or
entities engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons or entities. All property damage and casualty insurance shall name the
Bank as loss payee/mortgagee and all liability insurance shall name the Bank as
an additional insured. Upon request of the Bank, the Borrower shall furnish the
Bank a certificate from an officer of the Borrower (and, if requested by the
Bank, any insurance broker of the Borrower) setting forth the nature and extent
of all insurance maintained by the Borrower and its Subsidiaries in accordance
with this Section 12.7.
Section 12.10 Payment of Obligations. The Borrower shall, and shall
cause its Subsidiaries to, pay, discharge and perform as the same shall become
due and payable or required to be performed, all their respective obligations
and liabilities, including:
(a) all tax liabilities, assessments and governmental charges
or levies upon them or any of their property, unless the same are being
contested in good faith by appropriate proceedings which stay the
enforcement of any lien and adequate reserves in accordance with GAAP
are being maintained with respect thereto by the Borrower or such
Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property, unless the same are being contested in good
faith by appropriate proceedings which stay the enforcement of any Lien
and adequate reserves in accordance with GAAP are being maintained with
respect thereto by the Borrower or such Subsidiary;
(c) all Indebtedness, as and when due and payable, but subject
to any subordination provisions contained herein and/or in any
instrument or agreement evidencing or otherwise applicable to such
Indebtedness; and
(d) the performance of all obligations under any indenture,
contract, agreement or other undertaking by which the Borrower or any
of its Subsidiaries is bound, or to which any of them or any of their
property is subject, including the Indenture, except where the failure
to do so could not reasonably be expected to have a material adverse
effect on the Borrower=s business or assets.
Section 12.11 Compliance with Laws. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all laws
and regulations of any governmental authorities having jurisdiction over them or
their businesses, except such as may be contested in good faith by appropriate
proceedings without risk of loss of any Collateral and as to which a bona fide
dispute exists and appropriate reserves have been established on the Borrower's
or the applicable Subsidiary's financial statements.
Section 12.12 Inspection of Property and Books and Records. The Borrower
shall maintain and shall cause each of its Subsidiaries to maintain proper books
of record and account, in which full, true and correct entries in conformity
with GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiaries.
The Borrower shall permit, and shall cause each of its Subsidiaries to permit,
representatives and independent contractors of the Bank to visit and inspect any
of their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, that when an
Event of Default exists the Bank may do any of the foregoing at the expense of
the Borrower at any time during normal business hours and without advance
notice.
ARTICLE 13. FINANCIAL COVENANTS.
Section 13.1 Minimum Debt Service Coverage Ratio. The Borrower shall
maintain a minimum Debt Service Coverage Ratio, measured as of the end of any
fiscal quarter of the Borrower and for the four fiscal quarters then ended, of
1.10 to1.00; provided, however, that for purposes of this Section 13.1, for any
four fiscal quarter period that includes any period of time prior to November
27, 1997 (a APre-Reorganization Period@), determination of the numerator and
denominator of the Debt Service Coverage Ratio shall be based on actual
consolidated financial information for the Borrower and its Subsidiaries for the
period occurring after November 26, 1997 and pro forma consolidated financial
information for the Borrower, The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc. and Pretzel Time for
the applicable Pre-Reorganization Period (determined in accordance with GAAP as
if the Borrower owned the same interests in The ▇▇▇. ▇▇▇▇▇▇= Brand, Inc. and
Pretzel Time as it owns on the date of this Agreement, but subject to the
condition that such consolidated financial information of the Borrower with
respect to such Pre-Reorganization Period may be adjusted to eliminate certain
historical expenses that are not expected to recur after the consummation of the
Pretzel Contributions on November 26, 1997 so long as such adjustments are not
deemed to be contrary to the requirements of Regulation S-X under the Securities
Act of 1933 (the ASecurities Act@) by an Accounting Firm and the further
condition that, in calculating the Debt Service Coverage Ratio for any period,
to the extent that the proceeds from the incurrence of any Indebtedness are to
be used to fund the acquisition of Equity Interests, the Borrower may include
any pro forma adjustments permitted by Regulation S-X under the Securities Act
in its calculation of the amount of Free Cash Flow that relates solely to such
acquisition, so long as such pro forma adjustments are not deemed to be contrary
to the requirements of Rule 11-02 of Regulation S-X under the Securities Act in
writing by an Accounting Firm.)
Section 13.2 Maximum Capital Expenditures. The Borrower shall not make any
Capital Expenditures, individually or in the aggregate, in excess of $10,000,000
in any calendar year.
ARTICLE 14. EVENTS OF DEFAULT.
The Borrower, without notice or demand of any kind, shall be in default
under this Agreement upon the occurrence of any of the following events (each an
"Event of Default"):
Section 14.1 Nonpayment of Obligations. Any amount due and owing on the
Revolving Note is not paid within three (3) Business Days of when due, or any of
the other Obligations, whether by its terms or as otherwise provided herein, is
not paid within seven (7) Business Days of when due.
Section 14.2 Misrepresentation. Any oral or written warranty,
representation, certificate or statement by or on behalf of the Borrower or any
Guarantor in this Agreement, the Loan Documents or any other agreement with the
Bank shall be false in any material respect when made.
Section 14.3 Nonperformance. Any failure to perform or default in the
performance of any covenant, condition or agreement contained in Article 11 or
Article 13 of this Agreement or in Sections 12.2, 12.4 and 12.8.
Section 14.4 Nonperformance. Any failure to perform or default in the
performance of any covenant, condition or agreement contained in this Agreement
(other than as set forth in Sections 14.1 and 14.3 above) or in any other Loan
Document and such failure to perform or default in performance continues for a
period of thirty (30) days after the Borrower receives notice from the Bank of
such failure to perform or default in performance.
Section 14.5 Event of Default under Indenture. An "Event of Default" (as
defined in the Indenture) shall have occurred and be continuing under the
Indenture, or any Person obtains the right to accelerate the Indebtedness under
the Indenture, whether such right is rescinded or not.
Section 14.6 Default under other Agreements. A default shall occur under
any other agreement, document or instrument to which the Borrower is a party or
by which the Borrower or the Borrower's property is bound, and such default (i)
involves the failure to make any payment (whether of principal, interest or
otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise and after giving effect to any applicable
grace or cure period) in respect of any Indebtedness of the Borrower for
borrowed money or Guaranteed Indebtedness with respect to borrowed money of the
Borrower greater than $250,000, or (ii) causes (or permits any holder of such
Indebtedness or a trustee to cause) such Indebtedness (other than Indebtedness
of the Borrower under real property leases) or a portion thereof in an aggregate
amount exceeding $250,000, or (iii) cause Indebtedness of the Borrower under
real property leases or a portion thereof in an aggregate amount exceeding
$500,000 to become due prior to its Stated Maturity or prior to its regularly
scheduled dates of payment.
Section 14.7 Assignment for Creditors. The Borrower makes an assignment for
the benefit of creditors, fails to pay, or admits in writing its inability to
pay its debts as they mature; or if a trustee of any substantial part of the
assets of the Borrower is applied for or appointed, and in the case of such
trustee being appointed in a proceeding brought against the Borrower, the
Borrower, by any action or failure to act indicates its approval of, consent to,
or acquiescence in such appointment and such appointment is not vacated, stayed
on appeal or otherwise shall not have ceased to continue in effect within sixty
(60) days after the date of such appointment.
Section 14.8 Bankruptcy. Any proceeding involving the Borrower, is
commenced by or against the Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law or
statute of the federal government or any state government, and in the case of
any such proceeding being instituted against the Borrower, (i) the Borrower, by
any action or failure to act indicates its approval of, consent to or
acquiescence therein, or (ii) an order shall be entered approving the petition
in such proceedings and such order is not vacated, stayed on appeal or otherwise
shall not have ceased to continue in effect within sixty (60) days after the
entry thereof.
Section 14.9 Judgements. A judgment in an amount in excess of $500,000 is
rendered against the Borrower or any of its Subsidiaries and, within sixty (60)
days after the entry thereof, such judgment is not discharged or execution
thereof stayed pending appeal, or within sixty (60) days after the expiration of
any such stay, such judgment is not discharged.
Section 14.10 Collateral Impairement. The entry of any judgment, decree,
levy, attachment, garnishment or other process, or the filing of any lien
against, any material portion of the Collateral or any material portion of any
collateral under a separate security agreement securing any of the Obligations
and such judgment or other process shall not have been, within thirty (30) days
from the entry thereof, (i) bonded over to the satisfaction of the Bank and
appealed, (ii) vacated, or (iii) discharged, or the loss, theft, destruction,
seizure or forfeiture of a material portion of the Collateral, or the occurrence
of any material deterioration or impairment of any material portion of the
Collateral or any material portion of the collateral under any security
agreement securing any of the Obligations, or any material decline or
depreciation in the value or market price thereof (whether actual or reasonably
anticipated), which causes the Collateral, in the reasonable opinion of the Bank
acting in good faith, to become unsatisfactory as to value or character.
Section 14.11 Security Documents. Any Security Document shall become
invalid or unenforceable in any material respect.
ARTICLE 15. REMEDIES.
Upon the occurrence and continuance of an Event of Default, the Bank
shall have all rights, powers and remedies set forth in the Loan Documents, in
any other written agreement or instrument (other than this Agreement or the Loan
Documents) relating to any of the Obligations or any security therefor, or as
otherwise provided at law or in equity. Without limiting the generality of the
foregoing, the Bank may, at its option upon the occurrence and continuance of an
Event of Default, declare its commitments to the Borrower to be terminated and
all Obligations to be immediately due and payable, provided, however, that upon
the occurrence and continuance of an Event of Default under Section 14.7,
"Assignment for Creditors", or Section 14.8, "Bankruptcy", all commitments of
the Bank to the Borrower shall be immediately terminated and all Obligations
shall be automatically due and payable, all without demand, notice or further
action of any kind required on the part of the Bank. The Borrower hereby waives
any and all presentment, demand, notice of dishonor, protest, and all other
notices and demands in connection with the enforcement of Bank's rights under
the Loan Documents, and hereby consents to, and waives notice of release, with
or without consideration, of any Collateral, notwithstanding anything contained
herein or in the Loan Documents to the contrary. In addition to the foregoing:
Section 15.1 Sale of Collateral. Subject to applicable law, the Bank may
sell any or all of the Collateral at public or private sale, upon such terms and
conditions as the Bank may deem proper, and the Bank may purchase any or all of
the Collateral at any such sale. The Bank may apply the net proceeds it receives
from sale of any Collateral to the payment of the Revolving Note and/or any of
the other Obligations, and the Borrower shall remain liable for any amount
remaining unpaid after such application, with interest. Any notification of
intended disposition of the Collateral required by law shall be conclusively
deemed reasonably and properly given if given by the Bank at least five (5)
calendar days before the date of such disposition. The Borrower hereby confirms,
approves and ratifies all acts and deeds of the Bank relating to the foregoing,
and each part thereof.
Section 15.2 INTENTIONALLY OMITTED.
Section 15.3 Additional Remedies. The Bank shall have the right and power,
but shall not be obligated, to:
(a) instruct the Borrower, at Borrower=s own expense, to
notify any parties obligated on any of the Collateral, including, but
not limited to, any Account Debtors, to make payment directly to the
Bank of any amounts due or to become due thereunder, or the Bank may
directly notify such obligors of the Bank=s security interest, and/or
of the assignment to the Bank of the Collateral and direct such
obligors to make payment to the Bank of any amounts due or to become
due with respect thereto, and thereafter the Bank may collect any such
amounts due on the Collateral directly from such Persons obligated
thereon;
(b) extend, renew or modify for one or more periods (whether
or not longer than the original period) any obligation of any nature of
any other obligor with respect to any of the Collateral;
(c) grant releases, compromises or indulgences with respect to
the Revolving Note, any of the Obligations, any extension or renewal of
any of the Obligations, any security therefor, or to any other obligor
with respect to the Revolving Note or any of the Obligations;
(d) consent to an election with respect to the Collateral
under Section 1111 of the Code or take action under Section 364 or any
other section of the Code; provided, however, that any such action of
the Bank as set forth herein shall not, in any manner whatsoever,
impair or affect the liability of the Borrower hereunder, nor
prejudice, waive, nor be construed to impair, affect, prejudice or
waive the Bank's rights and remedies at law, in equity or by statute,
nor release, discharge, nor be construed to release or discharge, the
Borrower, any guarantor or other Person, firm, corporation or other
entity liable to the Bank for the Obligations; and
(e) at any time, and from time to time, accept additions to,
releases, reductions, exchanges or substitution of the Collateral,
without in any way altering, impairing, diminishing or affecting the
provisions of this Agreement, the Loan Documents, or any of the other
Obligations, or the Bank's rights hereunder, under the Revolving Note
or under any of the other Obligations.
The Borrower hereby ratifies and confirms whatever the Bank may do with
respect to the Collateral and agrees that the Bank shall not be liable for any
error of judgment or good faith mistakes of fact or law with respect to actions
taken in connection with the Collateral.
The Bank shall, after receipt of cash or solvent credits from
collection of items of payment, proceeds of Collateral or any other source,
apply the same in accordance with the terms of the Security Documents.
No Event of Default shall be waived by the Bank except in writing. No
failure or delay on the part of the Bank in exercising any right, power or
remedy hereunder shall operate as a waiver of the exercise of the same or any
other right at any other time; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. There shall be no
obligation on the part of the Bank to exercise any remedy available to the Bank
in any order. The remedies provided for herein are cumulative and not exclusive
of any remedies provided at law or in equity. The Borrower agrees that in the
event that the Borrower fails to perform, observe or discharge any of its
Obligations or liabilities under this Agreement or any other agreements with the
Bank, no remedy of law will provide adequate relief to the Bank, and further
agrees that the Bank shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
ARTICLE 16. MISCELLANEOUS.
Section 16.1 Obligations Absolute. None of the following shall affect the
Obligations of the Borrower to the Bank under this Agreement or the Bank's
rights with respect to the Collateral:
(a) Acceptance or retention by the Bank of other property
or any interest in property as security for the
Obligations;
(b) The Bank's release or releases of all or any part of
the Collateral or of any party liable with respect to
the Obligations;
(c) Release, extension, renewal, modification or
substitution by the Bank of the Revolving Note, or any
note evidencing any of the Obligations, or the
compromise of the liability of any guarantor of the
Obligations; or
(d) Failure of the Bank to resort to any other security or
to pursue the Borrower or any other obligor liable for
any of the Obligations before resorting to remedies
against the Collateral.
Section 16.2 Entire Agreement. This Agreement (i) is valid, binding and
enforceable against the Borrower and the Bank in accordance with its provisions
and no conditions exist as to its legal effectiveness; and (ii) together with
the other Loan Documents constitutes the entire agreement between the parties
and is the final expression of the intentions of the Borrower and the Bank. No
promises, either expressed or implied, exist between the Borrower and the Bank,
unless contained herein. This Agreement supersedes all negotiations,
representations, warranties, commitments, offers, contracts (of any kind or
nature, whether oral or written) prior to or contemporaneous with the execution
hereof.
Section 16.3 Amendments; Waivers. No amendment, modification, termination,
discharge or waiver of any provision of this Agreement or of the Loan Documents,
or consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only for the specific purpose for
which given.
Section 16.4 WAIVER OF DEFENSES. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF
ACTION, COUNTERCLAIM OR SETOFF WHICH THE BORROWER MAY NOW HAVE OR HEREAFTER MAY
HAVE TO ANY ACTION BY THE BANK IN ENFORCING THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, INCLUDING ANY IMPLIED COVENANT OF GOOD FAITH, AND THE BORROWER
RATIFIES AND CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER.
Section 16.5 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH THEIR RESPECTIVE
COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING NOTE
OR ANY OF THE OTHER LOAN DOCUMENTS OR THE COLLATERAL, OR ANY OTHER AGREEMENT,
INSTRUMENT OR DOCUMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE
BANK AND THE BORROWER ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER AND
SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT.
Section 16.6 LITIGATION. TO INDUCE THE BANK TO MAKE THE LOANS, THE BORROWER
IRREVOCABLY AGREES THAT ALL ACTIONS ARISING, DIRECTLY OR INDIRECTLY, AS A RESULT
OR CONSEQUENCE OF THIS AGREEMENT, THE REVOLVING NOTE, ANY OTHER LOAN DOCUMENT OR
THE COLLATERAL, SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN
THE CITY OF CHICAGO, ILLINOIS. THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID
CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE BORROWER
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO THE BORROWER AS SET FORTH HEREIN IN THE MANNER PROVIDED BY
APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
Section 16.7 Assignability. The Bank may at any time, with the written
consent of the Borrower, such consent not to be unreasonably withheld, assign
the Bank's rights in this Agreement, the Revolving Note, the Obligations and the
other Loan Documents, or any part thereof and transfer the Bank's rights in any
or all of the Collateral, and the Bank thereafter shall be relieved from all
liability with respect to such Collateral. The Borrower may not sell or assign
this Agreement, or any other agreement with the Bank or any portion thereof,
either voluntarily or by operation of law, without the prior written consent of
the Bank. This Agreement shall be binding upon the Bank and the Borrower and
their respective legal representatives and successors. All references herein to
the Borrower shall be deemed to include any successors, whether immediate or
remote.
Section 16.8 Confidentiality. The Borrower and the Bank hereby agree and
acknowledge that any and all information relating to the Borrower which is
furnished by the Borrower to the Bank (or to any Affiliate of the Bank) and
marked or identified as confidential or proprietary in nature shall be kept
confidential by the Bank or such Affiliate in accordance with applicable law,
provided, however, that such information and other credit information relating
to the Borrower may be (a) distributed by the Bank or such Affiliate to the
Bank's or such Affiliate's directors, officers, employees, attorneys,
Affiliates, auditors and regulators; (b) disclosed pursuant to requirements of
applicable law or upon the order of a court or other governmental agency having
jurisdiction over the Bank or such Affiliate; (c) disclosed to any financial
institution which is considering acquiring an assignment of any of the Bank's
rights hereunder and under the other Loan Documents or a participation in such
rights; (d) disclosed in any litigation between the Borrower and the Bank; and
(e) disclosed upon such information's becoming publicly disclosed by anyone
other than the Bank or its directors, officers, employees, attorneys, Affiliates
or auditors. The Borrower and the Bank further agree that this provision shall
survive the termination of this Agreement.
Section 16.9 Notices. Except as otherwise provided herein, the Borrower
waives all notices and demands in connection with the enforcement of the Bank's
rights hereunder. All notices, requests, demands and other communications
provided for hereunder shall be in writing, sent by certified or registered
mail, postage prepaid, by facsimile, telegram or delivered in Person, and
addressed as follows:
If to the Borrower: ▇▇▇. ▇▇▇▇▇▇' Original Cookies, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: L. ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank: LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this subsection. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
Section 16.10 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.
Section 16.11 Facsimile Signatures. The Bank is hereby authorized to rely
upon and accept as an original any Loan Documents or other communication which
is sent to the Bank by facsimile, telegraphic or other electronic transmission
(each, a "Communication") which the Bank in good faith believes has been signed
by Borrower and has been delivered to the Bank by a properly authorized
representative of the Borrower, whether or not that is in fact the case.
Notwithstanding the foregoing, the Bank shall not be obligated to accept any
such Communication as an original and may in any instance require that an
original document be submitted to the Bank in lieu of, or in addition to, any
such Communication.
Section 16.12 Binding Effect. This Agreement shall become effective upon
execution by the Borrower and the Bank. If this Agreement is not dated or
contains any blanks when executed by the Borrower, the Bank is hereby
authorized, without notice to the Borrower, to date this Agreement as of the
date when it was executed by the Borrower, and to complete any such blanks
according to the terms upon which this Agreement is executed.
Section 16.13 Governing Law. This Agreement, the Loan Documents (other than
the Security Documents, but including any Guaranty) and the Revolving Note shall
be delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Illinois (but giving effect to
federal laws applicable to national banks), and for all purposes shall be
construed in accordance with the laws and decisions of such State, without
giving effect to the choice of law provisions of such State.
Section 16.14 Enforeability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 16.15 Survival of Borrower Representations, Warranties, Covenants
and Agreements. All covenants, agreements, representations and warranties made
by the Borrower herein shall, notwithstanding any investigation by the Bank, be
deemed material and relied upon by the Bank and shall survive the making and
execution of this Agreement and the Loan Documents and the issuance of the
Revolving Note, and shall be deemed to be continuing representations and
warranties until such time as the Borrower has fulfilled all of its Obligations
to the Bank, and the Bank has been paid in full. The Bank, in extending
financial accommodations to the Borrower, is expressly acting and relying on the
aforesaid representations and warranties, covenants and agreements.
Section 16.16 Extension's of Bank's Commitment and Revolving Note. This
Agreement shall govern the terms of any extensions or renewals of the Bank's
commitment hereunder and the Revolving Note pursuant to the execution of any
modification, extension or renewal note executed by the Borrower and accepted by
the Bank in its sole and absolute discretion in substitution for the Revolving
Note.
Section 16.17 Time of Essence. Time is of the essence in making payments of
all amounts due the Bank under this Agreement and in the performance and
observance by the Borrower of each covenant, agreement, provision and term of
this Agreement.
Section 16.18 Indemnification. The Borrower agrees to defend (with counsel
satisfactory to the Bank), protect, indemnify and hold harmless each Indemnified
Party from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and distributions
of any kind or nature (including, without limitation, the disbursements and the
reasonable fees of counsel for each Indemnified Party thereto, which shall also
include, without limitation, attorneys' fees and time charges of attorneys who
may be employees of the Bank, any parent corporation or affiliated corporation
of the Bank), which may be imposed on, incurred by, or asserted against, any
Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without
limitation, securities, Environmental Laws and commercial laws and regulations,
under common law or in equity, or based on contract or otherwise) in any manner
relating to or arising out of this Agreement or any of the Loan Documents, or
any act, event or transaction related or attendant thereto, the preparation,
execution and delivery of this Agreement and the Loan Documents, including, but
not limited to, the making or issuance and management of the Loans or any
Letters of Credit, the use or intended use of the proceeds of the Loans or any
Letters of Credit, the enforcement of the Bank's rights and remedies under this
Agreement, the Loan Documents, the Revolving Note, any other instruments and
documents delivered hereunder, or under any other agreement between the Borrower
and the Bank; provided, however, that the Borrower shall not have any
obligations hereunder to any Indemnified Party with respect to any matter to the
extent caused by or resulting from the willful misconduct or gross negligence of
such Indemnified Party. To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall satisfy such undertaking to the
maximum extent permitted by applicable law. Any liability, obligation, loss,
damage, penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, or as such Indemnified Party shall otherwise
direct, and, failing prompt payment, shall, together with interest thereon at
the Default Rate from the date incurred by each Indemnified Party until paid by
the Borrower, be added to the Obligations of the Borrower and be secured by the
Collateral. The provisions of this Section 16.18 shall survive the satisfaction
and payment of the other Obligations and the termination of this Agreement.
[Balance of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF, the Borrower and the Bank have executed this
Amended and Restated Loan Agreement as of the date first above written.
▇▇▇. ▇▇▇▇▇▇' ORIGINAL COOKIES, INC. (as Borrower)
By:
Its:
LASALLE NATIONAL BANK (as Bank)
By:
Its:
Schedule 1.1
Existing Liens
Schedule 3.1
Jurisdictions for UCC Filings
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Minnesota
Missouri
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South
Carolina
South
Dakota
Texas
Utah
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▇▇▇▇▇▇▇▇▇▇
West
Virginia
Wisconsin
Wyoming
Schedule 9
Accounts of Borrower
Schedule 10.4
Environmental Matters
Schedule 10.8
Litigation and Tax Matters
Schedule 10.15
Places of Business
Schedule 11.12
Operating Leases