Exhibit 10
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
DAIRY MART CONVENIENCE STORES, INC.
AND
CERTAIN OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO,
AS DEBTORS AND DEBTORS-IN-POSSESSION,
AS BORROWERS,
CERTAIN OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO,
AS DEBTORS AND DEBTORS-IN-POSSESSION,
AS GUARANTORS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF SEPTEMBER 26, 2001
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT"), is entered into as
of September 26, 2001, between and among DAIRY MART CONVENIENCE STORES, INC., a
Delaware corporation, as debtor and debtor-in-possession (the "PARENT"), The
▇▇▇▇▇▇ Company, a Delaware corporation, as debtor and debtor-in-possession
("▇▇▇▇▇▇"), Quik Shops, Inc., an Ohio corporation, as debtor and debtor in
possession ("QUIK"), and Convenient Industries of America, Inc., a Kentucky
corporation, as debtor and debtor-in-possession ("CONVENIENT" and, together with
the Parent, ▇▇▇▇▇▇ and Quik, each, individually, a "BORROWER" and collectively,
the "BORROWERS"), certain subsidiaries of the Parent that are identified on the
signature pages hereof, each as debtor and debtor-in-possession (each
individually, a "GUARANTOR" and collectively the "GUARANTORS"), the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "LENDER" and collectively as the "LENDERS"), and FOOTHILL CAPITAL
CORPORATION, a California corporation, as the arranger and administrative agent
for the Lenders ("AGENT").
WHEREAS, on September 24, 2001 (the "FILING DATE"), the Borrowers and
the Guarantors commenced cases (the "CHAPTER 11 CASES") under Chapter 11 of
Title 11 of the United States Code in the United States Bankruptcy Court for the
Southern District of New York (the "BANKRUPTCY COURT") and the Borrowers and the
Guarantors have retained possession of their assets and are authorized under the
Bankruptcy Code to continue the operation of their businesses as
debtors-in-possession;
WHEREAS, the Bankruptcy Court has entered an order authorizing the
joint administration of the bankruptcy estates of the Borrowers and the
Guarantors;
WHEREAS, the Borrowers and the Guarantors have requested that Lenders
make post-petition loans, advances and other extensions of credit to Borrowers
in an aggregate principal amount not to exceed $46,000,000 at any time
outstanding (which shall be limited to $10,750,000 at any time outstanding until
the Final Financing Order (as hereinafter defined) shall have been entered); and
WHEREAS, Agent and Lenders have agreed to make such extensions of
credit available to Borrowers subject to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"ACCOUNT DEBTOR" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"ACCOUNTS" means all of each Loan Party's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION 4.4.
"ADMINISTRATIVE BORROWER" has the meaning set forth in SECTION 17.9.
"ADVANCES" has the meaning set forth in SECTION 2.1.
"AFFILIATE" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; PROVIDED, HOWEVER, that, in any event: (a) any Person which owns
directly or indirectly 20% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 20% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person, (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person, and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person.
"AGENT" means Foothill, solely in its capacity as agent for the Lenders
hereunder, and any successor thereto.
"AGENT'S ACCOUNT" means an account at a bank designated by Agent from
time to time as the account into which Borrowers shall make all payments to
Agent for the benefit of the Lender Group and into which the Lender Group shall
make all payments to Agent under this Agreement and the other Loan Documents;
unless and until Agent notifies Administrative Borrower and the Lender Group to
the contrary, Agent's Account shall be that certain deposit account bearing
account number 323-266193 and maintained by Agent with The Chase Manhattan Bank,
4 New York Plaza, 15th Floor, New York, New York 10004, ABA #▇▇▇▇▇▇▇▇▇.
"AGENT ADVANCES" has the meaning set forth in SECTION 2.3(e)(i).
"AGENT'S LIENS" means the Liens granted by the Loan Parties to Agent
for the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"AGENT-RELATED PERSONS" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"AGREED ADMINISTRATIVE EXPENSE PRIORITIES" means that administrative
expenses with respect to the Loan Parties shall have the following order of
priority:
(a) FIRST, (i) amounts payable pursuant to 28 U.S.C. ss. 1930(a)(6) and
any fees payable to the Clerk of the Bankruptcy Court and (ii) allowed fees and
expenses of attorneys, accountants and other professionals retained in the
Chapter 11 Cases pursuant to Section 327 and
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1103 of the Bankruptcy Code, but the amount entitled to priority under clause
(ii) of this clause first shall not exceed (A) prior to the Revolver Facility
Effective Date, $750,000 outstanding in the aggregate at any time and (B) after
the Revolver Facility Effective Date, $2,000,000 outstanding in the aggregate at
any time (in each case inclusive of any holdbacks required by the Bankruptcy
Court) (the "Permitted Professional Expenses Amount"); PROVIDED, HOWEVER, that
(x) after the occurrence and during the continuance of an Event of Default
hereunder or a default under the Interim Financing Order or the Final Financing
Order, any payments actually made to such professionals after such occurrence or
during such continuance (other than payments made out of pre-Filing Date
retainers), under Section 330 and 331 of the Bankruptcy Code or otherwise, shall
reduce the Permitted Professional Expenses Amount on a dollar-for-dollar basis,
and (y) for the avoidance of doubt, any payment actually made to such
professionals prior to the occurrence and during the continuance of an Event of
Default hereunder or a default under the Interim Financing Order or the Final
Financing Order may be retained by such professionals and not reduce the
Permitted Professional Expenses Amount;
(b) SECOND, all Obligations; and
(c) THIRD, all other allowed administrative expenses.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"ASSIGNEE" has the meaning set forth in SECTION 14.1.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in the
form of Exhibit A-1.
"AUTHORIZED PERSON" means any officer or other employee of
Administrative Borrower listed on Schedule A-1 attached hereto.
"AVAILABILITY" means, as of any date of determination, if such date is
a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrowers are entitled to borrow as Advances under SECTION 2.1
(after giving effect to all then outstanding Obligations and all sublimits and
reserves applicable hereunder).
"AVOIDANCE ACTIONS" means all causes of action of any Loan Party, as a
debtor and debtor-in-possession, arising under 11 U.S.C. ss. 510, 542, 544, 545,
547, 548, 549, 550 or 553.
"AVOIDED PAYMENT" has the meaning set forth in SECTION 2.4(a)(iii).
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as in effect
from time to time.
"BANKRUPTCY COURT" has the meaning set forth in the recitals to this
Agreement.
"BASE RATE" means, the rate of interest announced within ▇▇▇▇▇ Fargo at
its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate"
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is one of ▇▇▇▇▇ Fargo's base rates (not necessarily the lowest of such rates)
and serves as the basis upon which effective rates of interest are calculated
for those loans making reference thereto and is evidenced by the recording
thereof after its announcement in such internal publication or publications as
▇▇▇▇▇ Fargo may designate.
"BASE RATE LOAN" means each portion of an Advance or the Term Loan that
bears interest at a rate determined by reference to the Base Rate.
"BASE RATE MARGIN" means (i) 3.50 percentage points or (ii) during the
Extension Period, 4.50 percentage points.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in SECTION
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in SECTION 3(5) of ERISA) within
the past six years.
"BOARD OF DIRECTORS" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf of
the board.
"BOOKS" means each Loan Party's now owned or hereafter acquired books
and records (including all of its Records indicating, summarizing, or evidencing
its assets (including the Collateral) or liabilities, all of its Records
relating to its business operations or financial condition, and all of its goods
or General Intangibles related to such information).
"BORROWER" and "BORROWERS" have the respective meanings set forth in
the preamble to this Agreement.
"BORROWING" means a borrowing hereunder consisting of Advances (or term
loans, in the case of the Term Loan) made on the same day by the Lenders (or
Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by
Agent in the case of an Agent Advance.
"BORROWING BASE" has the meaning set forth in SECTION 2.1.
"BORROWING BASE CERTIFICATE" means a certificate in a form reasonably
acceptable to Agent and Administrative Borrower.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or other
day on which national banks are authorized or required to close.
"BUSINESS PLAN" means the set of Projections of Parent and its
Subsidiaries for the period beginning on September 1, 2001 and ending January
31, 2003 (on a monthly basis), in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent.
"CAPITAL LEASE" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness represented by
obligations under a Capital Lease.
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"CARVE-OUT EXPENSES" shall mean those amounts, fees, expenses and
claims set forth in clause "FIRST" of the definition of the term "Agreed
Administrative Expense Priorities."
"CASH COLLATERAL ORDER" means, with respect to the Chapter 11 Cases,
the Interim Stipulation and Order (i) Authorizing Use of Cash Collateral, (ii)
Approving Adequate Protection and (iii) Modifying Automatic Stay, which shall be
reasonably acceptable to Agent and approved by the Bankruptcy Court, provided
that, for the avoidance of doubt the Loan Parties acknowledge and agree that
such order shall not be acceptable to Agent if concurrently with the approval of
such order the Existing Lender has not entered into a lien intercreditor
agreement with Agent (or such order does not contain lien intercreditor
provisions reasonably acceptable to Agent), as such order may be amended,
modified or extended from time to time.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"CASH MANAGEMENT BANK" has the meaning set forth in SECTION 2.7(a).
"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION 2.7(a).
"CASH MANAGEMENT AGREEMENTS" means those certain cash management
service agreements, in form and substance reasonably satisfactory to Agent, each
of which is among a Borrower, Agent, and one of the Cash Management Banks.
"CHANGE OF CONTROL" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 20%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (b) a majority of the members of the Board of Directors do not constitute
Continuing Directors, or (c) any Borrower ceases to directly own and control the
outstanding capital Stock of each of its Subsidiaries owned by such Borrower as
of the Closing Date.
"CHAPTER 11 CASES" has the meaning specified therefor in the recitals
thereto.
"CLOSING DATE" means the date of the making of the initial Advance (or
other extension of credit) hereunder.
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"CLOSING DATE PROJECTIONS" means, for the 90-day period following the
Closing Date, Parent's and its Subsidiaries' forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consolidated basis, consistent with Parent's historical consolidated financial
statements, in each case together with appropriate supporting details and a
schedule containing the underlying assumptions.
"CODE" means the New York Uniform Commercial Code, as in effect from
time to time.
"COLLATERAL" means all hereafter acquired assets and property of each
Loan Party's estate (at defined in the Bankruptcy Code), including, without
limitation, each of the following:
1. Accounts,
2. Books,
3. Equipment,
4. General Intangibles,
5. Inventory,
6. Investment Property,
7. Negotiable Collateral,
8. Real Property Collateral,
9. Avoidance Actions (to the extent permitted by the
Bankruptcy Court),
10. money or other assets of each Loan Party that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
11. the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, Avoidance
Actions (to the extent permitted by the Bankruptcy Court), money, deposit
accounts, or other tangible or intangible property resulting from the sale,
exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"COLLECTIONS" means all cash, checks, notes, instruments, and other
items of payment (including, without limitation, insurance proceeds, proceeds of
cash sales, proceeds of credit card sales, rebates from marketing programs,
rental proceeds, franchise proceeds and tax refunds) of Loan Parties.
"COMMERCIAL TORT CLAIM ASSIGNMENT" has the meaning set forth in SECTION
4.4(b).
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"COMMITMENT" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"CONCENTRATION ACCOUNT" has the meaning set forth in SECTION 2.7(a).
"CONCENTRATION ACCOUNT BANK" has the meaning set forth in SECTION
2.7(a).
"CONTINUING DIRECTOR" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent (as such terms are used in Rule 14a-11 under the Exchange Act) and whose
initial assumption of office resulted from such contest or the settlement
thereof.
"CONTROL AGREEMENT" means a control agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or bank with respect to a deposit account.
"CREDIT CARD DEPOSITORY ACCOUNT AGREEMENTS" means one or more
agreements, each substantially in the form of Exhibit D-1 hereto, among a credit
card servicer for a Borrower, such Borrower and the Agent, as the same may be
amended or otherwise modified from time to time.
"DAILY BALANCE" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
"DARK PROPERTIES " has the meaning set forth in SECTION 3.1(p).
"DDA" means any checking or other demand deposit account maintained by
a Borrower.
"DEFAULT" means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.
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"DEFAULTING LENDER" means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"DEFAULTING LENDER RATE" means (a) the Base Rate for the first 3 days
from and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances.
"DEPOSITORY ACCOUNT AGREEMENTS" means each notice and agreement,
substantially in the form of Exhibit D-2 hereto, among a Depository Bank, the
applicable Borrower and the Agent, as such Agreement may be amended or otherwise
modified from time to time.
"DEPOSITORY ACCOUNTS" means the blocked depository accounts maintained
by a Borrower for the receipt of any portion of such Borrower's Collections.
"DEPOSITORY BANK" means each financial institution at which a
Depository Account is maintained.
"DESIGNATED ACCOUNT" means such account number of Administrative
Borrower maintained with the Designated Account Bank, or such other deposit
account of Administrative Borrower (located within the United States) that has
been designated as such, in writing, by Administrative Borrower to Agent.
"DESIGNATED ACCOUNT BANK" means such bank (located within the United
States) that has been designated as such, in writing, by Administrative Borrower
to Agent.
"DISBURSEMENT LETTER" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is reasonably
satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"DUE DILIGENCE LETTER" means the due diligence letter sent by Agent's
counsel to Administrative Borrower, together with Administrative Borrower's
completed responses to the inquiries set forth therein, the form and substance
of such responses to be reasonably satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains,
plus interest expense, income taxes, depreciation, amortization, non-cash
expenses attributable to the pre-Filing Date employment agreement between Parent
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and to the proposed merger between Parent and DM Acquisition
Corp., and non-recurring expenses attributable to (i) the reorganization of the
Loan Parties, (ii) the disposition of Loan Parties' retail convenience stores,
and (iii) Loan Parties' reimbursement obligations in respect of the pre-Filing
Date letter of credit or other similar guaranty issued pursuant to the Existing
Credit Agreement in connection with the New England Dairies' lawsuit, provided
that such non-recurring expenses are mutually agreed upon by Parent and Agent
(in Agent's Permitted Discretion), for such period, as determined in accordance
with GAAP.
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"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and
Administrative Borrower, and (f) during the continuation of an Event of Default,
any other Person approved by Agent who can reasonably be expected to fulfill the
obligations of a Lender hereunder as determined solely by Agent.
"ENTERPRISE VALUE" means, as of any date of determination, the
enterprise value of the Parent and its Subsidiaries taken as a whole, to be
determined from time to time by a qualified appraisal company reasonably
acceptable to Agent.
"ENTRY DATE" means the date upon which the Interim Financing Order is
signed by the Bankruptcy Court and entered on the docket of the Chapter 11
Cases.
"ENVIRONMENTAL ACTIONS" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of any Borrower or any predecessor in interest, or (b) from or onto any
facilities which received Hazardous Materials generated by any Borrower or any
predecessor in interest.
"ENVIRONMENTAL LAW" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC ss. 1251
et seq; the Toxic Substances Control Act, 15 USC, ss. 2601 et seq; the Clean Air
Act, 42 USC ss. 7401 et seq.; the Safe Drinking Water Act, 42 USC. ss. 3803 et
seq.; the Oil Pollution Act of 1990, 33 USC. ss. 2701 et seq.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.;
the Hazardous Material Transportation Act, 49 USC ss. 1801 et seq.; and the
Occupational Safety and Health Act, 29 USC. ss. 651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages,
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costs and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts, or consultants, and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of any
claim or demand by any Governmental Authority or any third party, and which
relate to any Environmental Action.
"ENVIRONMENTAL LIEN" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"EQUIPMENT" means all of each Loan Party's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(b), (b) any trade or business subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCESS AVAILABILITY" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of their
historical levels with respect thereto and all book overdrafts in excess of
their historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as in effect
from time to time.
"EXISTING CREDIT AGREEMENT" means the Credit Agreement, dated as of
December 28, 1999, among Parent, the lenders party thereto and the Existing
Lender.
"EXISTING LENDER" means Citizens Bank of Connecticut, as agent for the
lenders party to the Existing Credit Agreement.
"EXTENSION NOTICE" has the meaning set forth in SECTION 3.5.
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"EXTENSION PERIOD" has the meaning set forth in SECTION 3.5.
"FAMILY MEMBER" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"FAMILY TRUSTS" means, with respect to any individual, trusts or other
estate planning vehicles established for the benefit of Family Members of such
individual and in respect of which such individual serves as trustee or in a
similar capacity.
"FEE LETTER" means that certain fee letter, dated as of even date
herewith, among Borrowers and Agent, in form and substance reasonably
satisfactory to Agent.
"FEIN" means Federal Employer Identification Number.
"FILING DATE" has the meaning specified therefor in the recitals
hereto.
"FINAL FINANCING ORDER" means the final order of the Bankruptcy Court,
in form, scope and substance reasonably acceptable to Agent, approving this
Agreement and the Loan Documents, including either (a) the Term Loan in an
amount equal to the Term Loan Amount or (b) the Advances and Term Loan made and
to be made to the Borrowers and the Letters of Credit issued and to be issued on
behalf of the Borrowers in an aggregate amount of between $31,000,000 and
$46,000,000, in accordance with this Agreement, substantially in the form of the
Interim Financing Order, as the same may be amended, modified or supplemented
from time to time with the express written joinder or consent of Agent, on
behalf of the Required Lenders, which order shall be in full force and effect
and has not been vacated, modified, amended (without the express written joinder
or consent of Agent, on behalf of the Required Lenders), reversed, overturned or
stayed in any respect, and, in the event that such order is the subject of a
pending appeal, the performance of any obligation of any Loan Party shall not be
the subject of a stay pending appeal.
"FOOTHILL" means Foothill Capital Corporation, a California
corporation.
"FRANCHISE AGREEMENT" means a franchise agreement, substantially in the
form of Exhibit E-1 attached hereto, entered into by Parent in the ordinary
course of business in connection with the franchising of Parent's convenience
retail stores.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all of each Loan Party's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks
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or tapes, software, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other
than goods, Accounts, Investment Property, and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"GROUND LEASES" means each lease pursuant to which a Loan Party leases
the properties listed on Schedule 5.26(i) hereto, as the same may have
heretofore or may be hereafter amended or modified.
"GUARANTEED OBLIGATIONS" has the meaning set forth in SECTION 18.1.
"GUARANTOR" has the meaning specified in the preamble hereto.
"HAZARDOUS MATERIALS" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"INDEBTEDNESS" means (a) all obligations of any Loan Party for borrowed
money, (b) all obligations of any Loan Party evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of any Loan Party in respect of letters of credit, bankers acceptances, interest
rate swaps, or other financial products, (c) all obligations of any Loan Party
under Capital Leases, (d) all obligations or liabilities of others secured by a
Lien on any asset of any Loan Party, irrespective of whether such obligation or
liability is assumed, (e) all obligations of any Loan Party for the deferred
purchase price of assets (other than trade debt and accounts payable incurred in
the ordinary course of such Loan Party's business and repayable in accordance
with customary trade practices), and (f) any obligation of any Loan Party
guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse to such Loan
Party) any obligation of any other Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 11.3.
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"INDEMNIFIED PERSON" has the meaning set forth in SECTION 11.3.
"INTERIM FINANCING ORDER" means the interim order of the Bankruptcy
Court, substantially in the form of Exhibit I-1 hereto, approving this Agreement
and the other Loan Documents, including the Term Loan to be made to the
Borrowers hereunder, as such order may be amended, modified or supplemented from
time to time with the express written joinder or consent of the Agent, on behalf
of the Required Lenders, which order shall be in full force and effect and has
not been vacated, modified, amended (without the express written joinder or
consent of Agent, on behalf of the Required Lenders), reversed, overturned or
stayed in any respect, and, in the event that such order is the subject of a
pending appeal, the performance of any obligation of any Loan Party shall not be
the subject of a stay pending appeal.
"INVENTORY" means all of each Loan Party's now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by such Loan Party as lessor, goods that are furnished by such
Loan Party under a contract of service, and raw materials, work in process, or
materials used or consumed in such Loan Party's business.
"INVESTMENT" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"INVESTMENT PROPERTY" means all of each Loan Party's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time
to time.
"ISSUING LENDER" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to SECTION 2.12.
"L/C" has the meaning set forth in SECTION 2.12(a).
"L/C DISBURSEMENT" means a payment made by the Issuing Lender pursuant
to a Letter of Credit.
"L/C UNDERTAKING" has the meaning set forth in SECTION 2.12(a).
"LENDER" and "LENDERS" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of SECTION 14.1.
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"LENDER GROUP" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"LENDER GROUP EXPENSES" means all (a) reasonable costs or expenses
(including taxes, and insurance premiums) required to be paid by any Loan Party
under any of the Loan Documents that are paid or incurred by the Lender Group,
(b) reasonable fees or charges paid or incurred by Agent in connection with the
Lender Group's transactions with Loan Parties, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, judgment, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, environmental audits, and reasonable fees or charges paid to any
financial consultant retained by Agent pursuant to SECTION 6.17 hereof
(including, without limitation, ▇▇▇▇▇▇▇▇ & Associates, Inc.), (c) reasonable
costs and expenses incurred by Agent in the disbursement of funds to any Loan
Party (by wire transfer or otherwise), (d) reasonable charges paid or incurred
by Agent resulting from the dishonor of checks, (e) reasonable costs and
expenses paid or incurred by the Lender Group to correct any default or enforce
any provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) reasonable audit fees and expenses of Agent
related to audit examinations of the Books to the extent of the fees and charges
(and up to the amount of any limitation) contained in this Agreement, (g)
reasonable costs and expenses of third party claims or any other suit paid or
incurred by the Lender Group in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Loan Party or any guarantor of the
Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including reasonable attorneys fees, provided that, as between Agent's and each
Lender's attorneys, Agent's attorneys shall be primarily responsible for the
actions described in this clause (h)) incurred in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable fees and expenses (including reasonable
attorneys fees, provided that, as between Agent's and each Lender's attorneys,
Agent's attorneys shall be primarily responsible for the actions described in
this clause (i)) incurred in terminating, enforcing (including reasonable
attorneys fees and expenses incurred in connection with the Chapter 11 Cases or
in exercising rights or remedies under the Loan Documents), or defending the
Loan Documents, irrespective of whether suit is brought, or in taking any
Remedial Action concerning the Collateral.
"LENDER-RELATED PERSON" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the context
requires.
"LETTER OF CREDIT USAGE" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding
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time drafts accepted by an Underlying Issuer as a result of drawings under
Underlying Letters of Credit.
"LIEN" means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN DOCUMENTS" means this Agreement, the Cash Management Agreements,
the Control Agreements, the Credit Card Depository Account Agreements, the
Depository Account Agreements, the Disbursement Letter, the Due Diligence
Letter, the Fee Letter, the Letters of Credit, the Mortgages, the Officers'
Certificate, the Stock Pledge Agreement, the Interim Financing Order, the Final
Financing Order, the Trademark Security Agreement, any note or notes executed by
any Loan Party in connection with this Agreement and payable to a member of the
Lender Group, and any other agreement entered into, now or in the future, by any
Loan Party and the Lender Group in connection with this Agreement.
"LOAN PARTIES" means, collectively, each Borrower and each Guarantor.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of any Borrower, or the Loan Parties taken as
a whole, except for the commencement of the Chapter 11 Cases and events
(including, without limitation, defaults under pre-petition credit facilities)
that would typically result from the commencement of the Chapter 11 Cases, (b) a
material impairment of any Loan Party's ability to perform its obligations under
the Loan Documents to which it is a party or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with respect
to the Collateral as a result of an action or failure to act on the part of any
Loan Party; provided, however, that a Material Adverse Change shall not occur as
a result of (i) changes in the composition of the officers and directors of any
Loan Party prior to the Closing Date or (ii) the termination of any merger or
acquisition agreement prior to the Closing Date.
"MATERIAL CONTRACT" means, with respect to any Person, each agreement
or contract to which such Person is a party which (a) involves consideration
payable to such Person of $250,000 or more during any twelve month period, (b)
involves consideration payable by such Person of $250,000 or more during any
twelve month period, (c) imposes financial obligations on such Person of
$250,000 or more during any twelve month period (other than (i) any agreement
that by its terms may be terminated by such Person upon sixty (60) days' notice
or less and (ii) supply contracts that can be readily replaced within twenty
(20) days and are in fact so replaced
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with twenty (20) days on terms not materially less favorable to such Person) or
(d) is otherwise material (or together with related agreements and contracts, is
material) to the business, operations, financial condition, performance or
properties of any Borrower EXCLUDING, HOWEVER, purchase orders to any vendor of
such Person entered into in the ordinary course of such Person's business.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM REVOLVER AMOUNT" means (i) prior to the Revolver Facility
Effective Date, $0 and (ii) after the Revolver Facility Effective Date,
$20,250,000, provided that upon the receipt by the Agent and the Administrative
Borrower of additional Commitments pursuant to SECTION 3.2(A), after the
Revolver Facility Effective Date the Maximum Revolver Amount will increase, on a
dollar for dollar basis, by the amount of such additional Commitments received
pursuant to SECTION 3.2(A) up to a maximum of $35,250,000.
"MORTGAGE POLICY" has the meaning set forth in SECTION 3.1(p).
"MORTGAGES" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Loan Party in favor of Agent, for the benefit of the Lender Group, in form and
substance reasonably satisfactory to Agent, that encumber the Real Property
Collateral and the related improvements thereto.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) to which a Borrower, any of its Subsidiaries, or
any ERISA Affiliate has contributed, or was obligated to contribute, within the
past six years.
"NEGOTIABLE COLLATERAL" means all of each Loan Party's now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"OBLIGATIONS" means all loans (including the Term Loan), Advances,
debts, principal, interest, contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses, lease payments, guaranties, covenants, and duties of any kind
and description owing by any Loan Party to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Loan Parties are required to pay or reimburse
by the Loan Documents, by law, or otherwise. Any reference in this Agreement or
in the Loan Documents to the Obligations shall include all amendments, changes,
extensions, modifications, renewals replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.
"OFFICERS' CERTIFICATE" means the representations and warranties of
officers form submitted by Agent to Administrative Borrower, together with each
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be reasonably satisfactory to Agent.
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"ORDERS" means, collectively, the Interim Financing Order and the Final
Financing Order.
"ORIGINATING LENDER" has the meaning set forth in SECTION 14.1(e).
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(e).
"PARENT" has the meaning set forth in the preamble to this Agreement.
"PAY-OFF LETTER" means a letter, in form and substance reasonably
satisfactory to Agent, from Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Borrowers under the
Existing Credit Agreement and obtain a release of all of the Liens existing in
favor of Existing Lender in and to the assets of the Parent and its
Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto.
"PERMITTED DISCRETION" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"PERMITTED DISPOSITIONS" means (a) sales or other dispositions by any
Loan Party of Equipment that is substantially worn, damaged, or obsolete in the
ordinary course of such Loan Party's business, (b) sales by Loan Parties of
Inventory to buyers in the ordinary course of business, (c) the use or transfer
of money or Cash Equivalents by Loan Parties in a manner that is not prohibited
by the terms of this Agreement or the other Loan Documents, (d) the licensing by
Loan Parties, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of the applicable Loan
Party's business and (e) sales or other dispositions by any Loan Party of
Inventory and Equipment to franchisees in the ordinary course of such Loan
Party's business pursuant to a Franchise Agreement.
"PERMITTED HOLDER" means DM Associates, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and each of their respective Family Members and Family Trusts.
"PERMITTED INVESTMENTS" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, and (d) investments by any Borrower in any other Borrower, provided
that if any such investment is in the form of Indebtedness, such Indebtedness
investment shall be subject to the terms and conditions of the Intercompany
Subordination Agreement.
"PERMITTED LIENS" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1 provided
that, Schedule P-1 shall not contain the Liens granted by the Loan Parties prior
to the Filing Date as security for the Pre-Petition Obligations, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases
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to the extent that such Liens or interests secure Permitted Purchase Money
Indebtedness and so long as such Lien attaches only to the asset purchased or
acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Borrowers' business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens
arising from deposits made in connection with obtaining worker's compensation or
other unemployment insurance, (h) Liens or deposits to secure performance of
bids, tenders, or leases incurred in the ordinary course of Borrowers' business
and not in connection with the borrowing of money, (i) Liens granted as security
for surety or appeal bonds in connection with obtaining such bonds in the
ordinary course of Borrowers' business, (j) Liens resulting from any judgment or
award that is not an Event of Default hereunder, (k) Liens with respect to the
Real Property Collateral that are exceptions to the commitments for title
insurance issued in connection with the Mortgages, as accepted by Agent in its
Permitted Discretion, (l) with respect to any Real Property that is not part of
the Real Property Collateral, easements, rights of way, zoning restrictions and
similar charges, encumbrances, leases and imperfections in title that do not
materially interfere with or impair the use or operation thereof by any
Borrower, (m) prior to the Revolver Facility Effective Date, (i) Liens granted
by the Loan Parties prior to the Filing Date on the Personal Property Collateral
as security for the Pre-Petition Obligations to the extent such Liens are
perfected and (ii) replacement Liens granted after the Filing Date pursuant to
the Cash Collateral Order on the Personal Property Collateral, and (n) prior to
the Revolver Facility Effective Date, Liens granted after the Filing Date
pursuant to the Cash Collateral Order on the Real Property Collateral, provided
that such Liens on the Real Property Collateral are subject to an intercreditor
agreement between Existing Lender and Agent which intercreditor agreement is
reasonably satisfactory to Agent (or, in lieu of such agreement, the Cash
Collateral Order contains lien intercreditor provisions reasonably acceptable to
Agent).
"PERMITTED PRIORITY LIENS" means all Permitted Liens other than (a)
Liens permitted under paragraphs (b), (f), (j) and (n) of the definition of the
term "Permitted Liens" and (b) on and after the Revolver Facility Effective
Date, Liens permitted under paragraph (m) of the definition of the term
"Permitted Liens".
"PERMITTED PROFESSIONAL EXPENSES AMOUNT" shall have the meaning given
that term in sub-clause (ii) of the clause "FIRST" of the definition of the term
"Agreed Administrative Expense Priorities."
"PERMITTED PROTEST" means the right of the applicable Loan Party to
protest any Lien (other than any such Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Loan Party in good faith, and (c) Agent is
reasonably satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Agent's
Liens.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate
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principal amount outstanding at any one time not in excess of the sum of (i)
$500,000, provided that the amount of such Purchase Money Indebtedness in this
clause (i) is incurred solely in connection with a Borrower's purchase of
scanning equipment for use in its retail convenience stores, and (ii) $500,000.
"PERSON" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"PERSONAL PROPERTY COLLATERAL" means all Collateral other than Real
Property.
"PLAN" means any employee benefit plan, program, or arrangement
maintained or contributed to by any Borrower or with respect to which it may
incur liability.
"PRE-PETITION OBLIGATIONS" shall mean all indebtedness, obligations and
liabilities of the Loan Parties to the Existing Lender incurred prior to the
Filing Date arising from or related to the Existing Credit Agreement plus fees,
expenses, indemnities and reimbursement obligations due thereunder and interest
thereon accruing both before and after the Filing Date to the extent allowable
under Section 506(b) of the Bankruptcy Code.
"PROJECTIONS" means Parent's and its Subsidiaries' forecasted (a)
balance sheets, (b) profit and loss statements, and (c) cash flow statements,
all prepared on a basis consistent with Parent's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (i) prior to the Revolver Commitment being reduced to zero, the
percentage obtained by dividing (x) such Lender's Revolver Commitment, by (y)
the aggregate Revolver Commitments of all Lenders, and (ii) from and after the
time that the Revolver Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (x) the aggregate principal amount of such
Lender's Advances by (y) the aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, (i) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (x) such Lender's Revolver Commitment,
by (y) the aggregate Revolver Commitments of all Lenders, and (ii) from and
after the time that the Revolver Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (x) the aggregate principal amount of
such Lender's Advances by (y) the aggregate principal amount of all Advances,
(c) with respect to a Lender's obligation to make the Term
Loan and receive payments of interest, fees, and principal with respect thereto,
(i) prior to the making of the Term Loan, the percentage obtained by dividing
(x) such Lender's Term Loan Commitment, by (y) the aggregate amount of all
Lenders' Term Loan Commitments, and (ii) from and after the
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making of the Term Loan, the percentage obtained by dividing (x) the outstanding
principal amount of such Lender's portion of the Term Loan by (y) the
outstanding principal amount of the Term Loan, and
(d) with respect to all other matters (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) such Lender's Revolver Commitment PLUS the unpaid principal
amount of such Lender's portion of the Term Loan, by (ii) the aggregate amount
of Revolver Commitments of all Lenders PLUS the unpaid principal amount of the
Term Loan; provided, however, that, in each case, in the event the Revolver
Commitments have been terminated or reduced to zero, Pro Rata Share shall be the
percentage obtained by dividing (x) the principal amount of such Lender's
Advances PLUS the unpaid principal amount of such Lender's portion of the Term
Loan by (y) the principal amount of all outstanding Advances PLUS the
outstanding principal amount of the Term Loan.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"REAL PROPERTY" means any estates or interests in real property now
owned or hereafter acquired by any Loan Party and the improvements thereto.
"REAL PROPERTY COLLATERAL" means the parcel or parcels of Real Property
identified on Schedule R-1 and any Real Property hereafter acquired by any Loan
Party.
"RECORD" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping, or disposing of any Hazardous Material (including the abandonment or
discarding of barrels, containers, and other closed receptacles containing any
Hazardous Material) into the indoor or outdoor environment, including ambient
air, soil, surface or ground water, in each case in excess of the amount
permitted under Environmental Law to be so spilled, leaked, pumped, poured,
emitted, emptied, discharged, injected, escaped, leached, seeped, migrated,
dumped, or disposed of.
"REMEDIAL ACTION" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"REPORT" has the meaning set forth in SECTION 16.17.
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"REPORTABLE EVENT" means any of the events described in Section 4043(c)
of ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of 30 days notice to the PBGC is waived under applicable
regulations.
"REQUIRED AVAILABILITY" means Excess Availability and unrestricted cash
and Cash Equivalents in an amount of not less than $5,000,000.
"REQUIRED LENDERS" means, at any time, Lenders whose Pro Rata Shares
aggregate 51% of the Total Commitments, or if the Commitments have been
terminated irrevocably, 51% of the Obligations then outstanding.
"REVOLVER COMMITMENT" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, the aggregate amount of the
Revolver Commitments of all Lenders, in each case as such Dollar amounts are set
forth beside such Lender's name under the applicable heading on Schedule C-1 or
on the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of SECTION
14.1.
"REVOLVER FACILITY EFFECTIVE DATE" means the date, after the entry of
the Final Financing Order, on which all of the conditions precedent to the
increase of the Total Commitments to an amount in excess of $10,750,000, as set
forth in SECTION 3.2, are satisfied.
"REVOLVER USAGE" means, as of any date of determination, the sum of (a)
the then extant amount of outstanding Advances, plus (b) the then extant amount
of the Letter of Credit Usage.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term
is defined in the Code.
"SETTLEMENT" has the meaning set forth in SECTION 2.3(f)(i).
"SETTLEMENT DATE" has the meaning set forth in SECTION 2.3(f)(i).
"SOLVENT" means, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"STOCK" means all shares, options, warrants, interests, participations,
or other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting,
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including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means a stock pledge agreement, in form and
substance reasonably satisfactory to Agent, executed and delivered by each
Borrower to Agent with respect to the pledge of the Stock owned by each
Borrower.
"STORE EBITDA" has the meaning set forth in SECTION 7.20(a)(ii).
"SUBSIDIARY" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity;
PROVIDED, that for purposes of the Loan Documents, Financial Opportunities,
Inc., a Kentucky corporation, shall not be deemed a Subsidiary of any Loan
Party.
"SWING LENDER" means Foothill or any other Lender that, at the request
of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"SWING LOAN" has the meaning set forth in SECTION 2.3(d)(i).
"TAXES" has the meaning set forth in SECTION 16.11.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan, (ii) any event that causes any Borrower or any of its ERISA
Affiliates to incur liability under Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the
IRC, (iii) the filing of a notice of intent to terminate a Benefit Plan or the
treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA, (iv) the institution of proceedings by the PBGC to terminate a Benefit
Plan, or (v) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan.
"TERM LOAN" has the meaning set forth in SECTION 2.2.
"TERM LOAN AMOUNT" means $10,750,000.
"TERM LOAN COMMITMENT" means, with respect to each Lender, its Term
Loan Commitment, and, with respect to all Lenders, the aggregate amount of the
Term Loan Commitments of all Lenders, in each case as such Dollar amounts are
set forth beside such Lender's name under the applicable heading on Schedule C-1
or on the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of SECTION
14.1.
"TOTAL COMMITMENT" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, the aggregate amount of the Total
Commitments of all Lenders, in each case as such Dollar amounts are set forth
beside such Lender's name under the applicable
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heading on Schedule C-1 attached hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 14.1.
"TRADEMARK SECURITY AGREEMENT" means a trademark security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is reasonably satisfactory to Agent.
"UNDERLYING ISSUER" means a third Person which is the beneficiary of an
L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"UNDERLYING LETTER OF CREDIT" means a letter of credit that has been
issued by an Underlying Issuer.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
"▇▇▇▇▇ FARGO" means ▇▇▇▇▇ Fargo Bank, National Association, a national
banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
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1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally), on and after the Revolver
Facility Effective Date, to make advances ("Advances") to Borrowers in an amount
at any one time outstanding not to exceed such Lender's Pro Rata Share of an
amount equal to the lesser of (i) the Maximum Revolver Amount less the Letter of
Credit Usage, or (ii) the Borrowing Base less the Letter of Credit Usage. For
purposes of this Agreement, "Borrowing Base," as of any date of determination,
shall mean the result of:
(x) the lesser of
(i) Loan Parties' aggregate Collections with
respect to their cash receipts and Accounts, without
duplication, for the immediately preceding 21 day
period, and
(ii) 60% of the Enterprise Value of the
Parent and its Subsidiaries taken as a whole, minus
the aggregate principal amount of the Term Loan
outstanding, minus
(y) the aggregate amount of reserves, if any,
established by Agent under SECTION 2.1(b).
(b) Anything to the contrary in this SECTION 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that Borrowers are required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for AD VALOREM, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral. In addition to the foregoing, Agent shall have the right to have
the Enterprise Value redetermined by a qualified appraisal company selected by
Agent from time to time after the Revolver Facility Effective Date, which
redetermination, so long as no Event of Default has occurred and is continuing,
shall be conducted at Borrowers' expense no more frequently than one time during
each six month period following the Revolver Facility Effective Date and, after
the occurrence and during the continuance of an Event of Default, at Borrowers'
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expense as frequently as Agent shall reasonably determine. Based upon the
results of any such redetermination, and any other information received from the
collateral reporting required under SECTION 6.2 with respect to Loan Parties'
Collections, Agent may, in its Permitted Discretion, redetermine the Borrowing
Base.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the sum of the Revolver Usage to exceed the Maximum
Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement
and the Interim Financing Order, on the Closing Date, each Lender with a Term
Loan Commitment agrees (severally, not jointly or jointly and severally) to make
term loans (collectively, the "TERM LOAN") to Borrower in an amount equal to
such Lender's Pro Rata Share of the Term Loan Amount. The Borrower may prepay
the Term Loan at any time, in whole or in part, without penalty or premium. The
outstanding unpaid principal balance and all accrued and unpaid interest under
the Term Loan shall be due and payable on the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All amounts
outstanding under the Term Loan shall constitute Obligations.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the requested Funding Date in the case of a request for an Advance or the Term
Loan specifying (i) the amount of such Borrowing, and (ii) the requested Funding
Date, which shall be a Business Day. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such telephonic
notice to be confirmed in writing within 24 hours of the giving of such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for
a Borrowing pursuant to SECTION 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of SECTION 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of SECTION 2.3(d) in the amount of the requested
Borrowing; PROVIDED, HOWEVER, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to SECTION 2.3(d), Agent shall elect to
have the terms of SECTION 2.3(c) apply to such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the terms of
this SECTION 2.3(c) apply to a requested Borrowing as described in
SECTION 2.3(b), then promptly after receipt of a request for a
Borrowing pursuant to SECTION 2.3(a), Agent shall notify the Lenders,
not later than 12:00 p.m. (California time) on the Funding Date
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applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the
amount of such Lender's Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent's Account,
not later than 2:00 p.m. (California time) on the Funding Date
applicable thereto. After Agent's receipt of the proceeds of such
Advances (or the Term Loan, as applicable), upon satisfaction of the
applicable conditions precedent set forth in SECTION 3 hereof, Agent
shall make the proceeds thereof available to Borrowers on the
applicable Funding Date by transferring immediately available funds
equal to such proceeds received by Agent to Borrowers' Designated
Account; PROVIDED, HOWEVER, that, subject to the provisions of SECTION
2.3(i), Agent shall not request any Lender to make, and no Lender shall
make, any Advance (or its portion of the Term Loan) if Agent shall have
actual knowledge that (1) one or more of the applicable conditions
precedent set forth in SECTION 3 will not be satisfied on the requested
Funding Date for the applicable Borrowing unless such condition has
been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least 1 Business Day prior to the date of such Borrowing, that
such Lender will not make available as and when required hereunder to
Agent for the account of Borrowers the amount of that Lender's Pro Rata
Share of the Borrowing, Agent may assume that each Lender has made or
will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrowers on such date
a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds
and Agent in such circumstances has made available to Borrowers such
amount, that Lender shall on the Business Day following such Funding
Date make such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's Advance on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to Agent on the
Business Day following the Funding Date, Agent will notify
Administrative Borrower of such failure to fund and, upon demand by
Agent, Borrowers shall pay such amount to Agent for Agent's account,
together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an Advance
on such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by such
other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance
with their Commitments (but only to the extent that such Defaulting
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Lender's Advance was funded by the other members of the Lender Group)
or, if so directed by Borrowers and if no Default or Event of Default
had occurred and is continuing (and to the extent such Defaulting
Lender's Advance was not funded by the Lender Group), retain same to be
re-advanced to Borrowers as if such Defaulting Lender had made Advances
to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such
Defaulting Lender the amount of all such payments received and retained
by it for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a "Lender"
and such Lender's Commitment shall be deemed to be zero. This Section
shall remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders,
Agent, and Administrative Borrower shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its Pro
Rata Share of the applicable Advance and pays to Agent all amounts
owing by Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations
hereunder, or to relieve or excuse the performance by Borrowers of its
duties and obligations hereunder to Agent or to the Lenders other than
such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of
this Agreement and shall entitle Borrowers at their option, upon
written notice to Agent, to arrange for a substitute Lender to assume
the Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of such a
substitute Lender, the Defaulting Lender shall have no right to refuse
to be replaced hereunder, and agrees to execute and deliver a completed
form of Assignment and Acceptance Agreement in favor of the substitute
Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (including an
assumption of its Pro Rata Share of the Risk Participation Liability)
without any premium or penalty of any kind whatsoever; PROVIDED
FURTHER, HOWEVER, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of
the Lender Groups' or Borrowers' rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to
fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this SECTION 2.3(d) apply to
a requested Borrowing as described in SECTION 2.3(b), Swing Lender as a
Lender shall make such Advance in the amount of such Borrowing (any
such Advance made solely by Swing Lender as a Lender pursuant to this
SECTION 2.3(d) being referred to as a "Swing Loan" and such Advances
being referred to collectively as "Swing Loans") available to Borrowers
on the Funding Date applicable thereto by transferring immediately
available funds to Borrowers' Designated Account. Each Swing Loan is an
Advance hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except all payments on any Swing Loan
shall be payable to Swing Lender as a Lender solely for
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its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan).
Subject to the provisions of SECTION 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as
a Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in SECTION 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date.
Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set
forth in SECTION 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time after the Revolver Facility Effective Date, in
Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time
that any of the other applicable conditions precedent set forth in
SECTION 3 have not been satisfied, to make Advances to Borrowers on
behalf of the Lenders that Agent, in its Permitted Discretion deems
necessary or desirable (A) to preserve or protect the Collateral, or
any portion thereof, (B) to enhance the likelihood of repayment of the
Obligations, or (C) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in SECTION 10 (any
of the Advances described in this SECTION 2.3(e) shall be referred to
as "Agent Advances"), PROVIDED, that notwithstanding anything to the
contrary contained in this Section 2.3(e), the aggregate principal
amount of Agent Advances outstanding at any one time, when taken
together with the aggregate principal amount of Overadvances made in
accordance with Section 2.3(i) outstanding at any time, shall not
exceed an amount equal to the lesser of (x) 10% of the Borrowing Base
then in effect and (y) $2,000,000. Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except all payments thereon shall be
payable to Agent solely for its own account (and for the account of the
holder of any participation interest with respect to such Agent
Advance).
(ii) The Agent Advances shall be repayable by Borrowers on
demand and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances.
(f) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents,
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settlement among them as to the Advances, the Swing Loans, and the Agent
Advances shall take place on a periodic basis in accordance with the following
provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so determined
by Agent, (1) on behalf of Swing Lender, with respect to each
outstanding Swing Loan, (2) for itself, with respect to each Agent
Advance, and (3) with respect to Collections received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement being
the "Settlement Date"). Such notice of a Settlement Date shall include
a summary statement of the amount of outstanding Advances, Swing Loans,
and Agent Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including SECTION
2.3(c)(iii)): (y) if a Lender's balance of the Advances, Swing Loans,
and Agent Advances exceeds such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement Date, then
Agent shall, by no later than 12:00 p.m. (California time) on the
Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each
such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances, and (z) if a Lender's balance of the Advances, Swing
Loans, and Agent Advances is less than such Lender's Pro Rata Share of
the Advances, Swing Loans, and Agent Advances as of a Settlement Date,
such Lender shall no later than 12:00 p.m. (California time) on the
Settlement Date transfer in immediately available funds to the Agent's
Account, an amount such that each such Lender shall, upon transfer of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances. Such amounts made available
to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loan or Agent
Advance and, together with the portion of such Swing Loan or Agent
Advance representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not made
available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be
entitled to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal,
interest and fees payable by Borrowers and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments
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received by Agent, that in accordance with the terms of this Agreement
would be applied to the reduction of the Advances, for application to
Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement
Date, Collections received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share of
the Advances other than to Swing Loans, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date,
its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Agent Advances, and each Lender (subject to the effect of
letter agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent,
or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. (i) Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (A) after giving effect to such Advances (including
a Swing Loan), the outstanding Revolver Usage does not exceed the Borrowing Base
by an amount equal to the lesser of (x) 10% of the Borrowing Base then in effect
and (y) $2,000,000, (B) after giving effect to such Advances (including a Swing
Loan), the outstanding Revolver Usage (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) does not
exceed the Maximum Revolver Amount, (C) the aggregate principal amount of
Overadvances made pursuant to this Section 2.3(i) when taken together with the
aggregate principal amount of Agent Advances made pursuant to Section 2.3(e)
does not exceed at any time an amount equal to the lesser of (x) 10% of the
Borrowing Base then in effect and (y) $2,000,000, and (D) at the time of the
making of any such Advance (including any Swing Loan), Agent does not believe,
in good faith, that the
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Overadvance created by such Advance will be outstanding for more than 90 days.
The foregoing provisions shall not be applicable prior to the Revolver Facility
Effective Date and are for the exclusive benefit of Agent, Swing Lender, and the
Lenders and are not intended to benefit Borrowers in any way. The Advances and
Swing Loans, as applicable, that are made pursuant to this SECTION 2.3(i) shall
be subject to the same terms and conditions as any other Advance or Swing Loan,
as applicable, except the rate of interest applicable thereto shall be the rate
applicable to Advances under SECTION 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default.
(ii) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making
any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented
with Borrowers intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrowers to an amount
permitted by the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any Overadvance,
the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(iii) Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(f) for the
amount of such Lender's Pro Rata Share of any unintentional
Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(i), and any
Overadvances resulting from the charging to the Loan Account of
interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Agent's Account for the account
of the Lender Group and shall be made in immediately available funds,
no later than 11:00 a.m. (California time) on the date specified
herein. Any payment received by Agent later than 11:00 a.m. (California
time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until
such following Business Day.
(ii) Unless Agent receives notice from Borrowers prior
to the date on which any payment is due to the Lenders that Borrowers
will not make such payment in full as and when required, Agent may
assume that Borrowers have made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but
shall not be so required), in reliance upon such assumption, distribute
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to each Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent Borrowers do not make such payment in
full to Agent on the date when due, each Lender severally shall repay
to Agent on demand such amount distributed to such Lender, together
with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date
repaid.
(iii) In the event that after the Revolver Facility
Effective Date the Existing Lender is required to repay or disgorge to
the Loan Parties, or any representatives of the Loan Parties' estates,
all or any portion of the Pre-Petition Obligations or any payment on
account of the Pre-Petition Obligations made to the Existing Lender is
rescinded for any reason whatsoever, including, but not limited to, as
a result of any Avoidance Action, or any other action, suit, proceeding
or claim brought under any other provision of the Bankruptcy Code or
any applicable state law, or any other similar provisions under any
other state or federal statutory or common law (all such amounts being
hereafter referred to as the "AVOIDED PAYMENTS"), then, in such event,
(i) the Borrowers shall prepay the Obligations in an amount equal to
100% of such Avoided Payments immediately upon receipt of the Avoided
Payments by any Loan Party or any representative of the Loan Parties'
estates and (ii) such amount shall be applied FIRST, to prepay the
outstanding principal balance of the Term Loan until paid in full, and
SECOND, to the extent of any remaining portion of such Avoided Payment,
to prepay Advances until paid in full and to permanently reduce the
Revolver Commitments by the amount of such prepayment applicable to the
Advances.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held
by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to
any letter agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates. All
payments shall be remitted to Agent and all such payments (other than
payments received while no Default or Event of Default has occurred and
is continuing and which relate to the payment of principal or interest
of specific Obligations or which relate to the payment of specific
fees), and all proceeds of Accounts or other Collateral received by
Agent, shall be applied as follows:
(A) FIRST, to pay any Lender Group Expenses then due
to Agent under the Loan Documents, until paid in full,
(B) SECOND, to pay any Lender Group Expenses then due
to the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
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(C) THIRD, to pay any fees then due to Agent (for its
separate account, after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan Documents
until paid in full,
(D) FOURTH, to pay any fees then due to any or all of
the Lenders (after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,
(E) FIFTH, to pay interest due in respect of all
Agent Advances, until paid in full,
(F) SIXTH, ratably to pay interest due in respect of
the Advances (other than Agent Advances), the Swing Loans, and
the Term Loan until paid in full,
(G) SEVENTH, to pay the principal of all Agent
Advances until paid in full,
(H) EIGHTH, ratably to pay all principal amounts then
due and payable (other than as a result of an acceleration
thereof) with respect to the Term Loan until paid in full,
(I) NINTH, to pay the principal of all Swing Loans
until paid in full,
(J) TENTH, to pay the principal of all Advances until
paid in full,
(K) ELEVENTH, if an Event of Default has occurred and
is continuing, to pay the outstanding principal balance of the
Term Loan (in the inverse order of the maturity of the
installments due thereunder) until the Term Loan is paid in
full,
(L) TWELFTH, if an Event of Default has occurred and
is continuing, to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the
then extant Letter of Credit Usage until paid in full,
(M) THIRTEENTH, to pay any other Obligations until
paid in full, and
(N) FOURTEENTH, to Borrowers (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in
writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in SECTION 2.3(h).
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(iii) In each instance, so long as no Default or Event of
Default has occurred and is continuing, SECTION 2.4(b) shall not be
deemed to apply to any payment by Borrowers specified by Borrowers to
be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement or required by any
provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to the
terms thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this SECTION 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this SECTION 2.4
shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Sections 2.1 and
2.12 is greater than either the Dollar or percentage limitations set forth in
Sections 2.1 or 2.12, (an "Overadvance"), Borrowers shall, within 1 Business Day
of the occurrence of an Overadvance, pay to Agent, in cash, the amount of such
excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in Section 2.4(b). In addition,
Borrowers hereby promise to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full to the Lender Group as and when
due and payable under the terms of this Agreement and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit) that have been charged to
the Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to the Base Rate plus the Base Rate
Margin.
The foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on the Daily Balance thereof at a per annum rate less
than 10.25%. To the extent that interest accrued hereunder at the rate set forth
herein would be less than the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to
such minimum rate.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between
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Agent and individual Lenders), a Letter of Credit fee which shall accrue at a
rate equal to 3.50% per annum TIMES the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit )
that have been charged to the Loan Account pursuant to the terms hereof
shall bear interest on the Daily Balance thereof at a per annum rate
equal to 4 percentage points above the per annum rate otherwise
applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 4 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time without prior notice to
Borrowers, to charge such interest and fees, all Lender Group Expenses (as and
when incurred), the charges, commissions, fees, and costs provided for in
SECTION 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in SECTION 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including the installments due
and payable with respect to the Term Loan) to Borrowers' Loan Account, which
amounts (i) after the Revolving Facility Effective Date shall constitute
Advances hereunder and (ii) shall accrue interest at the rate then applicable to
Advances hereunder after the Revolving Facility Effective Date and the Term Loan
prior to the Revolver Facility Effective Date. Any interest not paid when due
shall be compounded by being charged to Borrowers' Loan Account and shall after
the Revolving Facility Effective Date constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances hereunder after the
Revolver Facility Effective Date and the Term Loan prior to the Revolver
Facility Effective Date.
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrowers and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; PROVIDED, HOWEVER, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, IPSO FACTO, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and
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payment received from Borrowers in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations to
the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall on or before the Revolver Facility
Effective Date (i) establish and maintain cash management services of a type and
on terms satisfactory to Agent at one or more of the banks set forth on Schedule
2.7(a) (each, a "CASH MANAGEMENT BANK"), (ii) cause all Collections and all
proceeds from the sale of Inventory of Loan Parties to be deposited each
Business Day into the Depository Accounts, (iii) cause all funds in the
Depository Accounts to be transferred by automated clearing house transfer or
wire transfer, on a daily basis, into a bank account (a "CASH MANAGEMENT
ACCOUNT") at one of the Cash Management Banks, (iv) establish and maintain a
concentration account in the name of the Parent (the "CONCENTRATION ACCOUNT") at
the bank which shall be designated as the concentration account bank for each
such Borrower on Schedule 2.7(a) (the "CONCENTRATION ACCOUNT BANK") which bank
shall be reasonably satisfactory to Agent, (v) cause all remittances on credit
card sales to be transferred, on a daily basis, into the Concentration Account,
and (vi) take such other actions as Agent deems necessary or advisable to grant
to Agent dominion and control over the funds in the Depository Accounts, the
Cash Management Accounts and the Concentration Account. Without limiting the
foregoing, each Loan Party agrees to irrevocably instruct its Account Debtors,
to remit all payments to be made by check or other drafts to a Depository
Account and to remit all payments to be made by wire transfer or by Automated
Clearing House, Inc. payment to a Cash Management Account or the Concentration
Account.
(b) Each Cash Management Bank and the Concentration Account
Bank shall on or before the Revolver Facility Effective Date establish and
maintain Cash Management Agreements with Agent and Borrowers, in form and
substance reasonably acceptable to Agent. Each such Cash Management Agreement
shall provide, among other things, that (i) all items of payment deposited in
such Cash Management Account and the Concentration Account and proceeds thereof
are held by such Cash Management Bank or the Concentration Account Bank, as the
case may be, as agent or bailee-in-possession for Agent, (ii) the Cash
Management Bank and the Concentration Account Bank have no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account or
Concentration Account, other than for payment of its service fees and other
charges directly related to the administration of such Cash Management Account
or Concentration Account and for returned checks or other items of payment,
(iii) (A) with respect to each bank at which a Cash Management Account is
located, such bank agrees, to forward immediately all amounts in each Cash
Management Account to the Concentration Account Bank and to cause daily sweeps
from such Cash Management Account into the Concentration Account, and (B) with
respect to the Concentration Account Bank, such bank agrees from and after a
receipt of a notice (an "ACTIVATION NOTICE") from Agent (which Activation Notice
may be given by Agent at any time at which an Event of Default shall have
occurred and is continuing), to immediately forward all amounts received in the
Concentration Account to the Agent's Account; PROVIDED, HOWEVER, that Agent
reserves the right, in its sole discretion, to require that Collections
representing amounts attributable to state lottery trust funds and money order
trust funds be segregated by the Cash Management Banks and held in a separate
account, to the extent such segregation is reasonably practicable (it being the
intent of Agent, to the extent it has sufficient information to do so, to so
segregate such trust funds and
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avoid the deposit of such funds into the Agent's Account); and (iv) prior to the
receipt by the Concentration Account Bank of an Activation Notice, all amounts
in the Concentration Account may be transferred to and used by Borrowers in the
ordinary course of business. From and after the date Agent has delivered an
Activation Notice to the Concentration Account Bank, no Borrower shall
accumulate or maintain cash in disbursement or payroll accounts as of any date
of determination in excess of checks outstanding against such accounts as of
that date and amounts necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or
replace a Cash Management Account Bank, Cash Management Account, Concentration
Account Bank or Concentration Account; PROVIDED, HOWEVER, that (i) such
prospective Cash Management Bank or Concentration Account Bank shall be
reasonably satisfactory to Agent and Agent shall have consented in writing in
advance to the opening of such Cash Management Account or Concentration Account
with the prospective Cash Management Bank or Concentration Account Bank, and
(ii) prior to the time of the opening of such Cash Management Account or
Concentration Account, Borrowers and such prospective Cash Management Bank or
Concentration Account Bank shall have executed and delivered to Agent a Cash
Management Agreement. Borrowers shall close any of their Cash Management
Accounts or Concentration Account (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank or Concentration Account Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts, Concentration Account Bank with respect to the
Concentration Account or Agent's liability under any Cash Management Agreement
with such Cash Management Bank or Concentration Account Bank is no longer
acceptable in Agent's reasonable judgment.
(d) After the Revolver Facility Effective Date, Administrative
Borrower shall notify Agent in writing promptly, and in any event within five
(5) days, after the establishment of any new credit card relationship and cause
to be delivered to Agent, within fifteen (15) days of the establishment of a new
credit card relationship, a Credit Card Depository Account Agreement duly
executed by the applicable Loan Party and such new credit card servicer.
(e) The Cash Management Accounts, the Concentration Account
and the Depository Accounts shall be cash collateral accounts, with all cash,
checks and similar items of payment in such accounts securing payment of the
Obligations, and in which each Borrower is hereby deemed to have granted a Lien
to Agent.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks or the
Concentration Account Bank pursuant to the Cash Management Agreements, the
Concentration Account Agreement or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be
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honored when presented for payment, then Borrowers shall be deemed not to have
made such payment and interest shall be calculated accordingly. Anything to the
contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and
the Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance, Agent Advance, or Swing Loan requested by
Borrowers and made by Agent or the Lenders hereunder shall be made to the
Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loan, all Advances
(including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the
Lenders to Borrowers or for Borrowers' account, the Letters of Credit issued by
Issuing Lender for Borrowers' account, and with all other payment Obligations
hereunder or under the other Loan Documents, including, accrued interest, fees
and expenses, and Lender Group Expenses. In accordance with Section 2.8, the
Loan Account will be credited with all payments received by Agent from Borrowers
or for Borrowers' account, including all amounts received in the Agent's Account
from any Cash Management Bank. Agent shall render statements regarding the Loan
Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the
Fee Letter, and
(b) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows
(i) a fee of $750 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Loan Parties performed by personnel employed by Agent, (ii)
if implemented, a one time charge of $3,000 plus out-of-
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pocket expenses for expenses for the establishment of electronic collateral
reporting systems, (iii) a fee of $1,500 per day per appraiser, plus
out-of-pocket expenses, for each appraisal of the Collateral performed by
personnel employed by Agent, and (iv) the actual reasonable charges paid or
incurred by Agent if it elects to employ the services of one or more third
Persons to perform financial audits of Loan Parties, to appraise the Collateral,
or any portion thereof, or to assess a Loan Party's business valuation;
PROVIDED, that so long as no Event of Default has occurred and is continuing,
such financial audits and appraisals shall be conducted at Borrowers' expense no
more frequently than one time during each six month period following the Closing
Date and, after the occurrence and during the continance of an Event of Default,
at Borrowers' expense as frequently as Agent shall determine in its Permitted
Discretion.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
LESS the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $15,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount LESS the then extant amount of outstanding Advances.
Borrowers and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
any corresponding Underlying Letter of Credit) shall have an expiry date no
later than 30 days prior to the Maturity Date and all such Letters of Credit
(and any corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to
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the Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Lender is obligated to disburse funds under a Letter of Credit,
Borrowers immediately shall reimburse such L/C Disbursement to Issuing Lender by
paying to Agent an amount equal to such L/C Disbursement not later than 11:00
a.m., California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such
L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Administrative Borrower prior to such time on
such date, then not later than 11:00 a.m., California time, on the Business Day
that Administrative Borrower receives such notice, if such notice is received
prior to 10:00 a.m., California time, on the date of receipt, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under SECTION 2.6. To the
extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrowers pursuant to this paragraph, Agent shall distribute such payment
to the Issuing Lender or, to the extent that Lenders have made payments pursuant
to SECTION 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to SECTION 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to
this SECTION 2.12(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in SECTION
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
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(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; PROVIDED, HOWEVER, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for any Borrower's account, even though this interpretation
may be different from Borrowers' own, and each Borrower understands and agrees
that the Lender Group shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following any Borrower's instructions or
those contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may
require Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C
Undertaking as a result of the Lender Group's indemnification of any Underlying
Issuer; PROVIDED, HOWEVER, that no Borrower shall be obligated hereunder to
indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of
Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer
or the Lender Group any other condition regarding any
Underlying Letter of Credit or any Letter of Credit issued
pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as
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Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this SECTION 2.12(e), as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.
2.13 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.14 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each of Borrowers and in consideration of
the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this SECTION 2.14), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to
make any payment with respect to any of the Obligations as and when due or to
perform any of the Obligations in accordance with the terms thereof, then in
each such event the other Persons composing Borrowers will make such payment
with respect to, or perform, such Obligation.
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(d) The Obligations of each Person composing Borrowers under
the provisions of this SECTION 2.14 constitute the absolute and unconditional,
full recourse Obligations of each Person composing Borrowers enforceable against
each such Borrower to the full extent of its properties and assets, irrespective
of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement,
each Borrower hereby waives notice of acceptance of its joint and several
liability, notice of any Term Loan, Advances or Letters of Credit issued under
or pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or any Lender under or in respect
of any of the Obligations, any requirement of diligence or to mitigate damages
and, generally, to the extent permitted by applicable law, all demands, notices
and other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Borrowers hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of
any of the Obligations, the acceptance of any payment of any of the Obligations,
the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by Lender at any time or times in respect of any default
by any Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Agent or any Lender in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of Agent or any Lender with respect to
the failure by any Borrower to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this SECTION 2.14
afford grounds for terminating, discharging or relieving any Borrower, in whole
or in part, from any of its Obligations under this SECTION 2.14, it being the
intention of each Borrower that, so long as any of the Obligations hereunder
remain unsatisfied, the Obligations of such Borrower under this SECTION 2.14
shall not be discharged except by performance and then only to the extent of
such performance. The Obligations of each Borrower under this SECTION 2.14 shall
not be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or Agent or any Lender. The joint and several liability of the
Borrowers hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Borrowers or Agent or any
Lender.
(f) Each Borrower represents and warrants to Lender Group that
such Borrower is currently informed of the financial condition of Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Lender Group that such Borrower has read and understands the
terms and conditions of the Loan Documents. Each Borrower hereby covenants that
such Borrower will continue to keep informed of Borrowers' financial condition,
the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
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(g) Each of the Borrowers waives all rights and defenses that
such Borrower may have because the Obligations are secured by Real Property.
This means, among other things:
(i) Agent may collect from such Borrower without
first foreclosing on any Real or Personal Property Collateral
pledged by Borrowers.
(ii) If Agent forecloses on any Real Property
Collateral pledged by Borrowers:
(A) The amount of the Obligations may be
reduced only by the price for which that collateral
is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
(B) Agent may collect from such Borrower
even if Agent, by foreclosing on the Real Property
Collateral, has rendered unenforceable any right such
Borrower may have to collect from the other
Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property.
(h) The provisions of this SECTION 2.14 are made for the
benefit of Lender Group and its respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Borrowers as
often as occasion therefor may arise and without requirement on the part of any
member of Lender Group, successor, or assign first to marshal any of its or
their claims or to exercise any of its or their rights against any of the other
Borrowers or to exhaust any remedies available to it or them against any of the
other Borrowers or to resort to any other source or means of obtaining payment
of any of the Obligations hereunder or to elect any other remedy. The provisions
of this SECTION 2.14 shall remain in effect until all of the Obligations shall
have been paid in full or otherwise fully satisfied. If at any time, any
payment, or any part thereof, made in respect of any of the Obligations, is
rescinded or must otherwise be restored or returned by any member of Lender
Group upon the insolvency, bankruptcy or reorganization of any of the Borrowers,
or otherwise, the provisions of this SECTION 2.14 will forthwith be reinstated
in effect, as though such payment had not been made.
(i) Each of the Borrowers hereby agrees that it will not
enforce any of its rights of contribution or subrogation against the other
Borrowers with respect to any liability incurred by it hereunder or under any of
the other Loan Documents, any payments made by it to Lender Group with respect
to any of the Obligations or any collateral security therefor until such time as
all of the Obligations have been paid in full in cash. Any claim which any
Borrower may have against any other Borrower with respect to any payments to
Lender Group hereunder or under any other Loan Documents are hereby expressly
made subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or
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distribution of any character, whether in cash, securities or other property,
shall be made to any other Borrower therefor.
(j) Each of the Borrowers hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, the
payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, ▇▇▇ for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Lender Group, and such Borrower shall deliver
any such amounts to Agent for application to the Obligations in accordance with
Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT.
The obligation of the Lender Group (or any member thereof) to make the Term
Loan, is subject to the fulfillment, to the reasonable satisfaction of Agent, of
each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before September 26,
2001;
(b) the Interim Bankruptcy Court Order shall have been
approved and signed by the Bankruptcy Court on or before September 26, 2001, and
such Order shall be in full force and effect and shall not have been reversed,
stayed, modified or amended absent the written joinder or consent of the Agent,
on behalf of the Required Lenders, and the Borrowers;
(c) Agent shall have received each of the following documents,
in form and substance reasonably satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) the Stock Pledge Agreement, together with all promissory
notes and certificates representing the shares of Stock pledged
thereunder (unless such promissory notes and shares are in the
possession of the Existing Lender), as well as Stock powers with
respect thereto endorsed in blank,
(ii) the Trademark Security Agreement,
(iii) the Disbursement Letter,
(iv) the Due Diligence Letter,
(v) the Fee Letter,
(vi) the Mortgages, and
(vii) the Officers' Certificate;
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(d) Agent shall have received a certificate from the Secretary
of each Loan Party attesting to the resolutions of such Loan Party's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Loan Party is a party and authorizing
specific officers of such Loan Party to execute the same;
(e) Agent shall have received copies of each Loan Party's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Loan Party;
(f) Agent shall have received a certificate of status with
respect to each domestic Loan Party, dated within 30 days of the Closing Date or
otherwise reasonably acceptable to Agent, such certificate to be issued by the
appropriate officer of the jurisdiction of organization of such Loan Party,
which certificate shall indicate that such Loan Party is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of status with
respect to each domestic Loan Party, each dated within 30 days of the Closing
Date or otherwise reasonably acceptable to Agent, such certificates to be issued
by the appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Loan Party) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Loan Party is in good standing in such jurisdictions;
(h) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.8, the form
and substance of which shall be satisfactory to Agent;
(i) Agent shall have received (i) an opinion of Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Loan Parties, in form and substance
reasonably satisfactory to Agent and (ii) an opinion of Loan Parties' Ohio
counsel, as to such matters as the Agent may reasonably request, which opinions
shall be in form and substance reasonably satisfactory to Agent;
(j) Agent shall have received a certificate from the chief
executive officer or chief financial officer of Administrative Borrower,
certifying as to the matters set forth SECTION 3.4 (other than clause (e)
thereof) pertaining to the Loan Parties;
(k) Agent shall have received a certificate of the chief
financial officer of Parent certifying that all tax returns required to be filed
by each Loan Party have been timely filed and all taxes upon each Loan Party or
its properties, assets, income, and franchises (including Real Property taxes
and payroll taxes) have been paid prior to delinquency, except such taxes that
are the subject of a Permitted Protest;
(l) Agent shall have received and been satisfied with the
Closing Date Projections and the Business Plan together with a certificate of
the chief financial officer of the Parent stating, that each of the Closing Date
Projections and the Business Plan have been prepared on a reasonable basis and
in good faith and is based on assumptions believed by
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Borrowers to be reasonable at the time made and from the best information then
available to Borrowers;
(m) Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(n) Borrowers shall have received all material licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by each Loan Party of this Agreement
or any other Loan Document or with the consummation of the transactions
contemplated hereby and thereby;
(o) no Material Adverse Change shall have occurred since May
31, 2001;
(p) Agent shall have received mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral (other than the Real Property identified on Schedule R-1 which
constitutes either vacant real property or developed but non-operating real
property (collectively, the "DARK PROPERTIES")) issued by a title insurance
company satisfactory to Agent (each, a "MORTGAGE POLICY" and, collectively, the
"MORTGAGE POLICIES") in amounts satisfactory to Agent assuring Agent that the
Mortgages on such Real Property Collateral are valid and enforceable first
priority mortgage Liens on such Real Property Collateral free and clear of all
defects and encumbrances except Permitted Priority Liens and except Carve-Out
Expenses having a priority over the Obligations to the extent set forth in the
definition of Agreed Administrative Expense Priorities, and the Mortgage
Policies otherwise shall be in form and substance reasonably satisfactory to
Agent;
(q) Agent shall have received a real estate survey with
respect to each parcel of Real Property Collateral set forth on Schedule 3.1(q);
the surveyors retained for such surveys, the scope of the surveys, and the
results thereof shall be reasonably acceptable to Agent;
(r) Agent shall have received UCC, tax and judgment lien
searches and other evidence satisfactory to it evidencing the absence of any
Liens on the Collateral other than Permitted Liens; and
(s) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance reasonably satisfactory
to Agent.
3.2 CONDITIONS PRECEDENT TO ADVANCES AND LETTERS OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make Advances or
assist the Borrowers in obtaining Letters of Credit, is subject to the
fulfillment of each of the conditions precedent set forth below:
(a) the Final Financing Order shall have been approved and
signed by the Bankruptcy Court and shall authorize the Advances and Term Loan
made and to be made to the Borrowers and the Letters of Credit issued and to be
issued on behalf of the Borrowers in an aggregate amount of between $31,000,000
and $46,000,000 and shall further authorize the Loan Parties to repay the
Pre-Petition Obligation with the proceeds of the initial Advances, and such
Order shall be in full force and effect and shall not have been reversed,
stayed, modified or
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amended absent the written joinder or consent of the Agent, on behalf of the
Required Lenders, and the Borrowers;
(b) the Lenders shall be satisfied that the Agent has been
granted and continues to have a perfected, first priority Lien on the Collateral
subject to Permitted Priority Liens and Carve-Out Expenses having a priority
over the Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities;
(c) Agent shall have received each of the following documents,
in form and substance reasonably satisfactory to Agent, duly executed, and each
such document shall be in full force and effect:
(i) Cash Management Agreements, the Credit Card Depository
Account Agreements and the Depository Account Agreements,
(ii) each promissory note, share of Stock and Stock power
described in Section 3.1(c)(i) that was not delivered to Agent under
that Section,
(iii) the Pay-off Letter together with UCC termination
statements and other documentation evidencing the termination by
Existing Lender of its Liens in and to the assets and property of the
Loan Parties;
(d) no Material Adverse Change shall have occurred since the
Closing Date;
(e) Lenders shall have completed their business and collateral
due diligence, including (i) a collateral audit and review of each Loan Party's
books and records and verification of each Loan Party's representations and
warranties to the Lender Group, the results of which shall be satisfactory to
the Lenders and (ii) receipt by the Lenders of satisfactory results of its field
survey due diligence, audit and business valuation appraisals, including an
appraisal of the Enterprise Value of Parent and its Subsidiaries, by auditors,
examiners and/or appraisers selected by Agent, the results of each of the
foregoing shall be satisfactory to the Lenders in their Permitted Discretion;
(f) no pending claim, investigation or litigation by any
Governmental Authority shall exist with respect to any Loan Party or the
transactions contemplated hereby;
(g) Agent shall be satisfied in its Permitted Discretion with
the cash management system of Borrowers and Agent shall have received Schedule
2.7(a) to this Agreement, which shall be satisfactory to the Agent;
(h) Borrowers shall have the Required Availability immediately
after giving effect to the extensions of the initial Advances hereunder;
(i) Agent shall have received endorsements to the Mortgage
Policies delivered to Agent pursuant to SECTION 3.1(P), which endorsements (i)
increase the insurance amounts of such Mortgage Policies to an aggregate amount
of at least $25,000,000, (ii) insure Agent, up to such increased amount of
insurance, that the Mortgages covered by such Mortgage
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Policies are valid and enforceable first priority mortgage Liens on the Real
Property Collateral such Mortgages purport to encumber free and clear of all
defects and encumbrances, except Permitted Priority Liens and Carve-Out Expenses
having a priority over the Obligations to the extent set forth in the definition
of Agreed Administrative Expense Priorities, (iii) are in form and substance
reasonably satisfactory to Agent, and (iv) insure that the Mortgages will not
lose their first Lien priority status (except as to customary items noted in the
endorsements) on the Real Property Collateral as Advances are borrowed and
re-borrowed pursuant to SECTION 2.1 hereof;
(j) Agent shall have received copies of each Material Contract
and each credit card agreement to which a Loan Party is a party, together with a
certificate of the Secretary of Administrative Borrower certifying each such
document as being a true, correct, and complete copy thereof; and
(k) Borrower shall have paid to Agent all Lender Group
Expenses owing as of the Revolver Facility Effective Date.
3.2(A) CONDITION PRECEDENT TO INCREASE IN MAXIMUM REVOLVER
AMOUNT. The obligation of Lender Group (or any member thereof) to make Advances
or assist in the issuance of Letters of Credit in an aggregate amount in excess
of $20,250,000 shall be subject to Persons, acceptable to Agent in its Permitted
Discretion, providing a Total Commitment of up to $15,000,000, which Commitment
may be allocated, in the Agent's Permitted Discretion to the Term Loan and/or
the Revolver Commitments and shall be subject to such term and conditions as are
acceptable to the Agent in its sole discretion.
3.3 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, Agent shall have
received certified copies of the policies of insurance, together with the
endorsements thereto, as are required by SECTION 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel;
(b) within 45 days of the Closing Date, Agent shall have
received Mortgage Policies (or marked commitments to issue the same) for the
Dark Properties in amounts satisfactory to Agent assuring Agent that the
Mortgages on such Dark Properties are valid and enforceable first priority
mortgage Liens on such Dark Properties free and clear of all defects and
encumbrances except Permitted Priority Liens and except Carve-Out Expenses
having a priority over the Obligations to the extent set forth in the definition
of Agreed Administrative Expense Priorities, and the Mortgage Policies otherwise
shall be in form and substance reasonably satisfactory to Agent; and
(c) within 45 days of the Closing Date, Agent shall have
received (i) a real estate survey with respect to each parcel of Real Property
Collateral not set forth on Schedule 3.1(q); the surveyors retained for such
surveys, the scope of the surveys, and the results thereof
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shall be reasonably acceptable to Agent and (ii) endorsements to the Mortgage
Policies delivered pursuant to SECTION 3.1(P) which cover the Real Property
Collateral described in clause (i) above, reflecting such surveys and providing
Agent with the scope of coverage (with respect to survey related matters) that
Agent obtained under the other Mortgage Policies delivered pursuant to SECTION
3.1(P) on the Closing Date.
3.4 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation
of the Lender Group (or any member thereof) to make all Term Loans and Advances
(or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates;
(d) no Material Adverse Change shall have occurred since the
Closing Date; and
(e) the Interim Financing Order or the Final Financing Order,
as the case may be, shall have been signed and entered by the Bankruptcy Court,
and such order shall be in full force and effect and shall not have been
reversed, stayed, modified or amended absent the express written joinder or
consent of Agent, on behalf of the Required Lenders, and, unless Agent, on
behalf of the Required Lenders, shall have expressly joined therein or expressly
consented thereto in writing, there shall be no motion pending (i) to reverse,
modify or amend the Interim Financing Order or Final Financing Order, as the
case may be, (ii) to permit any administrative expense against any Loan Party to
have administrative priority equal to or superior to the priority of Agent and
the Lenders in respect of the Obligations or (iii) to grant or permit the grant
of a Lien on any of the Collateral.
3.5 TERM. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Guarantors, Agent, and the Lenders and shall
continue in full force and effect for a term ending on the date (the "Maturity
Date") that is the earliest to occur of (a) one year from the Closing Date, (b)
the date which is 30 days from the Entry Date, if upon that date the Final
Bankruptcy Order (authorizing either (i) the Term Loan in an amount equal to the
Term Loan Amount or (ii) the Advances and Term Loan made and to be made to the
Borrowers and the Letters of Credit issued and to be issued on behalf of the
Borrowers in an aggregate amount of between $31,000,000 and $46,000,000) has not
been entered, (c) the date of substantial consummation (as defined in Section
1101(2) of the Bankruptcy Code) of a plan of reorganization in the Chapter 11
Case that has been confirmed by order of the Bankruptcy Court,
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(d) the conversion of the Chapter 11 Case to a case under Chapter 7 of the
Bankruptcy Code, (e) the Loan Parties ceasing or discontinuing their ordinary
business operations, and (f) the appointment of a trustee or an examiner with
expanded powers under the Bankruptcy Code. Borrowers may, by written notice to
Agent (such notice being an "Extension Notice") given no earlier than 90 days
and no later than 30 days prior to the Maturity Date, exercise their right to
extend the Maturity Date described in clause (a) of this SECTION 3.5 (and not
the Maturity Date described in any other clause of this Section 3.5) to a date
180 days after the first anniversary of the Closing Date (such 180 day period is
referred to herein as the "Extension Period"). The Agent shall promptly transmit
the Extension Notice to each Lender. Effective on the date on which Borrowers
pay the extension fee set forth in the Fee Letter to Agent in connection with
such extension of the Maturity Date, and so long as no Default or Event of
Default exists on such date and such extension and the payment of such extension
fee has been approved by a final order of the Bankruptcy Court (which may be the
Final Financing Order) and such order is in full force and effect and has not
been reversed, stayed, modified or amended absent the written joinder or consent
of the Agent, on behalf of the Required Lenders, the Maturity Date described in
clause (a) of this Section 3.5 shall be automatically and immediately extended
until the end of the Extension Period. The foregoing notwithstanding, the Lender
Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.
3.6 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrowers of their duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.7 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any
time upon 90 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including either (i) providing cash collateral
to be held by Agent for the benefit of those Lenders with a Revolver Commitment
in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender), in
full. If Administrative Borrower has sent a notice of termination pursuant to
the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including either (i)
providing cash collateral to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the then extant
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Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender), in full, on the date set forth as the date of
termination of this Agreement in such notice.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Loan Party hereby grants to Agent,
for the benefit of the Lender Group, a continuing security interest in all of
its right, title, and interest in all currently existing and hereafter acquired
or arising Personal Property Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by such Loan Party
of each of its covenants and duties under the Loan Documents. The Agent's Liens
in and to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or any Loan Party. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, each Loan Party has no
authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, each Loan Party, immediately upon the request of
Agent after the Revolver Facility Effective Date, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the Revolver Facility Effective Date and the
occurrence and during the continuation of an Event of Default, Agent or Agent's
designee may (a) notify Account Debtors of each Loan Party that the Accounts,
chattel paper, or General Intangibles have been assigned to Agent or that Agent
has a security interest therein, or (b) collect the Accounts, chattel paper, or
General Intangibles directly and charge the collection costs and expenses to the
Loan Account. Each Loan Party agrees that it will hold in trust for the Lender
Group, as the Lender Group's trustee, any Collections that it receives and
immediately will deliver said Collections to Agent or a Cash Management Bank in
their original form as received by such Loan Party.
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; PLEDGE
AMENDMENTS; DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.
(a) Each Loan Party authorizes Agent to file any financing
statement required hereunder, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of any
Loan Party where permitted by applicable law. Each Loan Party hereby ratifies
the filing of any financing statement, and any continuation statement or
amendment with respect thereto, filed without the signature of any Loan Party
prior to the date hereof.
(b) If any Loan Party acquires any commercial tort claims
after the date hereof, such Loan Party shall immediately deliver to Agent a
written description of such commercial tort claim and shall deliver a written
agreement, in form and substance reasonably satisfactory to Agent, pursuant to
which such Loan Party shall pledge and collaterally assign all
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of its right, title and interest in and to such commercial tort claim to Agent,
for the benefit of the Lenders, as security for the Obligations (a "COMMERCIAL
TORT CLAIM ASSIGNMENT").
(c) At any time upon the request of Agent, each Loan Party
shall execute and deliver to Agent, any and all financing statements, original
financing statements in lieu of continuation statements, fixture filings,
security agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (the "ADDITIONAL
DOCUMENTS") that Agent may request in its Permitted Discretion, in form and
substance reasonably satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents, including any Mortgages.
(d) To the maximum extent permitted by applicable law, each
Loan Party authorizes Agent to execute any such Additional Documents in such
Loan Party's name and authorizes Agent to file such executed Additional
Documents in any appropriate filing office. To the maximum extent permitted by
applicable law, each Loan Party authorizes the filing of any such Additional
Documents without the signature of such Loan Party in any appropriate filing
office. In addition, on such periodic basis as Agent shall require, each Loan
Party shall (i) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by such Loan
Party during the prior period, (ii) cause all patents, copyrights, and
trademarks acquired or generated by such Loan Party that are not already the
subject of a registration with the appropriate filing office (or an application
therefor diligently prosecuted) to be registered with such appropriate filing
office in a manner sufficient to impart constructive notice of such Loan Party's
ownership thereof, and (iii) cause to be prepared, executed, and delivered to
Agent supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
4.5 POWER OF ATTORNEY. Each Loan Party hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Loan Party's true and lawful attorney, with
power to (a) if such Loan Party refuses to, or fails timely to execute and
deliver any of the documents described in Section 4.4, sign the name of such
Loan Party on any of the documents described in Section 4.4, (b) at any time
that an Event of Default has occurred and is continuing, sign such Loan Party's
name on any invoice or ▇▇▇▇ of lading relating to the Collateral, drafts against
Account Debtors, or notices to Account Debtors, (c) send requests for
verification of Accounts, (d) endorse such Loan Party's name on any Collection
item that may come into the Lender Group's possession, (e) at any time that an
Event of Default has occurred and is continuing, make, settle, and adjust all
claims under such Loan Party's policies of insurance and make all determinations
and decisions with respect to such policies of insurance, and (f) at any time
that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Loan Party's attorney, and each and every one of
its rights and powers, being coupled with an interest, is irrevocable
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until all of the Obligations have been fully and finally repaid and performed
and the Lender Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter, upon reasonable notice and during normal business hours, to
inspect the Books and to check, test, and appraise the Collateral in order to
verify each Loan Party's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral; provided, that so
long as no Event of Default has occurred and is continuing, such inspections
shall be conducted no more frequently than one time during each six month period
following the Closing Date and, after the occurrence and during the continuance
of an Event of Default, as frequently as Agent shall reasonably determine.
4.7 CONTROL AGREEMENTS. Each Loan Party agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless such Loan Party,
Agent, and the substitute securities intermediary have entered into a Control
Agreement. No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by any Loan Party without the prior written consent of Agent. Upon the
occurrence and during the continuance of a Default or Event of Default, Agent
may notify any securities intermediary to liquidate the applicable Securities
Account or any related Investment Property maintained or held thereby and remit
the proceeds thereof to the Agent's Account.
4.8 ADMINISTRATIVE PRIORITY. Each Loan Party hereby agrees that the
Obligations shall constitute allowed administrative expenses in the Chapter 11
Cases having priority over all administrative expenses of and unsecured claims
against such Loan Party now existing or hereafter arising, of any kind or nature
whatsoever, including without limitation all administrative expenses of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code, subject, as to
priority, only to the Carve-Out Expenses having priority over any Obligations to
the extent set forth in the definition of Agreed Administrative Expense
Priorities.
4.9 GRANTS, RIGHTS AND REMEDIES. The Liens and security interests
granted by each Loan Party to Agent (for the benefit of Lender Group) by and
pursuant to Section 4.1 hereof may be independently granted by the Loan
Documents hereafter entered into. This Agreement, the Interim Financing Order,
the Final Financing Order and such other Loan Documents supplement each other,
and the grants, priorities, rights and remedies of Agent hereunder and
thereunder are cumulative.
4.10 NO FILINGS REQUIRED. The Liens and security interests granted by
each Loan Party to Agent (for the benefit of Lender Group) herein shall be
deemed valid, binding, continuing, enforceable and fully-perfected first
priority Liens on the Collateral by entry of the Interim Financing Order and the
Final Financing Order, as the case may be, subject to Permitted Priority Liens.
Agent shall not be required to file any financing statements, notices of Lien or
similar instruments in any jurisdiction or filing office or to take any other
action in order to validate or perfect the Liens and security interests granted
by or pursuant to this Agreement, the Interim Financing Order, the Final
Financing Order or any other Loan Document.
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4.11 SURVIVAL. The Liens and security interests granted to Agent (for
the benefit of Lender Group), the priority of such Liens and security interests,
and the administrative priorities and other rights and remedies granted to
Lender Group pursuant to this Agreement, the Interim Financing Order, the Final
Financing Order and the other Loan Documents (specifically including but not
limited to the existence, perfection and priority of the Liens and security
interest provided herein and therein) and the administrative priority provided
herein and therein shall not be modified, altered or impaired in any manner by
any other financing or extension of credit or incurrence of debt by any Loan
Party (pursuant to Section 364 of the Bankruptcy Code or otherwise), or by any
dismissal or conversion of the Chapter 11 Cases, or by any other act or omission
whatsoever. Without limitation, notwithstanding any such order, financing,
extension, incurrence, dismissal, conversion, act or omission;
(a) except for the Carve-Out Expenses having a priority over
the Obligations to the extent set forth in the definition of Agreed
Administrative Expense Priorities, no costs or expenses of administration which
have been or may be incurred in the Chapter 11 Cases or any conversion of the
same or in any other proceedings related thereto, and no priority claims, are or
will be prior to or on a parity with any claim of Agent and Lenders against any
Loan Party in respect of any Obligation;
(b) the Liens and security interests granted by each Loan
Party to Agent (for the benefit of Lender Group) by and pursuant to the Interim
Financing Order, the Final Financing Order and Section 4.1 hereof shall
constitute valid, binding, continuing, enforceable and fully-perfected first
priority Liens, subject only to Permitted Priority Liens and except for
Carve-Out Expenses having a priority over the Obligations to the extent set
forth in the definition of Agreed Administrative Expense Priorities, and shall
be prior to all other Liens and interests, now existing or hereafter arising, in
favor of any other creditor or any other Person whatsoever; and
(c) the Liens and security interests granted by each Loan
Party to Agent (for the benefit of Lender Group) by and pursuant to the Interim
Financing Order, the Final Financing Order and Section 4.1 hereof shall continue
to be valid, binding, continuing, enforceable and fully-perfected without the
necessity for Agent to file any financing statements or to otherwise perfect
such Liens and security interests under applicable non-bankruptcy law.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each
Loan Party makes the following representations and warranties to the Lender
Group, which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
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5.1 NO ENCUMBRANCES. Each Loan Party has good and marketable title to
its assets and properties comprising Collateral and the Real Property
Collateral, free and clear of Liens except for Permitted Liens.
5.2 [INTENTIONALLY OMITTED]
5.3 [INTENTIONALLY OMITTED]
5.4 EQUIPMENT. All of the Equipment is used or held for use in each
Loan Party's business and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on Schedule 5.5.
5.6 INVENTORY RECORDS. Each Loan Party keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN,
ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The state of incorporation of each Loan Party is set forth
in Schedule 5.7(a).
(b) The chief executive office of each Loan Party is located
at the address indicated in Schedule 5.7(b).
(c) Each Loan Party's FEIN and organizational identification
number is identified in Schedule 5.7(c).
(d) None of the Loan Parties holds any commercial tort claim
as of the date hereof, except as set forth in Schedule 5.7(d).
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change, except in each case as such may
be affected by the commencement of the Chapter 11 Case and all events and
circumstances associated therewith.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Loan Party, by class, and,
as of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Loan Party's capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. None of the Loan
Parties is subject
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to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by such Borrower. All of the outstanding capital Stock of
each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. Neither Borrowers
nor any of their Subsidiaries are subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
(e) Each of Borrowers' Subsidiaries listed on Schedule 5.8(e)
is an inactive company, has no operations, conducts no business and owns no
assets.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) Subject to the approval of the Bankruptcy Court pursuant
to the Orders, the execution, delivery, and performance by each Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Borrower.
(b) The execution, delivery, and performance by each Borrower
of this Agreement and the Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
applicable to such Borrower, the Governing Documents of such Borrower, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Borrower, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any Material Contract of
such Borrower, except defaults that are stayed by the Bankruptcy Court, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Borrower, other than Permitted
Liens, or (iv) require any approval of such Borrower's interestholders or any
approval or consent of any Person under any Material Contract of such Borrower
except for approvals or consents where any action that may be taken as a result
of the failure to obtain such approval or consent is stayed by the Bankruptcy
Court.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, the execution, delivery, and performance by each
Borrower of this Agreement and the Loan Documents to which any Borrower is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any
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Governmental Authority or other Person except for the approval of the Bankruptcy
Court pursuant to the Orders.
(d) This Agreement and the other Loan Documents to which each
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, subject to the approval of the
Bankruptcy Court pursuant to the Orders.
(e) Subject to the approval of the Bankruptcy Court pursuant
to the Orders, the Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Priority Liens and Carve-Out Expenses
having a priority over the Obligations to the extent set forth in the definition
of Agreed Administrative Expense Priorities.
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of Guarantor, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Guarantor, other than Permitted
Liens, or (iv) require any approval of Guarantor's interestholders or any
approval or consent of any Person under any Material Contract of Guarantor.
(h) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which such Guarantor is a party do not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority or other Person, other than the
filings referred to in subsection (c) of this Section 5.9.
(i) The Loan Documents to which each Guarantor is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
each Loan Party, threatened against any Borrower, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters relating to the commencement of the
Chapter 11 Case and the filing and prosecution of claims therein and (c) matters
arising after the Closing Date that, if decided adversely to any Borrower, or
any of its
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Subsidiaries, as applicable, reasonably could not be expected to result in a
Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Parent and its Subsidiaries that have been delivered by Parent to the Lender
Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments, or as otherwise shall be acceptable to Agent in its
Permitted Discretion) and present fairly in all material respects, Parent's and
its Subsidiaries' financial condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Parent or Parent and its Subsidiaries taken as a whole
since the date of the latest financial statements submitted to the Lender Group
on or before the Closing Date other than the commencement of the Chapter 11 Case
and all events and circumstances leading thereto and associated therewith.
5.12 FRAUDULENT TRANSFER. No transfer of property is being made by any
Loan Party and no obligation is being incurred by any Loan Party in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of any Loan Party.
5.13 EMPLOYEE BENEFITS. None of the Borrowers, any of their
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a)
the operations of the Loan Parties are in compliance with all applicable
Environmental Laws; (b) there has been no Release at any of the properties owned
or operated by any Loan Party or a predecessor in interest, or at any disposal
or treatment facility which received Hazardous Materials generated by any Loan
Party or any predecessor in interest; (c) no Environmental Action has been
asserted against any Loan Party or any predecessor in interest, nor does any
Loan Party have knowledge or notice of any threatened or pending Environmental
Action against any Loan Party or any predecessor in interest; (iv) no
Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by any Loan Party or any predecessor in
interest; and (v) the Loan Parties have caused to be delivered or made available
to Agent true and complete copies of all environmental reports, studies,
investigations or material correspondence regarding any Releases, violations of
Environmental Law or Environmental Liabilities and Costs of or by any of the
Loan Parties or any environmental conditions at any of the properties owned or
leased by any of the Loan Parties, which are in the possession of any Borrower
or its agents.
5.15 BROKERAGE FEES. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 INTELLECTUAL PROPERTY. Each Loan Party owns, or holds licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the conduct of its business as currently conducted.
Attached hereto as Schedule 5.16 is a true, correct, and complete listing of all
material patents, patent applications, trademarks, trademark
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applications, copyrights, and copyright registrations as to which each Loan
Party is the owner or is an exclusive licensee.
5.17 LEASES. Each Loan Party enjoys peaceful and undisturbed possession
under all leases (other than the Ground Leases) material to the business of such
Loan Party and to which it is a party or under which it is operating. All of
such leases are valid and subsisting and no material default by such Loan Party
exists under any of them.
5.18 DDAS. Set forth on Schedule 5.18 are all of each Borrower's DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of each Loan Party in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of each Loan Party in writing to Agent or any Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Projections included in the Business Plan
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Borrowers' good faith best estimate
of its future performance for the periods covered thereby.
5.20 [INTENTIONALLY OMITTED].
5.21 REGULATION U. None of the Borrowers is nor will be engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System), and no proceeds of any Advance or any Term Loan
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock.
5.22 PERMITS, ETC. Each Loan Party has, and is in compliance with, all
permits, licenses, authorizations, approvals, entitlements and accreditations
required for such Person lawfully to own, lease, manage or operate, or to
acquire, each business currently owned, leased, managed or operated, or to be
acquired, by such Person except for such permits, licenses, authorizations,
approvals, entitlements and accreditations the absence of which could not
reasonably be expected to result in a Material Adverse Change. No condition
exists or event has occurred which, in itself or with the giving of notice or
lapse of time or both, would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such permit, license, authorization, approval,
entitlement or accreditation, and there is no claim that any thereof is not in
full force and effect.
5.23 MATERIAL CONTRACTS. Set forth on Schedule 5.23 is a complete and
accurate list as of the Closing Date of all Material Contracts of each Loan
Party, showing the
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parties and subject matter thereof and amendments and modifications thereto.
Each such Material Contract (i) is in full force and effect and is binding upon
and enforceable against such Loan Party that is a party thereto and, to the best
knowledge of such Loan Party, all other parties thereto in accordance with its
terms except to the extent terminated in accordance with its terms after the
Closing Date, (ii) has not been otherwise amended or modified, and (iii) is not
in default due to the action of such Loan Party or, to the best knowledge of
such Loan Party, any other party thereto.
5.24 [INTENTIONALLY OMITTED].
5.25 CUSTOMERS AND SUPPLIERS. Except as set forth on Schedule 5.25,
there exists no actual or threatened termination, cancellation or limitation of,
or modification to or change in, the business relationship between (a) any Loan
Party, on the one hand, and any customer or any group thereof, on the other
hand, whose agreements with such Loan Party are individually or in the aggregate
material to the business or operations of such Loan Party, or (b) any Loan
Party, on the one hand, and any material supplier thereof, on the other hand;
and there exists no present state of facts or circumstances that could
reasonably give rise to or result in any such termination, cancellation,
limitation, modification or change.
5.26 TITLE TO PROPERTIES.
(a) GENERAL. Each Loan Party has good and marketable title to
all of its material personal properties and assets, and good and marketable
title to all of its Real Property, in all cases free and clear of all Liens,
except for Permitted Liens. Without limiting the generality of the foregoing,
each Loan Party has good, marketable and insurable fee simple title to each
parcel of Real Property encumbered by a Mortgage (as such insurability may be
subject to any restrictions, easements or covenants which are shown as title
exceptions on the title abstract reports delivered to Agent prior to the Closing
Date and such other standard exceptions and limitations to title insurance
coverages contained in the forms of title insurance policies utilized in the
states where such Real Property is located), free and clear of all Liens except
for Permitted Liens. The Permitted Liens encumbering the Real Property owned by
a Loan Party (i) do not include any deeds of trust by such Loan Party in favor
of any party other than Agent, and (ii) do not and will not adversely affect the
value, operation or use of the applicable Real Property (as currently used) or
any Borrower's ability to repay any of the Obligations. Loan Parties do not own
any Real Property that is not listed on Schedule R-1 hereto.
(b) MORTGAGES. Each Mortgage, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (i) a
valid, perfected, first priority lien on the applicable Real Property and (ii)
perfected, first priority security interests in and to, and perfected collateral
assignments of, all personalty (including all leases and rents referred to
therein), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Priority Liens and the Liens created by the Loan
Documents. There are no claims for payment for work, labor or materials
affecting the Real Properties to be encumbered by the Mortgages which are or may
become a lien prior to, or of equal priority with, the Liens created by the
Mortgages and which, either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Change unless, when such claims are
combined with all
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other inaccuracies in the representations and warranties in this Section 5.26,
the representations and warranties in this Section 5.26 are false or misleading
in any material respect when taken as a whole.
(c) COMPLIANCE. Except as set forth on Schedule 5.26(c)
hereto, each Real Property owned or leased by each Loan Party and the use
thereof complies in all respects with: (i) all applicable federal, state,
county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting such property or any part thereof, or the construction,
use, alteration or operation thereof, or any part thereof; including, without
limitation, building and zoning ordinances and codes; (ii) all permits, licenses
and authorizations and regulations relating thereto; and (iii) all covenants,
agreements, leases, restrictions and encumbrances contained in any instruments,
either of record or known to Borrowers, at any time in force affecting such
property or any part thereof, including, without limitation, any which may
require repairs, modifications or alterations in or to such property or any part
thereof or in any way limit the use and enjoyment thereof, except to the extent
any such failure to comply, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Change unless, when such
failure is combined with all other inaccuracies in the representations and
warranties in this Section 5.26, the representations and warranties in this
Section 5.26 are false or misleading in any material respect when taken as a
whole. Except as set forth on Schedule 5.26(c) hereto, Loan Parties are not in
default or violation of any requirement of any Governmental Authority, except to
the extent such default or violation, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Change unless, when
such default or violation is combined with all other inaccuracies in the
representations and warranties in this Section 5.26, the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole. There has not been committed by any Loan Party, or by any
other Person in occupancy of or involved with the operation or use of the Real
Properties owned or leased by such Loan Party, any act or omission affording the
federal government or any other Governmental Authority the right of forfeiture
as against any such property or any part thereof or any monies paid in
performance of the Loan Parties' obligations under any of the Loan Documents.
(d) CONDEMNATION. No temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain or other proceeding has
been commenced or, to the best knowledge of each Loan Party, is threatened or
contemplated with respect to all or any portion of any Real Property owned or
leased by the Loan Parties or for the relocation of roadways providing access to
any Real Property owned or leased by the Loan Parties, except to the extent any
such taking, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Change unless, when such taking is combined
with all other inaccuracies in the representations and warranties in this
Section 5.26, the representations and warranties in this Section 5.26 are false
or misleading in any material respect when taken as a whole.
(e) UTILITIES AND PUBLIC ACCESS. Each Real Property owned or
leased by the Loan Parties has rights of access to public ways and is served by
water, sewer, sanitary sewer and storm drain facilities adequate to service such
property for its respective intended uses, except to the extent such lack of
rights or service, either individually or in the aggregate, could
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not reasonably be expected to have a Material Adverse Change unless, when such
lack of rights or service is combined with all other inaccuracies in the
representations and warranties in this subsection (q), the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole. All roads necessary for the use of Real Property owned or
leased by the Loan Parties for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities, except to
the extent such lack of such roads, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Change unless, when
such lack of such roads is combined with all other inaccuracies in the
representations and warranties in this Section 5.26, the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole.
(f) SEPARATE LOTS. Each Real Property owned by the Loan
Parties is comprised of one (1) or more parcels that constitute a separate tax
lot or lots and does not constitute a portion of any other tax lot that is not a
part of such property, except to the extent such failure, either individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Change unless, when such failure is combined with all other inaccuracies in the
representations and warranties in this Section 5.26, the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole.
(g) BOUNDARIES. All improvements located on the real
properties owned or leased by the Loan Parties lie wholly within the boundaries
and building restriction lines of such property, and no improvements on
adjoining properties encroach upon such property, and no easements or other
encumbrances upon the applicable property encroach upon any of the improvements,
so as to affect the value or marketability of the applicable property, except to
the extent any such encroachment, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Change unless, when such
encroachment is combined with all other inaccuracies in the representations and
warranties in this Section 5.26, the representations and warranties in this
Section 5.26 are false or misleading in any material respect when taken as a
whole.
(h) FILING AND RECORDING TAXES. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable legal requirements currently in effect in connection
with the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgages, have been paid, and, under current legal requirements, each of the
Mortgages is enforceable in accordance with their respective terms by the holder
thereof, subject to principles of bankruptcy, insolvency and other laws
generally applicable to creditors' rights and the enforcement of debtors'
obligations.
(i) GROUND LEASES. A Loan Party is the owner of a valid and
subsisting interest as lessee under each Ground Lease, and the Loan Parties
enjoy the quiet and peaceful possession of the property demised thereby except
to the extent any such lack of enjoyment, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Change
unless, when such lack of enjoyment is combined with all other inaccuracies in
the representations and warranties in this Section 5.26, the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole. Each
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Ground Lease is in full force and effect and has not been modified or
supplemented except as indicated in the copies thereof delivered to Agent on or
about the date hereof, except to the extent any such lack of enforceability
against a landlord or such modification or supplement, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Change unless, when such lack of enforceability against a landlord or such
modification or supplement is combined with all other inaccuracies in the
representations and warranties in this Section 5.26, the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole. No Ground Lease can be cancelled solely by the lessor
(except upon default by the lessee thereunder and the failure by the lessee to
cure such default after notice thereof, or after the occurrence of a total or
substantial destruction by fire or other casualty or a taking by any
Governmental Authority, as may be more specifically set forth in each Ground
Lease), all rent, additional rent and other charges reserved in each Ground
Lease and payable prior to the date hereof have been paid, no party to any
Ground Lease is in default of any material obligation that such party has
thereunder, and no event has occurred which, with the giving of notice or the
lapse of time, or both, would constitute such a default, and no notice or other
written or, to the best of the Loan Parties' knowledge, oral communication has
been provided to any party under any Ground Lease which alleges that, as of the
date hereof, either a material default exists or with notice (if necessary) and
the passage of time will exist under the provisions of such Ground Lease, in
each case except to the extent any of the foregoing, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Change unless, when the foregoing is combined with all other inaccuracies in the
representations and warranties in this Section 5.26, the representations and
warranties in this Section 5.26 are false or misleading in any material respect
when taken as a whole.
5.27 ADMINISTRATIVE PRIORITY. (a) The Obligations of the Loan Parties
will constitute allowed administrative expenses in the Chapter 11 Cases having
priority over all other administrative expenses of and unsecured claims against
the Loan Parties now existing or hereafter arising, of any kind or nature
whatsoever, including without limitation all administrative expenses of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code, subject, as to
priority, only to Carve-Out Expenses having a priority over the Obligations to
the extent set forth in the definition of Agreed Administrative Expense
Priorities.
(b) The Lien and security interest of the Agent (for the benefit of the
Lender Group) on the Collateral shall be a valid and perfected first priority
Lien subject to Permitted Priority Liens and Carve-Out Expenses having a
priority over the Obligations to the extent set forth in the definition of
Agreed Administrative Expense Priorities.
(c) The Interim Financing Order or the Final Financing Order, as the
case may be, is in full force and effect, and has not been appealed, reversed,
stayed, modified or amended absent the written joinder or consent of the Agent,
on behalf of the Required Lenders.
5.28 APPOINTMENT OF TRUSTEE OR EXAMINER; LIQUIDATION. No order has been
entered in the Chapter 11 Cases (i) for the appointment of a Chapter 11 trustee,
(ii) for the appointment of an examiner with enlarged powers (beyond those set
forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code or (iii) to convert the Chapter 11 Cases to
Chapter 7 cases or to dismiss the Chapter 11 Cases.
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6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
and the termination of this Agreement, each Borrower shall and shall cause each
of its Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Loan Parties to produce financial statements in accordance with GAAP (or as
otherwise shall be acceptable to Agent in its Permitted Discretion) and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Each Loan Party also shall keep an
inventory reporting system that shows all additions, sales, purchases,
adjustments, and allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (with copies for each Lender)
with the following documents at the following times in form satisfactory to
Agent:
Weekly (not later than Monday of each (a) after the Revolver Facility Effective Date, cash deposits, credit card
week for the one week period ending on receipts and cash disbursements journal since the last such schedule and
Friday of the immediately preceding a calculation of the Borrowing Base as of such date.
week)
Monthly (not later than the 10th (b) a detailed calculation of the Borrowing Base,
Business Day of each fiscal month)
after the Revolver Facility Effective
Date (c) a detailed aging, by total, of the Accounts, together with a
reconciliation to the detailed calculation of the Borrowing Base
previously provided to Agent,
(d) a summary aging, by vendor, of each Borrower's accounts payable and any
book overdraft, and
(e) Inventory reports specifying each Borrower's cost and the wholesale
market value of its Inventory (to the extent such information is
available), by category, with additional detail showing additions to and
deletions from the Inventory.
Quarterly (f) a report regarding each Borrower's accrued, but unpaid, ADVALOREM taxes.
Upon request by Agent (g) copies of invoices in connection with the Accounts, credit memos,
remittance advices, deposit slips, shipping and delivery documents in
connection with the Accounts and, for Inventory and Equipment acquired
by each Borrower, purchase orders and invoices, and
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(h) such other reports as to the Collateral, or the financial condition of
Borrowers, as Agent may reasonably request.
In addition, each Loan Party agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days
(45 days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Parent's
fiscal years,
(i) (A) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period, and (B) a company prepared
income statement for each retail convenience store owned by a Loan
Party during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments), or
as otherwise shall be acceptable to Agent in its Permitted
Discretion, and fairly present in all material respects the
financial condition of Parent and its Subsidiaries,
(B) the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action each
Borrower has taken, is taking, or proposes to take with
respect thereto), and
(iii) for each month that is the date on which a financial
covenant in SECTION 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in SECTION
7.20, and
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(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years,
(i) financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications (other than a going-concern qualification), by such
accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and
statement of cash flow and, if prepared, such accountants' letter to
management),
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under SECTION 7.20,
(c) as soon as available, but in any event within 30 days prior
to the start of each of Parent's fiscal years,
(i) copies of Borrowers' Projections, in form and substance
(including as to scope and underlying assumptions) reasonably
satisfactory to Agent, in its Permitted Discretion, for the forthcoming
fiscal year, month by month, certified by the chief financial officer
of Parent as being such officer's good faith best estimate of the
financial performance of Borrowers during the period covered thereby,
(d) if and when filed by any Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) copies of each Borrower's federal income tax returns,
and any amendments thereto, filed with the Internal Revenue Service,
and
(iv) any other information that is provided by any Borrower to
its shareholders generally,
(e) if and when filed by each Loan Party and as requested by
Agent, reasonably satisfactory evidence of payment of applicable excise taxes in
each jurisdictions in which (i) each Loan Party conducts business or is required
to pay any such excise tax, (ii) where each Loan Party's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of each
Loan Party, or (iii) where each Loan Party's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as any Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Borrowers propose to take with respect
thereto,
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(g) promptly after submission to any Government Authority, (i)
all material documents and information furnished to such Government Authority
and (ii) a copy of the cover letter and a summary of all documents and
information furnished to such Governmental Authority in connection with any
investigation of any Loan Party other than routine inquiries by such
Governmental Authority; the Loan Parties agree promptly to furnish copies of any
documents or information described in any such summary and to furnish additional
copies of such submissions to any consultant or adviser to the Lenders or the
Agent as the Agent may reasonably request,
(h) (i) as soon as possible and in any event (A) within 10
Business Days after Parent or any ERISA Affiliate thereof knows or has reason to
know that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Benefit Plan has occurred, (B) within 10
Business Days after Parent or any ERISA Affiliate thereof knows or has reason to
know that any other Termination Event with respect to any Benefit Plan has
occurred, or (C) within 10 Business Days after Parent or any ERISA Affiliate
thereof knows or has reason to know that an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard (including
installment payments) or an extension of any amortization period under Section
412 of the IRC with respect to a Benefit Plan, a statement of an Authorized
Person setting forth the details of such occurrence and the action, if any,
which Parent or such ERISA Affiliate propose to take with respect thereto, (ii)
promptly and in any event within three Business Days after receipt thereof by
Parent or any ERISA Affiliate thereof from the PBGC, copies of each notice
received by Parent or any ERISA Affiliate thereof of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan, (iii)
promptly and in any event within 10 Business Days after the filing thereof with
the Internal Revenue Service if requested by Lender, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with respect to
each Benefit Plan and Multiemployer Plan, (iv) promptly and in any event within
10 Business Days after Parent or any ERISA Affiliate thereof knows or has reason
to know that a required installment within the meaning of Section 412 of the IRC
has not been made when due with respect to a Benefit Plan, (v) promptly and in
any event within three days after receipt thereof by Parent or any ERISA
Affiliate thereof from a sponsor of a Multiemployer Plan or from the PBGC, a
copy of each notice received by Parent or any ERISA Affiliate thereof concerning
the imposition or amount of withdrawal liability under Section 4202 of ERISA or
indicating that such Multiemployer Plan may enter reorganization status under
Section 4241 of ERISA, and (vi) promptly and in any event within 10 Business
Days after Parent or any ERISA Affiliate thereof send notice of a plant closing
or mass layoff (as defined in the Worker Adjustment and Retraining Notification
Act) to employees, copies of each such notice sent by Parent or any ERISA
Affiliate thereof,
(i) as soon as available and in any event within 5 Business Days
after the execution, receipt or delivery thereof, copies of any material notices
that any Loan Party executes or receives in connection with any Material
Contract,
(j) promptly after the commencement thereof but in any event not
later than 5 days after service of process with respect thereto on, or the
obtaining of knowledge thereof by, any of the Loan Parties, notice of each
action, suit or proceeding before any court or
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other Governmental Authority or other regulatory body or any arbitrator which if
adversely determined could have a Material Adverse Change, and
(k) upon the request of Agent, any other report reasonably
requested relating to the financial condition of any Loan Party.
Parent agrees that no Subsidiary of Parent will have a fiscal year
different from that of Parent. Each Borrower agrees that its independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information concerning such Borrower that
Agent reasonably may request. Each Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information reasonably requested by Agent
pursuant to or in accordance with this Agreement, and agrees that Agent may
contact directly any such accounting firm or service bureau in order to obtain
such information.
6.4 [INTENTIONALLY OMITTED].
6.5 [INTENTIONALLY OMITTED].
6.6 MAINTENANCE OF PROPERTIES AND LEASES. Maintain and preserve all of
its properties which are necessary or useful in the proper conduct to its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to which it is a party
as lessee so as to prevent any loss or forfeiture thereof or thereunder in each
case other than sales of property or rejection of leases approved by the
Bankruptcy Court and otherwise permitted by the terms of this Agreement.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against any Loan
Party or any of its assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Each Loan
Party will make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Agent with proof reasonably satisfactory
to Agent indicating that such Loan Party has made such payments or deposits.
Each Loan Party shall deliver reasonably satisfactory evidence of payment of
applicable excise taxes in each jurisdictions in which such Loan Party is
required to pay any such excise tax.
6.8 INSURANCE.
(a) At each Loan Party's expense, maintain insurance
respecting its assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Each Loan Party also
shall maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent. Each Loan
Party shall deliver copies of all such policies to Agent with a satisfactory
lender's loss payable endorsement naming
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Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Each Loan Party shall give Agent (i) prompt notice of any
property loss covered by such insurance in excess of $50,000 and (ii) notice,
within 10 days after the end of each fiscal quarter, of any third party claims
made during such fiscal quarter against any Loan Party that are covered by such
Loan Party's liability insurance policies. Agent shall have the exclusive right
to adjust any losses payable under any such insurance policies in excess of
$50,000, without any liability to such Loan Party whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations or shall be disbursed to Borrowers under
staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items of
property destroyed prior to such damage or destruction.
(c) None of the Loan Parties will take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this SECTION 6.8, unless Agent is included thereon as named
insured with the loss payable to Agent under a lender's loss payable endorsement
or its equivalent. Each Loan Party immediately shall notify Agent whenever such
separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5 and indicate on such
Schedule which locations are operated by franchisees of a Borrower; provided,
however, that each Loan Party may amend Schedule 5.5 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 [INTENTIONALLY OMITTED].
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers obtaining
financing from the Lender Group under this Agreement. Each Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers, and each Borrower agrees to
indemnify, defend, and hold Agent and the Lender Group harmless
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from and against any claim of any broker or finder arising out of Borrowers'
obtaining financing from the Lender Group under this Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and effect
each Loan Party's valid existence and good standing and any rights and
franchises material to each Loan Party's businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by each Loan
Party free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,
(b) comply, in all material respects, with Environmental Laws
and provide to Agent documentation of such compliance which Agent reasonably
requests,
(c) promptly notify Agent of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
each Loan Party and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and
(d) promptly provide Agent with written notice within 10 days
of the receipt of any of the following: (i) notice that an Environmental Lien
has been filed against any of the real or personal property of any Loan Party,
(ii) commencement of any Environmental Action or notice that an Environmental
Action will be filed against any Loan Party, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any material defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
6.16 REAL ESTATE. If at any time after the Closing Date, any Loan Party
or any of its Subsidiaries acquires any fee interest, easement or leasehold in
real property, such Loan Party shall promptly execute, deliver and record, or
cause such Subsidiary to execute, deliver and record, (i) in the case of (A) a
fee interest of any Loan Party or any of its Subsidiaries, and (B) a leasehold
interest of any Loan Party or any of its Subsidiaries where the applicable lease
does not prohibit collateral assignments to third parties without the consent of
the landlord, a first priority Mortgage in favor of Agent covering such real
property interest, in form and substance reasonably satisfactory to Agent, and
provide the Agent with a Mortgage Policy insuring the first priority lien of
said Mortgage in such real property encumbered thereby in an amount reasonably
acceptable to Agent and subject only to Permitted Liens and to such other
exceptions as are reasonably satisfactory to Agent, a survey of such real
property with a satisfactory surveyor's certificate thereon, a satisfactory
legal description of such property and an opinion from special
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counsel to such Loan Party, each in form and substance reasonably satisfactory
to Agent and as to such matters as Agent may reasonably request, and, to the
extent necessary under applicable law, Uniform Commercial Code financing
statements covering fixtures, in each case appropriately completed and duly
executed, for filing in the appropriate county land office and evidence that
such Loan Party shall have paid to the applicable title insurance company all
expenses of such title insurance company in connection with the issuance of such
reports and in addition shall have paid to such title insurance company an
amount equal to the recording and stamp taxes (including mortgage recording
taxes), if any, payable in connection with recording such mortgages in the
appropriate county land offices, each in form and substance reasonably
satisfactory to Agent, and (ii) in the case of a leasehold interest of any Loan
Party or any of its Subsidiaries where the applicable lease prohibits collateral
assignments to third parties without the consent of the landlord, if so required
by Agent, a negative pledge instrument in favor of Agent, in suitable form for
recording (unless the applicable lease would not permit such instrument to be
recorded) and in form and substance reasonably satisfactory to Agent. In
addition, each such Loan Party delivering a Mortgage pursuant to clause (i) of
this Section 6.16 shall, within 30 days after a request by Agent, cause to be
performed, at Loan Parties' joint and several cost and expense, a phase-I
environmental audit (and, if reasonably requested by Agent based upon the
results of such phase-I environmental audit, a phase-II environmental audit), in
form and substance and by an independent firm reasonably satisfactory to Agent.
6.17 FINANCIAL CONSULTANT. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Associates, Inc. (or any
other financial consultant retained by the Agent to assist the Agent in
monitoring the Collateral and the Loan Parties' operating performance) access to
each Loan Party's Books and properties as well as access to senior management of
the Parent relating to the foregoing matters, in each case during normal
business hours and upon reasonable prior notice.
6.18 BANKRUPTCY COURT FILINGS. Borrowers shall give or cause to be
given or served on Agent and its counsel copies of all pleadings, motions,
applications, financial information and other papers and documents filed by the
Loan Parties in the Chapter 11 Cases. Promptly after the sending thereof, the
Loan Parties shall give Agent copies of all written reports given by any Loan
Party to any official or unofficial creditors' committee in the Chapter 11
Cases.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligations
and the termination of this Agreement, none of the Borrowers will and will not
permit any of its Subsidiaries to do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
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(b) Indebtedness in existence on the Filing Date other than
the Pre-Petition Obligations,
(c) Permitted Purchase Money Indebtedness, and
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clause (c) of this SECTION 7.1 (and continuance or renewal of
any Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Agent's
reasonable judgment, materially impair the prospects of repayment of the
Obligations by any Loan Party or materially impair any Loan Party's
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to any Loan Party, and (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of payment to the Obligations,
then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must include subordination terms and conditions that are at least
as favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness; and
(e) prior to the Revolver Facility Effective Date, the
Pre-Petition Obligations in an aggregate principal amount not to exceed
$30,000,000.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
Notwithstanding the provisions of this SECTION 7.3, no Event of Default will
arise from the occurrence of any of the foregoing events so long as the
Obligations are repaid in full in cash concurrently with the occurrence of any
such event. In addition, the Lender Group agrees that in the event (i) Lender
Group consents to the occurrence of any of the foregoing events and (ii) the
consideration or other proceeds paid to Loan Parties in connection therewith
(net of reasonable transaction costs) do not repay the Obligations in full
concurrently with the occurrence of such
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event, Lender Group shall not charge Loan Parties a fee for providing such
consent so long as (A) the consideration or other proceeds (net of reasonable
transaction costs) are applied, first, to the prepayment of the Term Loan and,
second, to the Advances and (B) to the extent that such application is to the
Advances, the Revolver Commitments of the Lenders are permanently reduced, based
upon each Lender's Pro Rata Share, by an amount equal to the portion of such
consideration or other proceeds applied to the Advances.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of any Loan
Party's assets; provided, however, the Loan Parties may sell under-performing
retail convenience stores so long as (a) no Event of Default has occurred and is
continuing either immediately before or after giving effect to each sale, (b)
the aggregate amount of proceeds from all such sales do not exceed $2,000,000
(exclusive of fixtures and inventory), (c) each sale is approved by the
Bankruptcy Court, and (d) the net cash proceeds from each sale are paid by or on
behalf of the applicable purchaser of such stores to Agent and applied to the
prepayment of the Term Loan (or, if the Term Loan is no longer outstanding, the
Advances). Notwithstanding the provisions of this SECTION 7.4, no Event of
Default will arise from the occurrence of any of the foregoing events so long as
the Obligations are repaid in full in cash concurrently with the occurrence of
any such event. In addition, the Lender Group agrees that in the event (i)
Lender Group consents to the occurrence of any of the foregoing events and (ii)
the consideration or other proceeds (net of reasonable transaction costs) paid
to Loan Parties in connection therewith do not repay the Obligations in full
concurrently with the occurrence of such event, Lender Group shall not charge
Loan Parties a fee for providing such consent so long as (A) the consideration
or other proceeds (net of reasonable transaction costs) are applied, first, to
the prepayment of the Term Loan and, second, to the Advances and (B) to the
extent that such application is to the Advances, the Revolver Commitments of the
Lenders are permanently reduced, based upon each Lender's Pro Rata Share, by an
amount equal to the portion of such consideration or other proceeds applied to
the Advances.
7.5 CHANGE NAME. Change any Loan Party's name, organizational
identification number, state of incorporation, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that any Loan Party
may change its name upon at least 30 days prior written notice to Agent of such
change and so long as, at the time of such written notification, any Loan Party
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except (i) by endorsement of
instruments or items of payment for deposit to the account of any Loan Party or
which are transmitted or turned over to Agent, and (ii) with respect to the
Indebtedness permitted under Sections 7.1(a) and (e).
7.7 NATURE OF BUSINESS. Make any change in the principal nature of its
business.
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7.8 PREPAYMENTS AND AMENDMENTS
(a) Except in connection with a refinancing permitted by
SECTION 7.1(D), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Loan Party, other than the Obligations in accordance with
this Agreement.
(b) Except in connection with a refinancing permitted by
SECTION 7.1(D), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under SECTIONS 7.1(B), (C) OR (E).
(c) (i) Amend, modify or otherwise change its Governing
Documents, including, without limitation, by the filing or modification of any
certificate of designation, or any agreement or arrangement entered into by it
with respect to any of its capital Stock (including any shareholders'
agreement), or enter into any new agreement with respect to any of its capital
Stock, or (ii) amend, modify or otherwise change any Material Contract, except
any such amendments, modifications or changes or any such new agreements or
arrangements pursuant to this paragraph (c) that, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Change,
or (iii) amend, modify, or otherwise change any material term or provision of
the Cash Collateral Order.
(d) Agree to any amendment or other change to (or make any
payment consistent with any amendment or other change to), or waive any of its
rights under, any of the Ground Leases, PROVIDED that such consent shall not be
required if in the case of a Ground Lease, no Default or Event of Default exists
or will result from such amendment, modification, waiver or change.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control. Notwithstanding the provisions of this
SECTION 7.9, no Event of Default will arise from the occurrence of any of the
foregoing events so long as the Obligations are repaid in full in cash
concurrently with the occurrence of any such event. In addition, the Lender
Group agrees that in the event (a) Lender Group consents to the occurrence of
any of the foregoing events and (b) the consideration or other proceeds (net of
reasonable transaction costs) paid to Loan Parties in connection therewith do
not repay the Obligations in full concurrently with the occurrence of such
event, Lender Group shall not charge Loan Parties a fee for providing such
consent so long as (A) the consideration or other proceeds (net of reasonable
transaction costs) are applied, first, to the prepayment of the Term Loan and,
second, to the Advances and (B) to the extent that such application is to the
Advances, the Revolver Commitments of the Lenders are permanently reduced, based
upon each Lender's Pro Rata Share, by an amount equal to the portion of such
consideration or other proceeds applied to the Advances.
7.10 CONSIGNMENTS. Other than to franchisees of a Borrower in the
ordinary course of business, consign any Inventory or sell any Inventory on ▇▇▇▇
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any
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of any Loan Party's Stock, of any class, whether now or hereafter outstanding,
except that each Subsidiary of a Borrower may make distributions and pay
dividends to such Borrower.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrowers' accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
any Borrower's financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that, after the Revolver Facility Effective Date, Loan Parties shall
not have Permitted Investments (other than in the Cash Management Accounts) in
excess of $100,000 outstanding at any one time unless such Loan Party and the
applicable securities intermediary or bank have entered into Control Agreements
governing such Permitted Investments, as Agent shall determine in its Permitted
Discretion, to perfect (and further establish) the Agent's Liens in such
Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Loan Party except for
transactions that are in the ordinary course of such Loan Party's business, upon
fair and reasonable terms, that are fully disclosed to Agent, and that are no
less favorable to such Loan Party than would be obtained in an arm's length
transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 COMPENSATION. Increase the annual fee or per-meeting fees paid to
the members of its Board of Directors during any year by more than 15% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year, excluding, however, performance
bonus compensation packages approved by the Board of Directors (or the
applicable compensation committee) and approved in writing by Agent in its
Permitted Discretion.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term
Loan for any purpose other than (a) on and after the Closing Date, (i) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and (ii) to fund working capital of the Loan Parties (including, without
limitation, payments of fees and expenses to professionals under Sections 330
and 331 of the Bankruptcy Code and administrative expenses of the kind specified
in Section 503(b) of the Bankruptcy Code incurred in the ordinary course of
business of the Loan Parties, subject to the priorities set forth in the
definition of "Agreed Administrative Expense Priorities" herein) and (b) on the
Revolver Facility Effective Date, to repay, in full, the outstanding principal
(in an amount not in excess of $30,000,000), accrued interest and accrued fees
and expenses owing in respect of the Pre-Petition Obligations.
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7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Agent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. None of the Loan Parties shall transfer assets out of any
Securities Account; provided, however, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, each Loan Party may use
such assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA, measured on a month-end
basis, of not less than the required amount set forth in the following table
for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
----------------- -----------------------------------------------
$150,000 For the month ending October 31, 2001
$(275,000) For the 2 months ending November 30, 2001
$(550,000) For the 3 months ending December 31, 2001
$(1,100,000) For the 3 months ending January 31, 2002
$(850,000) For the 3 months ending February 28, 2002
$(850,000) For the 3 months ending March 31, 2002
$575,000 For the 3 months ending April 30, 2002
$825,000 For the 3 months ending May 31, 2002
$1,975,000 For the 3 months ending June 30, 2002
$2,800,000 For the 3 months ending July 31, 2002
$3,925,000 For the 3 months ending August 31, 2002
$3,300,000 For the 3 months ending September 30, 2002
Borrowers' EBITDA for the 3 month period ending each month
after September 30, 2002 shall not be less than Borrowers' projected EBITDA for
such period as set forth in the Projections delivered to Agent in accordance
with Section 6.3(c), which Projections are in form
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and substance acceptable to Agent; provided, that if Agent and Borrowers cannot
agree on Borrowers' projected EBITDA set forth in such Projections, for purposes
of this Section 7.20(a)(i), Borrowers' projected EBITDA for such 3 month period
shall not be less than $3,300,000.
(ii) MINIMUM STORE EBITDA. EBITDA derived solely from
the Borrowers' retail convenience stores ("Store EBITDA"), measured on a
month-end basis, of not less than the required amount set forth in the
following table for the applicable period set forth opposite thereto:
Applicable Amount Applicable Period
----------------- ----------------------------------------------
$2,425,000 For the month ending October 31, 2001
$3,850,000 For the 2 months ending November 30, 2001
$5,375,000 For the 3 months ending December 31, 2001
$4,850,000 For the 3 months ending January 31, 2002
$5,075,000 For the 3 months ending February 28, 2002
$5,075,000 For the 3 months ending March 31, 2002
$6,500,000 For the 3 months ending April 30, 2002
$6,800,000 For the 3 months ending May 31, 2002
$8,000,000 For the 3 months ending June 30, 2002
$8,900,000 For the 3 months ending July 31, 2002
$10,000,000 For the 3 months ending August 31, 2002
$9,400,000 For the 3 months ending September 30, 2002
Borrowers' Store EBITDA for the 3 month period ending each month after
September 30, 2002 shall not be less than Borrowers' projected Store EBITDA for
such period as set forth in the Projections delivered to Agent in accordance
with Section 6.3(c), which Projections are in form and substance acceptable to
Agent; provided, that if Agent and Borrowers cannot agree on Borrowers' Store
EBITDA set forth in such Projections, for purposes of this Section 7.20(a)(ii),
Borrowers' projected Store EBITDA for such 3 month period shall not be less than
$9,400,000.
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(b) Make:
(i) CAPITAL EXPENDITURES. Capital expenditures in excess of
$3,250,000 after the Closing Date.
7.21 ENVIRONMENTAL. Permit the use, handling, generation, storage,
treatment, Release or disposal of Hazardous Materials at any property owned or
leased by the Loan Parties except in material compliance with Environmental
Laws.
7.22 BANK ACCOUNTS. In the case of Borrowers, maintain any bank
accounts or other depository accounts other than (a) Depository Accounts in
accordance with this Agreement, (b) the Cash Management Accounts and (c)
collateral accounts designated by Agent.
7.23 INACTIVE SUBSIDIARY. Permit any of Borrowers' Subsidiaries listed
on Schedule 5.8(e) to become an active company, have operations, conduct
business or own any assets having an aggregate value in excess of $250,000.
7.24 INTERIM FINANCING ORDER; FINAL FINANCING ORDER; ADMINISTRATIVE
EXPENSE PRIORITY; LIEN PRIORITY; PAYMENTS.
(a) Seek, consent to or suffer to exist at any time any
modification, stay, vacation or amendment of the Interim Financing Order or the
Final Financing ]Order, as the case may be, except for modifications and
amendments joined or agreed to in writing by Agent, on behalf of the Required
Lenders, in its Permitted Discretion.
(b) Suffer to exist at any time a priority for any
administrative expense or unsecured claim against any Loan Party (now existing
or hereafter arising of any kind or nature whatsoever, including, without
limitation, any administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code) equal or superior to the priority of the
Lender Group in respect of the Obligations, except for Carve-Out Expenses having
a priority over the Obligations to the extent set forth in the definition of
Agreed Administrative Expense Priorities.
(c) Suffer to exist at any time any Lien on any Collateral
having a priority equal or superior to the Lien of the Agent for the benefit of
the Lender Group in respect of the Collateral except for Permitted Priority
Liens and except for Carve-Out Expenses having a priority over the Obligations
to the extent set forth in the definition of Agreed Administrative Expense
Priorities.
(d) Prior to the date on which the Obligations have been paid
in full in cash and the Commitments have been terminated, pay any administrative
expense claims except (A) Carve-Out Expenses and other payments pursuant to
clause "FIRST" of the definition of the term "Agreed Administrative Expense
Priorities", (B) any Obligations due and payable hereunder, (C) other
administrative expense claims incurred in the ordinary course of the business of
the Loan Parties in their respective Chapter 11 Cases, and (D) payments of
pre-petition obligations permitted pursuant to paragraph (e) hereof, in each
case to the extent and having the order of priority set forth in the Agreed
Administrative Expense Priorities.
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(e) Make any payment of principal or interest or otherwise on
account of any Indebtedness or trade payable incurred prior to the Filing Date,
PROVIDED that such payments may be made: (i) to the holders of, or in respect
of, wage, salary, commission or other compensation and employee benefit
obligations (including expense reimbursements) to employees and independent
contractors which arose prior to the Filing Date; (ii) to landlords in
connection with the assumption of unexpired leases under Section 365 of the
Bankruptcy Code in an aggregate amount acceptable to the Agent; (iii) to lessors
and non-debtor parties to executory contracts in connection with the assumption
of such leases and contracts under Section 365 of the Bankruptcy Code; (iv) in
respect of workers' compensation benefits and liability and property insurance
policies of the Loan Parties; (v) with respect to payroll taxes, garnishment
payments, sales taxes, customer credits or other trust fund disbursements in
accordance with past practice of the Loan Parties; (vi) to the holders of
Permitted Priority Liens, from the proceeds of the assets subject to such
Permitted Priority Liens in connection with the sale of such assets; and (vii)
to other creditors of the Loan Parties in an aggregate amount not to exceed
$100,000 so long as Agent has, in its Permitted Discretion, consented in writing
to each such payment under this clause (vii), in each case, after prior written
notice of such payment has been given by the Borrowers to the Agent and subject
to approval of the Bankruptcy Court, provided that, prior written notice is not
required in the case of the payments described in clauses (i), (iv) and (v)
above.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers fail to pay when due and payable or when declared due
and payable all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 If Loan Parties fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.1, 6.2 (but
only up to three times during any 12-month period), 6.3, 6.6, 6.9, 6.10, 6.11
and 6.15 of this Agreement, or comparable provisions of the other Loan
Documents, within 20 days of the date when required (or within 10 days of the
date when required in the case of Section 6.2 or Section 6.3), or if a Loan
Party otherwise fails to perform, keep, or observe any other term, provision,
condition, covenant, or agreement contained in this Agreement or in any of the
other Loan Documents (to the extent not otherwise provided for in Section 8.1 or
this Section 8.2);
8.3 If any portion of any Borrower's or any of its Subsidiaries' assets
having an aggregate value in excess of $500,000 is attached, seized, subjected
to a writ or distress warrant, levied upon, or comes into the possession of any
third Person;
8.4 If any Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
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8.5 If a notice of Lien, levy, or assessment securing or otherwise with
respect to Indebtedness or an obligation for the payment of money in an
aggregate amount in excess of $500,000 is filed of record with respect to any
Borrower's or any of its Subsidiaries' assets by the United States, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities in an aggregate amount in excess
of $500,000 becomes a Lien, whether ▇▇▇▇▇▇ or otherwise, upon any Borrower's or
any of its Subsidiaries' assets and the same is not paid before such payment is
delinquent;
8.6 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Borrower, its Subsidiaries, or any officer, employee, agent,
or director of any Borrower or any of its Subsidiaries;
8.7 Any Loan Party or any of its ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, such Loan Party or such ERISA Affiliate
incurs a withdrawal liability in an annual amount exceeding $500,000; or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof, such Loan Party's or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $500,000;
8.8 Any Termination Event with respect to any Employee Plan shall have
occurred, and, 30 days after notice thereof shall have been given to any Loan
Party by Agent, (i) such Termination Event (if correctable) shall not have been
corrected, and (ii) the then current value of such Employee Plan's vested
benefits exceeds the then current value of assets allocable to such benefits in
such Employee Plan by more than $500,000 (or, in the case of a Termination Event
involving liability under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of the Internal
Revenue Code, the liability is in excess of such amount); or
8.9 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Loan Party, or a proceeding shall be commenced by any Loan
Party, or by any Governmental Authority having jurisdiction over any Loan Party,
seeking to establish the invalidity or unenforceability thereof, or any Loan
Party shall deny that such Loan Party has any liability or obligation purported
to be created under any Loan Document.
8.10 If one or more judgments or decrees shall be entered against (i)
any Loan Party involving in the aggregate a post-Filing Date liability (not paid
or fully covered by insurance) of $500,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within the time required by the terms of such judgment;
8.11 An order with respect to the Chapter 11 Cases shall be entered by
the Bankruptcy Court appointing (i) a trustee under Section 1104, or (ii) an
examiner with enlarged
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powers (powers beyond those set forth in Section 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code;
8.12 An order with respect to the Chapter 11 Cases shall be entered by
the Bankruptcy Court converting the Chapter 11 Cases to Chapter 7 cases under
the Bankruptcy Code;
8.13 An order shall be entered by the Bankruptcy Court confirming a
plan of reorganization in the Chapter 11 Cases which does not (a) contain a
provision for termination of this Agreement, the cash collateralization or
return for cancellation of all Letters of Credit and the indefeasible payment in
full in cash of all Obligations in a manner reasonably satisfactory to Agent on
or before the effective date of such plan and (b) provide for the continuation
of the Liens and security interests granted to Agent and priorities until such
plan effective date;
8.14 An order shall be entered by the Bankruptcy Court dismissing the
Chapter 11 Cases which does not contain a provision for termination of this
Agreement, the cash collateralization or return for cancellation of all Letters
of Credit and the indefeasible payment in full in cash of all Obligations in a
manner reasonably satisfactory to Agent upon such dismissal;
8.15 An order with respect to the Chapter 11 Cases shall be entered by
the Bankruptcy Court without the express prior written consent of Agent, (i) to
revoke, vacate, reverse, stay, modify, supplement or amend this Agreement and
the transactions contemplated hereby, any Loan Document, the Interim Financing
Order or the Final Financing Order, or (ii) to permit any administrative expense
or any claim (now existing or hereafter arising, of any kind or nature
whatsoever) to have administrative priority as to any Loan Party equal or
superior to the priority of the Lender Group in respect of the Obligations,
except for Carve-Out Expenses having a priority over the Obligations to the
extent set forth in the definition of Agreed Administrative Expense Priorities;
8.16 An order shall be entered by the Bankruptcy Court granting relief
from the automatic stay to any creditor(s) of any Loan Party with respect to any
claim in an amount equal to or exceeding $500,000 in the aggregate; provided,
however, that it shall not be an Event of Default if relief from the automatic
stay is granted (i) solely for the purpose of allowing such creditor to
determine the liquidated amount of its claim against such Loan Party or (ii) to
permit the commencement of and/or prosecution of a proceeding to collect solely
against an insurance company;
8.17 An application for any of the orders described in Section 8.11,
8.12, 8.13, 8.14, 8.15 or 8.16 herein shall be made by any Loan party or any
other Person and such application (if made by any Person other than a Loan Party
) is not contested by the Loan Parties in good faith or the relief requested is
granted in an order that is not stayed pending appeal;
8.18 If (a) any Loan Party shall attempt to invalidate, reduce or
otherwise impair the Liens or security interests of Agent and the Lenders,
claims or rights against any Loan Party or to subject any Collateral to
assessment pursuant to Section 506(c) of the Bankruptcy Code, (b) any Lien or
security interest created by this Agreement, the Interim Financing Order or the
Final Financing Order shall, for any reason, cease to be valid or (c) any action
is commenced
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by any Loan Party or any other Person which contests the validity, perfection or
enforceability of any of the Liens and security interests of Agent and the
Lenders created by this Agreement, the Interim Financing Order or the Final
Financing Order; or
8.19 The occurrence and continuance of an "Event of Default" as defined
in the Cash Collateral Order which either permits the Existing Lender to
exercise remedies under the Cash Collateral Order or prevents the Loan Parties
from using cash collateral pursuant to the Cash Collateral Order for at least 3
Business Days.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Notwithstanding the provision of Section 362
of the Bankruptcy Code, upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of
their election and without demand) may authorize and instruct Agent to do any
one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders, shall do the same on behalf of
the Lender Group), all of which are authorized by the Loan Parties:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between any Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit Borrowers' Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Without notice to or demand upon any Borrower or any
Guarantor, make such payments and do such acts as Agent considers necessary or
reasonable in its Permitted Discretion to protect its security interests in the
Collateral. Each Loan Party agrees to assemble the Personal Property Collateral
if Agent so requires, and to make the Personal Property Collateral available to
Agent at a place that Agent may designate which is reasonably convenient to both
parties. Each Loan Party authorizes Agent to enter the premises where the
Personal Property Collateral is located, to take and maintain possession of the
Personal Property Collateral, or any part of it, and to pay, purchase, contest,
or compromise any Lien that in Agent's determination appears to conflict with
the Agent's Liens and to pay all reasonable expenses incurred in connection
therewith and to charge Borrowers' Loan Account therefor. With respect to any of
each Loan Party's owned or leased premises, each Loan Party hereby grants Agent
a license to enter into possession of such premises and to occupy the same,
without
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charge, in order to exercise any of the Lender Group's rights or remedies
provided herein, at law, in equity, or otherwise;
(f) Without notice to any Loan Party (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Loan Party held by the Lender Group;
(g) Hold, as cash collateral, any and all balances and
deposits of Borrowers held by the Lender Group, and any amounts received in the
Cash Management Accounts, to secure the full and final repayment of all of the
Obligations;
(h) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Agent is hereby granted a license or
other right to use, without charge, for the benefit of the Lender Group, each
Loan Party's labels, patents, copyrights, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Personal Property Collateral, in completing
production of, advertising for sale, and selling any Personal Property
Collateral and such Loan Party's rights under all licenses and all franchise
agreements shall inure to the Lender Group's benefit;
(i) Sell the Personal Property Collateral at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including any Loan Party's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Personal Property Collateral be present at any such sale;
(j) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the
benefit of the applicable Borrower) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Personal
Property Collateral, the time on or after which the private sale or
other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in SECTION 12,
at least 10 days before the earliest time of disposition set forth in
the notice; no notice needs to be given prior to the disposition of any
portion of the Personal Property Collateral that is perishable or
threatens to decline speedily in value or that is of a type customarily
sold on a recognized market;
(k) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale;
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(l) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(m) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document; and
(n) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by the
Loan Parties. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit of
the applicable Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Loan Party, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with SECTION 6.8 hereof, obtain and maintain insurance policies of the
type described in SECTION 6.8 and take any action with respect to such policies
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to, or contest the validity of, any such expense, tax, or Lien and the receipt
of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Each Loan Party waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any Loan Party may in any way be liable.
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11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Loan Party
hereby agrees that: (a) so long as Agent complies with its obligations, if any,
under the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Loan Parties.
11.3 INDEMNIFICATION. Borrowers shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other reasonable costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby, and (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, Borrowers shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified Liability that a
court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which any
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY ACT OR OMISSION OF SIMPLE NEGLIGENCE OF SUCH INDEMNIFIED PERSON
OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
any Loan Party or Agent to the other relating to this Agreement or any other
Loan Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Loan
Parties in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:
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If to any DAIRY MART CONVENIENCE STORES, INC.
Loan Party: One Dairy Mart Way
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: MILBANK, TWEED, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.,
▇▇▇▇ ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
If to Agent: FOOTHILL CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Agent and Administrative Borrower may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other party. All notices or demands sent in
accordance with this SECTION 12, other than notices by Agent in connection with
enforcement rights against the Collateral under the provisions of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Each Loan Party
acknowledges and agrees that notices sent by the Lender Group in connection with
the exercise of enforcement rights against Collateral under the provisions of
the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any other
method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT TO THE
EXTENT GOVERNED BY THE BANKRUPTCY CODE.
(b) EACH LOAN PARTY AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH LOAN PARTY AND THE LENDER GROUP REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee and no
notice to Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of a Lender or a fund or account managed
by a Lender), assign and delegate to one or more assignees (each an "Assignee")
all, or any part of all, of the Obligations, the Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $5,000,000 (except such minimum amount shall
not apply to any Affiliate of a Lender or to a fund or account managed by a
Lender); PROVIDED, HOWEVER, that Borrowers and Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Administrative Borrower and Agent by such Lender and the
Assignee, (ii) such Lender and its Assignee have delivered to Administrative
Borrower and Agent a fully executed Assignment and Acceptance substantially in
the form of EXHIBIT A-1, and (iii) the assignor Lender or Assignee has paid to
Agent for Agent's separate account a processing fee in the amount of $5,000.
Anything contained herein to the contrary notwithstanding, the consent of Agent
shall not be required (and payment of any fees shall not be required) if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of such Lender or the assignee is an Affiliate (other than
individuals) of, or a fund, money market account, investment account or other
account managed by a Lender or an Affiliate of a Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower, if applicable) that it has
received a fully executed Assignment and Acceptance and payment (if applicable)
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations
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hereunder have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Lender under the Loan Documents, and
(ii) the assignor Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (except with respect to
SECTION 11.3 hereof) and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall affect a novation between Borrowers and the
Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment (if applicable) under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of such Lender (a
"Participant") participating interests in its Obligations owing to such Lender,
the Commitment of such Lender, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents;
PROVIDED, HOWEVER, that (i) the Originating Lender shall remain a "Lender" for
all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under
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the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no
Originating Lender shall transfer or grant any participating interest under
which the Participant has the right to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment to, or consent or waiver with respect to this
Agreement or of any other Loan Document would (A) extend the final maturity date
of the Obligations hereunder in which such Participant is participating, (B)
reduce the interest rate applicable to the Obligations hereunder in which such
Participant is participating, (C) release all or a material portion of the
Collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Obligations hereunder in which such
Participant is participating, (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant, or (E) change the amount
or due dates of scheduled principal repayments or prepayments or premiums in
respect of the Obligations hereunder in which such Participant is participating;
and (v) all amounts payable by Borrowers hereunder shall be determined as if
such Lender had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves. The provisions of this
SECTION 14.1(e) are solely for the benefit of Lender Group, and none of the Loan
Parties shall have any rights as a third party beneficiary of any such
provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose to a third party all
documents and information which it now or hereafter may have relating to any
Borrower or any Borrower's business
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that none of the Borrowers may assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No
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consent to assignment by the Lenders shall release any Loan Party from its
Obligations. A Lender may assign this Agreement and the other Loan Documents and
its rights and duties hereunder and thereunder pursuant to Section 14.1 hereof
and, except as expressly required pursuant to Section 14.1 hereof, no consent or
approval by any Loan Party is required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by any Loan Party therefrom, shall be effective unless the same shall
be in writing and signed by the Required Lenders (or by Agent at the written
request of the Required Lenders) and Borrowers and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all of the Lenders affected
thereby and Borrowers, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend, modify or waive this Section or any provision of
the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by SECTION
16.12,
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or any Guarantor from any obligation
for the payment of money,
(j) change the definition of Borrowing Base or the definitions
of, Maximum Revolver Amount, or Term Loan Amount,
(k) modify, waive, release or subordinate the superpriority
claim status of the Obligations (except as permitted in this Agreement and the
Loan Documents), or
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(l) amend, modify or waive any of the provisions of Section
2.1(a) or (b), Section 2.2, Section 2.3(e), Section 2.3(i), Section 2.4(b) or
Section 16.
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender'), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance Agreement, subject only to the Holdout Lender being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance Agreement prior to the
effective date of such replacement, the Holdout Lender shall be deemed to have
executed and delivered such Assignment and Acceptance Agreement. The replacement
of any Holdout Lender shall be made in accordance with the terms of Section
14.1. Until such time as the Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances
and to purchase a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy the Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental
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thereto. Agent agrees to act as such on the express conditions contained in this
Section 16. The provisions of this Section 16 are solely for the benefit of
Agent, and the Lenders, and none of the Borrowers shall have any rights as a
third party beneficiary of any of the provisions contained herein. Any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document notwithstanding, Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against Agent;
it being expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Foothill is merely the representative of the Lenders, and
only has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
as long as this Agreement remains in effect: (a) maintain, in accordance with
its customary business practices, ledgers and records reflecting the status of
the Obligations, the Collateral, the Collections, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect to
the Collateral and the Collections, (f) perform, exercise, and enforce any and
all other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness,
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enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of any Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the Books or
properties of any Borrower or the books or records or properties of any
Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or any Borrower
referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a "notice of default." Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of Default of
which Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Section 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Parent
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations,
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property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person (other than the Lender Group) party to a Loan Document. Except
for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
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16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with any
Borrower and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though Foothill were not Agent hereunder, and, in each case,
without notice to or consent of the other members of the Lender Group. The other
members of the Lender Group acknowledge that, pursuant to such activities, Agent
or its Affiliates may receive information regarding any Borrower or its
Affiliates and any other Person (other than the Lender Group) party to any Loan
Documents that is subject to confidentiality obligations in favor of any
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with any
Borrower and its Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding any Borrower or its Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of any Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent
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Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank"
as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a properly completed IRS Form W-8BEN, before the first
payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the first payment of any interest
under this Agreement and at any other time reasonably requested by
Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or Administrative
Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other
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documentation required by subsection (a) of this Section are not delivered to
Agent, then Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrowers hereunder or under any note
will be made without setoff, counterclaim, or other defense, except as required
by applicable law other than for Taxes (as defined below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than of the United States) with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of a Lender, or (ii) to the extent that such tax
results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, Borrowers agree to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; PROVIDED, HOWEVER, that Borrowers shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this Section 16.11, or (ii) if the increase in
such amount payable results from Agent's or such Lender's own willful misconduct
or gross negligence. Each Borrower will furnish to Agent as promptly as possible
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by such Borrower.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrowers of all Obligations, (ii)
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constituting property being sold or disposed of if a release is required or
desirable in connection therewith and if the applicable Borrower certifies to
Agent that the sale or disposition is permitted under Section 7.4 of this
Agreement or the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry), (iii) constituting property in which
no Loan Party owned an interest at the time the security interest was granted or
at any time thereafter, or (iv) constituting property leased to any Loan Party
under a lease that has expired or is terminated in a transaction permitted under
this Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or any substantial portion of the Collateral, all
of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Borrowers at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; PROVIDED, HOWEVER, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of any Loan Party in respect of)
all interests retained by any Loan Party, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by any Loan Party or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, absent
Agent's gross negligence or willful misconduct, in its sole discretion given
Agent's own interest in the Collateral in its capacity as one of the Lenders and
that Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the
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Obligations arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such Lender from
Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in
excess of such Lender's Pro Rata Share of all such distributions by Agent, such
Lender promptly shall (1) turn the same over to Agent, in kind, and with such
endorsements as may be required to negotiate the same to Agent, or in
immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; PROVIDED, HOWEVER, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by or
at the request of Agent, and Agent shall so furnish each Lender with such
Reports,
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(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding any Loan
Party and will rely significantly upon the Books, as well as on representations
of any Loan Party's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding each Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Administrative Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to
time request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by any Loan Party to Agent that has not been
contemporaneously provided by such Loan Party to such Lender, and, upon receipt
of such request, Agent promptly shall provide a copy of same to such Lender, (y)
to the extent that Agent is entitled, under any provision of the Loan Documents,
to request additional reports or information from any Loan Party, any Lender
may, from time to time, reasonably request Agent to exercise such right as
specified in such Lender's notice to Agent, whereupon Agent promptly shall
request of any Loan Party the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from such Loan
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Party, Agent promptly shall provide a copy of same to such Lender, and (z) any
time that Agent renders to such Loan Party a statement regarding the Loan
Account, Agent shall send a copy of such statement to each Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of the Lenders to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Guarantors, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or any Loan Party,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Agent (on behalf of the requisite Lenders) and Borrowers and,
in the case of an amendment to Section 18, the Guarantors.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of
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which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The
foregoing shall apply to each other Loan Document mutatis mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrowers or any Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantors automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 PARENT AS AGENT FOR BORROWERS. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
effect unless and until Lender shall have received prior written notice signed
by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Lender with all notices with respect to Advances and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce Lender to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify Lender harmless against any and all
liability, expense, loss or claim of damage or
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injury, made against Lender by any Borrower or by any third party whosoever,
arising from or incurred by reason of (a) the handling of the Loan Account and
Collateral of Borrowers as herein provided, (b) Lender's relying on any
instructions of the Administrative Borrower, or (c) any other action taken by
Lender hereunder or under the other Loan Documents, except that Borrowers will
have no liability to any Lender-Related Person under this Section 17.9 with
respect to any liability to the extent the same has been finally determined by a
court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Lender-Related Person.
17.10 AGENT AS PARTY IN INTEREST. Each Loan Party hereby stipulates and
agrees that, until the repayment in full of the Obligations and the termination
of this Agreement, Agent is and shall remain a party in interest in the Chapter
11 Cases and shall have the right to participate, object and be heard in any
motion or proceeding in connection therewith. Without limitation of the
foregoing, Agent shall have the right to make any motion or raise any objection
it deems to be in its interest (specifically including but not limited to
objections to use of proceeds of the Advances and the Term Loan, to payment of
professional fees and expenses or the amount thereof, to sales or other
transactions outside the ordinary course of business or to assumption or
rejection of any executory contract or lease), until the repayment in full of
the Obligations and the termination of this Agreement.
18. GUARANTY.
18.1 GUARANTY; LIMITATION OF LIABILITY. Each Guarantor hereby
unconditionally and irrevocably jointly and severally guarantees the punctual
payment when due, whether at stated maturity, by acceleration or otherwise, of
all Obligations of Borrowers now or hereafter existing under any Loan Document,
whether for principal, interest fees, expenses or otherwise (such obligations,
to the extent not paid by Borrowers, being the "Guaranteed Obligations"), and
agrees to pay any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred by the Lender Group in enforcing any rights under the
guaranty set forth in this Section 18. Without limiting the generality of the
foregoing, the Guarantors' liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by Borrowers to the Agent
and the Lenders under any Loan Document but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Borrower.
18.2 GUARANTY ABSOLUTE. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent, or
the Lenders with respect thereto. The obligations of each Guarantor under this
Section 18 are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against each Guarantor to enforce such
obligations, irrespective of whether any action is brought against any Borrower
or whether any Borrower is joined in any such action or actions. The liability
of each Guarantor under this Section 18 shall be irrevocable, absolute and
unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
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(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to Borrowers or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any change, restructuring or termination of the corporate,
limited liability company or partnership structure or existence of any Borrower;
or
(e) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation by
the Agent, or the Lenders that might otherwise constitute a defense available
to, or a discharge of, any Guarantor, any Borrower or any other guarantor or
surety.
This SECTION 18 shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or the Lenders or any other Person,
all as though such payment had not been made.
18.3 WAIVER. Each Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Section 18 and any requirement that the Agent, or the
Lenders exhaust any right or take any action against any Borrower or any other
Person or any Collateral. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated herein
and that the waiver set forth in this Section 18 is knowingly made in
contemplation of such benefits. Each Guarantor hereby waives any right to revoke
this Section 18, and acknowledges that this Section 18 is continuing in nature
and applies to all Guaranteed Obligations, whether existing now or in the
future.
18.4 CONTINUING GUARANTY; ASSIGNMENTS. This Section 18 is a continuing
guaranty and shall (a) remain in full force and effect until the later of the
cash payment in full of the Guaranteed Obligations (other than indemnification
obligations as to which no claim has been made) and all other amounts payable
under this Section 18 and the Maturity Date, (b) be binding upon each Guarantor,
its successors and assigns and (c) inure to the benefit of and be enforceable by
the Agent, and the Lenders and their successors, pledgees, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Commitments, its loans, owing to it and any note held by it) to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted such Lender herein or otherwise, in each
case as provided in Section 14.1.
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18.5 SUBROGATION. No Guarantor will exercise any rights that
it may now or hereafter acquire against any Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Section 18, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Agent and the Lenders against any Borrower or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Section 18 shall have been paid in full in cash and this Agreement shall have
terminated. If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Section 18 and the termination of this Agreement, such amount shall be held
in trust for the benefit of the Agent and the Lenders and shall forthwith be
paid to the Agent and the Lenders to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Section 18, whether matured
or unmatured, in accordance with the terms of this Agreement, or to be held as
collateral for any Guaranteed Obligations or other amounts payable under this
Section 18 thereafter arising. If (i) any Guarantor shall make payment to the
Agent and the Lenders of all or any part of the Guaranteed Obligations, (ii) all
of the Guaranteed Obligations and all other amounts payable under this Section
18 shall be paid in full in cash and (iii) this Agreement has terminated, the
Agent and the Lenders will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Guarantor.
18.6 JOINT AND SEVERAL OBLIGATIONS. All of the Guaranteed
Obligations of the Guarantors hereunder and the other Loan Documents are joint
and several. Agent and the Lenders may, in their sole and absolute discretion,
enforce the provisions hereof against any of the Guarantors and shall not be
required to proceed against all Guarantors jointly or seek payment from the
Guarantors ratably.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWERS:
DAIRY MART CONVENIENCE STORES, INC.
a Delaware Corporation, as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
THE ▇▇▇▇▇▇ COMPANY,
a Delaware corporation, as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
QUIK SHOPS, INC.,
an Ohio corporation, as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
CONVENIENT INDUSTRIES OF AMERICA, INC.,
a Kentucky corporation, as a Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
GUARANTORS:
CIA FOOD MARTS, INC.,
a New York corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
DAIRY MART, INC.,
a Massachusetts corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
DAIRY MART FARMS, INC.,
a Connecticut corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
DAIRY MART EAST, INC.,
a Rhode Island corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
THE ▇▇▇▇▇▇ MILK COMPANY,
an Ohio corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
L M C, INC.,
an Ohio corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
GOLDEN STORES, INC.,
an Ohio corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
OPEN PANTRY PROPERTIES, INC.,
an Ohio corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
CONNA CORPORATION,
a Kentucky corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
REMOTE SERVICES, INC.,
a Kentucky corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
FOOD MERCHANDISERS, INC.,
a North Carolina corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇, INC.,
a Kentucky corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
SNG OF SOUTHERN MINNESOTA, INC.,
an Ohio corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
LAKESIDE WHOLESALE, INC.,
an Ohio corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
CONVENIENT GASOLINE, INC.,
a New York corporation, as a Guarantor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
DM RISK MANAGEMENT COMPANY, INC.,
an Ohio corporation, as a Guarantor
-4-
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Chief Financial Officer
LENDERS:
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Title: Vice-President
-5-
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS AND CONSTRUCTION............................................................................1
1.1 DEFINITIONS..................................................................................1
1.2 ACCOUNTING TERMS............................................................................23
1.3 CODE........................................................................................23
1.4 CONSTRUCTION................................................................................23
1.5 SCHEDULES AND EXHIBITS......................................................................24
2. LOAN AND TERMS OF PAYMENT..............................................................................24
2.1 REVOLVER ADVANCES...........................................................................24
2.2 TERM LOAN...................................................................................25
2.3 BORROWING PROCEDURES AND SETTLEMENTS........................................................25
2.4 PAYMENTS....................................................................................31
2.5 OVERADVANCES................................................................................34
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND CALCULATIONS.................34
2.7 CASH MANAGEMENT.............................................................................36
2.8 CREDITING PAYMENTS..........................................................................37
2.9 DESIGNATED ACCOUNT..........................................................................38
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS......................................38
2.11 FEES........................................................................................38
2.12 LETTERS OF CREDIT...........................................................................39
2.13 CAPITAL REQUIREMENTS........................................................................42
2.14 JOINT AND SEVERAL LIABILITY OF BORROWERS....................................................42
3. CONDITIONS; TERM OF AGREEMENT..........................................................................45
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT.....................................45
3.2 CONDITIONS PRECEDENT TO ADVANCES AND LETTERS OF CREDIT......................................47
3.3 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT....................................49
3.4 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT............................................50
3.5 TERM........................................................................................50
3.6 EFFECT OF TERMINATION.......................................................................51
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PAGE
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3.7 EARLY TERMINATION BY BORROWERS..............................................................51
4. CREATION OF SECURITY INTEREST..........................................................................52
4.1 GRANT OF SECURITY INTEREST..................................................................52
4.2 NEGOTIABLE COLLATERAL.......................................................................52
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE COLLATERAL......................52
4.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; PLEDGE AMENDMENTS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED...........................................................52
4.5 POWER OF ATTORNEY...........................................................................53
4.6 RIGHT TO INSPECT............................................................................54
4.7 CONTROL AGREEMENTS..........................................................................54
4.8 ADMINISTRATIVE PRIORITY.....................................................................54
4.9 GRANTS, RIGHTS AND REMEDIES.................................................................54
4.10 NO FILINGS REQUIRED.........................................................................54
4.11 SURVIVAL....................................................................................55
5. REPRESENTATIONS AND WARRANTIES.........................................................................55
5.1 NO ENCUMBRANCES.............................................................................56
5.2 [INTENTIONALLY OMITTED].....................................................................56
5.3 [INTENTIONALLY OMITTED].....................................................................56
5.4 EQUIPMENT...................................................................................56
5.5 LOCATION OF INVENTORY AND EQUIPMENT.........................................................56
5.6 INVENTORY RECORDS...........................................................................56
5.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN, ORGANIZATIONAL ID NUMBER;
COMMERCIAL TORT CLAIMS......................................................................56
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES............................................56
5.9 DUE AUTHORIZATION; NO CONFLICT..............................................................57
5.10 LITIGATION..................................................................................58
5.11 NO MATERIAL ADVERSE CHANGE..................................................................59
5.12 FRAUDULENT TRANSFER.........................................................................59
5.13 EMPLOYEE BENEFITS...........................................................................59
5.14 ENVIRONMENTAL CONDITION.....................................................................59
5.15 BROKERAGE FEES..............................................................................59
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5.16 INTELLECTUAL PROPERTY.......................................................................59
5.17 LEASES......................................................................................60
5.18 DDAS........................................................................................60
5.19 COMPLETE DISCLOSURE.........................................................................60
5.20 [INTENTIONALLY OMITTED].....................................................................60
5.21 REGULATION U................................................................................60
5.22 PERMITS, ETC................................................................................60
5.23 MATERIAL CONTRACTS..........................................................................60
5.24 [INTENTIONALLY OMITTED].....................................................................61
5.25 CUSTOMERS AND SUPPLIERS.....................................................................61
5.26 TITLE TO PROPERTIES.........................................................................61
5.27 ADMINISTRATIVE PRIORITY.....................................................................64
5.28 APPOINTMENT OF TRUSTEE OR EXAMINER; LIQUIDATION.............................................64
6. AFFIRMATIVE COVENANTS..................................................................................65
6.1 ACCOUNTING SYSTEM...........................................................................65
6.2 COLLATERAL REPORTING........................................................................65
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.................................................66
6.4 [INTENTIONALLY OMITTED].....................................................................69
6.5 [INTENTIONALLY OMITTED].....................................................................69
6.6 MAINTENANCE OF PROPERTIES AND LEASES........................................................69
6.7 TAXES.......................................................................................69
6.8 INSURANCE...................................................................................69
6.9 LOCATION OF INVENTORY AND EQUIPMENT.........................................................70
6.10 COMPLIANCE WITH LAWS........................................................................70
6.11 [INTENTIONALLY OMITTED].....................................................................70
6.12 BROKERAGE COMMISSIONS.......................................................................70
6.13 EXISTENCE...................................................................................71
6.14 ENVIRONMENTAL...............................................................................71
6.15 DISCLOSURE UPDATES..........................................................................71
6.16 REAL ESTATE.................................................................................71
6.17 FINANCIAL CONSULTANT........................................................................72
6.18 BANKRUPTCY COURT FILINGS....................................................................72
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7. NEGATIVE COVENANTS.....................................................................................72
7.1 INDEBTEDNESS................................................................................72
7.2 LIENS.......................................................................................73
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.........................................................73
7.4 DISPOSAL OF ASSETS..........................................................................74
7.5 CHANGE NAME.................................................................................74
7.6 GUARANTEE...................................................................................74
7.7 NATURE OF BUSINESS..........................................................................74
7.8 PREPAYMENTS AND AMENDMENTS..................................................................75
7.9 CHANGE OF CONTROL...........................................................................75
7.10 CONSIGNMENTS................................................................................75
7.11 DISTRIBUTIONS...............................................................................75
7.12 ACCOUNTING METHODS..........................................................................76
7.13 INVESTMENTS.................................................................................76
7.14 TRANSACTIONS WITH AFFILIATES................................................................76
7.15 SUSPENSION..................................................................................76
7.16 COMPENSATION................................................................................76
7.17 USE OF PROCEEDS.............................................................................76
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT WITH BAILEES..........77
7.19 SECURITIES ACCOUNTS.........................................................................77
7.20 FINANCIAL COVENANTS.........................................................................77
7.21 ENVIRONMENTAL...............................................................................79
7.22 BANK ACCOUNTS...............................................................................79
7.23 INACTIVE SUBSIDIARY.........................................................................79
7.24 INTERIM FINANCING ORDER; FINAL FINANCING ORDER; ADMINISTRATIVE EXPENSE PRIORITY; LIEN
PRIORITY; PAYMENTS..........................................................................79
8. EVENTS OF DEFAULT......................................................................................80
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................83
9.1 RIGHTS AND REMEDIES.........................................................................83
9.2 REMEDIES CUMULATIVE.........................................................................85
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10. TAXES AND EXPENSES.....................................................................................85
11. WAIVERS; INDEMNIFICATION...............................................................................85
11.1 DEMAND; PROTEST; ETC........................................................................85
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL.................................................86
11.3 INDEMNIFICATION.............................................................................86
12. NOTICES................................................................................................86
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................87
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................88
14.1 ASSIGNMENTS AND PARTICIPATIONS..............................................................88
14.2 SUCCESSORS..................................................................................90
15. AMENDMENTS; WAIVERS....................................................................................91
15.1 AMENDMENTS AND WAIVERS......................................................................91
15.2 REPLACEMENT OF HOLDOUT LENDER...............................................................92
15.3 NO WAIVERS; CUMULATIVE REMEDIES.............................................................92
16. AGENT; THE LENDER GROUP................................................................................92
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT......................................................92
16.2 DELEGATION OF DUTIES........................................................................93
16.3 LIABILITY OF AGENT..........................................................................93
16.4 RELIANCE BY AGENT...........................................................................94
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT.......................................................94
16.6 CREDIT DECISION.............................................................................94
16.7 COSTS AND EXPENSES; INDEMNIFICATION.........................................................95
16.8 AGENT IN INDIVIDUAL CAPACITY................................................................96
16.9 SUCCESSOR AGENT.............................................................................96
16.10 LENDER IN INDIVIDUAL CAPACITY...............................................................96
16.11 WITHHOLDING TAXES...........................................................................97
16.12 COLLATERAL MATTERS..........................................................................98
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.....................................99
16.14 AGENCY FOR PERFECTION......................................................................100
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16.15 PAYMENTS BY AGENT TO THE LENDERS...........................................................100
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS.......................................100
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS BY LENDERS; OTHER
REPORTS AND INFORMATION....................................................................100
16.18 SEVERAL OBLIGATIONS; NO LIABILITY..........................................................102
17. GENERAL PROVISIONS....................................................................................102
17.1 EFFECTIVENESS..............................................................................102
17.2 SECTION HEADINGS...........................................................................102
17.3 INTERPRETATION.............................................................................102
17.4 SEVERABILITY OF PROVISIONS.................................................................102
17.5 AMENDMENTS IN WRITING......................................................................102
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION......................................................102
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS...................................................103
17.8 INTEGRATION................................................................................103
17.9 PARENT AS AGENT FOR BORROWERS..............................................................103
17.10 AGENT AS PARTY IN INTEREST.................................................................104
18. GUARANTY..............................................................................................104
18.1 GUARANTY; LIMITATION OF LIABILITY..........................................................104
18.2 GUARANTY ABSOLUTE..........................................................................104
18.3 WAIVER.....................................................................................105
18.4 CONTINUING GUARANTY; ASSIGNMENTS...........................................................105
18.5 SUBROGATION................................................................................106
18.6 JOINT AND SEVERAL OBLIGATIONS..............................................................106
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit D-1 Form of Credit Card Depository Account Agreement
Exhibit D-2 Form of Depository Account Agreement
Exhibit E-1 Form of Franchise Agreement
Exhibit I-1 Form of Interim Financing Order
Schedule A-1 Authorized Person
Schedule C-1 Commitments
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 3.1(q) Closing Date Surveys
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7(a) State of Incorporation of each Loan Party
Schedule 5.7(b) Chief Executive Office
Schedule 5.7(c) FEIN; Organizational ID Number
Schedule 5.7(d) Commercial Tort Claims
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.8(e) Inactive Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.23 Material Contracts
Schedule 5.25 Business Relationship Changes
Schedule 5.26(c) Real Property Compliance
Schedule 5.26(i) Ground Leases
Schedule C-1
COMMITMENTS
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LENDER REVOLVER COMMITMENT PRIOR TO TERM LOAN COMMITMENT PRIOR TO TOTAL COMMITMENT
REVOLVER FACILITY EFFECTIVE REVOLVER FACILITY EFFECTIVE DATE
DATE
Foothill Capital $0 $10,750,000 $10,750,000
Corporation
Total $0 $10,750,000 $10,750,000
LENDER REVOLVER COMMITMENT AFTER TERM LOAN COMMITMENT AFTER TOTAL COMMITMENT
REVOLVER FACILITY EFFECTIVE REVOLVER FACILITY EFFECTIVE DATE
DATE
Foothill Capital $20,250,000 $10,750,000 $31,000,000
Corporation
Other Lender To Be Determined $0 To Be Determined
All Lenders $20,250,000* $10,750,000 $31,000,000*
* The Revolver Commitments of the Lenders may be increased up to $35,250,000 and
the Total Commitment of the Lenders may be increased up to $46,000,000, in each
case in accordance with SECTION 3.2(A) of this Agreement.