SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of March 20, 2002
by and among
AVADO BRANDS, INC., as Borrower,
the lenders signatory hereto,
FOOTHILL CAPITAL CORPORATION, as Administrative Agent,
and
ABLECO FINANCE LLC, as Collateral Agent
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Second Amended and Restated Credit Agreement, dated as of March 20, 2002,
by and among AVADO BRANDS, INC., a Georgia corporation ("Borrower"), each of the
lenders that from time to time is a party hereto (such lenders, each
individually a "Lender" and collectively, the "Lenders"), FOOTHILL CAPITAL
CORPORATION, a California corporation, as administrative agent for the Lender
Group (in such capacity, together with its successors in accordance with the
Transferee Side Letter, if any, in such capacity, "Administrative Agent"), and
ABLECO FINANCE LLC, a Delaware limited liability company, as collateral agent
for the Lender Group (in such capacity, together with its successors in
accordance with the Transferee Side Letter, if any, in such capacity, the
"Collateral Agent"; Administrative Agent, Collateral Agent and the Lenders,
individually and collectively, the "Lender Group").
RECITALS
WHEREAS, Borrower, the financial institutions a party thereto as lenders
(collectively, the "Former Lenders"), Wachovia Bank, National Association, as
the administrative agent for the Former Lenders (the "Former Administrative
Agent"; together with the Former Lenders, the "Former Lender Group") are parties
to that certain Amended and Restated Credit Agreement dated as of April 2, 2001,
as amended by that certain First Amendment to Amended and Restated Credit
Agreement dated as of August 22, 2001, as further amended by that certain Second
Amendment to Amended and Restated Credit Agreement dated as of October 31, 2001,
and as further amended by that certain Third Amendment to Amended and Restated
Credit Agreement dated as of November 7, 2001, (as amended, restated,
supplemented or otherwise modified prior to the date hereof, the "Former Credit
Agreement").
WHEREAS, concurrent herewith, the Lender Group and the Former Lender Group
have executed that certain letter agreement (the "Purchase Agreement") whereby
the Former Lender Group has transferred and assigned to the Lender Group all of
the rights and obligations of the Former Lender Group under the Former Loan
Documents.
WHEREAS, Borrower and the Lender Group wish to amend and restate the Former
Credit Agreement as set forth herein, it being understood that no repayment of
the obligations under the Former Credit Agreement is being effected hereby, but
merely an amendment and restatement in accordance with the terms hereof.
In consideration of the premises and the covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
SECTION 1.01. Definitions. As used in this Agreement, the following terms
shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of such terms:
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account Receivable.
"Account Receivable" means all of a 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" (as that term is
defined in the Code) in respect thereof.
"Acknowledgement Agreement" means that certain Acknowledgement Agreement
dated as of the date hereof, entered into by and among each of Borrower's
Subsidiaries and Collateral Agent, in form and substance satisfactory to
Collateral Agent.
"Action" has the meaning specified therefor in Section 9.12.
"Additional SunTrust Obligation" means Borrower's obligation to pay an
additional $200,000 per month plus applicable taxes, commencing on January 1,
2002, in connection with the SunTrust Lease Agreement.
"Adjusted Working Investment" means, as of any date of determination and
with respect to any Person, such Person's Working Investment as of such date,
minus the sum of such Person's Working Investment as of such date in respect of
(a) accounts payable which constitute Capital Expenditures, (b) accrued rental
obligations with respect to real property leases, (c) accrued obligations for
payroll benefits, (d) accrued obligations for bonuses, (e) accrued obligations
with respect to gift certificates, (f) accrued special charges in connection
with Restaurant closures as properly reported in such Person's income statements
in conformance with GAAP, and (g) accrued obligations in connection with the
opening of a new Restaurant, in an amount not to exceed $120,000.
"Administrative Agent" has the meaning set forth in the introductory
paragraph hereto.
"Administrative Agent Account" means the account identified on Schedule A.
"Affiliate" means, as to any Person, any other Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (i)
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vote more than 10% of the Capital Stock having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
Notwithstanding anything herein to the contrary, in no event shall the Lender
Group or any member thereof be considered an "Affiliate" of any Loan Party.
"After-Acquired Property" has the meaning set forth in Section 6.01(o).
"Agent" means Administrative Agent or Collateral Agent, as the context
requires.
"Agent-Related Persons" means Administrative Agent and any successor agents
thereto (in accordance with the terms of this Agreement), and Collateral Agent
and any successor agents thereto (in accordance with the terms of this
Agreement), together with their respective Affiliates, and the officers,
directors, employees, counsel, agents, and attorneys-in-fact of such Persons and
their Affiliates.
"Agreement" means this Second and Amended and Restated Agreement, together
with all Exhibits and Schedules hereto.
"Assignment and Acceptance" has the meaning specified therefor in Section
9.07(f).
"Authorized Officer" means the chief executive officer, chief
administrative officer, chief financial officer, vice president of financial
compliance and reporting or chief accounting officer of Borrower.
"Availability" means, as of any date of determination, the amount that
Borrower is entitled to borrow as Loans under Section 2.01(b) (after giving
effect to all then outstanding Obligations and all sublimits and reserves
applicable hereunder).
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) for which Borrower or any of its Subsidiaries or ERISA Affiliates has
been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
"Board" means the Board of Governors of the Federal Reserve System of the
United States.
"Borrower" has the meaning specified therefor in the preamble hereto.
"Borrower's EBITDA" means, with respect to Borrower and its Subsidiaries
for any period, the EBITDA of Borrower and its Subsidiaries for such period,
minus the EBITDA of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Holding Corp. and its Subsidiaries
during such period (if any).
"Borrowing Base" means, as of any date of determination, 2.25 times the
Borrowing Base EBITDA then in effect (which Borrowing Base EBITDA shall be
redetermined quarterly as set forth below in the definition of "Borrowing Base
EBITDA").
"Borrowing Base Certificate" means a certificate signed by an Authorized
Officer of Borrower and setting forth the calculation of the Borrowing Base in
compliance with Section 6.01(a)(vi), substantially in the form of Exhibit B.
"Borrowing Base EBITDA" means, (a) as of any date from the Effective Date
through the date Agents receive the quarterly financial statements for the
period ending December 31, 2001 which are required to be delivered pursuant to
Section 6.01(a)(i), the EBITDA of Borrower and each of its Subsidiaries during
the twelve month period ending on November 30, 2001, and (b) as of any other
date of determination, the EBITDA of Borrower and each of its Subsidiaries
during the period of four fiscal quarters of Borrower ending on the last day of
the most recent fiscal quarter of Borrower with respect to which the Agents have
each received the quarterly financial statements most recently required to be
delivered pursuant to Section 6.01(a)(i); provided, however that in the event
that such financial statements have not been submitted to the Agents as of the
date required pursuant to Section 6.01(a)(i), then the Borrowing Base EBITDA
shall be an amount determined by Collateral Agent in its Permitted Discretion
based upon the formula set forth above in paragraph (b) of this definition,
until such date as the Agents have received such financial statements.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City or the State of Georgia are authorized
or required to close.
"Capital Expenditures" means, with respect to any Person for any period,
the sum of (i) the aggregate of all expenditures paid or payable by such Person
and its Subsidiaries during such period that in accordance with GAAP are or
should be included in "property, plant equipment" or similar fixed asset account
on its balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
and (ii) to the extent not covered by clause (i) above, the aggregate of all
expenditures by such Person and its Subsidiaries to acquire by purchase or
otherwise the business or fixed assets of, or the Capital Stock of, any other
Person, excluding in each case, all expenditures made in connection with the
repair, replacement or restoration of a Restaurant which is the subject of the
loss, destruction, or taking by condemnation, to the extent permitted by Section
2.05(c)(v).
"Capitalized Lease" means, with respect to any Person, any lease of real or
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personal property by such Person as lessee which is required under GAAP to be
capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means, with respect to any Person,
obligations of such Person and its Subsidiaries under Capitalized Leases, and,
for purposes hereof, the amount of any such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Cash and Cash Equivalents" means all cash and any presently existing or
hereafter arising deposit account balances, certificates of deposit or other
financial instruments properly classified as cash equivalents under GAAP.
"Cash Flow From Restaurant Operations" means, for any period and with
respect to any Restaurant location, the earnings before interest, taxes,
depreciation, amortization, the non-cash component of "operating lease expenses"
(as such term is defined under GAAP), Pre-Opening Costs, and allocable general
and administrative expenses of such Restaurant location for such period, which
shall be calculated as consistently accounted for by Borrower and its
Subsidiaries in their internal financial accounts and reports.
"Change of Control" means each occurrence of any of the following:
(a) the acquisition, directly or indirectly, by any person or group (within
the meaning of Section 13(d)(3) of the Exchange Act) other than the Permitted
Holder of beneficial ownership of more than 20% of the aggregate outstanding
voting power of the Capital Stock of Borrower;
(b) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Borrower
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of Borrower was approved by a
vote of the majority of the directors of Borrower then still in office who were
either directors at the beginning of such period, or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Borrower;
(c) Borrower shall cease to have beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of at least 90% of the aggregate voting power of
the Capital Stock of each of its Subsidiaries, free and clear of all Liens,
other than Permitted Liens; and
(d) (i) Borrower consolidates with or merges into another entity (except
for consolidations or mergers permitted hereunder) or conveys, transfers or
leases all or substantially all of its property and assets to any Person, (ii)
any other Loan Party consolidates with or merges into another entity that is not
a Loan Party (except where such Loan Party is the surviving entity of such
merger or consolidation), or conveys, transfers or leases all or substantially
all of its property and assets to another Person that is not a Loan Party, or
(iii) any entity consolidates with or merges into any Loan Party in a
transaction pursuant to which the outstanding voting Capital Stock of such Loan
Party is reclassified or changed into or exchanged for cash, securities or other
property, other than any such transaction described in this clause (iii) in
which either (x) in the case of any such transaction involving Borrower, no
person or group (within the meaning of Section 13(d)(3) of the Exchange Act)
other than Permitted Holder has, directly or indirectly, acquired beneficial
ownership of more than 20% of the aggregate outstanding voting Capital Stock of
Borrower, or (y) in the case of any such transaction involving a Loan Party
other than Borrower, Borrower has beneficial ownership of less than 90% of the
aggregate voting power of all Capital Stock of the resulting, surviving or
transferee entity.
"Code" means the New York Uniform Commercial Code, as amended from time to
time.
"Collateral" means all of the property and assets and all interests therein
and proceeds thereof now owned or hereafter acquired by any Person upon which a
Lien is granted or purported to be granted by such Person as security for all or
any part of the Obligations.
"Collateral Agent" has the meaning set forth in the introductory paragraph
hereto.
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including insurance and condemnation proceeds, cash proceeds of
sales and other voluntary or involuntary dispositions of property, rental
proceeds, and tax refunds).
"Commitment" means, with respect to each Lender, such Lender's Revolving
Credit Commitment, Term Loan Commitment, or Total Commitment, as the context
requires.
"Commitment Percentage" means, with respect to any Lender, the ratio of (i)
the amount of the Commitment of such Lender to (ii) the aggregate amount of the
Commitments of all of the Lenders.
"Concentration Account Agreement" has the meaning set forth in Section
7.01(a).
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"Concentration Accounts" has the meaning specified therefor in Section
7.01(a).
"Concentration Account Bank" means Provident, or such other bank or
financial institution which is selected by Borrower and which is reasonably
acceptable to each Agent.
"Confidentiality Agreement" has the meaning set forth in Section 9.18.
"Contingent Obligation" means, with respect to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, (i) the direct or indirect guaranty, endorsement (other than
for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of a primary obligor, (ii) the obligation to make take-or-pay or similar
payments, if required, regardless of nonperformance by any other party or
parties to an agreement, (iii) any obligation of such Person, whether or not
contingent, (A) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (B) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (C) to purchase
property, assets, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (D) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof,
provided, however, that the term "Contingent Obligation" shall not include any
products warranties extended in the ordinary course of business. The amount of
any Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
"Control Agreement" means a control agreement, substantially in the form of
Exhibit CO-1 or Exhibit CO-2 hereto, executed and delivered by the applicable
Loan Party, Collateral Agent, and the applicable securities intermediary with
respect to a Securities Account or a bank with respect to a deposit account.
"Convertible Debentures" means those certain 7% Convertible Subordinated
Debentures due March 1, 2027 originally issued by Apple South, Inc., a Georgia
corporation, as predecessor-in-interest to Borrower.
"Credit Card Agreements means those certain agreements, dated as of the
date hereof, by and among Administrative Agent, Borrower and the applicable
credit card merchant, substantially in the form of one of the agreements
attached hereto as Exhibit CC.
"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.
"Default" means an event which, with the giving of notice or the lapse of
time or both, would constitute an Event of Default.
"Defaulting Lender" means any Lender with a Revolving Credit Commitment or
a Term Loan Commitment that fails to make any payment to Administrative Agent
that it is required to make hereunder on any Settlement Date and that has not
cured such failure by making such payment within 1 Business Day after written
demand upon it by Administrative Agent to do so.
"Defaulting Lenders Rate" means the Reference Rate for the first 3 days
from and after the date the relevant payment is due and, thereafter, at the
interest rate then applicable to the relevant Revolving Loan or Term Loan.
"Disbursement Account" means the account identified on Schedule D hereto.
"Disposition" means any transaction, or series of related transactions,
pursuant to which Borrower or any of its Subsidiaries sells, assigns, transfers
or otherwise disposes of any property or assets (whether now owned or hereafter
acquired) to any other Person, in each case whether or not the consideration
therefor consists of cash, securities or other assets owned by the acquiring
Person, excluding any sales of Inventory in the ordinary course of business on
ordinary business terms, sales or other dispositions of Permitted Investments,
or sales or other dispositions permitted by Section 6.02(c)(ii)(B) and closings
of Restaurants owned or operated by Borrower or any of its Subsidiaries, to the
extent that such closings do not involve the transfer or other disposition of
the Restaurant or the assets owned and/or operated by Borrower or the applicable
Subsidiary in connection with such Restaurant.
"Dollar", "Dollars" and the symbol "$" each means lawful money of the
United States of America.
"Dormant Subsidiaries" means Avado Holding Corp., a Delaware corporation,
Avado Operating Corp., a Georgia corporation, and Avado SCP VIII, Inc., an
Oregon corporation.
"EBITDA" means, with respect to any Person for any period, the Net Income
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of such Person for such period, plus without duplication, the sum of the
following amounts of such Person for such period and to the extent deducted in
determining Net Income of such Person for such period: (A) Net Interest Expense,
(B) income tax expense, (C) depreciation expense, (D) amortization expense, (E)
Pre-Opening Costs, (F) restructuring charges, asset revaluation and other
special charges, (G) extraordinary (on an after tax basis) or non-recurring
losses, (H) net losses attributable to Dispositions, (I) all other non cash
items (including without limitation, the cumulative effect from changes in
accounting principles (on an after tax basis)), and (J) items properly included
the category entitled "Other Income (Expense), Net" in Borrower's financial
statements (other than payments made to any limited partner of any Non-Wholly
Owned Subsidiary) and which are properly excluded from the operating income of
Borrower and its Subsidiaries, in each case consistent with the past accounting
practices of Borrower and its Subsidiaries, in all instances in (A) through (J)
above, reducing Net Income, minus without duplication, the sum of the following
amounts of such Person for such period and to the extent included in determining
Net Income of such Person for such period: (W) extraordinary (on an after tax
basis) or non-recurring gains, (X) net gains attributable to Dispositions, (Y)
items properly included the category entitled "Other Income (Expense), Net" in
Borrower's financial statements (other than payments made to any limited partner
of any Non-Wholly Owned Subsidiary) and which are properly excluded from the
operating income of Borrower and its Subsidiaries, in each case consistent with
the past accounting practices of Borrower and its Subsidiaries, and (Z) all
other non cash items (including without limitation, the cumulative effect from
changes in accounting principles (on an after tax basis)), in all instances (W)
through (Z) above, increasing Net Income, if any.
"Effective Date" means the date, on or before March 25, 2002, on which all
of the conditions precedent set forth in Section 4.01 are satisfied (or waived
by the Agents) and the initial Loan is made or the initial Letter of Credit
Accommodation is extended, in each case on or after the date hereof.
"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
$100,000,000; (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 having total
assets in excess of $100,000,000; 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 total assets in excess of $100,000,000; (d) any
Affiliate (other than individuals) of, or fund or account managed by, a Lender
party to this Agreement as of the Effective Date; (e) so long as no Event of
Default is continuing, any other Person approved, in writing, by Administrative
Agent and Borrower; and (f) during the continuation of an Event of Default, any
other Person approved by Administrative Agent; provided, however, that so long
as no Event of Default is continuing, no Person identified in the Transferee
Side Letter shall be an "Eligible Transferee" without Borrower's prior written
consent.
"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 involving violations of Environmental Laws or Releases of Hazardous
Materials (i) from any assets, properties or businesses of Borrower or any of
its Subsidiaries or any predecessor in interest; (ii) from adjoining properties
or businesses; or (iii) onto any facilities which received Hazardous Materials
generated by Borrower or any of its Subsidiaries or any predecessor in interest.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act (42 ▇.▇.▇.▇▇. 9601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C.ss.1801, et seq.). the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901, et seq.), the Federal Clean
Water Act (33 U.S.C.ss.1251 et seq.), the Clean Air Act (42 U.S.C.ss.7401 et
seq.),the Toxic Substances Control Act (15 U.S.C.ss.2601 et seq. and the
Occupational Safety and Health Act (29 U.S.C.ss.651 et seq.) as such laws may be
amended or otherwise modified from time to time, and any other present or future
federal, state, local or foreign statute, ordinance, rule, regulation, order,
judgment, decree, permit, license or other binding determination of any
Governmental Authority imposing liability or establishing standards of conduct
for protection of the environment.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigations 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 condition or
a Release of Hazardous Materials from or onto (i) any property presently or
formerly owned by Borrower or any of its Subsidiaries or (ii) any facility which
received Hazardous Materials generated by Borrower or any of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.
"Equipment" means all of a 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
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foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means, with respect to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which such Person
is a member and which would be deemed to be a "controlled group" within the
meaning of Sections 414(b), (c), (m) and (o) of the Internal Revenue Code.
"Estoppel Letter" means that certain letter agreement by and among the
Collateral Agent, and the Loan Parties regarding certain representations,
warranties, and agreements of the Loan Parties in connection with the sale by
Former Lender Group of all of its interest in the Credit Agreement and the other
Loan Documents.
"Event of Default" means the occurrence and continuance of any of the
events set forth in Section 8.01, after giving effect to any grace period
applicable thereto.
"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 Borrower and its Subsidiaries aged in excess of their
historical levels with respect thereto (excluding the amount of any trade
payables of Borrower or any of its Subsidiaries that (a) are the subject of a
good faith dispute by Borrower or such Subsidiary, (b) are to be paid C.O.D.,
(c) are paid within 60 days from the invoice date, other than Key Payables, and
(d) have individually negotiated payment dates or mutually accepted payment
practices (by contract or course of dealing), to the extent that (i) less than
$600,000 in the aggregate is due and payable by Borrower and its Subsidiaries
with respect to all such trade payables with individually negotiated payment
dates or mutually accepted payment practices (by contract or course of dealing),
or (ii) each Agent has consented, in its Permitted Discretion, to such
individually negotiated payment arrangements or mutually accepted payment
practices (by contract or course of dealing)) and all book overdrafts in excess
of their historical practices with respect thereto, in each case, pursuant to
this clause (ii), as determined by the Agents in their discretion.
"Excess Cash Flow" means, with respect to any Person for any period, (i)
Net Income of such Person and its Subsidiaries for such period, plus (ii) all
non-cash items of such Person and its Subsidiaries deducted in determining Net
Income for such period (provided that with respect to Borrower's and its
Subsidiaries' income tax expense for such period, the portion, if any, properly
recorded by Borrower and its Subsidiaries (in conformance with GAAP) as a
current receivable or payable will be considered a cash item and the portion, if
any, properly recorded by Borrower and its Subsidiaries (in conformance with
GAAP) as a deferred asset or liability will be considered a non-cash item), less
(iii) the sum of (A) all non-cash items of such Person and its Subsidiaries
included in determining Net Income for such period (provided that with respect
to Borrower's and its Subsidiaries' income tax expense for such period, the
portion, if any, properly recorded by Borrower and its Subsidiaries (in
conformance with GAAP) as a current receivable or payable will be considered a
cash item and the portion, if any, properly recorded by Borrower and its
Subsidiaries (in conformance with GAAP) as a deferred asset or liability will be
considered a non-cash item), (B) all scheduled and mandatory cash principal
payments on the Loans made during such period (but, in the case of the Revolving
Loans, only to the extent that the Revolving Credit Commitments are permanently
reduced by the amount of such payments), and all scheduled cash principal
payments on other Indebtedness for borrowed money of such Person or any of its
Subsidiaries during such period to the extent such other Indebtedness is
permitted to be incurred, and such payments are permitted to be made, under this
Agreement, (C) the cash portion of Capital Expenditures made by such Person and
its Subsidiaries during such period to the extent permitted to be made under
this Agreement, net of any cash received by such Person and its Subsidiaries
from landlords during such period for the landlords' share of renovation and
expansion costs, and (D) the excess, if any, of Adjusted Working Investment at
the end of such period over Adjusted Working Investment at the beginning of such
period (or minus the excess, if any, of Adjusted Working Investment at the
beginning of such period over Adjusted Working Investment at the end of such
period) (i.e. plus the change in Adjusted Working Investment from the beginning
of such period until the end of such period if Adjusted Working Investment is
greater at the end of such period than at the beginning of such period, or minus
the change in Adjusted Working Investment from the end of such period until the
beginning of such period if Adjusted Working Investment is less at the end of
such period than at the beginning of such period), if such change in Adjusted
Working Investment is greater than $1,000,000 during such period.
"Excluded Subsidiaries" means, individually and collectively, the Liquor
License Subsidiaries, the Dormant Subsidiaries and the Non-Wholly Owned
Subsidiaries.
"Existing Affiliate Advances" means all Indebtedness evidencing loans to
Affiliates, employees and officers of Borrower, made prior to the date hereof,
to the extent disclosed on, and in an amount not in excess of the amount set
forth on, Schedule E, and extensions and renewals thereof.
"Existing Notes" means those certain promissory notes (other than the New
▇▇▇▇▇▇ Note) executed prior to the Effective Date by ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. in favor
of Borrower.
"Expense Deposit" means the expense deposit in the amount of $300,000 paid
7
by Borrower to Collateral Agent on or prior to the Effective Date to pay the
out-of-pocket costs and expenses of the Lender Group in connection with the
performance of due diligence, the appraising and securing of Collateral and
other property and assets of Borrower and its Subsidiaries, and the preparation
of agreements, instruments and other documents in connection with the
transactions contemplated hereby and by the other Loan Documents, and otherwise
in connection with the consummation of such transactions.
"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 letter agreement, dated as of the date
hereof, between Borrower and Collateral Agent, setting forth certain fees
payable to Collateral Agent.
"Final Maturity Date" means March 20, 2005 or such earlier date on which
any Loan shall become due and payable, in whole or in part, in accordance with
the terms of this Agreement and the other Loan Documents.
"Financial Statements" means (i) the audited consolidated balance sheet of
Borrower and its Subsidiaries for the Fiscal Year ended December 31, 2000 and
the related consolidated statement of operations, shareholders' equity and cash
flows for the Fiscal Year then ended and (ii) the unaudited consolidated balance
sheet of Borrower and its Subsidiaries for the nine months ended September 30,
2001 and the related consolidated statement of operations, shareholder's equity
and cash flows for the nine months then ended.
"Fiscal Year" means the fiscal year of Borrower and its Subsidiaries ending
on the Sunday closest to December 31 of each year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
Borrower's EBITDA for such period, to (ii) the sum of (A) all principal of
Indebtedness for borrowed money of Borrower and its Subsidiaries scheduled to be
paid or prepaid during such period (not including prepayments of the Revolving
Loans unless such prepayments are accompanied by a reduction of the Revolving
Credit Commitment), plus (B) Net Interest Expense of Borrower and its
Subsidiaries for such period, plus (C) income taxes paid or payable by Borrower
and its Subsidiaries during such period (other than income taxes paid or payable
by Borrower during such period as a result of the transactions contemplated by
paragraphs 2 or 3 of the Side Letter) plus (D) cash dividends or distributions
paid by Borrower or any of its Subsidiaries (other than dividends or
distributions paid (1) to Borrower, or (2) on account of Borrower's interest
obligations with respect to the Convertible Debentures) during such period, plus
(E) Capital Expenditures made by Borrower and its Subsidiaries during such
period, plus (F) all amounts paid or payable by Borrower or any of its
Subsidiaries in connection with the Additional SunTrust Obligation during such
period.
"Foothill" means Foothill Capital Corporation, a California corporation, in
its individual capacity.
"Former Administrative Agent" has the meaning specified therefor in the
recitals to this Agreement.
"Former Credit Agreement" has the meaning specified therefor in the
recitals to this Agreement.
"Former Lender Group" has the meaning specified therefor in the recitals to
this Agreement.
"Former Lenders" has the meaning specified therefor in the recitals to this
Agreement.
"Former Loan Documents" means the Former Notes and any guaranties, security
agreements, mortgages, stock pledge agreements, financing statements, or other
agreements, instruments, certificates or documents which were executed,
delivered, filed or recorded in connection with the Former Credit Agreement, as
the same have been amended or otherwise modified from time to time prior to the
date hereof.
"Former Mortgages" means the mortgages and deeds of trust executed and
delivered by certain of the Loan Parties in favor of Former Administrative
Agent, as the same have been amended, restated, supplemented or otherwise
modified prior to the date hereof.
"Former Notes" means each of the promissory notes executed and delivered by
Borrower to each of the Former Lenders in connection with the Former Credit
Agreement.
"FFCA Master Lease" means that certain Master Lease Agreement dated as of
October 19, 2000 by and between SPV and Hops.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States, provided that for the purpose of Section 6.03
hereof and the definitions used therein, "GAAP" shall mean generally accepted
accounting principles in effect on the date hereof and consistent with those
used in the preparation of the Financial Statements, provided, further, that if
there occurs after the date of this Agreement any change in GAAP that affects in
8
any material respect the calculation of any covenant contained in Section 6.03
hereof, the Lender Group and Borrower shall negotiate in good faith amendments
to the provisions of this Agreement that relate to the calculation of such
covenant with the intent of having the respective positions of the Lender Group
and Borrower after such change in GAAP conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the covenants in Section 6.03 hereof shall be
calculated as if no such change in GAAP has occurred.
"Governmental Authority" means any nation or government, any Federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guaranties" means the guaranty, dated as of the date hereof, made by each
Subsidiary of Borrower identified in paragraph (i) of the definition of
Guarantors, in favor of the Lender Group, together with any other guaranty
delivered to the Lender Group pursuant to Section 6.01(b), each substantially in
the form of Exhibit G.
"Guarantors" means, individually and collectively, jointly and severally,
(i) Don Pablo's Holding Corp., a Delaware corporation, Don Pablo's Operating
Corp., an Ohio corporation, Don Pablo's Limited, Inc., an Ohio corporation, Don
Pablo's of Texas, LP, a Texas limited partnership, Canyon Cafe Operating Corp.,
a Georgia corporation, Canyon Cafe TX General, Inc., a Georgia corporation,
Canyon Cafe Limited, Inc., a Georgia corporation, Canyon Cafe of Texas, LP, a
Texas limited partnership, Hops of the Ohio Valley, Inc., a Florida corporation,
Hops of Southwest Florida, Inc., a Florida corporation, Hops Grill & Bar, Inc.,
a Florida corporation, Cypress Coast Construction Corporation, a Florida
corporation, Hops Marketing, Inc., a Florida corporation, Hops of Southeast
Florida, Ltd., a Florida limited partnership, Hops of Coral Springs, Ltd., a
Florida limited partnership, Hops of Boyton Beach, Ltd., a Florida limited
partnership, Hops of South Florida, Ltd., a Florida limited partnership, Hops of
Stuart, Ltd., a Florida limited partnership, Hops of the Gold Coast, Ltd., a
Florida limited partnership, Hops of the Ohio Valley, Ltd., a Florida limited
partnership, Hops of Bowling Green, Ltd., a Florida limited partnership, Hops of
Greater Orlando, Ltd., a Florida limited partnership, Hops of Florida Mall,
Ltd., a Florida limited partnership, Hops of Altamonte Springs, Ltd., a Florida
limited partnership, Hops of Greater ▇▇▇▇▇▇▇ ▇▇, Ltd., a Florida limited
partnership, Hops of Lakeland, Ltd., a Florida limited partnership, Hops of
Southwest Florida, Ltd., a Florida limited partnership, Hops of Bradenton, Ltd.,
a Florida limited partnership, HNEF Area Manager II, Ltd., a Florida limited
partnership, The Hops Northeast Florida Joint Venture No. I, a Florida general
partnership, The Hops Northeast Florida Joint Venture No. II, a Florida general
partnership, The Hops Northeast Florida Joint Venture No. III, a Florida general
partnership, Hops of South Carolina, Ltd., a Florida limited partnership, Hops
of the Carolinas, Ltd., a Florida limited partnership, Hops of ▇▇▇▇▇▇▇▇, Ltd., a
Florida limited partnership, Hops of the Carolinas II, Ltd., a Florida limited
partnership, Hops of Atlanta, Ltd., a Florida limited partnership, Hops of Ohio,
Ltd., a Florida limited partnership, Hops of Greater Detroit, Ltd., a Florida
limited partnership, Hops of Kansas, Ltd., a Florida limited partnership, Hops
of Missouri, LLC, a Florida limited liability company, Hops of Indiana, Ltd., a
Florida limited partnership, Hops of Greater Boston, Ltd., a Florida limited
partnership, and Hops of Rhode Island, LLC, a Rhode Island limited liability
company, and (ii) each other Person which guarantees, pursuant to Section
6.01(b) or otherwise, all or any part of the Obligations.
"Hazardous Materials" means (a) any element, compound or chemical that is
defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substances, extremely hazardous substance or
chemical, hazardous waste, special waste, or solid waste under Environmental
Laws; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d)
any substance exhibiting a hazardous waste characteristic, including but not
limited to, corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or explosive materials; and (e) any raw materials, building
components, including but not limited to asbestos-containing materials and
manufactured products containing hazardous substances.
"Hedging Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into by Borrower or any of its
Subsidiaries, which provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging Borrower's
or its Subsidiaries' exposure to fluctuations in interest or exchange rates,
loan, credit exchange, security or currency valuations or commodity prices.
"Hops" means Hops Grill & Bar, Inc., a Florida corporation.
"Hops Marks" means any trade names, trademarks, service marks and other
commercial symbols and applications related to the operation of "Hops Restaurant
Bar & Brewery" Restaurants on the realty which is the subject of the
Sale-Leaseback Agreement.
"Hops Marks License" means the License Agreement, dated as of even date
with the Sale-Leaseback Agreement, between Borrower, as licensor, and SPV, as
licensee, concerning the licensing of the Hops Marks to SPV, together with all
schedules and exhibits thereto, and any modifications or amendments thereof.
"Indebtedness" means, without duplication, with respect to any Person, (i)
all indebtedness of such Person for borrowed money; (ii) all obligations of such
9
Person for the deferred purchase price of property or services (other than trade
payables or other accounts payable incurred in the ordinary course of such
Person's business irrespective of when paid); (iii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments or
upon which interest payments are customarily made (excluding the TECONS); (iv)
all obligations and liabilities of such Person created or arising under any
conditional sales or other title retention agreement with respect to property
used and/or acquired by such Person, even though the rights and remedies of the
lessor, seller and/or lender thereunder are limited to repossession or sale of
such property; (v) all Capitalized Lease Obligations of such Person; (vi) all
obligations and liabilities, contingent or otherwise, of such Person, in respect
of letters of credit, acceptances and similar facilities; (vii) all obligations
and liabilities, calculated on a basis satisfactory to the Lender Group and in
accordance with accepted practice, of such Person under Hedging Agreements;
(viii) all Contingent Obligations; (ix) liabilities incurred under Title IV of
ERISA with respect to any plan (other than a Multiemployer Plan) covered by
Title IV of ERISA and maintained for employees of such Person or any of its
ERISA Affiliates; (x) withdrawal liability incurred under ERISA by such Person
or any of its ERISA Affiliates to any Multiemployer Plan; (xi) all other items
which, in accordance with GAAP, would be included as liabilities on the
liability side of the balance sheet of such Person; and (xii) all obligations
referred to in clauses (i) through (xi) of this definition of another Person
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien upon property owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness. The Indebtedness of any Person shall include the
Indebtedness of any partnership of or joint venture in which such Person is a
general partner or a joint venturer.
"Indemnified Matters" has the meaning specified therefor in Section 9.15.
"Indemnitees" has the meaning specified therefor in Section 9.15.
"Intercompany Advance" means loans made in the ordinary course of business
from Borrower to one of Borrower's Subsidiaries or from one of Borrower's
Subsidiaries to Borrower or another of Borrower's Subsidiaries.
"Intercompany Subordination Agreement" means a subordination agreement
executed and delivered by Borrower, each of its Subsidiaries, and Collateral
Agent, the form and substance of which is reasonably satisfactory to Collateral
Agent.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
(or any successor statute thereto) and the regulations thereunder.
"Inventory" means all of each of the Loan Parties' now owned and/or
hereafter acquired right, title, and interest with respect to inventory,
including goods held for sale and/or lease or to be furnished under a contract
of service, goods that are leased by a Loan Party as lessor, goods that are
furnished by a Loan Party under a contract of service, and raw materials, work
in process, and/or materials used and/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 Capital Stock of such other Person (including
without limitation an acquisition of Indebtedness pursuant to the Tender Offer),
and any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"IRS" means the Internal Revenue Service or any successor federal tax
Governmental Authority.
"Key Payable" means any trade payable of Borrower or any of its
Subsidiaries pursuant to which Borrower or any of its Subsidiaries obtains
Inventory or Equipment for use in connection with a material portion of the
business of Borrower and its Subsidiaries, taken as a whole.
"LC Exposure" means, without duplication, at any time, an amount equal to
100% of the aggregate undrawn face amount of all Standby Letters of Credit and
LC Guaranties of Standby Letters of Credit then outstanding.
"LC Guaranty" means any guaranty pursuant to which Administrative Agent or
any Affiliate of Administrative Agent shall guaranty the payment or performance
by Borrower of its reimbursement obligation under any letter of credit.
"Lease" means any lease of real property to which Borrower or any of its
Subsidiaries is a party as lessor or lessee.
"Lease Guaranties" means those certain guaranties executed and delivered by
Borrower or any of its Subsidiaries on account of indebtedness or other
obligations of any other Person in connection with one or more real property
leases (other than the Leases), including without limitation the guaranties
described on Schedule L hereto.
"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 as a "Lender" in accordance with the provisions hereof.
10
"Lender Group" has the meaning set forth in the introductory paragraph
hereto.
"Lender-Related Persons" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
counsel, agents, and attorneys-in-fact of such Lender and such Lender's
Affiliates.
"Letter of Credit" means any Standby Letter of Credit.
"Letter of Credit Accommodations" means Letters of Credit or LC Guaranties.
"Liabilities" has the meaning specified therefor in Section 2.07.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any Capitalized Lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Liquor License Subsidiaries" means, individually and collectively, Don
Pablo's TX Liquor, Inc., ▇▇▇ ▇▇▇▇▇▇ of Baltimore County, Inc., a Maryland
corporation, ▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇ County, Inc., a Maryland corporation, ▇▇▇
▇▇▇▇▇▇ of Prince George's County, Inc., a Maryland corporation, SMAS, Inc., a
Texas corporation, and any other Subsidiary of Borrower which does not own any
assets or property other than a liquor license.
"Loan Account" means an account maintained hereunder by Administrative
Agent on its books of account, at Administrative Agent's office and with respect
to Borrower, in which Borrower will be charged with all Loans made to, and all
other Obligations incurred by, Borrower.
"Loan Documents" means this Agreement, the Acknowledgment Agreement, the
Guaranties, the Security Agreements, the Side Letter, the Transferee Side
Letter, the Pledge Agreements, the Former Mortgages, the New Mortgages, the
Mortgage Assignments, the UCC Assignments, the Mortgage Amendments, the
Trademark Assignment, the Trademark Security Agreements, the Estoppel Letter,
the Concentration Account Agreement, the Credit Card Agreements, and all other
agreements, instruments, and other documents executed and delivered pursuant
hereto or thereto or otherwise evidencing or securing any Loan.
"Loan Parties" means Borrower and each Guarantor.
"Loans" means all of the Term Loans and the Revolving Loans.
"Material Adverse Effect" means a material adverse effect on any of (i) the
operations, business, assets, properties, condition (financial or otherwise) or
prospects of the Loan Parties, taken as a whole, (ii) the ability of any Loan
Party to perform any of its obligations under any Loan Document to which it is a
party, (iii) the legality, validity or enforceability of this Agreement or any
other Loan Document, (iv) the rights and remedies of the Lender Group under any
Loan Document, or (v) the validity, perfection or priority of a Lien in favor of
the Lender Group on any material portion of the Collateral.
"Material Contract" means each contract or agreement to which Borrower or
any of its Subsidiaries is a party which is material to the business,
operations, condition (financial or otherwise), or performance, of Borrower and
its Subsidiaries, taken as a whole, but excluding all contracts evidencing the
ownership or lease of any Restaurant, other than such contracts or agreements
with respect to which the net present value of all consideration payable by or
to Borrower or any of its Subsidiaries under such contract, as of the date
thereof, exceeds $10,000,000, including without limitation the contracts listed
on Schedule 5.01(z).
"Maximum Amount" means, as of any date of determination, the lower of (a)
$75,000,000, and (b) the sum of all Revolving Credit Commitments and all Term
Loan Commitments of all Lenders.
"Maximum Revolving Amount" means, as of any date of determination, the
lower of (a) $35,000,000, and (b) the sum of all Revolving Credit Commitments of
all Revolving Credit Lenders.
"Maximum Term Loan Amount" means, as of any date of determination, the
lower of (a) $40,000,000, and (b) the sum of all Term Loan Commitments of all
Term Loan Lenders.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor thereto.
"▇▇▇▇▇▇ Documents" means the ▇▇▇▇▇▇ Guaranty Agreement, any mortgage or
deed of trust which secures the Indebtedness of the Loan Parties under the
▇▇▇▇▇▇ Guaranty Agreement, the ▇▇▇▇▇▇ ▇▇▇▇ Subordination Agreements, and any
other agreements executed in connection therewith.
"▇▇▇▇▇▇ Guaranty Agreement" means that certain ISDA Master Agreement by and
between ▇▇▇▇▇▇ Guaranty Trust Company of New York, and Apple South, Inc. (as
predecessor-in-interest to Borrower), dated as of June 3, 1996, as amended by
that certain Waiver and Amendment Letter dated as of April 3, 2000, as further
amended by that certain Waiver and Consent Letter dated as of May 24, 2000, as
further amended by that certain Extension Letter dated as of May 31, 2000, as
further amended by that certain letter agreement dated as of September 29, 2000,
as further amended by that certain Third Waiver and Amendment Letter dated as of
October 12, 2000, as further amended by that certain Fourth Waiver and Amendment
11
Letter dated as of March 2, 2001, as further amended by that certain letter
agreement dated as of August 21, 2001, and as further amended by that certain
waiver letter dated November 14, 2001, and as otherwise amended, restated,
supplemented or otherwise modified from time to time.
"▇▇▇▇▇▇ ▇▇▇▇ Subordination Agreements" means those certain lien
subordination agreements executed by and among Former Administrative Agent,
▇▇▇▇▇▇ Guaranty Trust Company of New York and certain Subsidiaries of Borrower.
"Mortgage Assignments" means those certain assignments executed and
delivered by Former Administrative Agent to Collateral Agent of each of the
mortgages and deeds of trust made by a Loan Party in favor of Former
Administrative Agent, each in form and substance reasonably satisfactory to
Collateral Agent.
"Mortgage Amendments" means those certain amendments to the mortgages and
deeds of trust made by a Loan Party in favor of Former Administrative Agent,
executed and delivered by the applicable Loan Party and Collateral Agent, each
in form and substance reasonably satisfactory to Collateral Agent.
"M&S Asset Purchase Agreement" means that certain Asset Purchase Agreement,
dated as of June 7, 2001, by and among, on the one hand, Borrower and certain of
its Subsidiaries, and on the other hand, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Acquisition Corp.,
a Delaware corporation, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"M&S Disposition" has the meaning ascribed thereto in Section 4.01(h).
"M&S Purchase Documents" means the M&S Asset Purchase Agreement and each
other agreement executed in connection with the M&S Disposition.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA for which a Loan Party or any ERISA Affiliate of such Loan
Party has contributed to, or has been obligated to contribute to, at any time
during the preceding six (6) years.
"Net Cash Proceeds" means, (i) with respect to any Triggering Event or any
other Disposition by any Person, the amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or any of its
Subsidiaries or Affiliates, in connection therewith after deducting therefrom,
solely in connection with a Triggering Event which involves a Disposition, only
(A) the principal amount of any Indebtedness secured by any Permitted Lien on
any asset that is the subject of the Disposition (other than Indebtedness
assumed by the purchaser of such asset) which is required to be, and is, repaid
in connection with such Disposition (other than Indebtedness under this
Agreement), (B) reasonable expenses related thereto reasonably incurred such
Person or such Affiliate in connection therewith, (C) transfer taxes paid by
such Person or such Affiliate in connection therewith and (D) a provision for
net income taxes, whether paid or payable, in connection with such Disposition
(after taking into account any tax credits or deductions and any tax sharing
arrangements) and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person, or the sale or issuance by any Person of any shares
of its Capital Stock, the aggregate amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or any of its
Subsidiaries or Affiliates in connection therewith after deducting therefrom
only reasonable brokerage commissions, underwriting fees and discounts, legal
fees and similar fees and commissions.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with
GAAP.
"Net Interest Expense" means, with respect to any Person for any period,
gross interest expense of such Person for such period determined in conformity
with GAAP (including, without limitation, interest expense paid to Affiliates of
such Person, and accrued interest expense in connection with the TECONS), less
(i) the sum of (A) interest income for such period and (B) gains for such period
on Hedging Agreements (to the extent not included in interest income above and
to the extent not deducted in the calculation of such gross interest expense),
plus (ii) the sum of (A) losses for such period on Hedging Agreements (to the
extent not included in such gross interest expense) and (B) the upfront costs or
fees for such period associated with Hedging Agreements (to the extent not
included in gross interest expense), each determined in accordance with GAAP for
such Person.
"New Mortgages" means the mortgages and deeds of trust executed and
delivered by certain of the Loan Parties to Collateral Agent in favor of the
Lender Group pursuant to Section 6.01(b), in form and substance reasonably
satisfactory to Collateral Agent.
"New ▇▇▇▇▇▇ Note" means that certain promissory note, dated as of March 6,
2001, executed by ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. in favor of the Borrower, in an aggregate
amount equal to $14,130,472.99 as contemplated by the Permitted Affiliate
Transaction.
"Non-Wholly Owned Subsidiaries" means, individually and collectively, Hops
of Louisiana, Ltd., a Florida limited partnership, Hops of the Rockies, Ltd., a
Florida limited partnership, Hops of the Rockies II, Ltd., a Florida limited
partnership, Hops of Cherry Creek, Ltd., a Florida limited partnership, Hops of
Colorado Springs, Ltd., a Florida limited partnership, Hops of Connecticut,
Ltd., a Florida limited partnership, Hops of Minnesota, Ltd., a Florida limited
12
partnership, Hops of Virginia, Ltd., a Florida limited partnership, Hops of
▇▇▇▇▇▇▇▇ ▇▇, Ltd., a Florida limited partnership, Hops of Baltimore County, LLC,
a Florida limited liability company, and any other Subsidiary of Borrower which
is not a Wholly Owned Subsidiary of Borrower, a Liquor License Subsidiary or a
Dormant Subsidiary.
"Notice of Borrowing" has the meaning specified therefor in Section 2.02.
"Obligations" means the obligations (including contingent reimbursement
obligations under any outstanding Letter of Credit Accommodations unless repaid
or cancelled) of Borrower to pay, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or otherwise), all amounts
from time to time owing by it in respect of the Loan Documents, whether for
principal, interest (including, without limitation, the Term Loan PIK Amount and
all interest that accrues after the commencement of any case, proceeding or
other action relating to bankruptcy, insolvency or reorganization of Borrower),
fees, indemnification payments, expense reimbursements or otherwise.
"Operating Lease Obligations" means all obligations for the payment of rent
for any real or personal property under leases or agreements to lease, other
than Capitalized Lease Obligations.
"Overadvance" means, as of any date of determination, the amount, if any,
by which the aggregate amount of all Obligations outstanding as of such date
exceeds the lesser of (a) the Borrowing Base then in effect (net of the amount
of reserves, if any, established by Administrative Agent pursuant to the terms
of this Agreement), or (b) the Maximum Amount.
"Participant Register" has the meaning specified therefor in Section
9.07(d)(ii).
"Payment Event of Default" means an Event of Default under Section 8.01(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Affiliate Transaction" means the proposed transaction pursuant
to which (a) the real property securing the Existing Notes will be sold, (b) the
proceeds of such sale (in an amount equal to the lesser of the amount of such
proceeds and the amount which is necessary to purchase Senior Subordinated Notes
with a face value equal to the face amount of the New ▇▇▇▇▇▇ Note) will be used
to purchase a portion of the Senior Subordinated Notes, which will be pledged to
secure the New ▇▇▇▇▇▇ Note, (c) the New ▇▇▇▇▇▇ Note will be executed and
delivered by ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. to Borrower, and (d) the Existing Notes will be
either terminated or exchanged for the New ▇▇▇▇▇▇ Note.
"Permitted Convertible Debenture Payments" means those payments that are
permitted pursuant to the terms of paragraph 1 of the Side Letter.
"Permitted Deferred Taxes" means with respect to any date (each such date,
a "Determination Date") (A) before the date that is 90 days after the Effective
Date, taxes which are set forth on Schedule 5.01(k)(ii) in an aggregate
outstanding amount as of such Determination Date which is not more than
$9,741,000, (B) on and after the date that is 90 days after the Effective Date
and before the date that is 180 days after the Effective Date, penalties with
respect to sales taxes set forth on Schedule 5.01(k)(iii) in an aggregate
outstanding amount as of such Determination Date which is not more than
$2,100,000, and (C) as of any Determination Date, any other taxes, interest
thereon and/or penalties in an aggregate outstanding amount as of such
Determination Date which is not more than $250,000.
"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 Holder" means ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
"Permitted Indebtedness" means:
(a) any Indebtedness owing to the Lender Group under the Loan Documents or
pursuant to the Obligations;
(b) any other Indebtedness of Borrower or its Subsidiaries', other than the
Liquor License Subsidiaries, listed on Schedule 6.02(b), including the extension
of maturity, refinancing or modification of the terms thereof; provided,
however, that (i) such extension, refinancing or modification is pursuant to
terms that are not, in the aggregate, materially less favorable to Borrower or
any of its Subsidiaries than the terms of the Indebtedness being extended,
refinanced or modified and (ii) after giving effect to the extension,
refinancing or modification, such Indebtedness is not greater than the amount of
Indebtedness outstanding immediately prior to such extension, refinancing or
modification;
(c) Indebtedness of Borrower or its Subsidiaries', other than the Excluded
Subsidiaries, evidenced by Capitalized Lease Obligations entered into in order
to finance Capital Expenditures made by Borrower or such Subsidiaries in
accordance with the provisions of Section 6.02(g), which indebtedness, when
aggregated in the principal amount of all indebtedness incurred under this
clause (c) and clause (d) of this definition, does not exceed the amounts set
forth on Borrower's Business Operation Plan dated December 12, 2001;
(d) Indebtedness of Borrower or its Subsidiaries', other than the Excluded
Subsidiaries, permitted by clauses (e) and (l) of the definition of "Permitted
13
Liens";
(e) Indebtedness of Borrower or its Subsidiaries resulting from endorsement
of negotiable instruments received in the ordinary course of Borrower's or such
Subsidiary's business;
(f) Indebtedness of Borrower and its Subsidiaries resulting from (A) unpaid
taxes, licenses and fees, to the extent that such Indebtedness is either (i) not
yet due and payable, or (ii) the subject of a Permitted Protest, or (B)
Permitted Deferred Taxes.
(g) accrued and unfunded pension fund, workers compensation and other
employee benefit plan obligations and liabilities, provided that such
Indebtedness does not otherwise result in the existence of a Default or Event of
Default;
(h) Indebtedness in respect of guarantees by the Borrower or its
Subsidiaries of Indebtedness permitted hereunder;
(i) Indebtedness arising under a Concentration Account Agreement;
(j) Indebtedness in connection with the plans identified on Schedule
5.01(e);
(k) Indebtedness of Borrower or its Subsidiaries' resulting from Permitted
Investments;
(l) Indebtedness secured by liens permitted under clause (j) of the
definition of Permitted Liens;
(m) Indebtedness of Borrower or any of its Subsidiaries in connection with:
beer, wine and liquor related bonds, utility bonds, construction bonds and other
similar bonds or guaranties in respect of Restaurant operations or management in
the ordinary course of business;
(n) Indebtedness arising from Permitted Intercompany Advances;
(o) Indebtedness of Borrower to Excluded Subsidiaries;
(p) Indebtedness of Borrower and its Subsidiaries in connection with unpaid
insurance premiums in the ordinary course of business; and
(q) additional Indebtedness of Borrower or any of its Subsidiaries, other
than the Excluded Subsidiaries, not expressly permitted by clauses (a) through
(p) above, provided that the aggregate principal amount of the Indebtedness
outstanding under this clause (q) shall not at any time exceed $750,000.
"Permitted Intercompany Advance" means an Intercompany Advance, so long as
(a) the Intercompany Subordination Agreement is in full force and effect with
respect to the proposed Intercompany Advance, (b) if the Person acting as the
borrower with respect to such Intercompany Advance is a Non-Wholly Owned
Subsidiary and has not executed a Guaranty or a Security Agreement, (i) the
aggregate outstanding amount of all such Intercompany Advances to non-guarantors
other than Liquor License Subsidiaries, as of the last day of each fiscal
quarter of Borrower, shall not be greater than the sum of (A) the aggregate
outstanding amount of such Intercompany Advances as of December 30, 2001, and
(B) $1,000,000, and (ii) the proceeds of each such Intercompany Advance are used
solely for Capital Expenditures and other general business or operating expenses
of a Restaurant operated by such Person, and (c) if the Person acting as the
borrower with respect to such Intercompany Advance is a Liquor License
Subsidiary and has not executed a Guaranty or a Security Agreement, the proceeds
of each such Intercompany Advance are used solely for the obligation of such
Liquor License Subsidiary to pay for or maintain licenses and related expenses
in respect thereof.
"Permitted Investments" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six months from the date of acquisition thereof, (ii)
commercial paper, maturing not more than 270 days after the date of issue rated
P-1 by Moody's or A-1 by Standard & Poor's; (iii) certificates of deposit
maturing not more than one year after the date of issue, issued by commercial
banking institutions and money market or demand deposit accounts maintained at
commercial banking institutions, each of which is a member of the Federal
Reserve System and has a combined capital and surplus and undivided profits of
not less than $500,000,000; (iv) repurchase agreements having maturities of not
more than 90 days from the date of acquisition which are entered into with major
money center banks included in the commercial banking institutions described in
clause (iii) above, (v) money market accounts maintained with mutual funds
having assets in excess of $2,500,000,000, (vi) tax exempt securities rated A or
better by Moody's or A+ or better by Standard & Poor's, (vii) Investments
permitted pursuant to Section 2.05(c)(v), (viii) Investments arising from
Permitted Intercompany Advances and from Indebtedness of Borrower to Excluded
Subsidiaries, (ix) Investments made in connection with the operation of a
Restaurant or purchases of goods or services, in each case in the ordinary
course of business, (x) Capital Expenditures, to the extent otherwise permitted
under Section 6.02(g), (xi) Existing Affiliate Advances, (xii) Investments
arising from the Tender Offer, (xiii) Investments arising from escrow deposits
for the payment of taxes, rents, utilities, insurance or like matters in the
ordinary course of business of Borrower and its Subsidiaries, (xiv) deposits of
cash in demand deposit accounts of banks in the ordinary course of its business
in furtherance of any Concentration Account Agreement, and endorsement of
checks, drafts or other instruments in connection therewith, (xv) loans and
14
advances to employees and officers of Borrower and its Subsidiaries from time to
time in the ordinary course of business for travel expenses, moving expenses,
and signing bonuses, (xvi) other loans to employees and officers of Borrower and
its Subsidiaries from time to time in the ordinary course of business, other
than Existing Affiliate Advances and Investments described in paragraph (xvii)
of this definition, in an aggregate outstanding amount not in excess of
$100,000, (xvii) Investments in connection with the plans identified on Schedule
5.01(e), (xviii) Investments permitted pursuant to Section 6.02(c)(ii) hereof,
and (xix) Investments not otherwise described in the foregoing clauses of this
definition in an aggregate outstanding amount not in excess of $100,000.
"Permitted Liens" means:
(a) Liens securing the Obligations;
(b) Liens on property of Borrower or its Subsidiaries' for shopping center
assessments and charges, taxes, assessments and governmental charges which are
not yet delinquent or which are the subject of a Permitted Protest;
(c) Liens on property of Borrower or its Subsidiaries' imposed by law, such
as carriers', warehousemen's, mechanics', materialmen's and other similar Liens
arising in the ordinary course of business and securing obligations (other than
Indebtedness for borrowed money) that are not overdue or are being contested in
good faith and by appropriate proceedings promptly initiated and diligently
conducted, and a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;
(d) Liens on property of Borrower or its Subsidiaries', other than the
Excluded Subsidiaries, described on Schedule 6.02(a), and Liens arising out of
the extension of maturity, refinancing or other modification of the terms
thereof, to the extent that the Indebtedness secured thereby is Permitted
Indebtedness, but not the increase of the Indebtedness secured thereby or the
extension of coverage thereof to other property;
(e) purchase money Liens on Equipment acquired by Borrower or any of its
Subsidiaries, other than the Excluded Subsidiaries, to secure the purchase price
of such Equipment; provided, however, that (A) no such Lien shall extend to or
cover any other property of Borrower or any of its Subsidiaries, and (B) the
principal amount of the Indebtedness secured by any such Lien shall not exceed
the lesser of 100% of the fair market value or the cost of the property so held
or acquired;
(f) deposits and pledges of property of Borrower or its Subsidiaries',
other than the Excluded Subsidiaries, securing (i) obligations incurred in
respect of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits or pledges are incurred or otherwise arise in the ordinary
course of business and secure obligations not past due;
(g) the licensing of the Hops Marks to SPV under the Hops Marks License;
(h) grants of security and rights of setoff (including, without limitation,
the rights of Former Administrative Agent, on or before the date that is 60 days
after Effective Date, in the funds escrowed to secure Borrower's cash management
obligations to Former Administrative Agent) in deposit accounts, securities and
other properties held at banks or financing institutions;
(i) rights of lessors under operating leases, provided that the
Indebtedness secured thereby is permitted by Section 6.02(f);
(j) easements, zoning and similar restrictions, encroachments, operation
and use requirements, maintenance obligations, reservations, repurchase rights
and other minor encumbrances on, and irregularities in, title thereto that do
not (i) secure obligations for the payment of money, or (ii) materially impair
the value of such property or its use by Borrower or any of its Subsidiaries in
the ordinary course of such Person's business.
(k) Liens securing the Indebtedness of Borrower under the ▇▇▇▇▇▇ Guaranty
Agreement; provided, however, that from and after the date when such Liens have
been released, such Liens shall no longer constitute Permitted Liens;
(l) rights of lessors under Capitalized Leases, provided that the
Indebtedness secured thereby is permitted by Section 6.02(f);
(m) Liens consisting of deposits or Permitted Investments pledged to secure
Indebtedness permitted pursuant to clause (m) of the definition of "Permitted
Indebtedness";
(n) Liens in cash deposited into escrow in connection with the FFCA Master
Lease in an aggregate amount which as of any one time does not exceed $725,000;
and
(o) Liens securing Indebtedness in an aggregate amount not to exceed
$100,000 at any one time outstanding.
"Permitted Protest" means the right of Borrower or any of its Subsidiaries
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 by Borrower in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
15
diligently by Borrower or the applicable Subsidiary, in good faith, and (c)
Agents are satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, and/or priority of any of the Lender
Group's Liens on any material portion of the Collateral.
"Permitted Transactions" means, so long as no Default or Event of Default
is continuing, any transaction described on Schedule 2.05(c)(v) to the extent in
conformance with the terms and the amount set forth therein.
"Person" means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or Governmental Authority.
"Pledge Agreements" means the pledge agreements, executed and delivered by
the Loan Parties and Collateral Agent, in favor of the Lender Group, in respect
of the outstanding Capital Stock owned by the Loan Parties, each substantially
in the form of Exhibit P.
"Post-Default Rate" means a rate of interest per annum equal to the
applicable rate of interest otherwise in effect from time to time pursuant to
the terms of this Agreement plus 3.0%.
"Pre-Opening Costs" means costs incurred by Borrower or any of its
Subsidiaries prior to opening a Restaurant location including wages and
salaries, hourly employee recruiting and training, initial license fees,
advertising, pre-opening parties, lease expense, food cost, utilities, meals,
lodging, and travel plus the cost of hiring and training the management teams.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Revolving Loans and
receive payments relative thereto, (x) prior to the Revolving Credit Commitment
being terminated or reduced to zero, the percentage obtained by dividing (i)
such Lender's Revolving Credit Commitment, as set forth on Schedule C-1, by (ii)
the aggregate Revolving Credit Commitments of all Lenders, as set forth on
Schedule C-1, and (y) from and after the time that the Revolving Credit
Commitment has been terminated or reduced to zero, the percentage obtained by
dividing (i) the aggregate unpaid principal amount of such Lender's Revolving
Loans by (ii) the aggregate unpaid principal amount of all Revolving Loans;
(b) with respect to a Lender's obligation to participate in Letter of
Credit Accommodations, and receive payments of fees with respect thereto, (x)
prior to the Revolving Credit Commitment being terminated or reduced to zero,
the percentage obtained by dividing (i) such Lender's Revolving Credit
Commitment, as set forth on Schedule C-1, by (ii) the aggregate Revolving Credit
Commitments of all Lenders, as set forth on Schedule C-1, and (y) from and after
the time that the Revolving Credit Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (i) the aggregate unpaid principal
amount of such Lender's Revolving Loans by (ii) the aggregate unpaid principal
amount of all Revolving Loans;
(c) with respect to a Lender's obligation to make a Term Loan and receive
payments relative thereto (including the Term Loan PIK Amount), (x) prior to the
making of the initial Term Loan hereunder, the percentage obtained by dividing
(i) such Lender's Term Loan Commitment , as set forth on Schedule C-1, by (ii)
the aggregate Term Loan Commitments of all Lenders, as set forth on Schedule C-
1, and (y) from and after the time that such Term Loan has been made, the
percentage obtained by dividing (i) the sum of (A) the aggregate unpaid
principal amount of such Lender's Term Loans (excluding the Term Loan PIK
Amount), and (B) such Lender's remaining Term Loan Commitments, by (ii) the sum
of (A) the aggregate unpaid principal amount of all Term Loans (excluding the
Term Loan PIK Amount), and (B) the aggregate remaining Term Loan Commitments of
all Lenders; and
(d) with respect to all other matters (including the indemnification
obligations arising under Section 10.05), the percentage obtained by dividing
(i) the sum of (A) such Lender's Revolving Credit Commitments as set forth on
Schedule C-1, (B) the aggregate unpaid principal amount of such Lender's Term
Loans (excluding the Term Loan PIK Amount), and (C) such Lender's remaining Term
Loan Commitments, by (ii) the sum of (A) the aggregate Revolving Credit
Commitments of all Lenders, as set forth on Schedule C-1, (B) the aggregate
unpaid principal amount of all Term Loans (excluding the Term Loan PIK Amount),
and (C) the aggregate remaining Term Loan Commitments of all Lenders; provided,
however, that, in each case, in the event that all Commitments have been
terminated or reduced to zero, such Pro Rata Share shall be the percentage
obtained by dividing (i) the sum of (A) the aggregate unpaid principal amount of
such Lender's Revolving Loans, and (B) the aggregate unpaid principal amount of
such Lender's Term Loans (excluding the Term Loan PIK Amount), by (ii) the sum
of (A) the aggregate unpaid principal amount of all Revolving Loans, and (B) the
aggregate unpaid principal amount of all Term Loans (excluding the Term Loan PIK
Amount).
"property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Provident" means The Provident Bank.
"Purchase Agreement" has the meaning specified therefor in the recitals to
this Agreement.
"Rating Agencies" has the meaning specified therefor in Section 2.07.
"Reference Bank" means JPMorgan Chase Bank, its successors or any other
16
commercial bank designated by Administrative Agent to Borrower from time to time
and which has been similarly designated by Foothill in connection with
substantially all of the other loan agreements, credit agreements, financing
agreements and other similar agreements with respect to which Foothill is acting
as the administrative agent.
"Reference Rate" means the greater of (a) the rate of interest publicly
announced by the Reference Bank in New York, New York from time to time as its
prime rate or base rate, and (b) 5.75% per annum. The prime rate or base rate is
determined from time to time by the Reference Bank as a means of pricing some
loans to its borrowers and neither is tied to any external rate of interest or
index nor necessarily reflects the lowest rate of interest actually charged by
the Reference Bank to any particular class or category of customers. Each change
in the Reference Rate shall be effective from and including the date such change
is publicly announced as being effective.
"Register" has the meaning specified therefor in Section 9.07(c).
"Registered Loan" has the meaning specified therefor in Section 2.03(c).
"Registered Note" has the meaning specified therefor in Section 2.03(c).
"Regulation T", "Regulation U", and "Regulation X" mean, respectively,
Regulations T, U, and X of the Board or any successor, as the same may be
amended or supplemented from time to time.
"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.
"Remedial Action" means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous Materials in the indoor or outdoor environment; (ii) 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; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
"Required Availability" means Excess Availability and/or unrestricted Cash
and Cash Equivalents of Borrower in an aggregate amount of not less than
$10,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate at least 66-2/3% of the Commitments or, if the Commitments shall have
been terminated irrevocably, Lenders holding at least 66-2/3% of the Obligations
then outstanding.
"Restaurant" means a restaurant or other similar establishment owned or
operated by Borrower or any of its Subsidiaries.
"Revolving Credit Commitment" means, for each Lender, the commitment of
such Lender to make Revolving Loans to Borrower in an aggregate principal amount
at any time outstanding with respect to each such Lender not to exceed the
amount set forth opposite the name of such Lender under Revolving Credit
Commitment on Schedule C-1, as such amount may be terminated or reduced from
time to time in accordance with the terms of this Agreement.
"Revolving Credit Lenders" means, individually and collectively, each of
the Lenders which is listed on Schedule C-1 or on the signature page of an
Assignment and Acceptance as having a Revolving Credit Commitment.
"Revolving Facility Usage" means as of any date of determination, the sum
of the aggregate amount of Revolving Loans outstanding and the LC Exposure.
"Revolving Loan" has the meaning set forth in Section 2.01(b).
"Revolving Loan Commitment Termination Date" means March 20, 2005, or such
earlier date on which the Revolving Credit Commitments are terminated in full
pursuant to Section 2.05 or 8.01.
"Revolving Loan Margin" means 4.50%; provided, however, that, with respect
to any month, if Borrower has timely delivered to each Agent the financial
statements required by Section 6.01(a)(iii) and the certified calculations
required by Section 6.01(a)(iv)(B), and if such financial statements and
certified calculations demonstrate that the Senior Debt to EBITDA Ratio for the
twelve fiscal month period ending on the last day of the second month
immediately preceding such month is less than or equal to 2.00, the Revolving
Loan Margin shall mean 2.50% during such month; provided, further that (a) for
the time period from the Effective Date until the date when Agents have received
the monthly financial statements and certified calculations for the fiscal month
ending December 30, 2001 required by Section 6.01(a)(iii) and Section
6.01(a)(iv)(B), the determination described in the second clause of this
definition shall be made based upon the ratio of (i) the aggregate amount of all
Obligations as of the Effective Date (after giving effect to the initial Loans
and the initial Letter of Credit Accommodations made on or after the date
hereof), to (ii) Borrower's EBITDA for the twelve fiscal month period ending on
November 25, 2001, and (b) for the time period from the date when Agents have
received such monthly financial statements and certified calculations for the
month ending December 30, 2001 until the date when Agents have received such
17
monthly financial statements and certified calculations for the fiscal month
ending in January of 2002, the determination described in the second clause of
this definition shall be made based upon the ratio of (i) the aggregate amount
of all Obligations as of the Effective Date (after giving effect to the initial
Loans and the initial Letter of Credit Accommodations made on or after the date
hereof), to (ii) Borrower's EBITDA for the twelve fiscal month period ending on
December 30, 2001. The Revolving Loan Margin shall be determined on the
Effective Date and shall be redetermined each month on the fifth Business Day of
each such month. If financial statements and certified calculations described in
the second clause of this definition are not timely delivered, the Revolving
Loan Margin shall mean 4.50% until the date on which such financial statements
and certified calculations are delivered (on which date (but not retroactively),
without constituting a waiver of any Default or Event of Default occasioned by
the failure to timely deliver such certification, the Revolving Loan Margin
shall be redetermined based upon such financial statements and certified
calculations).
"Sale-Leaseback Agreement" means the Sale-Leaseback Agreement, dated on or
about October 19, 2000, between Hops and Borrower, as "Seller" thereunder, and
SPV, as "Buyer" thereunder, concerning the sale and purchase of certain real and
personal property of Hops, together with all schedules and exhibits thereto, and
any modifications or amendments thereof.
"SEC" means the Securities and Exchange Commission or any other similar or
successor agency of the Federal government administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.
"Securities Account" means a "securities account" as that term is defined
in the Code.
"Securitization" has the meaning specified therefor in Section 2.07.
"Securitization Party" the meaning specified therefor in Section 2.07.
"Security Agreements" means the security agreements executed and delivered
by the Loan Parties and Collateral Agent, in favor of the Lender Group, each
substantially in the form of Exhibit S.
"Senior Debt to EBITDA Ratio" means, for any period, the ratio of (a) the
aggregate amount of all Obligations as of the last date of such period, to (b)
Borrower's EBITDA for such period.
"Senior Note Documents" means, collectively, all notes, indentures, trusts,
guarantees or other documents or agreements of any kind, as the same may be
amended, restated supplemented or otherwise modified from time to time, which
have been executed in connection with the Senior Notes.
"Senior Notes" means those certain 9.75% Senior Notes due June 2006
originally issued by Apple South, Inc., a Georgia corporation, as
predecessor-in-interest to Borrower.
"Senior Subordinated Note Documents" means, collectively, all notes,
indentures, trusts, guarantees or other documents or agreements of any kind, as
the same may be amended, restated supplemented or otherwise modified from time
to time, which have been executed in connection with the Senior Subordinated
Notes.
"Senior Subordinated Notes" means those certain 11.75% Senior Subordinated
Notes due June 2009 originally issued by Apple South, Inc., a Georgia
corporation, as predecessor-in-interest to Borrower.
"Side Letter" means that certain letter agreement, dated as of the date
hereof, by and among the Lender Group and Borrower, concerning certain payments
in respect of Borrower's Indebtedness.
"Solvent" means, with respect to any Person on a particular date, that on
such date (i) the fair value of the property of such Person is not less than the
total amount of its liabilities of such Person, (ii) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its existing debts as
they become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"SPV" means Pubs Property, LLC, a Delaware limited liability company.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and any successor thereto.
"Standby Letter of Credit" means any stand-by letter of credit issued by
Administrative Agent or any of Administrative Agent's Affiliates for the account
of Borrower.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited or general partnership, limited liability company, trust,
18
association or other entity (i) the accounts of which would be consolidated with
those of such Person in such Person's consolidated financial statements if such
financial statements were prepared in accordance with GAAP or (ii) of which more
than 50% of (A) the outstanding Capital Stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the board of
directors of such corporation, (B) the interest in the capital or profits of
such partnership or limited liability company or (C) the beneficial interest in
such trust or estate is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such Person,
provided, that "Subsidiary" shall not include Apple South Financing I, a
Delaware business trust or any successor entity formed pursuant to the TECON
Documents.
"Subsidiary Activities" has the meaning set forth in Section 6.02(t) of
this Agreement.
"SunTrust Loan Agreement" means that certain Loan and Security Agreement,
dated as of September 24, 1997, by and among First Security Bank, National
Association, a national banking association, as owner trustee of the Apple South
Trust No. 97-1, the lenders from time to time that are parties thereto, and
SunTrust Bank, a Georgia banking corporation, as agent for the lenders, together
with any documents executed in connection therewith and all amendments,
modifications or restatements thereto entered into on or prior to the date
hereof.
"SunTrust Participation Agreement" means that certain Participation
Agreement, dated as of September 24, 1997, by and among Borrower, as lessee
under the Master Equipment Lease Agreement, First Security Bank, National
Association, a national banking association, as owner trustee of the Apple South
Trust No. 97-1, SunTrust Bank, a Georgia banking corporation, as holder of the
beneficial interest in the trust estate established under Apple South Trust No.
97-1, the financial institutions from time to time that are parties thereto, and
SunTrust Bank, a Georgia banking corporation, as collateral agent and
administrative agent for the lenders and the holders above referenced holder and
financial institutions, together with any documents executed in connection
therewith and all amendments, modifications or restatements thereto entered into
on or prior to the date hereof.
"SunTrust Lease Agreement" means that certain Master Equipment Lease
Agreement, dated as of September 24, 1997, between First Security Bank, National
Association, a national banking association, as lessor, and Borrower, as lessee,
together with any documents executed in connection therewith and all amendments,
modifications or restatements thereto entered into on or prior to the date
hereof.
"SunTrust Trust Agreement" means that certain Trust Agreement, dated as of
September 24, 1997, between SunTrust Bank, a Georgia banking corporation, as
holder of the beneficial interest in the trust estate established under Apple
South Trust No. 97-1, and First Security Bank, National Association, a national
banking association, as owner trustee of the Apple South Trust No. 97-1,
together with any documents executed in connection therewith and all amendments,
modifications or restatements thereto entered into on or prior to the date
hereof.
"SunTrust Master Lease Documents" means the SunTrust Lease Agreement, the
SunTrust Participation Agreement, the SunTrust Trust Agreement, the SunTrust
Loan Agreement, and any other documents or agreement of any kind executed in
connection therewith and all amendments, modifications or restatements thereto
entered into on or prior to the date hereof.
"Tangible Net Worth" means, with respect to any Person at any time, (i) the
sum of the following accounts (or their equivalents) set forth on a consolidated
balance sheet of such Person and its Subsidiaries prepared in accordance with
GAAP: the par or stated value of all outstanding Capital Stock, capital surplus,
retained earnings (or less accumulated deficits), and, with respect to the
Borrower, the TECONS, less (ii) all intangibles included on the asset side of
such balance sheet, including, without limitation, goodwill (including any
amounts, however designated on such balance sheet, representing the excess of
the purchase price paid for assets or stock acquired over the value assigned
thereto on the books of such Person and its Subsidiaries), patents, trademarks,
trade names, copyrights and similar intangibles.
"TECON Documents" means, collectively, all notes, indentures, trusts,
guarantees or other documents or agreements of any kind, as the same may be
amended, restated supplemented or otherwise modified from time to time, which
have been executed in connection with the TECONS and the Convertible Debentures.
"TECONS" means those certain $3.50 Term Convertible Securities, Series A,
originally issued by Apple South Financing I.
"Tender Offer" means the cash offer by Borrower for the repurchase
Indebtedness in accordance with the Side Letter.
"Term Loan Commitment" means, for each Lender, the commitment of such
Lender to make a Term Loan, in the principal amount with respect to each such
Lender equal to the amount set forth opposite the name of such Lender under Term
Loan Commitment on Schedule C-1, as such amount may be terminated or reduced
from time to time in accordance with the terms of this Agreement.
"Term Loan Commitment Termination Date" means March 20, 2005, or such
earlier date on which the Term Loan Commitments are terminated in full pursuant
to Section 2.05 or 8.01.
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"Term Loan Lenders" means, individually and collectively, each of the
Lenders which is listed on Schedule C-1 or on the signature page of an
Assignment and Acceptance as having a Term Loan Commitment.
"Term Loan Margin" means 4.50%; provided, however, that, with respect to
any month, if Borrower has timely delivered to each Agent the financial
statements required by Section 6.01(a)(iii) and the certified calculations
required by Section 6.01(a)(iv)(B), and if such financial statements and
certified calculations demonstrate that the Senior Debt to EBITDA Ratio for the
twelve fiscal month period ending on the last day of the second month
immediately preceding such month is less than or equal to 2.00, the Term Loan
Margin shall mean 2.50% during such month; provided, further that (a) for the
time period from the Effective Date until the date when Agents have received the
monthly financial statements and certified calculations for the fiscal month
ending December 30, 2001 required by Section 6.01(a)(iii) and Section
6.01(a)(iv)(B), the determination described in the second clause of this
definition shall be made based upon the ratio of (i) the aggregate amount of all
Obligations as of the Effective Date (after giving effect to the initial Loans
and the initial Letter of Credit Accommodations made on or after the date
hereof), to (ii) Borrower's EBITDA for the twelve fiscal month period ending on
November 25, 2001, (b) for the time period from the date when Agents have
received such monthly financial statements and certified calculations for the
fiscal month ending December 30, 2001 until the date when Agents have received
such monthly financial statements and certified calculations for the fiscal
month ending in January of 2002, the determination described in the second
clause of this definition shall be made based upon the ratio of (i) the
aggregate amount of all Obligations as of the Effective Date (after giving
effect to the initial Loans and the initial Letter of Credit Accommodations made
on or after the date hereof), to (ii) Borrower's EBITDA for the twelve fiscal
month period ending on December 30, 2001. The Term Loan Margin shall be
determined on the Effective Date and shall be redetermined each month on the
fifth Business Day of each such month. If financial statements and certified
calculations described in the second clause of this definition are not timely
delivered, the Term Loan Margin shall mean 4.50% until the date on which such
financial statements and certified calculations are delivered (on which date
(but not retroactively), without constituting a waiver of any Default or Event
of Default occasioned by the failure to timely deliver such certification, the
Term Loan Margin shall be redetermined based upon such financial statements and
certified calculations).
"Term Loan PIK Amount" means as of any date of determination, the amount of
all interest accrued with respect to the Term Loans that has been paid-in-kind
by being added to the balance thereof in accordance with Section 2.04(b).
"Term Loans" has the meaning set forth in Section 2.01(a).
"Title Insurance Policies" means the mortgagee's loan policies, together
with all indorsements made from time to time thereto, issued by or on behalf of
a title insurance company reasonably satisfactory in form and substance to
Collateral Agent, insuring the Liens created by the New Mortgages (if any) and
the Former Mortgages in an aggregate amount not in excess of $75,000,000, and on
terms reasonably satisfactory to Collateral Agent, delivered to Collateral Agent
pursuant to Article IV hereof or Section 6.01(b).
"Total Commitment" means, for each Lender, the obligation of such Lender to
fund Loans, with respect to each type of Loan in the amount set forth opposite
the name of such Lender under the Commitment relative to such Loan type on
Schedule C-1, and in an aggregate amount with respect to such Lender equal to
the amount set forth opposite the name of such Lender under Total Commitment on
Schedule C-1.
"Trademark Lien Assignment" means that certain assignment executed and
delivered by Former Administrative Agent to Collateral Agent of the trademark
security agreement made by Borrower in favor of Former Administrative Agent, in
form and substance satisfactory to Collateral Agent.
"Trademark Security Agreement" means a Trademark Security Agreement,
executed and delivered by Borrower and Collateral Agent for the benefit of the
Lender Group, substantially in the form of Exhibit T.
"Transferee Side Letter" means that certain letter agreement, dated as of
the date hereof, by and among the Lender Group and Borrower, concerning certain
restrictions on the right of members of the Lender Group to assign their rights
and responsibilities hereunder.
"Triggering Event" has the meaning specified therefor in Section
2.05(c)(v).
"UCC Assignments" means those certain assignments to Collateral Agent of
the financing statements previously filed by the Former Administrative Agent
with respect to the Loan Parties pursuant to the Former Loan Documents.
"Wholly Owned Subsidiary" means, with respect to any Person at any date,
any corporation, limited or general partnership, limited liability company,
trust, association or other entity of which 100% of (A) the outstanding Capital
Stock having (in the absence of contingencies) ordinary voting power to elect a
majority of the board of directors of such corporation, (B) the interest in the
capital or profits of such partnership or limited liability company or (C) the
beneficial interest in such trust or estate is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries,
by such Person.
"Working Investment" means, as of any date of determination and with
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respect to any Person, the difference between the current assets and the current
liabilities of such Person on such date, as adjusted for the current portion of
long-term debt and all accrued interest and taxes and assets held for sale which
are included as current assets.
SECTION 1.02. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof'" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement.
SECTION 1.03. Accounting and Other Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under GAAP. All terms used in this Agreement which are defined in Article 8
or Article 9 of the Code and which are not otherwise defined herein shall have
the same meanings herein as set forth therein.
SECTION 1.04. Time References. Unless otherwise indicated herein, all
references to time of day refer to Eastern standard time or Eastern daylight
saving time, as in effect in New York City on such day. For purposes of the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding"; provided, however, that with respect to a computation
of fees or interest payable to the Lender Group, such period shall in any event
consist of at least one full day.
ARTICLE II
THE LOANS
SECTION 2.01. Commitments. (a) Term Loans. The Term Loan Lenders severally
agree, ratably in accordance with their respective Term Loan Commitments, and on
the terms and conditions hereinafter set forth (including subject to the
satisfaction of the applicable conditions precedent set forth in Article IV
hereof), to make term loans (collectively, the "Term Loans") to Borrower from
time to time on any Business Day during the period commencing on the date hereof
and ending on, but excluding the Term Loan Commitment Termination Date, in an
aggregate principal amount equal to the lesser of (i) the Maximum Term Loan
Amount, or (ii) the amount of the Borrowing Base then in effect minus the sum of
(A) the then extant Revolving Facility Usage, and (B) the amount of any other
reserves established by Administrative Agent, as of such date pursuant, to
Section 2.01(b). The Term Loans shall be repayable in accordance with the terms
hereof, shall be secured by all of the Collateral, and shall, together with the
Term Loan PIK Amount, constitute Obligations. The proceeds of the Term Loans
shall be used solely for the purposes set forth in Section 5.01(v) hereof. Any
principal amount of the Term Loans which is repaid or prepaid by Borrower may
not be reborrowed.
(b) Revolving Loans. Each Revolving Credit Lender severally agrees, ratably
in accordance with its respective Revolving Credit Commitment, and on terms and
conditions hereinafter set forth (including subject to the satisfaction of the
applicable conditions precedent set forth in Article IV hereof), to make loans
(collectively, the "Revolving Loans") to Borrower from time to time on any
Business Day during the period commencing on the date hereof and ending on, but
excluding the Revolving Loan Commitment Termination Date, in an aggregate
principal amount at any time outstanding not to exceed such Lender's Pro Rata
Share (in accordance with its Revolving Credit Commitment) of an amount equal to
the lesser of (i) the Maximum Revolving Amount minus the then extant LC
Exposure, or (ii) the amount of the Borrowing Base then in effect minus the sum
of (I) the then extant LC Exposure (to the extent that Administrative Agent is
not holding cash collateral in a reserve account with respect to such LC
Exposure), (II) the aggregate principal amount of the Term Loans which is
outstanding as of such time (inclusive of the then extant Term Loan PIK Amount),
and (III) the amount of any other reserves established by Administrative Agent,
as of such date, as set forth below. Administrative Agent shall have the right
to establish reserves in such amounts, and with respect to such matters, as
Administrative Agent in its Permitted Discretion shall deem necessary or
appropriate, against the Borrowing Base, including with respect to (A) sums
chargeable against Borrower's Loan Account as Revolving Loans under any section
of this Agreement, (B) amounts owing by Borrower or any of its Subsidiaries to
any Person to the extent secured by a Lien on, or trust over, any property of
Borrower or any of its Subsidiaries, (C) sales taxes, income taxes, property
taxes, and other taxes or charges of any kind which Borrower or any of its
Subsidiaries is required, and has failed, to pay (except to the extent subject
to a Permitted Protest), and (D) such other matters, events, conditions, or
contingencies as to which Administrative Agent, in its Permitted Discretion,
determines reserves should be established from time to time hereunder. The
proceeds of Revolving Loans shall be used solely for the purposes set forth in
Section 5.01(v) hereof. Within the limit of the aggregate amount of the
Revolving Credit Commitments, Borrower may borrow, prepay and reborrow Revolving
Loans pursuant to this Article II. The Revolving Loans shall be evidenced
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hereby, shall be secured by all of the Collateral, and shall constitute
Obligations.
(c) Letter of Credit Accommodations.
(i) On the terms and conditions hereinafter set forth (including subject to
the satisfaction of the applicable conditions precedent set forth in Article IV
hereof), at the written request of Borrower, Administrative Agent, on behalf of
the Revolving Credit Lenders (ratably in accordance with their respective
Revolving Credit Commitments), agrees to provide or arrange for Letter of Credit
Accommodations for the account of Borrower containing terms and conditions
acceptable to Administrative Agent and (if other than Administrative Agent) the
issuer thereof.
(ii) In addition to any customary charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrower
shall pay to Administrative Agent, for the ratable benefit of the Revolving
Credit Lenders, a Letter of Credit Accommodation fee at a rate equal to 2.50%
per annum, on the daily outstanding balance of the undrawn amount of all Letter
of Credit Accommodations for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, except that
Borrower shall pay to Administrative Agent, for the ratable benefit of the
Revolving Credit Lenders, such Letter of Credit Accommodation fee, at the
Required Lender's option, without notice, at a rate equal to 5.50% per annum on
such daily outstanding balance of the undrawn and/or uncancelled amount of all
Letter of Credit Accommodations for: (A) the period from and after the date of
termination of this Agreement until the earlier of (i) the date when the Lender
Group has received full payment in cash of all Obligations (notwithstanding the
entry of any judgment against Borrower), and (ii) the date the Lender Group has
received full payment in cash of the undrawn amount of all Letter of Credit
Accommodations or such Letter of Credit Accommodations have been cancelled, and
(B) the period from and after the date of the occurrence of an Event of Default
for so long as such Event of Default is continuing. Such Letter of Credit
Accommodation fee shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligation of Borrower to pay
such fee shall survive the termination of this Agreement. Any and all charges,
commissions, fees, and costs incurred by the Lender Group relating to the
Letters of Credit Accommodations shall be considered Obligations for purposes of
this Agreement and immediately shall be reimbursable by Borrower to
Administrative Agent for the benefit of the Lender Group.
(iii) Letter of Credit Accommodations shall be available only if and to the
extent that, on the date of the proposed issuance of any Letter of Credit
Accommodations, the LC Exposure shall not exceed the lesser of (A) $20,000,000,
and (B) the lesser of (1) the Maximum Revolving Amount minus the aggregate
principal amount of Revolving Loans which is outstanding at such time, or (2)
the Borrowing Base at such time minus the sum of (W) the aggregate principal
amount of Revolving Loans outstanding at such time, (X) the aggregate principal
amount of the Term Loans outstanding at such time (inclusive of the then extant
Term Loan PIK Amount), and (Y) the amount of all other reserves, if any,
established by Administrative Agent pursuant to Section 2.01(b).
(iv) Without the prior written consent of the Required Lenders, Borrower
shall not request any Letter of Credit Accommodation with an expiration date
that is after the Final Maturity Date. Borrower agrees to immediately reimburse
Administrative Agent for the benefit of the Lender Group for any amounts paid by
the Lender Group with respect to Letter of Credit Accommodations, and Borrower
and the Lender Group agree that any amounts paid by the Lender Group under any
Letter of Credit Accommodation and not reimbursed by Borrower shall constitute
additional Revolving Loans pursuant to Section 2.02(b) (except without any
requirement to satisfy notice and other conditions precedent otherwise
applicable to the borrowing of Revolving Loans), shall be secured by all of the
Collateral, and shall bear interest and be payable at the same rate and in the
same manner as all other Revolving Loans and, as a result, Borrower's obligation
to reimburse the Lender Group for such amounts paid with respect to such Letter
of Credit Accommodations shall be discharged and shall not constitute an Event
of Default hereunder.
(v) Immediately upon issuance of any Letter of Credit Accommodation in
accordance with this Section 2.01(c), each Revolving Credit Lender shall be
deemed to have irrevocably and unconditionally purchased and received, without
recourse or warranty, an undivided interest and participation in the credit
support or enhancement provided through Administrative Agent to such issuer in
connection with the issuance of such Letter of Credit Accommodation equal to
such Lender's Pro Rata Share (based upon its respective Revolving Credit
Commitment) of the face amount of such Letter of Credit Accommodation
(including, without limitation, all obligations of Borrower with respect
thereto, and any security therefor or guaranty pertaining thereto). In the event
any payment by or on behalf of Borrower received by Administrative Agent with
respect to any Letter of Credit Accommodation (or any guaranty by Borrower or
reimbursement obligation of Borrower relating thereto) and distributed by
Administrative Agent to the Revolving Credit Lenders on account of their
respective participations therein is thereafter set aside, avoided, or recovered
from Administrative Agent in connection with any receivership, liquidation, or
bankruptcy proceeding, each of the Revolving Credit Lenders shall, upon demand
by Administrative Agent, pay to Administrative Agent such Lender's Pro Rata
Share (based upon its respective Revolving Credit Commitment) of such amount set
aside, avoided, or recovered, together with interest at the rate required to be
paid by Administrative Agent upon the amount required to be repaid by it.
(vi) Borrower shall indemnify and hold the Lender Group harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses
which the Lender Group may suffer or incur in connection with any Letter of
22
Credit Accommodations and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation, excluding in all cases any losses, claims, damages,
liabilities, costs and expenses arising from the gross negligence or willful
misconduct of any member of the Lender Group. Borrower assumes all risks for,
and agrees to pay, all foreign, federal, state, and local taxes, duties and
levies relating to any goods subject to any Letter of Credit Accommodations or
any documents, drafts or acceptances thereunder. Borrower hereby releases and
holds the Lender Group harmless from and against any acts, waivers, errors,
delays or omissions, whether caused by Borrower, by any issuer, correspondent,
drawer, benficiary or otherwise with respect to or relating to any Letter of
Credit Accommodation, except to the extent caused by the gross negligence or
willful misconduct of any member of the Lender Group. The provisions of this
Section 2.01(c)(vi) shall survive the payment of Obligations and the termination
or non-renewal of this Agreement.
(vii) Nothing contained herein shall be deemed or construed to grant
Borrower any right or authority to pledge the credit of the Lender Group in any
manner. The Lender Group shall have no liability of any kind with respect to any
Letter of Credit Accommodation provided by an issuer other than Administrative
Agent unless Administrative Agent has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrower shall be bound by any
interpretation made in good faith by Administrative Agent, or any other issuer
or correspondent under or in connection with any Letter of Credit Accommodation
or any documents, drafts or acceptances thereunder, and which does not
constitute gross negligence or willful misconduct on the part of Administrative
Agent, notwithstanding that such interpretation concerning a request for a draw
under an outstanding Letter of Credit Accommodation may be inconsistent with any
instructions of Borrower. Administrative Agent shall have the sole and exclusive
right, at any time an Event of Default has occurred and is continuing, to
approve or resolve any questions of non-compliance of documents in connection
with any Letter of Credit Accommodation, or to give instructions as to
acceptance or rejection of any documents in connection with any Letter of Credit
Accommodation. Administrative Agent may take such actions either in its own name
or in Borrower's name; provided, that the Administrative Agent shall be liable
for acts resulting from its gross negligence or willful misconduct. Borrower
shall not, and shall not have the right to: (A) approve or resolve any questions
of non-compliance of documents in connection with any Letter of Credit
Accommodation, (B) give any instructions as to acceptance or rejection of any
documents in connection with any Letter of Credit Accommodation, (C) grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents in connection with any Letter of Credit
Accommodation, or (D) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
(viii) Any rights, remedies, duties or obligations granted or undertaken by
Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Administrative Agent for the
benefit of the Lender Group. Any duties or obligations undertaken by
Administrative Agent to any issuer or correspondent in any application for any
Letter of Credit Accommodation with respect to Borrower, or any other agreement
by Administrative Agent in favor of any issuer or correspondent relating to any
Letter of Credit Accommodation, shall be deemed to have been undertaken by
Borrower to the Lender Group and to apply in all respects to Borrower.
(ix) Borrower hereby authorizes and directs any issuing bank that issues a
Letter of Credit Accommodation to deliver to Administrative Agent all
instruments, documents, and other writings and property received by the issuing
bank pursuant to such Letter of Credit Accommodation, and to accept and rely
upon Administrative Agent's instructions and agreements with respect to all
matters arising in connection with such Letter of Credit Accommodation and the
related application. Borrower shall be the "applicant" or "account party" with
respect to such Letter of Credit Accommodation.
(x) If, after the date hereof, by reason of (A) any change in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application by any governmental authority of any such applicable law, treaty,
rule, or regulation, or (B) compliance by the issuing bank 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,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect (and any successor thereto):
(1)any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit Accommodation (unless such
accommodation has been funded or cancelled) issued hereunder; or
(2) there shall be imposed on the issuing bank or the Lender Group any
other condition regarding any Letter of Credit Accommodation (unless such
accommodation has been funded or cancelled) issued pursuant hereto;
and the result of the foregoing (collectively, a "Regulatory Event") is to
increase, directly or indirectly, the cost to the Lender Group of issuing any
Letter of Credit Accommodation, or to reduce the amount receivable in respect
thereof by the Lender Group, then, and in any such case, Administrative Agent
may, at any time within a reasonable period, and in any event within 180 days,
after the additional cost is incurred or the amount received is reduced, notify
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Borrower, and Borrower shall pay, within 10 Business Days of written demand
therefor, such amounts as Administrative Agent may reasonably specify to be
necessary to compensate the Lender Group for such additional cost or reduced
receipt during (A) the 180 days preceding the date on which such notice is
given, (B) each fiscal quarter thereafter, and (C) the period prior to the date
Administrative Agent received notice of a Regulatory Event, to the extent (with
respect to the period described in this clause C) that (I) such Regulatory Event
is imposed with retroactive application pursuant to the terms of such Regulatory
Event, and (II) Administrative Agent received notice of such Regulatory Event
within 180 days of the date Administrative Agent notified Borrower of such
additional cost or reduced receipt, together with interest on such amount from
the date such payment is due until payment in full thereof at the rate then
applicable to Revolving Loans pursuant hereto. The determination by
Administrative Agent of any amount due pursuant to this Section 2.01(c)(x), as
set forth in a certificate setting forth the basis for such claim and the
calculation thereof in reasonable detail and delivered to Borrower, shall, in
the absence of manifest or demonstrable error, be final and conclusive and
binding on all of the parties hereto.
SECTION 2.02. Making the Loans. (a) Borrower shall give Administrative
Agent prior telephone notice (immediately confirmed in writing, in substantially
the form of Exhibit N hereto (a "Notice of Borrowing")), not later than (i)
11:00 a.m. (Los Angeles Time) on the date of any proposed Revolving Loan, and
(ii) 11:00 a.m. (Los Angeles time) three Business Days prior to the date of any
proposed Term Loan. Such Notice of Borrowing shall be irrevocable and shall
include (i) the principal amount of the proposed Loan, (ii) whether such Loan is
requested to be a Revolving Loan or a Term Loan, (iii) the use of the proceeds
of such proposed Loan, (iv) the proposed borrowing date, which must be a
Business Day, and (v) an updated Borrowing Base Certificate which is prepared
after giving effect to the proposed Loan (except for reserves, fees, or expenses
maintained or charged by Administrative Agent hereunder with respect to which an
Authorized Officer does not have notice or actual knowledge). Administrative
Agent may act without liability upon the basis of written, telecopied or
telephonic notice believed by the Administrative Agent in good faith to be from
Borrower (or from any Authorized Officer thereof designated in writing from
Borrower to Administrative Agent). Borrower hereby waives the right to dispute
Administrative Agent's record of the terms of any such telephonic Notice of
Borrowing. Each Notice of Borrowing shall be irrevocable and binding on
Borrower. Each Revolving Loan shall be made in a minimum amount of $500,000 and
shall be in an integral multiple of $25,000. Administrative Agent on behalf of
the Lender Group will make the proceeds of such Loan available to Borrower on
the day of the proposed Loan by causing all such proceeds, in immediately
available funds, to be deposited in an account designated by Borrower to
Administrative Agent at a commercial bank reasonably satisfactory to
Administrative Agent.
(b) Section 2.02(a) notwithstanding, the becoming due of any Obligation
required to be paid under this Agreement, the Fee Letter, or any other Loan
Document, whether of principal or interest or for any other Obligation, shall be
deemed irrevocably to be a request for a Revolving Loan on the due date in the
amount required to pay such principal, interest, or other Obligation, to the
extent that such Obligation is due and payable and arising under the terms of
the applicable Loan Document.
(c) Administrative Agent shall from time to time, but no less frequently
than weekly, notify each Revolving Credit Lender of the date such Lender is to
fund its Revolving Loans, and fund any amounts paid under any Letter of Credit
Accommodation, and the amount to be made available by it. If and to the extent
that a Revolving Credit Lender and Administrative Agent so agree, at
Administrative Agent's discretion, the amount to be made available by such
Revolving Credit Lender on any date may be netted against any amount owing to
such Lender and otherwise payable by Administrative Agent on account of payments
received by it from Borrower on such date. The amount to be made available by
each Revolving Credit Lender on any date shall be made available by it on such
date to Administrative Agent at the Administrative Agent Account, in immediately
available funds, not later than 1:00 p.m. (New York time) on any day in the case
of fundings of which such Lenders have received notice not later than 11:00 a.m.
(New York time) on such day (or, if notice is received after such time, not
later than 12:00 p.m. (New York time) on the next succeeding Business Day). The
obligation of each Revolving Credit Lender to Administrative Agent (as opposed
to Borrower) to fund its Revolving Loans, and any payments under any Letter of
Credit Accommodation, on the date specified by Administrative Agent is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including (i) any set off counterclaim, recoupment, defense or other right which
such Lender may have against Administrative Agent, Borrower or any other Person
for any reason whatsoever, (ii) the financial condition or prospects of
Borrower, (iii) the failure of any other such Lender to make funds available to
Administrative Agent with respect to its Revolving Loans or any payments under
any Letter of Credit Accommodation, (iv) the occurrence or continuation of an
Event of Default, whether the same shall occur before or after Administrative
Agent shall have made the Revolving Loans or Letter of Credit Accommodations, or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(d) Borrower and the Lender Group hereby irrevocably authorize
Administrative Agent to disburse the proceeds of each Revolving Loan requested,
or deemed to be requested, pursuant to this Section 2.02 as follows: (i) the
proceeds of each Revolving Loan requested under Section 2.02(a) hereof shall
(subject to receipt by Administrative Agent of funds from the Revolving Credit
Lenders) be disbursed by Administrative Agent in lawful money of the United
States of America in immediately available funds, in the case of the initial
borrowing, in accordance with the terms of a written disbursement letter from
Borrower, and in the case of each subsequent borrowing, by wire transfer to such
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bank account as may be agreed upon by Borrower and Administrative Agent from
time to time or elsewhere if pursuant to a written direction from Borrower, and
(ii) the proceeds of each Revolving Loan requested under Section 2.02(b) hereof
shall be charged to Borrower's Loan Account and disbursed by Administrative
Agent, in its sole discretion, either to the Disbursement Account or by way of
direct payment of the relevant Obligation.
(e) Borrower and the Lender Group hereby irrevocably authorize and direct
Administrative Agent to charge to Borrower's Loan Account hereunder, as a
Revolving Loan deemed made to Borrower, a sum sufficient to pay all principal of
Term Loans due and all interest accrued on the Obligations during the
immediately preceding month and to pay all costs, fees, and expenses at any time
owed by Borrower to the Lender Group hereunder or under any of the Loan
Documents (including the Fee Letter); provided, however, that Administrative
Agent may, but shall not be required to, so charge Borrower's Loan Account
during the existence of an Event of Default or if and to the extent such charge
would result in an Overadvance. Amounts so charged pursuant to this Section
2.02(e) shall be deemed Revolving Loans requested by Borrower pursuant to
Section 2.02(b), and the provisions of Section 2.02(c) and Section 2.02(d) shall
be applicable to each such Revolving Loan.
(f)
(i) Revolving Loans, Letter of Credit Accommodations, and payments will be
settled among Administrative Agent and the Revolving Credit Lenders according to
such procedures as Administrative Agent and such Lenders may agree in writing
from time to time. These procedures notwithstanding, each such Lender's
obligation to fund its portion of the Revolving Loans and amounts paid under
Letter of Credit Accommodations made by Administrative Agent to Borrower shall
commence on the date such Revolving Loans and Letter of Credit Accommodations
are made by Administrative Agent. Such payments to Administrative Agent will be
made by such Lenders without set-off, counterclaim or reduction of any kind.
(ii) Administrative Agent may require the Revolving Credit Lenders to
settle Revolving Loans, amounts paid under Letter of Credit Accommodations, and
payments on a daily basis (or such lesser frequency as Administrative Agent may
determine) (each day of settlement being a "Settlement Date"). Administrative
Agent will advise each Revolving Credit Lender by telephone or telecopy of the
amount of each such Lender's Pro Rata Share (in accordance with its Revolving
Credit Commitment) of the Revolving Facility Usage as of the close of business
of the Business Day immediately preceding the Settlement Date. In the event that
payments are necessary to adjust such Lender's actual Pro Rata Share (in
accordance with its Revolving Credit Commitment) of the Revolving Facility Usage
as of any Settlement Date to equal the amount of such Lender's required Pro Rata
Share (in accordance with its Revolving Credit Commitment) of the Revolving
Facility Usage, the party from which such payment is due will pay the other, in
same day funds, by wire transfer to the other's account not later than the
applicable time set forth on Section 2.02(c).
(iii) If any such payment is not made to Administrative Agent by any such
Lender on the Settlement Date applicable thereto to the extent required by the
terms hereof, such Lender shall be a Defaulting Lender and Administrative Agent
shall be entitled to recover for its account such amount on demand from such
Lender together with interest thereon at the Defaulting Lenders Rate.
Administrative Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrower to Administrative Agent for the Defaulting
Lender's benefit on account of its Revolving Loans and participations in Letter
of Credit Accommodations. Any such amounts payable to a Defaulting Lender shall
instead be paid to or retained by Administrative Agent. Administrative Agent may
hold and, in its discretion, re-lend to Borrower as Revolving Loans the amount
of any or all such payments received or retained by it for the account of such
Defaulting Lender or treat any or all such amounts as participations in Letter
of Credit Accommodations made for Borrower's account. Solely for the purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Required Lenders, Defaulting Lender shall be deemed not to be a
"Lender" (in respect of its Revolving Loans, participations in Letter of Credit
Accommodations, and Revolving Credit Commitment) and such Defaulting Lender's
Revolving Credit Commitment with respect to the Revolving Loans and Letter of
Credit Accommodations shall be deemed to be zero (-0-). 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 or (y) the Revolving Credit Lenders that are non-Defaulting Lenders and
Administrative Agent shall have waived such Lender's default in writing. The
operation of this section shall not be construed to increase or otherwise affect
the Commitments of any Lender other than such Defaulting Lender, or relieve or
excuse the performance by Borrower of its duties and obligations hereunder.
SECTION 2.03. Repayment of Loans and other Obligations. (a) [Intentionally
Omitted]
(b) Repayment. The outstanding principal of each Loan, together with all
other Obligations, shall be due and payable on the date when this Agreement is
terminated pursuant to Section 2.05 hereof; provided, however, that if an
Overadvance shall exist, Borrower shall, immediately and without demand by the
Lender Group, repay such Overadvance.
(c) Registration. Borrower agrees to record each Loan on the Register
referred to in Section 9.07(c). Each Loan recorded on the Register (the
"Registered Loan") may not be evidenced by promissory notes other than the
Registered Notes (as defined below). Upon the registration of any Loan, any
promissory note (other than a Registered Note) evidencing the same shall be null
and void and shall be returned to Borrower. Borrower agrees, at the request of
any Lender, to execute and deliver to such Lender a promissory note in
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registered form satisfactory to such Lender to evidence such Registered Loan and
registered as provided in Section 9.07(c) (a "Registered Note"), payable to the
order of such Lender and otherwise duly completed. Once recorded on the
Register, each Registered Loan may not be removed from the Register so long as
it remains outstanding, and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note.
SECTION 2.04. Interest. (a) Loans.
Except to the extent provided to the contrary in Section 2.04(c), each Term
Loan and each Revolving Loan shall bear interest on the principal amount thereof
(in the case of the Term Loans, such principal shall be inclusive of any Term
Loan PIK Amount) from time to time outstanding, from the date of such Loan until
such principal amount becomes due, at a rate per annum equal to:
(i) with respect to the Term Loans, the Reference Rate plus the Term Loan
Margin.
(ii) with respect to the Revolving Loans, the Reference Rate plus the
Revolving Loan Margin.
(b) PIK Interest. In addition to any other interest provided for in this
Agreement, the Term Loans (inclusive of any Term Loan PIK Amount) shall bear
additional interest on the amount thereof outstanding from time to time at a per
annum rate of 1.50% to be paid-in-kind (in the absence of an election by
Borrower to pay all or part of such interest in cash) by being added to the
principal balance of the Term Loans (inclusive of any Term Loan PIK Amount
theretofore so added); provided, however, that Borrower shall pay in cash all
accrued and unpaid interest under this Section 2.04(b) on the Final Maturity
Date.
(c) Default Interest. To the extent permitted by law, during the
continuance of an Event of Default, the principal of, and all accrued and unpaid
interest on, all Loans, and all fees, indemnities or any other Obligations of
Borrower under this Agreement and other Loan Documents shall bear interest, from
the date such Event of Default occurred until such Event of Default is cured or
waived in writing in accordance herewith, at a rate per annum equal at all times
to the Post-Default Rate.
(d) 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. Borrower 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, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower 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.
(e) Interest Payment. Except as set forth in Section 2.04(c), interest on
each Loan shall be payable monthly, in arrears, on the first Business Day of
each month, commencing on the first Business Day of the month following the
month in which such Loan is made and at maturity (whether upon demand, by
acceleration or otherwise). Interest at the Post-Default Rate shall be payable
on demand. Borrower hereby authorizes Administrative Agent to, and
Administrative Agent may, from time to time, charge the Loan Account pursuant to
Section 2.02(b) and Section 3.01 with the amount of any interest payment due
hereunder.
(f) General. All interest shall be computed on the basis of a year of 360
days for the actual number of days, including the first day but excluding the
last day, elapsed.
SECTION 2.05. Reduction of Commitment; Prepayment of Loans; Term and
Termination. (a) Reduction of Revolving Credit Commitment.
(i) Optional Revolving Credit Commitment Reduction. Borrower may, without
premium or penalty, reduce the aggregate Revolving Credit Commitments, ratably
in accordance with the Revolving Credit Lenders' Pro Rata Shares, to an amount
(which may be zero) not less than the sum of (i) the aggregate unpaid principal
amount of all Revolving Loans then outstanding and (ii) the aggregate principal
amount of all Revolving Loans not yet made as to which a Notice of Borrowing has
been given by Borrower under Section 2.02. Each such reduction shall be in an
amount which is an integral multiple of $100,000, shall be made by providing not
less than three Business Days' prior written notice to Administrative Agent and
shall be irrevocable. Once reduced, the Revolving Credit Commitment may not be
increased.
(ii) Mandatory Revolving Credit Commitment Reduction. The aggregate
Revolving Credit Commitments, ratably in accordance with the Revolving Credit
Lenders' Pro Rata Shares, shall be reduced automatically and concurrently with
any prepayment of Revolving Loans pursuant to Subsection (c)(v) below.
(b) Optional Prepayment. Borrower may, upon prior written notice to
Administrative Agent and Collateral Agent, prepay the principal of any Revolving
Loan or Term Loan, in each case, in whole or in part and ratably in accordance
with the applicable Lenders' Pro Rata Shares as to the Loans being prepaid. Each
prepayment made pursuant to this clause (b) shall be accompanied by the payment
of accrued interest (inclusive of any Term Loan PIK Amount) to the date of such
26
payment on the amount prepaid and shall be made without penalty or premium.
(c) Mandatory Prepayment.
(i) At any time when an Overadvance exists, Borrower shall prepay the
outstanding principal balance of the Term Loans, ratably in accordance with the
Term Loan Lenders' Pro Rata Shares (or, if such Term Loans have been paid in
full, the Revolving Loans ratably in accordance with the Revolving Credit
Lenders' Pro-Rata Shares), to the full extent of such Overadvance. On the
forty-fifth day after the first day of each fiscal quarter of Borrower and on
each day that Borrower requests a Loan, Borrower shall hereby be deemed to
represent and warrant to the Lender Group that, to the best of Borrower's
knowledge, the Borrowing Base (net of the amount of reserves, if any,
established by Administrative Agent) applicable on such date (in accordance with
the definition of Borrowing Base EBITDA) equals or exceeds the aggregate amount
of all Obligations outstanding on such day.
(ii) Borrower will immediately prepay the outstanding principal amount of
the Term Loans, ratably in accordance with the Term Loan Lenders' Pro Rata
Shares, in the event that the Revolving Credit Commitment is terminated by the
Required Lenders in accordance with the terms of this Agreement.
(iii) Within ten (10) Business Days of delivery to the Lender Group of
audited annual financial statements pursuant to Section 6.01(a)(ii), commencing
with the delivery to the Lender Group of the financial statements for the Fiscal
Year ended December 31, 2001, or, if such financial statements are not delivered
to the Lender Group on the date such statements are required to be delivered
pursuant to such Section 6.01(a)(ii), ten (10) Business Days after the date such
statements are required to be delivered to the Lender Group pursuant to Section
6.01(a)(ii), Borrower shall prepay the outstanding principal amount of the Term
Loans, ratably in accordance with the Term Loan Lenders' Pro Rata Shares (or, if
such Term Loans have been paid in full, the Revolving Loans ratably in
accordance with the Revolving Credit Lenders' Pro Rata Shares) in an amount
equal to 50% of the Excess Cash Flow of Borrower and its Subsidiaries for such
Fiscal Year.
(iv) [intentionally omitted]
(v) Dispositions; Casualty Events; Tax Refunds and Other Events.
Immediately upon any Disposition (other than any proceeds received from the M&S
Disposition and other than the proceeds (in an aggregate amount not to exceed
$7,000,000) received from Dispositions set forth on Schedule 2.05(c)(v)) by
Borrower or any of its Subsidiaries pursuant to Section 6.02(c)(ii)(C), the
loss, destruction or taking by condemnation of any Collateral, or the receipt by
Borrower or any of its Subsidiaries of any refund in excess of $500,000 during
any fiscal year of Borrower with respect to federal, state, local or other taxes
of any kind (other than payroll taxes and the net of the amount of taxes owed by
Borrower or the applicable Subsidiary to the taxing authority which issued the
refund) previously paid by Borrower or any of its Subsidiaries (each such event,
a "Triggering Event"), Borrower shall prepay the outstanding principal balance
of the Term Loans, ratably in accordance with the Term Loan Lenders' Pro Rata
Shares (or, if such Term Loans have been paid in full, the Revolving Loans
ratably in accordance with the Revolving Credit Lenders' Pro-Rata Shares), in an
amount equal to 100% of the Net Cash Proceeds received by Borrower or any of its
Subsidiaries or Affiliates in connection with such Triggering Event to the
extent necessary to satisfy the requirements of Section 2.05(c)(i). Borrower
shall make an additional prepayment of the outstanding principal balance of the
Term Loans, ratably in accordance with the Term Loan Lenders' Pro Rata Shares
(or, if such Term Loans have been paid in full, the Revolving Loans ratably in
accordance with the Revolving Credit Lenders' Pro-Rata Shares), in an amount
equal to the remaining Net Cash Proceeds (if any) received by Borrower or any of
its Subsidiaries or Affiliates in connection with such Triggering Event;
provided, however, that (i) if (A) no Default or Event of Default is continuing,
and (B) Borrower's Excess Availability is greater than or equal to $5,000,000,
or if each Agent provides its prior written consent thereto, Borrower shall have
the option not to make the additional mandatory prepayment required by the first
clause of this sentence, and instead may use such remaining Net Cash Proceeds
(if any) in accordance with the terms of paragraphs 3 and 4 of the Side Letter,
in an aggregate amount by cash value (inclusive of all other amounts paid in
accordance with the terms of paragraphs 3 and 4 of the Side Letter pursuant to
this Section 2.05(c)(v)) not in excess of $7,000,000, and (ii) with respect to
Net Cash Proceeds resulting from the loss, destruction, or taking by
condemnation of a Restaurant, in an aggregate amount during any twelve
consecutive month period not in excess of $1,500,000, so long as (A) no Default
or Event of Default shall have occurred and is continuing, (B) Borrower's Excess
Availability is greater than or equal to $5,000,000, (C) Borrower shall have
given Administrative Agent prior written notice of its intention or the
intention of the applicable Subsidiary to apply such Net Cash Proceeds to the
costs of repairs, replacement or restoration of the Restaurant which is the
subject of the loss, destruction, or taking by condemnation, and (D) Borrower or
the applicable Subsidiary commences the permitting process or the construction
with respect to such repairs, replacement or restoration within 90 days after
receiving such Net Cash Proceeds and completes such repairs, replacements or
restoration within 18 months after receiving such Net Cash Proceeds, Borrower
shall have the option not to make the additional mandatory prepayment required
by the first clause of this sentence, and instead may apply such remaining Net
Cash Proceeds (if any) to the costs of repairs, replacement or restoration of
the Restaurant which is the subject of the loss, destruction, or taking by
condemnation unless and to the extent that such applicable period shall have
expired without such repairs, replacements or restoration being made, and in any
case, any remaining amounts shall be paid to Administrative Agent and applied as
described above in the first clause of this sentence.
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(vi) Upon the issuance or incurrence by Borrower or any of its Subsidiaries
of any Indebtedness except as permitted by Section 6.02(b), or the sale or
issuance by Borrower or any of its Subsidiaries of any shares of its Capital
Stock (except the issuance of Capital Stock of Borrower in accordance with
paragraph 1 of the Side Letter or in connection with the plans identified on
Schedule 5.01(e) or Capital Stock issued pursuant to a shareholder rights plan),
Borrower shall prepay the outstanding principal of the Term Loans, ratably in
accordance with the Term Loan Lenders' Pro Rata Shares (or, if such Term Loans
have been paid in full, the Revolving Loans ratably in accordance with the
Revolving Credit Lenders' Pro Rata Shares) in an amount equal to 100% of the Net
Cash Proceeds received by Borrower or any of its Subsidiaries or Affiliates in
connection therewith. The provisions of this Section 2.05(c)(vi) shall not be
deemed to be implied consent to any such issuance, incurrence or sale otherwise
prohibited by the terms and conditions hereof.
(d) Application of Payments. Each prepayment pursuant to subsection (c)
above shall be applied, first, to the applicable Term Loans, and second, to the
Revolving Loans.
(e) Interest and Fees. Any prepayment made pursuant to this Section 2.05
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of prepayment, and if such prepayment would reduce the amount of the
outstanding Loans to zero at a time when the Revolving Credit Commitments have
been terminated, such prepayment shall be accompanied by the payment of the fees
accrued to such date pursuant to Section 2.06.
(f) Cumulative Prepayments. Except as otherwise expressly provided in this
Section 2.05, payments with respect to any subsection of this Section 2.05 are
in addition to payments made or required to be made under any other subsection
of this Section 2.05.
(g) Term of Agreement. Subject to the right of the Lender Group to cease
making new Loans and extending new Letter of Credit Accommodations to Borrower
during the continuance of any Event of Default, this Agreement shall be in
effect for the period commencing on the Effective Date and ending on the Final
Maturity Date, unless sooner terminated as provided in Section 2.05(h).
(h) Termination of Agreement by Lender Group. Administrative Agent (acting
on the written instructions of the Required Lenders) or Collateral Agent (acting
on the written instructions of the Required Lenders) may terminate this
Agreement at any time upon delivery of written notice to Borrower during the
continuance of an Event of Default.
(i) Effect of Termination. All of the Obligations (including contingent
reimbursement obligations of Borrower with respect to outstanding Letters of
Credit) shall be immediately due and payable upon the earlier to occur of the
Maturity Date and the termination date stated in any notice of termination of
this Agreement pursuant to clause (h) above (including either (a) providing cash
collateral to be held by Administrative Agent for the benefit of the Revolving
Credit Lenders in an amount equal to 105% of the then extant LC Exposure, or (b)
causing the original Letters of Credit or LC Guaranties, as applicable to be
returned to the Person who issued such Letters of Credit or LC Guaranties). All
undertakings, agreements, covenants, warranties, and representations of Borrower
contained in the Loan Documents shall survive any such termination, and,
notwithstanding such termination, Collateral Agent shall retain its Liens in the
Collateral for the benefit of the Lender Group, and the Lender Group shall
retain all of its rights and remedies under the Loan Documents, until Borrower
has paid to Administrative Agent, for the account of the Lender Group, all of
Borrower's Obligations then due and payable to the Lender Group, in full, in
immediately available funds, together with any contractually agreed upon
termination charge, if any. Collateral Agent shall not be required to terminate
its security interests in the Collateral until the Lender Group has received
payment of all of the Obligations then due and payable in full, in cash in
immediately available funds.
SECTION 2.06. Fees. (a) Unused Line Fee. On the first day of each month
prior to the Final Maturity Date, Borrower shall pay to the Collateral Agent an
unused line fee in an amount equal to three quarters of one percent (0.75%) per
annum times the result of (a) the Maximum Amount, minus (b) the result of (i)
the average Daily Balance of Revolving Facility Usage, plus (ii) the average
Daily Balance of the principal amount of the Term Loans that were outstanding
during the immediately preceding month, minus (iii) the aggregate amount of all
principal payments with respect to the Term Loans.
(b) Fee Letter Fees. Borrower shall pay to the Collateral Agent the fees
set forth in the Fee Letter in accordance with the terms thereof and such fees
are Obligations hereunder.
SECTION 2.07. Securitization. Borrower hereby acknowledges that the Lenders
and any of their Affiliates may sell or securitize the Loans (a
"Securitization") through the pledge of the Loans as collateral security for
loans to the such Lenders or their Affiliates or through the sale of the Loans
or the issuance of direct or indirect interests in the Loans, which loans to
such Lenders or their Affiliates or direct or indirect interests will be rated
by ▇▇▇▇▇'▇, Standard & Poor's or one or more other rating agencies (the "Rating
Agencies"). Borrower shall undertake reasonable efforts with such Lenders and
their Affiliates (such Lenders and the Affiliates, together with any of the
Rating Agencies and any party providing credit support or otherwise
participating in the Securitization, collectively the "Securitization Parties")
to help them as they effect the Securitization including, without limitation, by
(a) negotiating in good faith to consider amending this Agreement and the other
Loan Documents, and negotiating in good faith to consider executing such
additional documents, as reasonably requested by such Lenders, in connection
28
with the Securitization, provided that (i) any such amendment or additional
documentation does not impose additional costs on Borrower and (ii) any such
amendment or additional documentation does not adversely affect the rights, or
increase the obligations, of Borrower under the Loan Documents or change or
affect in a manner adverse to Borrower the financial terms of the Loans, (b)
providing such information as may be reasonably requested by such Lenders, in
connection with the rating of the Loans or the Securitization, and (c) providing
such information regarding Borrower and its Subsidiaries and Affiliates, the
Collateral and other property, assets and business of Borrower (including
appraisals and valuations) as may be reasonably requested by such Lenders or
their successors or assignees without the imposition of additional costs to
Borrower. Notwithstanding the foregoing, it is understood that Borrower and its
Affiliates shall not be obligated to incur any increased cost, administrative
burden or increased obligation in connection with any Securitization.
SECTION 2.08. Control Agreements. Borrower agrees that it will not, nor
will it permit any of its Subsidiaries to, transfer assets out of any Securities
Accounts other than as permitted under Section 6.02(o) and, if to another
securities intermediary, unless each of the applicable Loan Party, Collateral
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 Collateral
Agent. During the continuance of a Default or Event of Default, Collateral 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 Administrative Agent Account.
ARTICLE III
PAYMENTS AND OTHER COMPENSATION
SECTION 3.01. Payments; Computations and Statements. Borrower will make
each payment under this Agreement and the other Loan Documents (whether of
principal, interest, fees, expense reimbursements or otherwise) not later than
11:00 a.m. (Los Angeles time) on the day when due, in lawful money of the United
States of America and in immediately available funds, to Administrative Agent
for the benefit of the Lender Group at the Administrative Agent Account. All
such payments received by the Administrative Agent for the benefit of the Lender
Group after 11:00 a.m. (Los Angeles time) on any Business Day will be credited
to the Loan Account on the next succeeding Business Day. All such payments shall
be made by Borrower to the Lender Group without regard to defense, set-off or
counterclaim. Borrower hereby authorizes Administrative Agent to, and
Administrative Agent may, from time to time charge the Loan Account with all
Obligations and any other amount due and payable under any Loan Document to
which Borrower is a party, whether or not any Event of Default or Default shall
have occurred or be continuing or whether any of the conditions precedent in
Section 4.02 have been satisfied. Any amount charged to the Loan Account shall
be deemed a Revolving Loan hereunder made by the Revolving Credit Lenders to
Borrower. Borrower confirms that any charges which Administrative Agent may so
make to the Loan Account as herein provided will be made as an accommodation to
Borrower and solely at Administrative Agent's discretion. Whenever any payment
to be made under any such Loan Document shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall in such case be included in the computation
of interest or fees, as the case may be, provided that, if any such payment is
made by a charge to the Loan Account, such charge may be made by Administrative
Agent for the benefit of the Lender Group on any day, whether or not a Business
Day. All computations of interest and fees shall be made by the Lender Group on
the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fee is payable. Each determination by the Lender Group of an
interest rate, fees or expense reimbursement hereunder shall be conclusive and
binding for all purposes in the absence of manifest error.
SECTION 3.02. Payments to Lender Group, Return of Payments.
(a) Each payment received by Administrative Agent under this Agreement of
any Obligation for the account of any member of the Lender Group shall (subject
to Section 2.02(c)) be paid by Administrative Agent promptly to such member of
the Lender Group, in immediately available funds, to the account of such member
of the Lender Group as specified from time to time by such member of the Lender
Group in a written notice to Administrative Agent.
(b) Unless Administrative Agent receives notice from Borrower prior to the
date on which any payment is due to the Lender Group that Borrower will not make
such payment in full as and when required, Administrative Agent may assume that
Borrower has made such payment in full to Administrative Agent on such date in
immediately available funds and Administrative Agent may (but shall not be so
required), in reliance upon such assumption, distribute to the applicable
members of the Lender Group on such due date an amount equal to the amount then
due such member of the Lender Group. If and to the extent Borrower has not made
such payment in full to Administrative Agent, each member of the Lender Group
shall repay to Administrative Agent on demand such amount distributed to such
member of the Lender Group, together with interest thereon at the Reference Rate
for each day from the date such amount is distributed to such member of the
Lender Group until the date repaid by such member of the Lender Group.
SECTION 3.03. Apportionment and Application of Payments. Except as
otherwise provided with respect to Defaulting Lenders and except as otherwise
provided in the Loan Documents, 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)
29
and payments of fees and expenses (other than fees or expenses that are for
Collateral Agent's sole and separate account) 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 in respect of the Obligations
(other than the proceeds of any Loan) shall be remitted to Administrative Agent
and all such payments, whether remitted to Administrative Agent or otherwise
(other than payments received while no Event of Default is continuing and which
relate to the payment of principal or interest of specific Obligations), and all
proceeds of any Collateral received by either Agent or any Lender, shall be
applied as follows (unless reinvested pursuant to Section 2.05(c)(v)):
(a) unless all of the Obligations have become or been declared due and
payable:
(i) first, to pay any expenses then due to the Agents under the Loan
Documents, on a ratable basis, until paid in full,
(ii) second, to pay any expenses then due to the Lenders under the Loan
Documents, on a ratable basis, until paid in full,
(iii) third, to pay any fees then due to either Agent (for such Agent's
separate account, after giving effect to any letter agreements between such
Agent and individual Lenders) under the Loan Documents, on a ratable basis,
until paid in full,
(iv) fourth, to pay any fees then due to any or all of the Lenders (after
giving effect to any letter agreements between Collateral Agent and individual
Lenders) under the Loan Documents, on a ratable basis, until paid in full,
(v) fifth, ratably to pay interest then due in respect of the Revolving
Loans and the Term Loans (unless paid-in-kind in accordance with Section
2.04(b)) until paid in full (if such proceeds are insufficient to pay all such
interest in full, then such amount shall be applied pro rata to interest accrued
and unpaid with respect to each of the Revolving Loans and Term Loans),
(vi) sixth, ratably to pay all principal amounts then due and payable
(other than as a result of an acceleration thereof) with respect to the Term
Loans until paid in full,
(vii) seventh, to pay the principal of all Revolving Loans until paid in
full,
(viii) eighth, if an Event of Default is continuing, to Administrative
Agent, to be held by such Agent in an interest bearing account with interest
thereon to be credited to Borrower, for the ratable benefit of those Lenders
having a Revolving Credit Commitment, as cash collateral in an amount up to 105%
of the then extant LC Exposure until paid in full or to the extent that such LC
Exposure is terminated, it being understood that amounts will be released from
such account and applied against all remaining Obligations pursuant to the
provisions of this Section 3.03 to the extent of such termination and, in full
upon the cure or waiver of all Events of Default,
(ix) ninth, if an Event of Default is continuing, to be held by such Agent
in an interest bearing account with interest thereon to be credited to Borrower,
for the ratable benefit of the Term Loan Lenders, as cash collateral in an
amount up to 100% of the outstanding principal balance of the Term Loans until
paid in full, it being understood that (A) amounts will be released from such
account and applied against all remaining Obligations pursuant to the provisions
of this Section 3.03 upon the cure or waiver of all Events of Default, and (B)
any amount held in such account shall be immediately applied against any
outstanding Revolving Loans and against any other Obligations that are due and
payable in accordance with the provisions of this Section 3.03,
(x) tenth, to pay any other Obligations then due and payable until paid in
full, and
(xi) eleventh, to Borrower (to be wired to the Designated Account), or to
such other Person to the extent required by court order.
SECTION 3.04. All Loans to Constitute One Obligation. The Loans shall
constitute one general Obligation of Borrower, and shall be secured by
Collateral Agent's Lien upon all of the Collateral, for the benefit of the
Lender Group.
SECTION 3.05. Loan Account; Statements of Account. Administrative Agent
shall enter all Loans as debits to the Loan Account and also shall record in the
Loan Account all payments made by Borrower on any Obligations and all proceeds
of Collateral which are finally paid to the Lender Group. Administrative Agent
will account to Borrower monthly with a statement of Loans, charges, and
payments made pursuant to this Agreement, and such accounting rendered by
Administrative Agent shall be deemed final, binding and conclusive upon
Borrower, absent manifest error, unless Administrative Agent is notified by
Borrower in writing to the contrary within 30 days of the date each accounting
is mailed to Borrower. Such notice only shall be deemed an objection to those
items specifically objected to therein.
ARTICLE IV
CONDITIONS TO LOANS
SECTION 4.01. Conditions Precedent to Effectiveness and the Initial Loan or
the Initial Letter of Credit Accommodation. The obligation of the Lender Group
to make the initial Loan or issue the initial Letter of Credit Accommodation on
or after the date of this Agreement is subject to the fulfillment, in a manner
reasonably satisfactory to Administrative Agent and Collateral Agent, of each of
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the following conditions precedent:
(a) Payment of Fees, Etc. Borrower shall have paid on or before the date of
this Agreement all fees, costs, and expenses then due and owing and payable
pursuant to Section 2.06 (it being understood that the Expense Deposit will be
applied to reduce the amount of such fees, costs, and expenses).
(b) Representations and Warranties; No Event of Default. The following
statements shall be true and correct: (i) the representations and warranties
contained in Article V and in each other Loan Document are true and correct in
all material respects on and as of the Effective Date as though made on and as
of such date and (ii) no Default (other than Defaults (A) which shall be cured
promptly with the proceeds of the initial Revolving Loan made on or after the
date hereof, or (B) with respect to the tax returns and taxes described on
Schedules 5.01(k)(i), 5.01(k)(ii) and 5.01(k)(iii), which shall be cured within
the respective time periods set forth in Sections 4.03(d), 4.03(e) and 4.03(f),
as applicable) or Event of Default shall have occurred and be continuing on the
Effective Date or would result from this Agreement or the other Loan Documents
becoming effective in accordance with its or their respective terms, both
immediately before and immediately after giving effect to such initial Loan.
(c) Legality. The making of the initial Loan or the initial Letter of
Credit Accommodation shall not contravene any law, rule or regulation applicable
to the Lender Group or Borrower or any other Loan Party.
(d) Delivery of Documents. Administrative Agent and Collateral Agent shall
have received on or before the Effective Date the following, each in form and
substance reasonably satisfactory to the Administrative Agent and Collateral
Agent and, unless indicated otherwise, dated the Effective Date:
(i) the Fee Letter, duly executed and delivered by Borrower and by
Collateral Agent;
(ii) a Security Agreement, duly executed and delivered by each Loan Party
and by Collateral Agent;
(iii) a Trademark Security Agreement duly executed and delivered by
Borrower and by Collateral Agent;
(iv) a Guaranty, duly executed and delivered by each Loan Party other than
Borrower, in favor of Collateral Agent;
(v) a Pledge Agreement, duly executed by each of the Loan Parties, together
with (A) such original stock certificates or other certificated securities or
instruments representing all of the Capital Stock of each Subsidiary of Borrower
owned by a Loan Party, (B) undated stock powers executed in blank, and (C) such
opinion of counsel and such approving certificate of the issuer of such Capital
Stock as Collateral Agent may reasonably request with respect to complying with
any legend on any such certificate or any other matter relating to such Capital
Stock;
(vi) the Intercompany Subordination Agreement, duly executed and delivered
by Borrower, each of its Subsidiaries, and by Collateral Agent;
(vii) the Acknowledgement Agreement, duly executed and delivered by each of
Borrower's Subsidiaries and by Collateral Agent;
(viii) the Side Letter, duly executed and delivered by Borrower, and each
member of the Lender Group;
(ix) the Transferee Side Letter, duly executed and delivered by Borrower,
and each member of the Lender Group;
(x) [Intentionally Omitted]
(xi) the Purchase Agreement, duly executed and delivered by each member of
the Former Lender Group and by Collateral Agent and Administrative Agent;
(xii) the Estoppel Letter, duly executed and delivered by each Loan Party
and by Collateral Agent;
(xiii) the Mortgage Assignments, duly executed, acknowledged and delivered
by the Former Administrative Agent;
(xiv) the Mortgage Amendments, duly executed, acknowledged and delivered by
the applicable Loan Party and by Collateral Agent;
(xv) [intentionally omitted]
(xvi) evidence of the recording of the Mortgage Assignments and the
Mortgage Amendments in the appropriate office or offices as determined by
Collateral Agent in its sole discretion;
(xvii) the Title Insurance Policies;
(xviii) the UCC Assignments and the UCC-1 financing statements, duly filed
in the appropriate office or offices as determined by Collateral Agent in its
sole discretion;
(xix) the Trademark Lien Assignment, duly executed and delivered by Former
Administrative Agent;
(xx) certified copies of request for copies of information on Form ▇▇▇- ▇▇,
▇▇
listing all effective financing statements which name as debtor any Loan Party
and which are filed in the offices referred to in paragraph (xviii) above,
together with copies of such financing statements, none of which, except as
otherwise agreed in writing by Collateral Agent, shall cover any of the
Collateral and the results of searches for any tax Lien and judgment Lien filed
against such Person or its property, which results, except as otherwise agreed
to in writing by Collateral Agent, shall not show any such Liens;
(xxi) a copy of the resolutions of each Loan Party, certified as of the
Effective Date by an Authorized Officer thereof, authorizing (A) the borrowings
hereunder (in the case of Borrower) and the transactions contemplated by the
Loan Documents to which such Loan Party is a party, and (B) the execution,
delivery and performance by such Loan Party of each Loan Document and the
execution and delivery of the other documents to be delivered by such Loan Party
in connection herewith and therewith;
(xxii) a certificate of an Authorized Officer of each Loan Party,
certifying the names and true signatures of the representatives of such Loan
Party authorized to sign each Loan Document (including, in the case of Borrower,
Notices of Borrowing and all other notices hereunder or under the other Loan
Documents) to which such Loan Party is a party and the other documents to be
executed and delivered by such Loan Party in connection herewith and therewith,
together with evidence of the incumbency of such authorized officers;
(xxiii) a certificate of the appropriate state official(s) of the state of
organization and each state of foreign qualification of each Loan Party in which
its failure to be duly qualified or licensed would reasonably be expected to
have a Material Adverse Effect, certifying as to the subsistence in good
standing of, and (to the extent available to be contained in a good standing
certificate) the payment of taxes (other than taxes (A) which will be paid
promptly with the proceeds of the initial Revolving Loan made on or after the
date hereof, and (B) Permitted Deferred Taxes) by, such Loan Party in such
states, together with confirmation by telephone or telegram (where available) on
the Effective Date from such official(s) as to such matters;
(xxiv) a true and complete copy of the charter, certificate of formation,
certificate of limited partnership or other publicly filed organizational
document of each Loan Party certified as of a date not more than 45 days prior
to the Effective Date by an appropriate official of the state of organization of
such Loan Party;
(xxv) a copy of the charter and by-laws, limited liability company
agreement, operating agreement, agreement of limited partnership or other
organizational document of each Loan Party, together with all amendments
thereto, certified as of the Effective Date by an Authorized Officer of such
Loan Party;
(xxvi) an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, each counsel to the Loan Parties, and of the Loan
Parties' local counsel, as to such matters as Administrative Agent or Collateral
Agent may reasonably request;
(xxvii) a certificate of an Authorized Officer of Borrower, certifying as
to the matters set forth in subsection (b) of this Section 4.01;
(xxviii) a copy of the Financial Statements;
(xxix) certificates of insurance evidencing of the insurance coverage
required by Section 6.01(h) and required by the terms of the Former Mortgages
and the Security Agreement, with such endorsements as to the additional insureds
or loss payees thereunder as Collateral Agent may reasonably request and
providing that such policy may be terminated or canceled (by the insurer or the
insured thereunder) only upon 30 days' prior written notice to the Collateral
Agent and each such other named insured or loss payee, together with evidence of
the payment of all premiums due in respect thereof for such period as Collateral
Agent may request;
(xxx) a certificate of an Authorized Officer, setting forth in reasonable
detail the calculations required to establish compliance with each of the
financial covenants contained in Section 6.03;
(xxxi) copies of the Material Contracts and the Former Loan Documents as in
effect on the Effective Date, certified as true and correct copies thereof by an
Authorized Officer of Borrower, together with a certificate of an Authorized
Officer of Borrower stating that such agreements remain in full force and effect
and that the Loan Parties have not breached or defaulted in any material respect
in any of their obligations under such agreements;
(xxxii) a schedule listing all of the material operating licenses issued by
the applicable state Governmental Authority, evidencing the authority of each
Loan Party to own and operate lawfully each Restaurant location owned and
operated by it and the date of expiration of each such license, certified by an
Authorized Officer of Borrower;
(xxxiii) the Concentration Account Agreement, duly executed and delivered
by each of the parties thereto other than Administrative Agent;
(xxxiv) the Credit Card Agreements, duly executed and delivered by each of
the parties thereto other than Administrative Agent;
(xxxv) the Control Agreements, duly executed and delivered by each of the
parties thereto other than Administrative Agent;
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(xxxvi) the Agents shall have received such evidence as they shall require
in their sole and absolute discretion (including a certificate from an
Authorized Officer of the Borrower) to demonstrate the fact that the net book
value of all property securing the Indebtedness of Borrower in connection with
the ▇▇▇▇▇▇ Guaranty Agreement does not exceed $16,300,000;
(xxxvii) the Agents shall have received a certificate of an Authorized
Officer that all tax returns required to be filed by Borrower or any of its
Subsidiaries have been timely filed (or extensions have been obtained which
themselves have not expired), except with respect to the state and local sales
tax returns and the local property tax returns identified on Schedule 5.01(k)(i)
hereto, and all taxes upon Borrower or any of its Subsidiaries or their
properties, assets, income, and franchises (including Real Property taxes,
mortgage recording taxes, sales taxes and payroll taxes) have been paid prior to
delinquency or will be paid from the proceeds of the initial Revolving Loan made
on or after the date hereof, except such taxes that are the subject of a
Permitted Protest and Permitted Deferred Taxes; and
(xxxviii) such other agreements, instruments, approvals, opinions and other
documents, each reasonably satisfactory to Administrative Agent and Collateral
Agent in form and substance, as Administrative Agent or Collateral Agent may
reasonably request.
(e) Effective Date. The Effective Date shall have occurred on or before
March 25, 2002.
(f) Required Availability. Administrative Agent and Collateral Agent shall
be reasonably satisfied that Borrower will have the Required Availability after
giving effect to the initial extensions of credit hereunder on or after the date
hereof, and that Borrower's and its Subsidiares' accounts payable are at a level
and in a condition reasonably satisfactory to the Agents in their discretion.
(g) Material Adverse Change. No material adverse change shall have occurred
in the business, operations, condition (financial or otherwise), properties or
prospects of Borrower and its Subsidiaries, taken as a whole, since December 31,
2000.
(h) Consummation of Sale of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇'▇. The sale of all of the
property formerly owned by ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Holding Corp. and its
Subsidiaries (collectively, the "M&S Disposition") shall have been consummated,
which shall have generated net cash proceeds in an amount which is acceptable to
the Agents in their discretion.
(i) Proceedings, Receipt of Documents. All proceedings in connection with
the making of the initial Loan or the initial Letter of Credit Accommodation and
the other transactions contemplated by this Agreement and the other Loan
Documents, and all documents incidental hereto and thereto, shall be
satisfactory to Administrative Agent, Collateral Agent, and their respective
counsel, and Administrative Agent, Collateral Agent, and such counsel shall have
received all such information and such counterpart originals or certified or
other copies of such documents as Administrative Agent, Collateral Agent, or
such counsel may reasonably request.
(j) Management Reference Checks. Administrative Agent and Collateral Agent
shall have received reasonably satisfactory reference checks for key management
of Borrower.
(k) Non-Wholly Owned Subsidiaries. Each Agent shall have received such
evidence as it shall require in its discretion, that all parcels of real
property owned by a Non-Wholly Owned Subsidiary of Borrower prior to the
Effective Date has been transferred to a Guarantor and is the subject of a New
Mortgage.
(l) Due Diligence. The Lender Group shall have completed its due diligence
with respect to Borrower and its Subsidiaries and the results thereof shall be
acceptable to the Lender Group, in its sole and absolute discretion. Without
limiting the foregoing, the Lender Group shall have received (a) an appraisal of
the Collateral from such appraisal firm as selected by Collateral Agent, and
such appraisal and the results thereof shall be acceptable to the Agents, in
their sole and absolute discretion, (b) an audit report with respect to Borrower
from such audit firm as selected by the Agents, and such audit and the results
thereof shall be acceptable to the Agents in their sole and absolute discretion,
(c) an analysis of the unaudited consolidated financial statements of Borrower
and its Subsidiaries for the Fiscal Year ending December 31, 2000, which shall
verify that the sum of Borrower's EBITDA during such Fiscal Year and all
adjustments for the pre-opening expenses of Canyon Cafe Operating Corporation
and its Subsidiaries during such Fiscal Year was not less than $38,800,000, and
(d) an analysis of the projected financial statements of Borrower and its
Subsidiaries for the Fiscal Year ending December 31, 2001, which shall verify
that the projected amount of Borrower's EBITDA during such Fiscal Year plus the
projected amount of all adjustments for all Pre-Opening Costs during such Fiscal
Year is not less than $30,200,000.
SECTION 4.02. Conditions Precedent to Subsequent Loans. The obligation of
the Lender Group to make any Loan or Letter of Credit Accommodation (subsequent
to the initial Loan or the initial Letter of Credit Accommodation) is subject to
the fulfillment, in a manner reasonably satisfactory to Administrative Agent and
Collateral Agent, of each of the following conditions precedent:
(a) Payment of Fees, Etc. Borrower shall have paid all fees, costs,
expenses and taxes then due and owing and payable by Borrower pursuant to this
Agreement and the other Loan Documents, including, without limitation, Section
2.06 hereof.
33
(b) Representations and Warranties; No Event of Default. The following
statements shall be true and correct, and the submission by Borrower to
Administrative Agent of a Notice of Borrowing with respect to such Loan or
Letter of Credit Accommodation, and the Borrower's acceptance of the proceeds of
such Loan or Letter of Credit Accommodation, shall each be deemed to be a
representation and warranty by Borrower on the date of such Loan or Letter of
Credit Accommodation that: (i) the representations and warranties contained in
Article V and in each other Loan Document are true and correct in all material
respects on and as of such date as though made on and as of such date, (ii) at
the time of and immediately after giving effect to the making of such Loan or
Letter of Credit Accommodation, no Default or Event of Default is continuing or
would result from the making of the Loan or Letter of Credit Accommodation to be
made on such date, and (iii) the conditions set forth in this Section 4.02
(other than 4.02(f)) have been satisfied as of the date of such request.
(c) Legality. The making of such Loan or Letter of Credit Accommodation
shall not contravene any material law, rule or regulation applicable to the
Lender Group, or Borrower or any other Loan Party.
(d) Borrowing Notice. Administrative Agent shall have received a Notice of
Borrowing pursuant to Section 2.02.
(e) Delivery of Documents. Administrative Agent and Collateral Agent shall
have received such other agreements, instruments, approvals, opinions and other
documents, each in form and substance satisfactory to Administrative Agent and
Collateral Agent, as Administrative Agent or Collateral Agent may reasonably
request in writing.
(f) Proceedings, Receipt of Documents. All proceedings in connection with
the making of such Loan or Letter of Credit Accommodation and the other
transactions contemplated by this Agreement and the other Loan Documents, and
all documents incidental hereto and thereto, shall be reasonably satisfactory to
Administrative Agent and its counsel, and Administrative Agent and such counsel
shall have received all such information and such counterpart originals or
certified or other copies of such documents, in form and substance satisfactory
to Administrative Agent, as Administrative Agent or such counsel may reasonably
request in writing.
SECTION 4.03. Conditions Subsequent to Subsequent Loans. The obligation of
the Lender Group (or any member thereof) to continue to make any new Loan or new
Letter of Credit Accommodation is subject to the fulfillment, on or before the
date applicable thereto, of each of the conditions subsequent set forth below
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default):
(a) For the period from and after the Effective Date up to the date that is
180 days after the Effective Date, Borrower shall, and shall cause its
Subsidiaries to, use their commercially reasonable efforts to execute and
deliver to Collateral Agent New Mortgages with respect to all material real
property in which a Loan Party has an ownership, leasehold or other interest and
which is not subject to a Former Mortgage on the Effective Date;
(b) For the period from and after the Effective Date up to the date that is
180 days after the Effective Date, Borrower shall, and shall cause its
Subsidiaries to, use their commercially reasonable efforts to obtain a landlord
waiver, substantially in the form of Exhibit L, executed and delivered by each
landlord with respect to each of the Leases set forth on Schedule 5.01(p);
(c) If Borrower terminates the ▇▇▇▇▇▇ Documents, (i) within 10 Business
Days of such termination, Borrower shall provide evidence to each Agent that all
Liens which secure the Indebtedness in respect of the ▇▇▇▇▇▇ Documents have been
released, and that each document reflecting the release of such Liens on real
property has been sent to be recorded with the applicable county recorder's
office, and (ii) promptly upon receipt thereof, Borrower shall provide recorded
copies of each such document to each Agent;
(d) Within 60 days of the Effective Date, deliver to Collateral Agent a
certificate of an Authorized Officer that states that all Federal, state and
material local tax returns and other material reports required by applicable law
to be filed by Borrower and each of its Subsidiaries have been filed (or
extensions have been obtained which themselves have not expired); and
(e) Within 90 days of the Effective Date, deliver to Collateral Agent a
certificate of an Authorized Officer that states that all taxes imposed upon
Borrower or any of its Subsidiaries or any property of Borrower or any of its
Subsidiaries and which have become due and payable have been paid prior to
delinquency, except (i) to the extent subject to a Permitted Protest, and (ii)
taxes and penalties described in clauses (B) and (C) of the definition of
"Permitted Deferred Taxes".
(f) Within 180 days of the Effective Date, deliver to Collateral Agent a
certificate of an Authorized Officer that states that all taxes imposed upon
Borrower or any of its Subsidiaries or any property of Borrower or any of its
Subsidiaries and which have become due and payable have been paid prior to
delinquency, except (i) to the extent subject to a Permitted Protest, and (ii)
taxes and penalties described in clause (C) of the definition of "Permitted
Deferred Taxes".
(g) On or before July 1, 2002, Borrower shall have hired a full time
permanent chief financial officer.
(h) Within 30 days of the Effective Date, deliver to Collateral Agent an
34
opinion of local Rhode Island counsel to Hops of Rhode Island, LLC, a Rhode
Island limited liability company, as to such matters as Administrative Agent or
Collateral Agent may reasonably request.
(i) For the period from and after the Effective Date up to the date that is
90 days after the Effective Date, Borrower shall use its commercially reasonable
efforts to obtain the consent of SPV to the execution and delivery by Borrower
of the amendment to the Pledge Agreement described below in Section 4.03(j)
hereof (which reasonable commercial efforts shall include but shall not be
limited to the payment of a fee requested by SPV in consideration for such
consent to the extent that such fee does not exceed $25,000); provided, however,
that in the event that SPV refuses to consent to the execution of such
amendment, Borrower shall promptly provide Collateral Agent with written notice
of such refusal and, with the prior written consent of Collateral Agent, which
consent shall not be unreasonably withheld, for the period up to the date that
is 90 days after the Effective Date, Borrower shall use its commercially
reasonable efforts to obtain the consent of SPV to the transfer of Capital Stock
of Hops described below in Section 4.03(k)(2) (which reasonable commercial
efforts shall include but shall not be limited to the payment of a fee requested
by SPV in consideration for such consent to the extent that such fee does not
exceed $25,000).
(j) Within 20 days of the date (if ever) when Borrower receives the consent
of SPV described above in the first clause of Section 4.03(i), Borrower shall
have executed and delivered to Collateral Agent an amendment to the Pledge
Agreement which is in form and substance reasonably satisfactory to Collateral
Agent and which provides for a pledge by Borrower of 100% of the Capital Stock
of Hops as additional security for the Obligations, together with (1)
certificates evidencing all of the Capital Stock of Hops, (2) undated stock
powers executed in blank, and (3) such opinion of counsel and such approving
certificate of Hops as Collateral Agent may reasonably request.
(k) Within 20 days of the date (if ever) when Borrower receives the consent
of SPV described above in the proviso set forth in the second clause of Section
4.03(i), Borrower shall have (1) formed a new Wholly Owned Subsidiary of
Borrower, with respect to which 100% of the Capital Stock of such new Wholly
Owned Subsidiary is owned by Borrower, (2) transferred to such new Wholly Owned
Subsidiary 100% of the Capital Stock of Hops, (3) executed and delivered to
Collateral Agent an amendment to the Pledge Agreement which is in form and
substance reasonably satisfactory to Collateral Agent and which provides for a
pledge by Borrower of 100% of the Capital Stock of such new Wholly Owned
Subsidiary, as additional security for the Obligations, together with (A)
certificates evidencing all of the Capital Stock of such new Wholly Owned
Subsidiary, (B) undated stock powers executed in blank, and (C) such opinion of
counsel and such approving certificate of such new Wholly Owned Subsidiary as
Collateral Agent may reasonably request, (4) caused such new Wholly Owned
Subsidiary to execute and deliver to Collateral Agent (A) a Guaranty, and (B) a
Security Agreement, and (5) caused such new Wholly Owned Subsidiary to become a
party to the Intercompany Subordination Agreement and the Acknowledgment
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties. Borrower hereby represents
and warrants to the Lender Group as follows:
(a) Organization, Good Standing, Etc. Borrower and each of its Subsidiaries
(i) is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of the state of
its organization, (ii) has all requisite power and authority to conduct its
business as now conducted and as presently contemplated and, in the case of
Borrower, to make the borrowings hereunder, and to execute and deliver each Loan
Document to which it is a party, and to consummate the transactions contemplated
thereby, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary,
except where the failure to so qualify or to be in good standing would not
reasonably be expected to have a Material Adverse Effect.
(b) Authorization, Etc. The execution, delivery and performance by each
Loan Party of each Loan Document to which it is or will be a party, (i) have
been or, with respect to Subsidiaries of Borrower formed or acquired hereafter,
will be, duly authorized by all necessary action, (ii) do not and will not
contravene its charter or by-laws, its limited liability company or operating
agreement or its certificate of partnership or partnership agreement, as
applicable, or any applicable law or any material contractual restriction
binding on or otherwise affecting it or any of its properties, (iii) do not and
will not result in or require the creation of any Lien (other than pursuant to
any Loan Document) upon or with respect to any of its properties, and (iv) do
not and will not result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to its operations or any of its properties.
(c) Governmental Approvals. No authorization or approval or other action
by, and no notice to or filing with, any Governmental Authority that has not
been obtained is required in connection with the due execution, delivery and
performance by any Loan Party of any Loan Document to which it is a party.
(d) Enforceability of Loan Documents. This Agreement is, and each other
Loan Document to which any Loan Party is or will be a party, when delivered
hereunder, will be, a legal, valid and binding obligation of such Person,
35
enforceable against such Person in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, or by general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) Capitalization. On the Effective Date, the authorized Capital Stock of
Borrower and the issued and outstanding Capital Stock of Borrower are as set
forth on Schedule 5.01(e). All of the issued and outstanding shares of Capital
Stock of Borrower have been validly issued and are fully paid and nonassessable,
and the holders thereof are not entitled to any preemptive, first refusal or
other similar rights. Schedule 5.01(e) sets forth each plan pursuant to which
shares of the Capital Stock of Borrower are issueable as of the Effective Date,
copies of which plans have been delivered to the Lender Group in the form and on
the terms in effect on the Effective Date, and the number of shares of Capital
Stock of Borrower issuable under each such plan. Except as described in the Side
Letter and on Schedule 5.01(e), as of the Effective Date (i) there are no other
plans or arrangements in existence relating to the issuance of shares of Capital
Stock of a Loan Party, and (ii) there are no outstanding debt or equity
securities of Borrower and no outstanding obligations of Borrower convertible
into or exchangeable for, or warrants, options or other rights for the purchase
or acquisition from Borrower, or other obligations of Borrower to issue,
directly or indirectly, any shares of Capital Stock of any such Person, except
for the Convertible Debentures.
(f) Subsidiaries. Schedule 5.01(f) is a complete and correct description of
the name, jurisdiction of incorporation and ownership of the outstanding Capital
Stock of each Subsidiary of Borrower in existence on the date hereof. All of the
issued and outstanding shares of Capital Stock of such Subsidiaries have been
validly issued and are fully paid and nonassessable, and the holders thereof are
not entitled to any preemptive, first refusal or other similar rights. Except as
indicated on such Schedule, all such Capital Stock is owned by Borrower or one
or more of its Subsidiaries, free and clear of all Liens, except for Permitted
Liens. Except as described on Schedule 5.01(f), there are no outstanding debt or
equity securities of any of Borrower's Subsidiaries and no outstanding
obligations of any of Borrower's Subsidiaries convertible into or exchangeable
for, or warrants, options or other rights for the purchase or acquisition from
any of Borrower's Subsidiaries, or other obligations of any such Subsidiary to
issue, directly or indirectly, any shares of Capital Stock of any Subsidiary of
Borrower.
(g) Litigation. Except as set forth in Schedule 5.01(g), there is no
pending or, to the knowledge of Borrower, threatened action, suit or proceeding
affecting Borrower or any of its Subsidiaries before any court or other
Governmental Authority or any arbitrator that (i) would reasonably be expected
to have a Material Adverse Effect or (ii) relates to this Agreement or any other
Loan Document or any transaction contemplated hereby or thereby.
(h) Financial Condition.
(i) The Financial Statements, copies of which have been delivered to the
Agents, fairly present the consolidated financial condition of Borrower and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations of Borrower and its Subsidiaries for the fiscal periods ended on such
respective dates, all in accordance with GAAP (subject to normal year-end
adjustments in the case of any quarterly statement), and since December 31,
2000, other than as disclosed in Borrower's quarterly financial statements
through September 30, 2001, no event or development has occurred that has had or
would reasonably be expected to have a Material Adverse Effect.
(ii) Borrower has heretofore furnished to the Agents (i) projected monthly
balance sheets, income statements and statements of cash flows of Borrower and
its Subsidiaries for the period from January 1, 2001 through December 31, 2001,
and (ii) projected annual balance sheets, income statements and statements of
cash flows of Borrower and its Subsidiaries for the Fiscal Years ending in 2002
through 2005, in each case as updated from time to time pursuant to Section
6.01(a)(vii). Such projections, as so updated, have been prepared on a
reasonable basis and in good faith by Borrower, and have been based on
assumptions believed by Borrower to be reasonable at the time made and upon the
best information then reasonably available to Borrower, and Borrower is not
aware of any facts or information that would lead it to believe that such
projections, as so updated, are incorrect or misleading in any material respect.
(i) Compliance with Law, Etc. Neither Borrower nor any of its Subsidiaries
is in violation of its organizational documents, any material law, rule,
regulation, judgment or order of any Governmental Authority applicable to it or
any of its property or assets, or any material term of any material agreement or
instrument (including, without limitation, any Material Contract) binding on it
or any of its properties.
(j) ERISA. None of Borrower, any of its Subsidiaries, or any of their ERISA
Affiliates maintains or contributes to any Benefit Plan.
(k) Taxes, Etc. All Federal, state and material local tax returns and other
material reports required by applicable law to be filed by Borrower and each of
its Subsidiaries have been filed, or extensions have been obtained, except, as
of any date on or before the date that is 60 days after the Effective Date, with
respect to the state and material local sales tax returns, and material local
property tax returns set forth on Schedule 5.01(k)(i), and all taxes,
assessments and other governmental charges imposed upon Borrower or any of its
Subsidiaries or any property of Borrower or any of its Subsidiaries and which
have become due and payable have been paid prior to delinquency or will be paid
promptly from the proceeds of the initial Revolving Loan made on or after the
date hereof, except (x) to the extent subject to a Permitted Protest, and (y)
36
Permitted Deferred Taxes.
(l) Margin Stock. Neither Borrower nor any of its Subsidiaries is or 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), and no
proceeds of any 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.
(m) Nature of Business. Neither Borrower nor any of its Subsidiaries is
engaged in any business other than the ownership and operation of restaurant
chains and reasonable extensions thereof.
(n) Adverse Agreements, Etc. Neither Borrower nor any of its Subsidiaries
is a party to any agreement or instrument, or subject to any charter, limited
liability company agreement, partnership agreement or other corporate,
partnership or limited liability company restriction or any judgment, order,
regulation, ruling or other requirement of a court or other Governmental
Authority, which, with respect to all of the foregoing items in this clause (n),
has had, or is reasonably expected to have, a Material Adverse Effect.
(o) Permits, Etc. Each of Borrower and its Subsidiaries has, and is in
compliance with, all material permits, licenses, authorizations, approvals,
entitlements and accreditations required for such Person lawfully to own, lease,
manage or operate each business currently owned, leased, managed or operated by
such Person, except where the failure to have or to so comply would not
reasonably be expected to have a Material Adverse Effect. 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.
(p) Properties.
(i) Each of Borrower and its Subsidiaries has good and marketable title to,
or valid leasehold interests in, all property and assets material to its
business, free and clear of all Liens except Permitted Liens. The properties are
in good working order and condition, ordinary wear and tear excepted.
(ii) Schedule 5.01(p) sets forth a complete and accurate list as of the
Effective Date of the location, by state and street address, of all real
property owned or leased by any of Borrower and its Subsidiaries. As of the
Effective Date, each of Borrower and its Subsidiaries has valid leasehold
interests in the Leases described on Schedule 5.01(p) to which it is a party as
lessee. Schedule 5.01(p) sets forth with respect to each such Lease, the
commencement date, termination date, renewal options (if any) and annual base
rents. Each such Lease is valid and enforceable in accordance with its terms in
all material respects and is in full force and effect. No consent or approval of
any landlord or other third party in connection with any such Lease is necessary
for Borrower or any of its Subsidiaries to enter into and execute the Loan
Documents to which it is a party, except as set forth on Schedule 5.01(p). To
Borrower's knowledge, (a) no other party to any such Lease is in default of its
obligations thereunder, (b) none of Borrower and its Subsidiaries (or any other
party to any such Lease) have at any time delivered or received any notice of
default which remains uncured under any such Lease and, and (c) as of the
Effective Date, no event has occurred which, with the giving of notice or the
passage of time or both, would constitute a default by Borrower or any of its
Subsidiaries under any such Lease, that, with respect to (a), (b) or (c) above
would be reasonably expected to result in an Material Adverse Effect on the
Borrower and its Subsidiaries, taken as a whole.
(q) Full Disclosure. Borrower has disclosed to the Lender Group all
material agreements, instruments and corporate or other restrictions to which it
or any of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect. None of the reports, financial statements, certificates
or other written information furnished by or on behalf of Borrower to the Lender
Group in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, taken as a whole, in the light of the
circumstances under which it was made, not materially misleading; provided that,
with respect to projected financial information, Borrower represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time. As of the Effective Date, there is no contingent
liability or fact that would reasonably be expected to have a Material Adverse
Effect which has not been set forth in a footnote included in the Financial
Statements or a schedule hereto.
(r) [Intentionally Omitted]
(s) Operating Lease Obligations. On the Effective Date, neither Borrower
nor any of its Subsidiaries has any obligations as lessee for the payment of
rent for any real or personal property other than the Operating Lease
Obligations set forth on Schedule 5.01(s) and other than leases in the ordinary
course of business where annual rental payments are less than $50,000.
(t) Environmental Matters. Except as set forth on Schedule 5.01 (t), (i)
the operations of each of Borrower and its Subsidiaries are in compliance with
applicable Environmental Laws, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect; (ii) there has been no
Release at any of the properties owned or operated by Borrower or its
Subsidiaries or a predecessor in interest, or at any disposal or treatment
37
facility which received Hazardous Materials generated by Borrower or its
Subsidiaries or any predecessor in interest which would reasonably be expected
to have a Material Adverse Effect; (iii) to the best of Borrower's and its
Subsidiaries' knowledge, no Environmental Action has been asserted against
Borrower or its Subsidiaries or any predecessor in interest nor does Borrower or
any of its Subsidiaries have knowledge or notice of any threatened or pending
Environmental Action against Borrower or its Subsidiaries or any predecessor in
interest which would reasonably be expected to have a Material Adverse Effect;
and (iv) to the best of Borrower's and its Subsidiaries' knowledge, no
Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by Borrower or its Subsidiaries or any
predecessor in interest which would reasonably be expected to have a Material
Adverse Effect.
(u) Insurance. Each of Borrower and its Subsidiaries keeps its property
adequately insured and maintains (i) insurance to such extent and against such
risks, including fire, as is customary with companies in the same or similar
businesses, (ii) workmen's compensation insurance in the amount required by
applicable law, (iii) public liability insurance, which shall include product
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (iv) such other insurance as may be
required by law (including, without limitation, against larceny, embezzlement or
other criminal misappropriation). Schedule 5.01(u) sets forth a list of all
insurance maintained by Borrower and its Subsidiaries on the Effective Date.
(v) Use of Proceeds. The proceeds of the Loans shall be used solely (i) on
the Effective Date, with respect to the Revolving Loans, for (A) the
satisfaction in full of existing Indebtedness of Borrower to the Former Lender
Group, and (B) payment of transactional costs, expenses, and fees incurred in
connection with this Agreement and the other Loan Documents, and (ii) from and
after the Effective Date, (A) with respect to the Term Loans, for the purposes
set forth in paragraph 2 of the Side Letter, and (B) with respect to the
Revolving Loans, for Borrower's and its Subsidiaries' general corporate and
working capital purposes (including without limitation, for any of the purposes
contemplated by the Side Letter), all in a manner consistent with the provisions
of this Agreement and all applicable laws.
(w) Solvency. After giving effect to the transactions contemplated by this
Agreement and before and after giving effect to each Loan, each of Borrower and
its Subsidiaries is, and Borrower and its Subsidiaries on a consolidated basis
are, Solvent.
(x) Location of Bank Accounts. Schedule 5.01(x) sets forth a complete and
accurate list as of the Effective Date of all deposit, checking and other bank
accounts, all securities and other accounts maintained with any broker dealer
and all other similar accounts maintained by Borrower, or any of its
Subsidiaries, together with a description thereof (i.e., the bank or broker
dealer at which such deposit or other account is maintained and the account
number and the purpose thereof).
(y) Intellectual Property. Except as set forth on Schedule 5.01(y), each of
Borrower and its Subsidiaries owns or licenses or otherwise has the right to use
all licenses, patents, patent applications, trademarks, trademark applications,
service marks, tradenames, copyrights, copyright applications, franchises, and
other intellectual property rights that are necessary for the operations of its
businesses as currently conducted, without, to the knowledge of Borrower,
infringement upon or conflict with the rights of any other Person with respect
thereto, except for such infringements and conflicts which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Set forth on Schedule 5.01(y) is a complete and accurate list as of the
Effective Date of all such material licenses, patents, patent applications,
registered trademarks, trademark applications, registered service marks,
tradenames, registered copyrights, copyright applications, franchises, of
Borrower and its Subsidiaries. Except as set forth in Schedule 5.01(y), to the
knowledge of Borrower, no slogan or other advertising device, product, process,
method, substance, part or other material now employed by Borrower or its
Subsidiaries in the conduct of their business, infringes upon or conflicts with
any rights owned by any other Person, except for such infringements and
conflicts which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and no claim or litigation regarding any
of the foregoing is pending or threatened against Borrower or its Subsidiaries,
except for such claims or litigation which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(z) Material Contracts. Set forth on Schedule 5.01(z) is a complete and
accurate list as of the Effective Date of all Material Contracts to which
Borrower or any of its Subsidiaries is a party, showing the parties and subject
matter thereof and amendments and modifications thereto. Each such Material
Contract (i) unless terminated in accordance with the terms of this Agreement,
is in full force and effect and is binding upon and enforceable against each of
Borrower and its Subsidiaries that is a party thereto and, to the best of
Borrower's knowledge, all other parties thereto in accordance with its terms,
(ii) has not been otherwise amended or modified (except to the extent permitted
by this Agreement), and (iii) is not in default due to the action of Borrower or
its Subsidiaries or, to the best of Borrower's knowledge, any other party
thereto, except to the extent disclosed in writing to Collateral Agent.
(aa) Holding Company and Investment Company Acts. Neither Borrower nor any
of its Subsidiaries is (i) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or (ii)
an "investment company" or an "affiliated person" or "promoter" of, or
38
"principal underwriter" of or for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(bb) Employee and Labor Matters. (i) There is (A) no unfair labor practice
complaint pending or, to the best of Borrower's knowledge, threatened against
Borrower or any of its Subsidiaries before any Governmental Authority and no
grievance or arbitration proceeding pending or, to the best of Borrower's
knowledge, threatened against Borrower or any of its Subsidiaries which arises
out of or under any collective bargaining agreement, (B) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or, to the
best of Borrower's knowledge, threatened against Borrower or any of its
Subsidiaries and (C) to the best of Borrower's knowledge, no union
representation question existing with respect to the employees of Borrower or
any of its Subsidiaries and no union organizing activity taking place with
respect to any of the employees of any of them, that, in the case of (A), (B)
and (C) would reasonably be expected to have a Material Adverse Effect.
(cc) Customers and Suppliers. There exists no actual or, to the best of
Borrower's knowledge, threatened termination, cancellation or limitation of, or
modification to or change in, the business relationship between (A) Borrower or
any of its Subsidiaries, on the one hand, and any customer or any group thereof,
on the other hand, whose agreements with Borrower or any such Subsidiary are
individually or in the aggregate material to the business or operations of
Borrower and its Subsidiaries, taken as a whole, or (B) Borrower or any of its
Subsidiaries, on the one hand, and any material supplier of Borrower and its
Subsidiaries, taken as a whole, on the other hand; and there exists no present
state of facts or circumstances that would reasonably be expected to give rise
to or result in any such termination, cancellation, limitation, modification or
change.
(dd) No Bankruptcy Filing. Neither Borrower nor any of its Subsidiaries is
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
Borrower's or such Subsidiary's assets or property, except the liquidation of
any Dormant Subsidiary, and neither Borrower nor any of its Subsidiaries has any
knowledge of any Person contemplating the filing of any such petition against
it.
(ee) Liquor License Subsidiaries. None of the Liquor License Subsidiaries
(i) have any assets other than those assets necessary to sell liquor, including
liquor licenses, alcohol, and such bank accounts as are necessary to maintain
cash sufficient to purchase alcohol (which assets have an aggregate fair market
value which does not exceed $250,000 at any one time), (ii) have any liabilities
of any nature whatsoever (except short term liabilities in connection with
purchases of alcohol and in respect of the maintenance of and compliance with
liquor licenses (in an aggregate outstanding amount which does not exceed
$250,000 at any one time)), or (iii) engage in any activity or business of any
kind other than with respect to liquor licenses and the purchase of alcohol and
its sale within Restaurants.
(ff) Non-Wholly Owned Subsidiaries. The Non-Wholly Owned Subsidiaries do
not have contractual liabilities of any kind or nature which have not been paid
when due, in an aggregate outstanding amount at any one time in excess of
$600,000, other than Indebtedness in respect of Permitted Intercompany Advances.
(gg) Dormant Subsidiaries. None of the Dormant Subsidiaries (i) have any
assets, (ii) have any liabilities of any nature whatsoever other than tax
liabilities due and payable after the end of the 2002 Fiscal Year or liabilities
resulting from the resolution of outstanding lawsuits, or (iii) engage in any
activity or business of any kind.
(hh) [Intentionally Omitted]
(ii) Location of Inventory; Place of Business; Chief Executive Office.
There is no location at which Borrower or any of its Subsidiaries has any
Inventory (except for Inventory in transit) other than (i) those locations
listed on Schedule 5.01(ii) and (ii) any other locations approved in writing by
Administrative Agent and Collateral Agent. Schedule 5.01(ii) hereto contains a
true, correct and complete list, as of the Effective Date, of the legal names
and addresses of each warehouse at which Inventory of Borrower and its
Subsidiaries is stored. None of the receipts received by Borrower or any of its
Subsidiaries from any warehouse states that the goods covered thereby are to be
delivered to bearer or to the order of a named Person or to a named Person and
such named Person's assigns. Schedule 5.01(ii) sets forth a complete and
accurate list as of the date hereof of (A) each place of business of Borrower
and its Subsidiaries and (B) the chief executive office of each of Borrower and
its Subsidiaries.
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. Affirmative Covenants. So long as any principal of or
interest on any Loan or any other Obligations (whether or not due) shall remain
unpaid or the Lenders shall have any Commitment hereunder, Borrower will and
will cause each of its Subsidiaries to:
(a) Reporting Requirements. Furnish to Administrative Agent and Collateral
Agent:
(i) with respect to the fourth fiscal quarter of the 2001 Fiscal Year, on
or before April 2, 2002, with respect to the fourth fiscal quarter of each
subsequent Fiscal Year, within 60 days after the end of the fourth fiscal
39
quarter of such Fiscal Year, and with respect to each other fiscal quarter of
Borrower and its Subsidiaries, within 45 days after the end of such fiscal
quarter of Borrower and its Subsidiaries, unaudited consolidated balance sheets,
consolidated statements of operations and retained earnings, consolidated
statements of cash flows of Borrower and its Subsidiaries, for such fiscal
quarter of Borrower, and for the period commencing at the end of the immediately
preceding Fiscal Year and ending with the end of such quarter, setting forth in
each case in comparative form the reported amounts for the corresponding date or
period of the immediately preceding Fiscal Year, substantially in the form of
Exhibit 6.01(a)(i)(A), and certified by an Authorized Officer as fairly
presenting, in all material respects, the financial position of Borrower and its
Subsidiaries as of the end of such quarter and the results of operations and
cash flows of Borrower and its Subsidiaries for such quarter, in accordance with
GAAP and disclosure for interim financial statements applicable to Form 10Q,
applied in a manner consistent with that of the most recent audited financial
statements (except for mandatory changes in accounting principles disclosed in
such statements) of Borrower and its Subsidiaries furnished to the Agents,
subject to normal year-end adjustments and, in addition, Borrower shall furnish,
with respect to the fourth fiscal quarter of the 2001 Fiscal Year, on or before
April 2, 2002, with respect to the fourth fiscal quarter of each subsequent
Fiscal Year, within 60 days after the end of the fourth fiscal quarter of such
Fiscal Year, and with respect to each other fiscal quarter of Borrower and its
Subsidiaries, within 45 days after the end of such fiscal quarter of Borrower
and its Subsidiaries, statements of Cash Flow From Restaurant Operations for
each Restaurant, substantially in the form of Exhibit 6.01(a)(i)(B);
(ii) with respect to the 2001 Fiscal Year, on or before April 2, 2001, and
with respect to each subsequent Fiscal Year, within 60 days after the end of
such Fiscal Year, consolidated balance sheets, consolidated statements of
operations and retained earnings and consolidated statements of cash flows of
Borrower and its Subsidiaries as at the end of such Fiscal Year, setting forth
in comparative form the corresponding figures for the immediately preceding
Fiscal Year, substantially in the form of Exhibit 6.01(a)(ii), and prepared in
accordance with GAAP, and accompanied by a report and an opinion unqualified in
all material respects, prepared in accordance with generally accepted auditing
standards, of independent certified public accountants of recognized standing
selected by Borrower and reasonably satisfactory to Administrative Agent and
Collateral Agent (which opinion shall be without (A) a "going concern" or like
qualification or exception, (B) any qualification or exception as to the scope
of such audit or (C) any qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 6.03),
together with a written statement of such accountants (1) to the effect that, in
making the examination necessary for their certification of such financial
statements, they have not obtained any knowledge of the existence of an Event of
Default or a Default and (2) if such accountants shall have obtained any
knowledge of the existence of an Event of Default or such Default, describing
the nature thereof;
(iii) with respect to each of the fiscal months of December of 2001,
January of 2002 and February of 2002, on or before April 2, 2002, and (except
for months ending on a fiscal quarter of Borrower) within 30 days of the end of
each other fiscal month of Borrower and its Subsidiaries, unaudited consolidated
balance sheets, consolidated statements of operations, consolidated statements
of cash flows, and statements of Cash Flow From Restaurant Operations for each
Restaurant location for such fiscal month of Borrower and for the period from
the beginning of such Fiscal Year to the end of such fiscal month, substantially
in the form of Exhibit 6.01(a)(iii), and certified by an Authorized Officer as
fairly presenting, in all material respects, the financial position of Borrower
and its Subsidiaries as of the end of such fiscal month and the results of
operations and cash flows of Borrower and its Subsidiaries for such fiscal
month, in accordance with GAAP (except for footnotes and other disclosures
required in annual and quarterly reports on Form 10K and 10Q, respectively)
applied in a manner consistent with that of the most recent audited financial
statements (except for mandatory changes in accounting principles) furnished to
the Agents, subject to normal year-end adjustments;
(iv) simultaneously with the delivery of the financial statements of
Borrower and its Subsidiaries required by clauses (i), (ii) and (iii) of this
Section 6.01(a), a certificate of an Authorized Officer (A) stating that such
Authorized Officer has reviewed the provisions of this Agreement and the other
Loan Documents and has made or caused to be made under his or her supervision a
review of the condition and operations of Borrower and its Subsidiaries during
the period covered by such financial statements with a view to determining
whether a Default or Event of Default occurred during such period, and that such
review has not disclosed, and such Authorized Officer has no knowledge of, the
existence during such period of an Event of Default or Default or, if an Event
of Default or Default existed, describing the nature and period of existence
thereof and the action which Borrower and its Subsidiaries propose to take or
have taken with respect thereto, and (B) attaching a schedule showing the
calculations (1) specified in Section 6.03 and (2) which are required to
determine the Revolving Loan Margin and the Term Loan Margin;
(v) within 30 days of the end of each fiscal month of Borrower, reports in
detail reasonably satisfactory to the Agents and certified by an Authorized
Officer as being accurate and complete (A) if the aggregate amount of Accounts
Receivable other than credit card receivables during such month exceeds
$200,000, listing all Accounts Receivable of Borrower and its Subsidiaries as of
the last Business Day of such month, which shall include the amount and age of
each Account Receivable, and a description of all Liens, set-offs, defenses and
counterclaims with respect thereto, together with a reconciliation of such
schedule with the schedule delivered to Administrative Agent pursuant to this
40
clause (v)(A) for the immediately preceding month, the name and mailing address
of each Account Debtor with respect to each such Account Receivable and such
other related information as Administrative Agent shall reasonably request, (B)
a summary aging of all accounts payable of Borrower and its Subsidiaries as of
the last Business Day of such month which shall include the amount and age of
each account payable by vendor, and such other information in respect thereof as
Administrative Agent may reasonably request, and (C) a summary report of the
amount of all sales, payroll and other tax obligations, substantially in the
form of Exhibit 6.01(a)(v)(C);
(vi) simultaneously with the delivery of the financial statements of
Borrower required by clause (i) of this Section 6.01(a), a Borrowing Base
Certificate as of the close of business on the last day of the prior fiscal
quarter of Borrower, supported by schedules showing the derivation thereof and
containing such detail and other related information as Administrative Agent may
reasonably request from time to time provided, that (A) the Borrowing Base set
forth in the Borrowing Base Certificate shall be effective from and including
the date such Borrowing Base Certificate is duly received by Administrative
Agent but not including the date on which a subsequent Borrowing Base
Certificate is received by the Administrative Agent, unless Administrative Agent
disputes the accuracy of any statements contained in the Borrowing Base
Certificate concerning the Borrowing Base by written notice of such dispute to
Borrower, and (B) in the event of any dispute, based on objective information
obtained by Administrative Agent from the analysis of the information contained
in the Borrowing Base Certificate (and any supporting documents submitted by
Borrower in connection therewith) by a financial professional retained by either
Agent on behalf of the Lender Group, and disclosed to Borrower in reasonable
detail, concerning the accuracy of any statements contained in the Borrowing
Base Certificate concerning the Borrowing Base, Administrative Agent's good
faith judgment (following discussions with Borrower concerning the basis for
such judgment) shall control;
(vii) on or before December 21 of each year, financial projections (A)
supplementing and superseding the financial projections for such period referred
to in Section 5.01(h)(ii), prepared on a monthly basis substantially in the form
of Exhibit 6.01(a)(vii), for the immediately succeeding Fiscal Year for Borrower
and its Subsidiaries and (B) on or before the date that is 45 days after the
last day of each fiscal quarter of Borrower, financial projections supplementing
and superseding the financial projections for such period referred to in Section
5.01(h)(ii), prepared on a monthly basis and otherwise in form and substance
reasonably satisfactory to Administrative Agent and Collateral Agent, for each
remaining quarterly period in such Fiscal Year, all such financial projections
to be prepared on a reasonable basis and in good faith, and to be based on
assumptions believed by Borrower to be reasonable at the time made and from the
best information then reasonably available to Borrower;
(viii) promptly after submission to any Governmental Authority, all
documents and information furnished to such Governmental Authority in connection
with any investigation of Borrower or any of its Subsidiaries other than routine
inquiries by such Governmental Authority;
(ix) as soon as possible, and in any event within three Business Days after
the occurrence of an Event of Default or Default or the occurrence of any event
or development that would reasonably be expected to have a Material Adverse
Effect, the written statement of an Authorized Officer setting forth the details
of such Event of Default, Default, or Material Adverse Effect and the action
which Borrower and its Subsidiaries propose to take with respect thereto;
(x) promptly after the commencement thereof but in any event not later than
five Business Days after service of process with respect thereto on, or the
obtaining of knowledge thereof by, Borrower or any Subsidiary, notice of each
action, suit or proceeding before any court or other Governmental Authority or
other regulatory body or any arbitrator which would reasonably be expected to
have a Material Adverse Effect;
(xi) as soon as possible and in any event within eight Business Days after
execution, receipt or delivery thereof, copies of any material notices that
Borrower executes or receives from or sends in connection with the Senior Note
Documents, the Senior Subordinated Note Documents, the TECON Documents, or the
▇▇▇▇▇▇ Documents;
(xii) promptly after the sending or filing thereof, copies of all
statements, reports and other information Borrower or any of its Subsidiaries
sends generally to all holders of any of its Indebtedness or all holders of any
class of its securities or files with the SEC or any national (domestic or
foreign) securities exchange (including without limitation, registration
statements, annual, quarterly or monthly reports, financial statements and proxy
statements);
(xiii) promptly upon receipt thereof, copies of all financial reports
(including, without limitation, management letters), if any, submitted to
Borrower or any of its Subsidiaries by its auditors in connection with any
annual or interim audit of the books thereof; and
(xiv) promptly upon request, such other information concerning the
condition or operations, financial or otherwise, of Borrower or any of its
Subsidiaries as Administrative Agent or Collateral Agent may from time to time
reasonably request.
(b) Additional Guaranties and Collateral Security. Cause:
(i) each of its Subsidiaries, other than the Non-Wholly Owned Subsidiaries,
not in existence on the Effective Date to execute and deliver to Collateral
41
Agent for the benefit of the Lender Group promptly and in any event, with
respect to each of the documents described below in clauses (A), (B), (C), (x)
and (y), within three Business Days after the formation, acquisition or change
in status thereof (A) a Guaranty guaranteeing the Obligations, (B) a Security
Agreement, (C) if such Subsidiary has any Subsidiaries, a Pledge Agreement
together with (x) certificates evidencing all of the Capital Stock of any Person
owned by such Subsidiary, (y) undated stock powers executed in blank, and (z)
within 20 Business Days after the formation, acquisition, or change in status of
such Subsidiary, such opinion of counsel and such approving certificate of such
Subsidiary as Collateral Agent may reasonably request in respect of complying
with any legend on any such certificate or any other matter relating to such
shares, (D) within 20 Business Days of the date when such Subsidiary acquires
any real property, one or more New Mortgages creating on such real property
owned by such Subsidiary a perfected, first priority Lien on such real property,
and a Title Insurance Policy covering such real property, together with such
other agreements, instruments and documents as Collateral Agent may reasonably
require whether comparable to the documents required under Section 6.01(o) or
otherwise, and (E) promptly and as soon as reasonably practicable, upon request
by Collateral Agent, such other agreements, instruments, approvals, legal
opinions or other documents reasonably requested by Collateral Agent in order to
create, perfect, establish the first priority nature of or otherwise protect any
Lien purported to be created by any such Security Agreement, Pledge Agreement or
New Mortgage or otherwise to effect the intent that such Subsidiary shall become
bound by all of the terms, covenants and agreements contained in the
Intercompany Subordination Agreement and, in accordance with the terms of the
Acknowledgment Agreement, the Loan Agreement, and that all property and assets
of such Subsidiary shall become Collateral for the Obligations; and
(ii) each owner of the Capital Stock of any new Subsidiary of Borrower, to
the extent that such Capital Stock is owned by Borrower or any of its
Subsidiaries other than the Non-Wholly Owned Subsidiaries, to execute and
deliver promptly and in any event, with respect to the documents described below
in clauses (A) and (B), within three Business Days after the formation or
acquisition of such Subsidiary a Pledge Agreement, together with (A)
certificates evidencing all of the Capital Stock of such Subsidiary in order to
create, perfect, establish the first priority nature of, or otherwise protect
any Lien purported to be created by such Pledge Agreement, (B) undated stock
powers or other appropriate instruments of assignment executed in blank, (C)
within 20 Business Days after the formation or acquisition of such Subsidiary,
such opinion of counsel and such approving certificate of such new Subsidiary as
Collateral Agent may reasonably request in respect of complying with any legend
on any such certificate or any other matter relating to such shares, and (D)
promptly and as soon as reasonably practicable, upon request by Collateral
Agent, such other agreements, instruments, approvals, legal opinions or other
documents reasonably requested by Collateral Agent in order to create or perfect
the first priority nature of, or otherwise protect, any Lien created by such
Pledge Agreement;
(c) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries
to comply, in all material respects with all applicable laws, rules, regulations
and orders (including, without limitation, all Environmental Laws), except where
compliance is being contested by Borrower or its Subsidiaries in good faith by
appropriate proceedings, such compliance to include, without limitation, (i)
paying before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or upon any of
its properties except taxes described in clauses (A) and (B) of the definition
of "Permitted Deferred Taxes", and (ii) paying all other lawful claims which if
unpaid might become a Lien or charge upon any of its properties, except, in the
case of the foregoing clauses (i) and (ii), (y) to the extent subject to a
Permitted Protest, or (z) to the extent that the outstanding amount of such
obligations does not exceed, as of any date, $250,000 in the aggregate.
(d) Preservation of Existence, Etc. Except as permitted under Section
6.02(c), maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary and the failure to be so qualified or in good
standing would reasonably be expected to have a Material Adverse Effect.
(e) Keeping of Records and Books of Account. Keep adequate records and
books of account, on a consolidated basis with respect to Borrower and its
Subsidiaries, with complete entries made in accordance with GAAP.
(f) Inspection Rights. Permit, and cause each of its Subsidiaries to
permit, Administrative Agent, Collateral Agent, or any agents or representatives
thereof at any time and, so long as no Default or Event of Default has occurred
and is continuing, upon reasonable prior notice during normal business hours, to
examine and make copies of and abstracts from their records and books of
account, to visit and inspect their properties, to verify materials, leases,
notes, accounts receivable, deposit accounts, other Collateral and other assets
of Borrower and its Subsidiaries, to determine whether Borrower and its
Subsidiaries have paid all sales, payroll and other taxes or charges of any kind
or nature prior to delinquency, to conduct audits, physical counts, valuations
(including without limitation, valuations of the businesses of Borrower and its
Subsidiaries), appraisals, environmental assessments or examinations and to
discuss their affairs, finances and accounts with any of the directors,
officers, senior managerial employees, independent accountants or other
financial or managerial consultants. Borrower agrees to pay the reasonable cost
of such audits, physical counts, valuations, appraisals, assessments or
examinations, but only up to (x) a fee not in excess of $1,500 per day, per
auditor, plus actual out-of-pocket expenses for each financial audit of Borrower
performed by personnel employed by either Agent, and (y) the actual reasonable
42
charges paid or incurred by either Agent if such elects to employ the services
of one or more third Persons to perform such audits, physical counts,
valuations, appraisals, assessments or examinations; provided, however that
Borrower shall have no obligation to reimburse the Agents for (1) audits,
physical counts, assessments or examinations which are conducted when a Default
or Event of Default is not continuing, solely to the extent that (A) more than
four (4) such audits, physical counts, assessments or examinations are conducted
during any calendar year, or (B) the aggregate amount of the actual charges
which are paid or incurred by either Agent with respect to such audits, physical
counts, assessments or examinations exceeds $150,000 during any calendar year,
(2) valuations of Borrower's and its Subsidiaries' business which are conducted
when a Default or Event of Default is not continuing, solely to the extent that
the aggregate amount of the actual charges which are paid or incurred by either
Agent with respect to such business valuations exceeds $50,000 during any
calendar year, and (3) appraisals of the real property owned by Borrower and its
Subsidiaries which are conducted when an Event of Default is not continuing,
solely to the extent that more than one (1) such appraisal is conducted during
any calendar year.
(g) Maintenance of Properties, Etc. Except with respect to Restaurant
closures that do not constitute Dispositions, maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of their properties which
are necessary or useful in the proper conduct of their business in good working
order and condition, ordinary wear and tear excepted, and comply, and cause each
of its Subsidiaries to comply, in all material respects with the provisions of
all material leases to which each of them is a party as lessee or under which
each of them occupies property, so as to prevent any material loss or forfeiture
thereof or thereunder.
(h) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries
to maintain (either in the name of Borrower or in such Subsidiary's own name),
insurance with financially sound and reputable insurance companies or
associations (including, without limitation, commercial general liability,
property and business interruption insurance) with respect to their properties
(including all real properties leased or owned by them) and business, in such
amounts and covering such risks as is required by any Governmental Authority
having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated. All property policies covering the Collateral shall name
Collateral Agent for the benefit of the Lender Group, as its interests may
appear, as an additional insured or loss payee, in case of loss. All
certificates of insurance are to be delivered to Collateral Agent and the
policies shall contain a loss payable and additional insured endorsements in
favor of Collateral Agent for the benefit of the Lender Group (substantially in
the form in existence on the Effective Date), and shall provide for not less
than 30 days' prior written notice to Collateral Agent and other named insureds
of the exercise of any right of cancellation.
(i) Obtaining of Permits, Etc. Obtain, maintain and preserve, and cause
each of its Subsidiaries to obtain, maintain and preserve, all permits,
licenses, authorizations, approvals, entitlements and accreditations which are
necessary or useful in the proper conduct of its business and where the failure
to so obtain, maintain and preserve would reasonably be expected to have a
Material Adverse Effect.
(j) Environmental. (i) Keep any property either owned or operated by it or
any of its Subsidiaries free of any Environmental Liens; (ii) comply, and cause
it Subsidiaries to comply, in all material respects with Environmental Laws and
provide to Collateral Agent documentation of such compliance which Collateral
Agent reasonably requests; (iii) immediately notify Collateral Agent of any
Release of a Hazardous Material in excess of any reportable quantity from or
onto property owned or operated by Borrower or any of its Subsidiaries and take
any Remedial Actions required to ▇▇▇▇▇ said Release; and (iv) promptly provide
Collateral Agent with written notice within 8 Business Days of the receipt of
any of the following: (A) notice that an Environmental Lien has been filed
against any property of Borrower or any of its Subsidiaries; (B) commencement of
any Environmental Action or notice that an Environmental Action will be filed
against Borrower or any of its Subsidiaries; and (C) notice of a violation,
citation or other administrative order which would reasonably be expected to
have a Material Adverse Effect.
(k) Further Assurances. Take such action and execute, acknowledge and
deliver, and cause each of its Subsidiaries to take such action and execute,
acknowledge and deliver, at its sole cost and expense, such agreements,
instruments or other documents as the Lender Group may reasonably require from
time to time in order (i) to carry out more effectively the purposes of this
Agreement and the other Loan Documents, (ii) to subject to valid and perfected
first priority Liens (subject only to Permitted Liens) any of the Collateral or
any other property of Borrower and its Subsidiaries acquired after the Effective
Date (other than property owned by a Non-Wholly Owned Subsidiary), (iii) to
establish and maintain the validity and effectiveness of any of the Loan
Documents and the validity, perfection and priority of the Liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer and
confirm unto the Lender Group the rights now or hereafter intended to be granted
to the Lender Group under this Agreement or any other Loan Document.
(l) Change in Collateral; Collateral Records. (i) Give Administrative Agent
and Collateral Agent not less than 30 days' prior written notice of any change
in the location of any Collateral, other than to locations set forth on Schedule
6.01(l) (and other than any change in location resulting from a Disposition
which is permitted under this Agreement), (ii) advise Collateral Agent promptly,
in sufficient detail, of any change which would reasonably be expected to have a
Material Adverse Effect relating to the value of the Collateral or the Lien
43
granted thereon and (iii) execute and deliver, and cause each of its
Subsidiaries to execute and deliver, to Collateral Agent for the benefit of the
Lender Group from time to time, solely for the Lender Group's convenience in
maintaining a record of Collateral, such written statements and schedules,
maintained by Borrower and its Subsidiaries in the ordinary course of business,
as Collateral Agent may reasonably require, designating, identifying or
describing the Collateral.
(m) Landlord Waivers. Obtain at the time a Loan Party enters into a lease
for real property not occupied on the Effective Date a landlord's waiver from
the landlord of such real property (which waiver may be contained in such
lease), substantially in the form of Exhibit L.
(n) Term Loan Proceeds. Use the proceeds of each Term Loan solely for the
purposes set forth in paragraph 2 of the Side Letter.
(o) After Acquired Real Property. Upon the acquisition by Borrower or any
of its Subsidiaries after the date hereof of any interest (whether fee or
leasehold) in any real property (wherever located) (each such interest being an
"After Acquired Property") (x) with a Current Value (as defined below) in excess
of $500,000 in the case of a fee interest, or (y) requiring the payment of
annual rent exceeding in the aggregate $125,000 in the case of leasehold
interest, Borrower shall promptly so notify Collateral Agent, setting forth with
specificity a description of the interest acquired, the location of the real
property, any structures or improvements thereon and either an appraisal or
Borrower's good-faith estimate of the current value of such real property (for
purposes of this Section, the "Current Value"). Collateral Agent shall notify
Borrower, in writing within 60 days after receiving notice from Borrower
pursuant to the preceding sentence, whether Collateral Agent for the benefit of
the Lender Group intends to require a New Mortgage and the other documents
referred to below or in the case of leasehold, a leasehold New Mortgage or
landlord's waiver (pursuant to Section 6.01(m) hereof). Upon receipt of such
notice requesting a New Mortgage, the Person which has acquired such After
Acquired Property shall promptly furnish to Collateral Agent the following, each
in form and substance reasonably satisfactory to Collateral Agent: (i) a New
Mortgage with respect to such real property and related assets located at the
After Acquired Property, each duly executed by such Person and in recordable
form; (ii) evidence of the recording of the New Mortgage referred to in clause
(i) above in such office or offices as may be necessary to create and perfect a
valid and enforceable first priority lien on the property purported to be
covered thereby or to otherwise protect the rights of the Lender Group
thereunder, (iii) a Title Insurance Policy, (iv) a survey of such real property,
certified to the Lender Group and to the issuer of the Title Insurance Policy by
a licensed professional survey or reasonably satisfactory to Collateral Agent,
(v) phase I environmental assessment reports with respect to such real property,
certified to the Lender Group by a company reasonably satisfactory to Collateral
Agent, (vi) in the case of a leasehold interest, a certified copy of the lease
between the landlord and such Person with respect to such real property in which
such Person has a leasehold interest, and the certificate of occupancy with
respect thereto, (vii) in the case of a leasehold interest, an attornment and
nondisturbance agreement from the landlord (and Borrower shall use its
commercially reasonable efforts to obtain such an agreement from any fee
mortgagee) with respect to such real property and Collateral Agent for the
benefit of the Lender Group, and (viii) such other documents or instruments
(including guarantees and opinions of counsel) as Collateral Agent may
reasonably require. Borrower shall pay all fees and expenses, including
reasonable attorneys' fees and expenses, and all title insurance charges and
premiums, in connection with their obligations under this Section 6.01(o).
(p) Fiscal Year. Cause the Fiscal Year of Borrower and its Subsidiaries to
end on the Sunday closest to December 31 of each calendar year unless the
Required Lenders consent to a change in such Fiscal Year (and appropriate
related changes to this Agreement).
(q) Chief Financial Officer. In the event that the employment of any chief
financial officer hired by the Borrower terminates after the Effective Date,
retain a temporary chief financial officer who works not less than 30 hours per
week until such time as a full-time permanent chief financial officer is
retained by Borrower.
SECTION 6.02. Negative Covenants. So long as any principal of or interest
on any Loan or any other Obligation (whether or not due) shall remain unpaid or
the Lenders shall have any Commitment hereunder, Borrower shall not, nor shall
it permit any of its Subsidiaries to:
(a) Liens, Sale-Leasebacks, Sales of Accounts Recievable, Etc. (i) Create,
incur, assume or suffer to exist any Lien upon or with respect to any of its
property, whether now owned or hereafter acquired, (ii) file or suffer to exist
under the Code or any similar law or statute of any jurisdiction, a financing
statement (or the equivalent thereof) that names Borrower or any of its
Subsidiaries as debtor, other than in connection with a replacement financing
resulting in the termination of this Agreement and the payment in full in cash
of all of the Obligations then due and payable, (iii) sign or suffer to exist
any security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof), other than in connection with a
replacement financing resulting in the termination of this Agreement and the
payment in full in cash of all of the Obligations then due and payable, (iv)
sell any of its property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets and (including
sales of accounts receivable) with recourse to Borrower or any of its
Subsidiaries (other than any such arrangement with respect to property or assets
with respect to which the provisions of Section 2.05(c) are satisfied) or (v)
assign or otherwise transfer, or permit any of its Subsidiaries to assign or
44
otherwise transfer, any Account Receivable or other right to receive income,
other than (with respect to clauses (i), (ii), (iii), (iv) or (v) above)
Permitted Liens.
(b) Indebtedness. Create, incur, assume, guarantee or suffer to exist, or
otherwise become or remain liable with respect to any Indebtedness other than
Permitted Indebtedness.
(c) Fundamental Changes, Asset Sales, and Acquisitions. Wind-up, liquidate
or dissolve itself (or permit or suffer any thereof) or merge, consolidate or
amalgamate with any Person, convey, sell, lease or sublease, transfer or
otherwise dispose of, whether in one transaction or a series of related
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or (agree to do any of the foregoing) or purchase
or otherwise acquire, whether in one transaction or a series of related
transactions, all or substantially all of the assets of any Person (or any
division thereof) (or agree to do any of the foregoing), or permit any of its
Subsidiaries to do any of the foregoing; provided, however, that:
(i) any Dormant Subsidiary or any Non-Wholly Owned Subsidiary may be
wound-up, liquidated or dissolved, so long as the proceeds of any such
liquidation or dissolution and any remaining assets of such Dormant Subsidiary
or Non-Wholly Owned Subsidiary are promptly transferred to Borrower or any of
its Wholly Owned Subsidiaries in connection therewith;
(ii) any Subsidiary of Borrower may be merged into Borrower or another such
Wholly Owned Subsidiary of Borrower, other than a Liquor License Subsidiary or a
Dormant Subsidiary, consolidate with another such Wholly Owned Subsidiary of
Borrower, other than a Liquor License Subsidiary or a Dormant Subsidiary, or
sell assets to Borrower or another Wholly Owned Subsidiary of Borrower, other
than a Liquor License Subsidiary or a Dormant Subsidiary, so long as (A)
Borrower gives the Lender Group (I) at least 15 days' prior written notice of
any such merger or consolidation, or (II) at least 10 days' prior written notice
of any such sale of assets, (B) no Default or Event of Default shall have
occurred and be continuing either before or after giving effect to such
transaction, (C) the Lender Group's rights in any Collateral, including, without
limitation, the existence, perfection and priority of any Lien thereon, are not
adversely affected by such merger, consolidation or sale of assets, and (D) in
the case of a merger or consolidation of Subsidiaries, the surviving Subsidiary,
if any, is a party to a Guaranty and a Security Agreement and the Capital Stock
of such Subsidiary is the subject of a Pledge Agreement, in each case which is
in full force and effect on the date of and immediately after giving effect to
such merger or consolidation;
(iii) Borrower and its Subsidiaries (other than the Liquor License
Subsidiaries and the Dormant Subsidiaries) may (A) sell Inventory in the
ordinary course of business, (B) dispose of obsolete or worn-out equipment in
the ordinary course of business, (C) close Restaurants owned or operated by
Borrower or any of its Subsidiaries, to the extent that such closings do not
involve the Disposition of the Restaurant or the assets owned and/or operated by
Borrower or the applicable Subsidiary in connection with such Restaurant, (D)
consummate the Permitted Affiliate Transaction, (E) sell or otherwise dispose of
other property or assets for at least 80% cash (including without limitation any
sales or other dispositions of property or assets in connection with the closure
of a Restaurant location) in an aggregate amount not less than the fair market
value of such property or assets, provided that the Net Cash Proceeds of such
Dispositions with respect to this clause (c)(ii)(E) do not exceed $5,000,000 in
the aggregate in any twelve-month period, and are paid to the Lender Group to
the extent required by Section 2.05(c)(v), and (F) sell or dispose of the
property and assets set forth on Schedule 2.05(c)(v), so long as all of the Net
Cash Proceeds thereof are paid to Administrative Agent as a payment of the
outstanding principal balance of the Revolving Loans.
(d) Change in Nature of Business. Except as permitted by Section 6.02(c),
make any material change in the nature of its business as carried on at the date
hereof.
(e) Investments. Hold or invest in or commit or agree to hold or invest in,
or purchase or otherwise acquire or commit or agree to purchase or otherwise
acquire any shares of the Capital Stock, bonds, notes, debentures or other
securities of, or make or commit or agree to make any other Investment in, any
Person, or purchase or own any futures contract or otherwise become liable for
the purchase or sale of currency or other commodities at a future date in the
nature of a futures contract, or permit any of its Subsidiaries to do any of the
foregoing, except for: (i) Investments existing on the date hereof, as set forth
on Schedule 6.02(e) hereto, but not any increase in the amount thereof as set
forth in such Schedule or any other modification of the terms thereof, and (ii)
Permitted Investments; provided, however, that Borrower shall not have Permitted
Investments in Securities Accounts or deposit accounts (other than in the
Concentration Accounts or in deposit accounts directly receiving proceeds of
Restaurant sales, solely to the extent of such proceeds) in excess of $200,000
outstanding at any one time unless the applicable Loan Party and the applicable
securities intermediary or bank have entered into Control Agreements or similar
arrangements governing such Permitted Investments, as Collateral Agent shall
determine in its Permitted Discretion, to perfect (and further establish) the
Lender Group's Liens in such Permitted Investments.
(f) Lease Obligations. Create, incur or suffer to exist any obligations as
lessee for the payment of rent for any real or personal property under leases or
agreements to lease other than (A) Capitalized Lease Obligations which would not
cause the aggregate amount of all obligations under Capitalized Leases entered
into after the Effective Date owing by Borrower and its Subsidiaries in any
Fiscal Year to exceed the amounts set forth in subsection (g) of this Section
45
6.02, and (B) Operating Lease Obligations which would not cause the aggregate
amount of all Operating Lease Obligations (other than the portion of the
Operating Lease Obligations which is based on the level of sales of Borrower or
the applicable Subsidiary) owing by Borrower and its Subsidiaries to exceed
$25,500,000 during any Fiscal Year.
(g) Capital Expenditures. Make or commit or agree to make any Capital
Expenditure (by purchase or Capitalized Lease) that would cause the aggregate
amount of all such Capital Expenditures made by Borrower and its Subsidiaries to
exceed the amount set forth below opposite the applicable Fiscal Year:
Fiscal Year Maximum Capital Expenditures
2002 $19,334,000
2003 $22,494,000
2004 and each $28,697,000
Fiscal Year thereafter
(h) Restricted Payments. (i) Declare or pay any cash dividend or other cash
distribution, direct or indirect, on account of any Capital Stock of Borrower or
any of its Subsidiaries, now or hereafter outstanding, other than cash dividends
or other cash distributions made to any limited partner of any of Borrower's
Subsidiaries (other than any limited partner which is a Subsidiary of Borrower)
pursuant to the terms of (A) the applicable limited partnership agreement or (B)
the plans described on Schedule 5.01(e), (ii) make any repurchase, redemption,
retirement, defeasance, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any bonds, notes, debentures or
other debt securities of a Loan Party, now or hereafter outstanding, other than
(A) Investments described in paragraphs (vii) or (xii) of the definition of
Permitted Investments, (B) Investments in connection with the Permitted
Affiliate Transaction, (C) Permitted Intercompany Advances, (D) payments with
respect to Indebtedness described in paragraph (o) of Permitted Indebtedness,
(E) payments in connection with the transactions described in paragraph 2 of the
Side Letter, (F) with the consent of each Agent (which consent shall not be
unreasonably withheld), payments made in connection with the cancellation of the
▇▇▇▇▇▇ Documents and the release of the Liens securing the Indebtedness
evidenced thereby, or (G) as permitted pursuant to subparagraph (v) below in
this Section 6.02(h), (iii) make any cash payment to retire, or to obtain the
surrender of, any Capital Stock of a Loan Party or any outstanding warrants,
options or other rights for the purchase or acquisition of shares of any class
of Capital Stock of a Loan Party, now or hereafter outstanding, other than cash
payments made pursuant to the terms of the plans described in Schedule 5.01(e),
as modified from time to time in the ordinary course of business, (iv) return
capital to any shareholders or other equity holders of Borrower or any of its
Subsidiaries, or make any other capital distribution or dividend in kind of
property, assets, shares of Capital Stock, warrants, rights, options,
obligations or securities as such to any shareholders or other equity holders of
Borrower or any of its Subsidiaries, other than cash dividends or other cash
distributions made to any limited partner of any of Borrower's Subsidiaries
(other than any limited partner which is a Subsidiary of Borrower) pursuant to
the terms of (A) the applicable limited partnership agreement or (B) the plans
described on Schedule 5.01(e) or the granting to all holders of common stock of
Borrower of rights to subscribe for or purchase any shares of Capital Stock of
any class or of any other rights, (v) make any payments in respect of the
Convertible Debentures or the TECONS that Borrower is entitled to defer, other
than payments made in accordance with paragraph 1 of the Side Letter or clause
(vii) of the definition of "Permitted Investments", or (vi) pay any management
fees or any other fees or expenses (including the reimbursement thereof by
Borrower or any of its Subsidiaries) pursuant to any management, consulting or
other services agreement to any of the shareholders or other equityholders of
Borrower or any of its Subsidiaries or other Affiliates, or to any other
Subsidiaries or Affiliates or Borrower, other than (A) book entries which do not
involve any cash payments, or (B) cash dividends or other cash distributions
made to any limited partner of any of Borrower's Subsidiaries (other than any
limited partner which is a Subsidiary of Borrower) pursuant to the terms of the
applicable limited partnership agreement; provided, however, that:
(X) Subsidiaries of Borrower may declare and pay cash and stock dividends,
return capital and make distributions of assets to Borrower or a Guarantor; and
(Y) Borrower or any of its Subsidiaries may (x) declare and pay dividends
and distributions payable solely in shares of such Person's common stock, and
(y) purchase or otherwise acquire shares of its Capital Stock with proceeds
received from the issue of new shares of its Capital Stock.
(i) Federal Reserve Regulations. Permit any Loan or the proceeds of any
Loan under this Agreement to be used for any purpose that would cause such Loans
to be margin loans under the provisions of Regulation T, U or X of the Board.
(j) Transactions with Affiliates. Enter into, renew, extend or be a party
to any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease, transfer or exchange of property or
assets of any kind or the rendering of services of any kind) with any of its
Affiliates, except (i) in the ordinary course of business in a manner and to an
extent consistent with past practice and necessary or desirable for the prudent
operation of its business, for fair consideration and on terms no less favorable
to Borrower or such Subsidiary than would be obtainable in a comparable arm's
length transaction with a Person that is not an Affiliate thereof, (ii) in
connection with the Permitted Affiliate Transaction, the Permitted Convertible
Debenture Payments, Permitted Intercompany Advances and payments in respect of
Indebtedness permitted pursuant to clauses (j) and (o) of the definition of
46
"Permitted Indebtedness", (iii) with the consent of each Agent (which consent
shall not be unreasonably withheld), the cancellation of the ▇▇▇▇▇▇ Documents,
the release of the Liens securing the Indebtedness evidenced thereby, and the
payments made to effect such cancellation and release, and (iv) royalty and
management fees, solely to the extent permitted above by Section 6.02(h)(vi) and
to the extent consistent with past practices.
(k) Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries. Create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any of its Subsidiaries (i) to pay dividends or to make any
other distribution on any shares of Capital Stock of such Subsidiary owned by
Borrower or any of its Subsidiaries, (ii) to subordinate (other than in
connection with the Senior Subordinated Note Documents or the Convertible
Debentures) or to pay or prepay any Indebtedness owed to Borrower or any of its
Subsidiaries, (iii) to make loans or advances to Borrower or any of its
Subsidiaries or (iv) to transfer any of its property or assets to Borrower or
any of its Subsidiaries, or permit any of its Subsidiaries to do any of the
foregoing; provided, however, that nothing in any of clauses (i) through (iv) of
this Section 6.02(k) shall prohibit or restrict:
(A) this Agreement and the other Loan Documents;
(B) any applicable law, rule or regulation (including, without limitation,
applicable currency control laws and applicable state corporate statutes
restricting the payment of dividends in certain circumstances);
(C) in the case of clause (iv) any agreement setting forth customary
restrictions on the subletting, assignment or transfer of any property or asset
that is a lease, license, conveyance or contract of similar property or assets;
or
(D) in the case of clause (iv) any holder of a Permitted Lien from
restricting on customary terms the transfer of any property or assets subject
thereto.
(l) Limitation on Issuance of Capital Stock.
(i) Except as permitted by Section 6.02(e), (h) or (j), issue or sell or
enter into any agreement or arrangement for the issuance and sale of any shares
of its Capital Stock, any securities convertible into or exchangeable for its
Capital Stock or any warrants, options or other rights for the purchase or
acquisition of any of its Capital Stock, other than the granting to all holders
of common stock of Borrower of rights to subscribe for or purchase any shares of
Capital Stock of Borrower of any class or of any other rights or the issuance of
Capital Stock of Borrower in connection with the exercise of such rights or the
conversion of Capital Stock of Borrower acquired pursuant to such rights; or
(ii) Except as permitted by Section 6.02(e), (h) or (j), permit any of its
Subsidiaries to issue or sell or enter into any agreement or arrangement for the
issuance and sale of any shares of its Capital Stock, any securities convertible
into or exchangeable for its Capital Stock or any warrants.
(m) Modifications of Indebtedness, Organizational Documents and Certain
Other Agreements; Etc. (i) Amend, modify or otherwise change in a materially
adverse manner (consent to the amendment, modification or other change in a
materially adverse manner of) any of the provisions of any Indebtedness for
borrowed money of Borrower or any of its Subsidiaries or of any instrument
(including, without limitation, the ▇▇▇▇▇▇ Documents, the Senior Note Documents,
the Senior Subordinated Note Documents, the TECON Documents) relating to any
such Indebtedness, except in connection with (A) the Permitted Affiliate
Transaction or Indebtedness permitted pursuant to clauses (j), (n) or (o) of the
definition of "Permitted Indebtedness," and, (B) with the consent of each Agent
(which consent shall not be unreasonably withheld), the cancellation of the
▇▇▇▇▇▇ Documents, and the release of the Liens securing the Indebtedness
evidenced thereby, if such amendment, modification or change would shorten the
final maturity or average life to maturity of, or require any payment to be made
earlier than the date scheduled (as of the date hereof) on, such Indebtedness,
would increase the interest rate applicable to such Indebtedness, or would
change the subordination provision, if any, of such Indebtedness, or would
otherwise be materially adverse to the issuer of such Indebtedness, (ii) except
for the Obligations or as permitted pursuant to Section 6.02(h) or (j) hereof,
make any voluntary or optional payment, prepayment, redemption or other
acquisition for value (other than Investments described in paragraphs (vii) or
(xii) of the definition of Permitted Investments) of any Indebtedness of
Borrower or any of its Subsidiaries (including, without limitation, by way of
depositing money or securities with the trustee therefor before the date
required for the purpose of paying any portion of such Indebtedness when due),
or refund, refinance, replace or exchange any other Indebtedness for any such
Indebtedness, make any prepayment, redemption or repurchase of any outstanding
Indebtedness as a result of any asset sale, change of control, issuance and sale
of debt or equity securities or similar event, or give any notice with respect
to any of the foregoing, or make any payment of any kind with respect to or in
connection with the TECONS or the Convertible Debentures, or (iii) except as
permitted pursuant to Section 6.02(h) or (j) hereof, amend, modify or otherwise
change its certificate of incorporation or bylaws (or other similar
organizational 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), unless each Agent has been given 20 Business Days'
advance notice thereof, or enter into any new agreement with respect to any of
its Capital Stock except (A) any such amendments, modifications or changes or
any such new agreements or arrangements pursuant to this clause (iii) that
47
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect, or (B) any such amendments, modifications or
changes related to the implementation of a "rights plan" by Borrower that grants
to all holders of common stock of Borrower rights to subscribe for or purchase
any shares of Capital Stock of Borrower of any class or of any other rights.
(n) Investment Company Act of 1940. Engage in any business, enter into any
transaction, use any securities or take any other action that would cause it or
any of its Subsidiaries to become subject to the registration requirements of
the Investment Company Act of 1940, as amended, by virtue of being an
"investment company" or a company "controlled" by an "investment company" not
entitled to an exemption within the meaning of such Act.
(o) Securities Accounts. Establish or maintain any Securities Account
unless Collateral Agent shall have received a Control Agreement in respect of
such Securities Account. Borrower shall comply in all material respects with the
provisions of each Control Agreement to which it is a party.
(p) Environmental. Permit the use, handling, generation, storage,
treatment, release or disposal of Hazardous Materials at any property owned or
leased by Borrower or any of its Subsidiaries except in compliance with
Environmental Laws and so long as such use, handling, generation, storage,
treatment, release or disposal of Hazardous Materials does not result in a
Material Adverse Effect.
(q) Certain Agreements. Except as expressly permitted pursuant to Sections
6.02(h), (j) or (m) hereof, agree to any material amendment or other material
change to or material waiver of any of its rights under the Material Contracts
without the prior written consent of Collateral Agent, if and only if such
material amendment, material change or material waiver does not occur in the
ordinary course of business or if it would reasonably be expected to have a
Material Adverse Effect.
(r) Liquor License Subsidiaries. Permit any Liquor License Subsidiary to
(i) have or acquire any assets other than liquor licenses or such assets as are
necessary for the sale of alcohol in certain Restaurants (which assets have an
aggregate fair market value which does not exceed $250,000 at any one time),
(ii) incur liabilities of any nature whatsoever (except in connection with the
maintenance of and compliance with liquor licenses, and liabilities, as are
necessary for the sale of alcohol in certain Restaurants (in an aggregate
outstanding amount which does not exceed $250,000 at any one time)), or (iii)
engage in any other activity or business of any kind other than with respect to
the sale of alcohol in certain Restaurants.
(s) Non-Wholly Owned Subsidiaries. Except as set forth on Schedule 6.02(s),
permit any Non-Wholly Owned Subsidiary to own any Capital Stock.
(t) Dormant Subsidiaries. Permit any Dormant Subsidiary to (i) have or
acquire any assets, (ii) incur any additional liabilities of any nature
whatsoever, or (iii) engage in any other activity or business of any kind other
than the payment of outstanding taxes, the resolution of outstanding lawsuits
and the dissolution thereof.
(u) Chief Financial Officer. On each day from and after July 1, 2002, fail
to retain or continue to retain a full time permanent chief financial officer
for a period of more than 120 consecutive days.
(v) Permitted Subsidiary Activities. Notwithstanding any other provision
hereof, in the event that, and to the extent that, as of the date hereof, any of
the terms or conditions set forth in Sections 6.02(b), (e), (h), (k), or (l)
shall operate to restrict the ability of any Subsidiary to (i) pay dividends or
make distributions to Borrower or any Guarantor, to the extent permitted under
applicable law, on any capital stock of such Subsidiary owned by Borrower or any
Guarantor, (ii) make any payment to Borrower or any Guarantor with respect to
any Indebtedness or other obligation owed to Borrower or any Guarantor, (iii)
make loans or advances to Borrower or any Guarantor, or (iv) transfer any of its
property or assets to Borrower or any Guarantor (collectively, the "Subsidiary
Activities"), and the imposition of such restriction on any such Subsidiary
Activity pursuant hereto is expressly prohibited under or constitutes an event
of default under, the terms of the Senior Note Documents, then, notwithstanding
the foregoing, such Subsidiary Activity shall be permitted.
SECTION 6.03. Financial Covenants. So long as any principal of or interest
on any Loan or any other Obligation (other than solely contingent
indemnification obligations) shall remain unpaid or the Lenders shall have any
Commitment hereunder, Borrower shall not:
(a) Maximum Senior Debt to EBITDA Ratio. Permit the Senior Debt to EBITDA
Ratio, for the twelve month period ending on that last day of any month, to be
greater than 2.25.
(b) Tangible Net Worth. Permit Tangible Net Worth of Borrower and its
Subsidiaries at any time to be less than $20,000,000.
(c) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio for
the twelve fiscal month period ending on each date set forth below to be less
than the amount set forth opposite such date (subject to the agreement set forth
in Section 6.04):
49
Trailing Twelve Fiscal Month Period Ending Fixed Charge Coverage Ratio
------------------------------------------ ---------------------------
March 31, 2002 0.56
April 30, 2002 0.58
May 31, 2002 0.59
June 30, 2002 0.57
July 31, 2002 0.55
August 31, 2002 0.54
September 30, 2002 0.51
October 31, 2002 0.50
November, 30, 2002 0.53
December 31, 2002 and
thereafter until March 31, 2003 0.55
March 31, 2003 and thereafter
until June 30, 2003 0.58
June 30, 2003 and thereafter
until September 30, 2003 0.58
September 30, 2003 and thereafter
until December 31, 2003 0.57
December 31, 2003 and thereafter 0.70
(d) Borrower's EBITDA. Permit Borrower's EBITDA for the twelve fiscal month
period ending on each date set forth below to be less than the amount set forth
opposite such date (subject to the agreement set forth in Section 6.04):
Trailing Twelve Fiscal Month Period Ending Borrower's EBITDA
------------------------------------------ -----------------
March 31, 2002 $24,218,000
April 30, 2002 $24,563,000
May 31, 2002 $25,000,000
June 30, 2002 $23,975,000
July 31, 2002 $24,150,000
August 31, 2002 $24,200,000
September 30, 2002 $24,250,000
October 31, 2002 $24,325,000
November, 30, 2002 $25,275,000
December 31, 2002 and thereafter
until March 31, 2003 $26,400,000
March 31, 2003 and thereafter
until June 30, 2003 $26,800,000
June 30, 2003 and thereafter
until September 30, 2003 $27,825,000
September 30, 2003 and thereafter
until December 31, 2003 $29,225,000
December 31, 2003 and thereafter $30,740,000
(e) Minimum Restaurants Generating Positive Operating Income. As of the
last day of each fiscal month of Borrower, permit the number of Restaurant
locations which generate positive Cash Flow From Restaurant Operations for the
twelve fiscal month period ending on each such date, to be less than the lesser
of: (i) 150 Restaurant locations, or (ii) the smallest whole number equal to
seventy percent (70%) of all Restaurant locations.
(f) Maximum Repurchase Payments. Pay or permit its Subsidiaries to pay, in
the aggregate, more than $1,050,000 during any Fiscal Year to any limited
partner of any Non-Wholly Owned Subsidiary in connection with the purchase of
the Capital Stock in the Borrower or any of its Subsidiaries owned by such
limited partner.
(g) Maximum Pre-Opening Costs. Incur, or permit any of its Subsidiaries to
incur, Pre-Opening Costs in any four consecutive fiscal quarters of Borrower,
tested quarterly beginning with the fiscal quarter ending December 30, 2001, in
excess of the amount set forth below for the applicable period set forth below
(subject to the agreement set forth in Section 6.04):
50
Four Fiscal Quarter Period Ending Maximum Pre-Opening Costs
--------------------------------- -------------------------
March 31, 2002 $200,000
June 30, 2002 $400,000
September 30, 2002 $900,000
December 31, 2002 $2,145,000
March 31, 2003 $3,300,000
June 30, 2003 $4,600,000
September 30, 2003 $5,450,000
December 31, 2003 $4,600,000
March 31, 2004 and thereafter $5,130,000
SECTION 6.04. Revisions to Financial Covenants. Borrower and the Lender
Group each agree that the financial covenants set forth in Sections 6.03(c),
6.03(d) and 6.03(g): for each trailing twelve fiscal month period ending on the
last day of each fiscal month after December 31, 2003 shall be reset at a level
based on 80% of the monthly projections most recently delivered by Borrower to
each Agent with respect to such period, if such projections are timely delivered
to each Agent as required by this Agreement, which projections shall be in form
and substance reasonably satisfactory to each Agent.
ARTICLE VII
MANAGEMENT, COLLECTION AND STATUS OF
ACCOUNTS RECEIVABLE AND OTHER COLLATERAL
SECTION 7.01. Collection of Accounts Receivable; Management of Collateral.
(a) Borrower shall establish and at all times maintain concentration
accounts (the "Concentration Accounts") at the Concentration Account Bank, and
promptly deposit, and shall cause its Subsidiaries to promptly deposit, all
Collections in excess of $200,000 received by Borrower or any of its
Subsidiaries from any source promptly, and in any event no later than the first
Business Day after the date of receipt thereof, and all other Collections
received by Borrower or any of its Subsidiaries from any source promptly, and in
any event no later than the second Business Day after the date of the receipt
thereof, into the Concentration Accounts. Borrower, Administrative Agent, and
Concentration Account Bank shall enter into a concentration account agreement,
in form and substance reasonably satisfactory to Administrative Agent (the
"Concentration Account Agreement"). Neither the Concentration Account Agreement
nor the arrangements contemplated thereby shall be modified by Borrower or any
of its Subsidiaries without the prior written consent of Administrative Agent on
behalf of the Lender Group. Upon the terms and subject to the conditions set
forth in the Concentration Account Agreement, all amounts received in the
Concentration Accounts shall be deposited each Business Day into the
Administrative Agent Account. Until the Lender Group has advised Borrower to the
contrary during the continuance of an Event of Default, Borrower and its
Subsidiaries may and will enforce, collect and receive all amounts owing on the
Account Receivables for the Lender Group's benefit and on the Lender Group's
behalf. All Collections (including checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness) received directly by
Borrower or any of its Subsidiaries from any Account Debtor or any other source
(exclusive of the Lender Group), whether as proceeds from Accounts Receivable,
or as proceeds of any other Collateral, or otherwise, shall be received and held
by the applicable Loan Party in trust for the Lender Group and deposited by such
Loan Party in original form and no later than the next Business Day after
receipt thereof into the Concentration Accounts. The Borrower shall not, nor
shall it permit its Subsidiaries to, commingle such collections with the
proceeds of any Loan. All Collections of each Subsidiary of Borrower deposited
into the Concentration Accounts by such Subsidiary shall be deemed first to be a
repayment of all outstanding Intercompany Advances made by any Loan Party to
such Subsidiary, until paid in full, with all such remaining Collections being
deemed to be a distribution by such Subsidiary to Borrower through each Person
who (directly or indirectly through one or more intermediaries) owns the Capital
Stock of such Subsidiary, other than any limited partner of a Non-Wholly Owned
Subsidiary. Administrative Agent shall charge the Loan Account on the last day
of each month for 2 Business Days of 'clearance' or' float' at the rate
applicable to Revolving Loans set forth in Section 2.04(a) or Section 2.04(b),
as applicable, on all Collections that are received by Administrative Agent
(regardless of whether forwarded by a Concentration Account Bank to
Administrative Agent, whether provisionally applied to reduce the Obligations
under the Loan Documents, or otherwise). This across-the-board 2 Business Day
clearance or float charge on all Collections is acknowledged by the parties to
constitute an integral aspect of the pricing of the Lender Group's financing of
Borrower, and shall apply irrespective of the characterization of whether
receipts are owned by Borrower or the Lender Group, and whether or not there are
any outstanding Revolving Loans, the effect of such clearance or float charge
being the equivalent of charging 2 Business Days of interest on such
Collections. All funds received in the Concentration Accounts pursuant to this
Section 7.01(a) shall be credited to the Loan Account for application at the end
of each Business Day to reduce the then principal balance of the Revolving
Loans, subject to the provisions of Section 9.14(B) hereof. No checks, drafts or
other instruments received by the Lender Group shall constitute final payment to
the Lender Group unless and until such instruments have actually been collected.
51
(b) During the continuance of an Event of Default, the Lender Group may
send a notice of assignment and/or notice of the Lender Group's security
interest to any and all Account Debtors, and during such time period, the Lender
Group shall have the sole right to collect the Accounts Receivable and/or take
possession of the Accounts Receivable and the books and records relating
thereto. Except, in the absence of a continuing Event of Default, if the
aggregate amount of Accounts Receivable other than credit card receivables is
more than $200,000, Borrower shall not, and shall not permit its Subsidiaries
to, without prior written consent of Administrative Agent, grant any extension
of time of payment of any Account Receivable, compromise or settle any Account
Receivable for less than the full amount thereof, release, in whole or in part,
any Person or property liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(c) Borrower hereby appoints the Administrative Agent for the benefit of
the Lender Group or its designee on behalf of the Lender Group as Borrower's
attorney-in-fact with power exercisable during the continuance of any Event of
Default: (i) to demand payment of the Accounts Receivable from Account Debtors,
to enforce payment of the Accounts Receivable by legal proceedings or otherwise,
and generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts Receivable, (ii) to endorse Borrower's name upon any
checks or other evidences of payment relating to the Accounts Receivable, (iii)
to sign Borrower's name on any invoice or ▇▇▇▇ of lading relating to any of the
Accounts Receivable, (iv) to sign Borrower's name on any drafts against Account
Debtors with respect to Accounts Receivable, (v) to prepare, file, and sign
Borrower's name to a proof of claim or similar document against any Account
Debtor in connection with a bankruptcy proceeding commenced by or with respect
to such Account Debtor, (vi) to use Borrower's stationery and to sign Borrower's
name on any assignments of Accounts Receivable, verifications of Accounts
Receivable and notices to Account Debtors with respect to Accounts Receivables,
and (vii) to send verifications of Accounts Receivable. All acts of said
attorney or designee are hereby ratified and approved, and said attorney or
designate shall not be liable for any acts of omission or commission, or for any
error of judgment or mistake of fact or law (other than acts, errors, or
mistakes, constituting gross negligence or willful misconduct); this power being
coupled with an interest is irrevocable until all of the Loans and other
Obligations under the Loan Documents are paid in full and all of the Loan
Documents are terminated.
(d) Nothing contained herein shall be construed to constitute any member of
the Lender Group as agent of Borrower or any of its Subsidiaries in connection
with its actions under this Article VII for any purpose whatsoever, and no
member of the Lender Group shall be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Accounts Receivable
wherever the same may be located and regardless of the cause thereof (other than
from acts or omissions of the Lender Group constituting gross negligence or
willful misconduct). The Lender Group shall not, under any circumstance or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Accounts Receivable or any instrument received in payment thereof or for any
damage resulting therefrom (other than acts or omissions of the Lender Group
constituting gross negligence or willful misconduct). The Lender Group, by
anything in this Article VII or in any assignment or otherwise, does not assume
any of the obligations under any contract or agreement assigned to the Lender
Group and shall not be responsible in any way for the performance by Borrower or
any of its Subsidiaries of any of the terms and conditions thereof.
(e) If any Account Receivable includes a charge for any tax payable to any
Governmental Authority, Administrative Agent is hereby authorized (but in no
event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for Borrower's account and to charge Borrower therefor.
Borrower shall notify Administrative Agent if any Account Receivable includes
any taxes due to any such Governmental Authority and, in the absence of such
notice or actual knowledge of such tax, Administrative Agent for the benefit of
the Lender Group shall not, to the fullest extent permitted by law, be liable
for any taxes that may be due by reason of the sale and delivery creating such
Account Receivable.
SECTION 7.02. Accounts Receivable Documentation. Borrower will, and will
cause its Subsidiaries to, at such intervals as Administrative Agent may require
during the continuance of an Event of Default, execute and deliver confirmatory
written assignments of the Accounts Receivable to the Lender Group and furnish
such further schedules and/or information as Administrative Agent may reasonably
require relating to the Accounts Receivable. The items to be provided under this
Section 7.02 are to be in form similar to Borrower's existing practices and are
to be executed and delivered to Administrative Agent from time to time (upon
request) solely for its convenience in maintaining records of the Collateral.
The failure of Borrower or its Subsidiaries to give any of such items to the
Lender Group shall not affect, terminate, modify or otherwise limit the Lender
Group's Lien on the Collateral.
SECTION 7.03. Status of Accounts Receivable and Other Collateral. With
respect to Accounts Receivable of Borrower or any other Loan Party, other than
(solely to the extent that the Credit Card Agreements are in full force and
effect and are being complied with by all parties thereto in all material
respects other than Administrative Agent) credit card receivables, and so long
as the aggregate amount of such Accounts Receivable (other than credit card
receivables) exceeds $200,000, Borrower covenants, represents and warrants as
follows: (a) the Loan Parties shall be the sole owner, free and clear of all
Liens except in favor of the Lender Group or as otherwise permitted hereunder,
and fully authorized to sell, transfer, pledge and/or grant a security interest
in each such Account Receivable; (b) substantially all of such Accounts
52
Receivable shall be good and valid Accounts Receivable representing undisputed
bona fide indebtedness incurred or an amount indisputably owed by the Account
Debtor therein named, for a fixed sum as set forth in the invoice relating
thereto with respect to any absolute sale and delivery upon the specified terms
of goods sold or services rendered by Borrower or any other Loan Party; (c)
substantially all of such Accounts Receivable shall not be subject to any
defense, offset, counterclaim, discount or allowance except as may be stated in
the invoice relating thereto, discounts and allowances as may be customary in
Borrower's business and as otherwise disclosed to the Administrative Agent; (d)
none of the transactions underlying or giving rise to substantially all of such
Accounts Receivable shall violate any applicable state or federal laws or
regulations, and all documents relating thereto shall be legally sufficient
under such laws or regulations and shall be legally enforceable in accordance
with their terms; (e) no agreement under which any deduction or offset of any
kind, other than normal trade discounts, may be granted or shall have been made
by Borrower or any other Loan Party at or before the time such Accounts
Receivable are created; (f) all agreements, instruments and other documents
relating to such Account Receivable shall be true and correct and in all
material respects what they purport to be; (g) all signatures and endorsements
that appear on all material agreements, instruments and other documents of
Borrower and its Subsidiaries relating to such Accounts Receivable shall be
genuine and all signatories and endorsers shall have full capacity to contract;
(h) Borrower shall, and shall cause its Subsidiaries to, maintain books and
records pertaining to such Accounts Receivable in such detail, form and scope as
is in accordance with its past practices; (i) Borrower shall immediately notify
Administrative Agent if the material portion of any Accounts Receivable arise
out of contracts with the United States or any department, agency, or
instrumentality thereof and will execute any instruments and take any steps
required by Administrative Agent in order that all monies due or to become due
under any such contract shall be assigned to the Lender Group and notice thereof
given to the United States Government under the Federal Assignment of Claims
Act; (j) Borrower will, immediately upon learning thereof, report to
Administrative Agent any material loss or destruction of, or substantial damage
to, any material portion of such Accounts Receivable, and any other matters
affecting the value, enforceability or collectibility of any material portion of
such Accounts Receivable; (k) if any amount payable under or in connection with
any material portion of such Accounts Receivable is evidenced by a promissory
note or other instrument, such promissory note or instrument shall be
immediately pledged, endorsed, assigned and delivered to Collateral Agent for
the benefit of the Lender Group as additional Collateral.
SECTION 7.04. Collateral Custodian. During the continuance of (i) a Payment
Event of Default or (ii) an Event of Default created by a violation of Section
6.02(g) or Section 6.03, the Lender Group may at any time and from time to time
employ and maintain on Borrower's and its Subsidiaries' premises one or more
custodians selected by Collateral Agent who shall have reasonable access to the
books and records of Borrower and its Subsidiaries and shall have full authority
to perform all acts reasonably required to (a) ensure that all Collections are
sent to the Concentration Account Bank in conformance with the Concentration
Account Agreement and the Credit Card Agreements, or (b) take such actions as
are authorized pursuant to Sections 9.04(z) and 9.21(c). Borrower hereby agrees
to, and to cause its Subsidiaries to, cooperate with any such custodian and to
do whatever Collateral Agent may reasonably request in connection with the
foregoing. All reasonable costs and expenses incurred by the Lender Group by
reason of the employment of the custodian shall be the responsibility of
Borrower and charged to the Loan Account. The Lender Group and such custodians
shall be responsible for any loss, liability, claim or expense to the extent
resulting from the gross negligence or willful misconduct of any such custodian.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any of the following Events of Default
shall occur and be continuing:
(a) Borrower fails to pay any principal of any Loan when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise); or
Borrower fails to pay any interest on any Loan, or any fee, indemnity or other
amount payable under this Agreement or any other Loan Document; provided,
however, that in the case of Overadvances that are caused by the charging of
interest, fees, indemnities or expenses to the Loan Account, such event shall
not constitute an Event of Default if, within 3 Business Days of Borrower's
receipt of telephonic or other notice of such Overadvance, Borrower eliminates
such Overadvance;
(b) any representation or warranty made or deemed made by or on behalf of
any Loan Party or by any officer of the foregoing under or in connection with
any Loan Document or under or in connection with any report, certificate, or
other document delivered to the Lender Group pursuant to any Loan Document shall
have been incorrect in any material respect when made or deemed made;
(c) Borrower fails to perform or comply with any covenant or agreement
contained in Sections 6.01(a) (Reporting Requirements) (other than the covenants
or agreements contained in Section 6.01(a)(vi) or 6.01(a)(ix)), 6.01(c)
(Compliance with Laws, Etc.), 6.01(i) (Obtaining Permits), or 6.01(l) (Change in
Collateral; Collateral Records), and such failure continues for a period of 5
Business Days;
(d) Borrower fails to perform or comply with any covenant or agreement
contained in Section 6.01(e) (Keeping of Records and Books of Account), and such
failure continues for a period of 10 Business Days from the date when Borrower
obtains notice of such failure;
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(e) Borrower fails to perform or comply with any covenant or agreement
contained in Section 6.01(g) (Maintenance of Properties), and such failure
continues for a period of 20 Business Days from the date when Borrower obtains
notice of such failure;
(f) Borrower fails to perform or comply with any covenant or agreement
contained in Sections 6.01(a)(vi), 6.01(a)(ix), 6.02 or 6.03;
(g) any Loan Party fails to perform or comply with any other term, covenant
or agreement contained in any Loan Document to be performed or observed by it
and, except as set forth in subsections (a), (b), (c), (d), (e), or (f) of this
Section 8.01, such failure, if capable of being remedied, shall remain
unremedied for 15 Business Days after the earlier of the date a senior officer
of any Loan Party becomes aware of such failure and the date written notice of
such default shall have been given by Collateral Agent on behalf of the Lender
Group to Borrower;
(h) any Loan Party fails to pay any principal of or interest on any of its
Indebtedness for borrowed money or any Indebtedness evidenced by a Material
Contract (excluding Indebtedness evidenced by the Loan Documents) in excess of
$600,000 in the aggregate, or any interest or premium thereon, when due (whether
by scheduled maturity, required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness, or any
other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), redeemed, purchased or defeased
or an offer to prepay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case prior to the stated maturity thereof;
(i) Borrower or any of its Subsidiaries (i) shall institute any proceeding
or voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for any such Person or for any substantial
part of its property, (ii) shall be generally not paying its debts as such debts
become due or shall admit in writing its inability to pay its debts generally,
(iii) shall make a general assignment for the benefit of creditors, or (iv)
shall take any action to authorize or effect any of the actions set forth above
in this subsection (f);
(j) any proceeding shall be instituted against Borrower or any of its
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
any such Person or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of 40 Business Days
or any of the actions sought in such proceeding (including, without limitation,
the entry of an order for relief against any such Person or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property) shall occur;
(k) any provision of any Loan Document shall at any time for any reason
(other than pursuant to the express terms thereof) cease to be valid and binding
on or enforceable against a Loan Party intended to be a party thereto, or the
validity or enforceability thereof shall be contested by any party thereto, or a
proceeding shall be commenced by a Loan Party or any Governmental Authority
having jurisdiction over any of them, seeking to establish the invalidity or
unenforceability thereof, or a Loan Party shall deny in writing that it has any
liability or obligation purported to be created under any Loan Document;
(l) any Security Agreement, any Trademark Security Agreement, any Former
Mortgage, any New Mortgage, any Pledge Agreement or any other security document,
after delivery thereof pursuant hereto, shall for any reason (other than
pursuant to the express terms hereof or thereof) fail or cease to create a valid
and perfected and, except to the extent permitted by the terms hereof or thereof
and except for Permitted Liens, first priority Lien in favor of the Lender Group
on any Collateral purported to be covered thereby, which has an aggregate fair
market value in excess of $150,000, and, such failure, if capable of being
remedied, shall remain unremedied for 5 Business Days after the date when
Borrower or any of its Subsidiaries receives notice of such failure;
(m) one or more judgments or judicial or administrative orders for the
payment of money exceeding $500,000 in the aggregate shall be rendered against a
Loan Party and remain unsatisfied and either (i) enforcement proceedings shall
have been commenced by any creditor upon any such judgment or judicial or
administrative order, or (ii) there shall be a period of 20 consecutive Business
Days after entry thereof during which a stay of enforcement of any such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect;
provided, however, that any such judgment or order shall not give rise to an
Event of Default under this subsection (m) if and to the extent that (A) the
amount of such judgment or order is covered by a valid and binding policy of
insurance between the defendant and the insurer covering full payment thereof
and (B) such insurer has been notified, and has not disputed the claim made for
payment, of the amount of such judgment or order;
54
(n) a Change of Control shall have occurred;
(o) an event or development occurs which has and continues to have a
Material Adverse Effect;
(p) Borrower or any of its Subsidiaries makes any payment or payments of
any kind or nature on account of one or more Lease Guaranties which, in the
aggregate, exceed $250,000; or
(q) Borrower or any of its Subsidiaries makes any payments in respect of
the Convertible Debentures or the TECONS, except to the extent expressly
permitted by paragraph 1 of the Side Letter or clause (vii) of the definition of
"Permitted Investments",
then, and in any such event, either Agent shall (at the direction of the
Required Lenders), by notice to Borrower, (i) terminate the Commitments,
whereupon the Commitments shall terminate immediately, (ii) declare all Loans
then outstanding to be due and payable, whereupon the aggregate principal of
such Loans, all accrued and unpaid interest thereon, all fees and all other
amounts payable under this Agreement shall become due and payable immediately,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower and (iii) exercise any and all of its
other rights and remedies under applicable law, hereunder and under the other
Loan Documents; provided, however, that upon the occurrence of any Event of
Default with respect to Borrower described in subsection (f) or (g) of this
Section 8.01, without any notice to Borrower or any other Person or any act by
the Lender Group, the Commitments shall automatically terminate and the Loans
then outstanding, together with all accrued and unpaid interest thereon, all
fees and all other amounts due under this Agreement shall become due and payable
automatically and immediately, without presentment, demand, protest or notice of
any kind, all of which are expressly waived by Borrower. Without limiting the
generality of the foregoing, if an Event of Default has occurred and is
continuing, Administrative Agent may, at its option, require Borrower to deposit
with Administrative Agent funds equal to 105% of the LC Exposure and, if
Borrower fails to promptly make such deposit, Administrative Agent may advance
such amount as a Revolving Loan (whether or not an Overadvance is created
thereby). Any such deposit or advance shall be held by Administrative Agent in
an interest bearing account (with interest thereon to be credited to Borrower)
as a reserve to fund future payments on such LC Guaranties and future drawings
against such Letters of Credit. To the extent that (x) LC Guaranties have been
paid or terminated and all Letters of Credit have been drawn upon or expired, or
(y) no Events of Default are continuing (because of cure or waiver), amounts
remaining in such reserve shall be applied against any outstanding Obligations
pursuant to the provisions of Section 3.03. In addition, to the extent that as
of any date of determination, the amount remaining in such reserve exceeds 105%
of the LC Exposure as of such date, such funds shall be applied against any
outstanding Obligations pursuant to the provisions of Section 3.03, solely to
the extent of such excess.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed, telecopied or delivered:
if to Borrower, at the following address:
AVADO BRANDS, INC.
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Suite 2800
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ (ILLINOIS)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Administrative Agent or to Administrative Agent on behalf of the Lenders,
at the following address:
Foothill Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Business Finance Division Manager
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Collateral Agent or to Collateral Agent on behalf of the Lenders, at the
following address:
Ableco Finance LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Senior Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section 9.01. All such notices and other communications shall be
effective, (i) if mailed, when received or five days after deposited in the
mails postage pre-paid, whichever occurs first, (ii) if telecopied, when
transmitted and confirmation received, or (iii) if delivered, upon delivery,
except that notices to Administrative Agent pursuant to Article II shall not be
effective until received by Administrative Agent.
SECTION 9.02. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
Borrower or any other Loan Party therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders (or by
Administrative Agent and Collateral Agent, in each case, at the written request
of the Required Lenders), and then 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 Borrower, all the Lenders, Administrative Agent, and
Collateral Agent, do any of the following:
(a) increase or extend the 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 to
the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein, on
any Loan, or any fees or other amounts payable hereunder or under any other Loan
Document, or forgive, compromise, or cancel any of the Obligations; provided,
however, that no consent of the Term Loan Lenders shall be required for the
compromise of any Obligation relating solely to Revolving Loans and no consent
of the Revolving Credit Lenders shall be required for the compromise of any
Obligation relating solely to Term Loans;
(d) change the percentage of the Commitments that is required for the
Lenders or any of them to take any action hereunder;
(e) amend this Section or any provision of the Agreement providing for
consent or other action by all Lenders;
(f) release Collateral other than as permitted by Section 10.11, or
subordinate any security interests or liens of Collateral Agent for the benefit
of the Lender Group;
(g) change the definition of "Required Lenders";
(h) release Borrower from any Obligation for the payment of money, or agree
to subordinate any of the Obligations in right of payment to any other
Indebtedness;
(i) amend the provisions of Section 3.03;
(j) permit the sale of all or substantially all of the Capital Stock of
Borrower or any of its Subsidiaries (except to the extent necessary to effect a
Disposition otherwise permitted hereunder);
(k) change the definition of the Borrowing Base or the definition of any
defined terms used therein; or
(l) amend any of the provisions of Article X;
and, provided further, however, that (1) no amendment, waiver or consent
shall, unless in writing and signed by Administrative Agent, affect the rights
or duties of Administrative Agent under this Agreement or any other Loan
Document, (2) no amendment, waiver or consent shall, unless in writing and
signed by Collateral Agent, affect the rights or duties of Collateral Agent
56
under this Agreement or any other Loan Document, and (3) each member of the
Lender Group is hereby deemed to have instructed the Collateral Agent (A) to
release its Liens as to the property which is the subject of any asset sale,
assignment or other disposition of property or assets which is permitted
hereunder without any further consent of any member of the Lender Group, and (B)
to take such other actions as are necessary or desirable to facilitate any such
disposition. The foregoing notwithstanding, any amendment, modification, waiver,
consent, termination, or release of or with respect to Sections 2.01(c)(v),
2.02(c), and 2.02(f) (except the last sentence thereof), and Article X shall not
require the consent by or the agreement of any Loan Party.
SECTION 9.03. No Waiver; Remedies, Etc. No failure on the part of the
Lender Group to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any right under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right. The rights
and remedies of the Lender Group provided herein and in the other Loan Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law. The rights of the Lender Group under any Loan Document
against any party thereto are not conditional or contingent on any attempt by
the Lender Group to exercise any of their rights under any other Loan Document
against such party or against any other Person.
SECTION 9.04. Expenses; Taxes, Attorneys' Fees. Borrower will pay on demand
all reasonable costs and expenses incurred by or on behalf of the Lender Group,
regardless of whether the transactions contemplated hereby are consummated,
including, without limitation, reasonable fees, costs, client charges and
expenses of the several counsel (including in-house counsel) for the several
members of the Lender Group, accounting, due diligence, periodic field audits,
physical counts, valuations, fees of Rating Agencies associated with the rating
of the Loans (but not in connection with a Securitization), investigations,
monitoring of assets, appraisals of Collateral, environmental assessments,
miscellaneous disbursements, examination, travel, lodging and meals arising from
or relating to: (a) the negotiation, preparation, execution, delivery,
performance and administration of this Agreement and the other Loan Documents,
(including, without limitation, the preparation of any additional Loan
Documents, pursuant to Section 6.01(b)), (b) any requested amendments (other
than amendments requested solely by the Lender Group), waivers or consents to
this Agreement or the other Loan Documents whether or not such documents become
effective or are given, (c) the preservation and protection of any of the Lender
Group's rights under this Agreement or the other Loan Documents, (d) the filing
of any petition, complaint, answer, motion or other pleading by the Lender
Group, or the taking of any action in respect of the Collateral or other
security, in connection with this Agreement or any other Loan Document, (e) the
protection, collection, lease, sale, taking possession of or liquidation of, any
Collateral or other security in connection with this Agreement or any other Loan
Document, (f) any attempt to enforce any Lien or security interest in any
Collateral or other security in connection with this Agreement or any other Loan
Document, (g) any attempt to collect from Borrower or any other Loan Party, (h)
during the continuance of an Event of Default, the receipt by the Lender Group
of any advice from its professionals (including without limitation, the
reasonable fees of its attorneys and consultants) with respect to any of the
foregoing (to the extent that such fees, costs and expenses are not otherwise
recoverable pursuant to any other provision of this Agreement or any other Loan
Document); provided, that the Lender Group shall use their commercially
reasonable efforts to use a single group of financial advisors and accountants,
to the extent reasonably advisable under the circumstances, (i) all liabilities
and costs arising from or in connection with the past, present or future
operations of Borrower and each other Loan Party involving any damage to real or
personal property or natural resources or harm or injury alleged to have
resulted from any Release of Hazardous Materials on, upon or into such property,
(j) any Environmental Liabilities and Costs incurred in connection with the
investigation, removal, cleanup and/or remediation of any Hazardous Materials
present or arising out of the operations of any facility of Borrower and any
other Loan Party, or (k) any Environmental Liabilities and Costs incurred in
connection with any Environmental Lien, provided that Borrower shall not be
liable to any member of the Lender Group for any amount arising from or relating
to any of the foregoing to the extent such amounts arise from the gross
negligence or willful misconduct of the Person seeking payment hereunder.
Without limitation of the foregoing or any other provision of any Loan Document:
(x) Borrower agrees to pay all stamp, document, transfer, recording or filing
taxes or fees and similar impositions now or hereafter determined by the Lender
Group to be payable in connection with this Agreement or any other Loan
Document, and Borrower agrees to save the Lender Group harmless from and against
any and all present or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such taxes, fees or
impositions, (y) Borrower agrees to pay all broker fees with respect to any
broker retained by Borrower or its Subsidiaries that may become due in
connection with the transactions contemplated by this Agreement, and (z) during
the continuance of (i) a Payment Event of Default or (ii) an Event of Default
created by a violation of Section 6.02(g) or Section 6.03, if a Loan Party (A)
fails to make any payments or deposits with respect to any taxes of any kind or
nature to the extent that such payments or deposits are due and payable prior to
delinquency, except in respect of Permitted Deferred Taxes, (B) fails to make
any payments or deposits with respect to any other governmental assessment prior
to the time that any Lien may inure against any property of Borrower or any of
its Subsidiaries, or (C) fails to make any payments or deposits with respect to
any insurance premiums then due and payable or otherwise comply with Section
6.01(h) hereof, except with respect to A, B, or C above, to the extent permitted
pursuant to the terms of this Agreement, then, either Agent, in its sole
discretion and without prior notice to Borrower, may do any or all of the
following, without duplication: (X) make payment of the same or any part
thereof, (Y) set up such reserves in Borrower's Loan Account as such Agent deems
57
necessary to protect the Lender Group from the exposure created by such failure,
or (Z) in the case of any failure described in Section 9.04(z)(iii) hereof,
obtain and maintain insurance policies of the type described in Section 6.01(h)
and take the actions with respect to such policies which are authorized pursuant
to Section 9.21(c). Any payment described above in clause (z) 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. Neither Agent need inquire as to, or contest the validity of, any
such obligation. The foregoing to the contrary notwithstanding, the agreements
set forth above in this Section 9.04 are subject to the limitations set forth in
Sections 2.07 and 6.02(f), solely to the extent applicable. Administrative Agent
agrees to provide to Borrower an invoice with respect to each cost or expense
incurred in connection with the Loan Documents by any member of the Lender Group
promptly upon Administrative Agent's receipt thereof, and agrees, upon the
reasonable request of Borrower, to provide reasonable backup information with
respect to such costs or expenses (subject to the right of each Agent to take
whatever steps are reasonably necessary to protect any confidential or
privileged information which may be contained therein).
SECTION 9.05. Right of Set-off, Sharing of Payments, Etc.
(a) During the continuance of any Event of Default and in addition to (and
without limitation of) any right of set-off, banker's lien, or counterclaim any
Lender may otherwise have, each Lender (at its option but only with the prior
written consent of all Lenders) may, and is hereby authorized by Borrower to, at
any time and from time to time, without notice to Borrower (any such notice
being expressly waived by Borrower), to the fullest extent permitted by law, set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower against any
and all Obligations now or hereafter existing under any Loan Document,
irrespective of whether or not the Lender Group shall have made any demand
hereunder or thereunder and although such obligations may be contingent or
unmatured. During the continuance of any Event of Default, the Lender Group may,
and is hereby authorized to, at any time and from time to time, without notice
to Borrower (any such notice being expressly waived by Borrower), to the fullest
extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender Group to or for the credit or the
account of Borrower against any and all Obligations now or hereafter existing
under any Loan Document, irrespective of whether or not the Lender Group shall
have made any demand hereunder or thereunder. The Lender Group agrees to notify
Borrower, Collateral Agent, and Administrative Agent promptly after any such
set-off and application made by the Lender Group provided that the failure to
give such notice to Borrower shall not affect the validity of such set-off and
application.
(b) If any Lender shall obtain from Borrower payment of any Obligation
through the exercise of any right of set-off, banker's lien, or counterclaim or
similar right or otherwise (other than from Administrative Agent as provided in
this Agreement), and, as a result of such payment, such Lender shall have
received a greater amount of the Obligations than the amount allocable to such
Lender hereunder, Administrative Agent and the other members of the Lender Group
(including such Lender) shall promptly make such adjustments from time to time
as shall be equitable, to the end that the Lender Group shall share the benefit
of such excess payment (net of any expenses that may be incurred by such Lender
in obtaining or preserving such excess payment) in accordance with Section 3.03.
To such end the Lender Group shall make appropriate adjustments among themselves
if such payment is rescinded or must otherwise be restored.
(c) Nothing contained in this Section 9.05 shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 9.05 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section 9.05 to share
in the benefits of any recovery on such secured claim.
SECTION 9.06. Severability. Any provision of this Agreement, which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 9.07. Assignments and Participations.
(a) This Agreement shall be binding upon and inure to the benefit of
Borrower and the Lender Group and their respective successors and assigns;
provided, however, that Borrower may not assign or transfer any of their rights
hereunder without the prior written consent of the Lender Group and any such
assignment without the Lender Group's prior written consent shall be null and
void. No member of the Lender Group shall assign or transfer any of their rights
hereunder in violation of the provisions of Section 9.07(f) or the Transferee
Side Letter, and any assignment in violation thereof shall be null and void.
Except as provided in this Section 9.07, this Agreement shall not inure to the
benefit of any party other than Borrower and the Lender Group.
(b) Any member of the Lender Group may at any time sell, assign or
participate to an Affiliate of such member of the Lender Group its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments and the Loans made by it) without notice to or the
58
consent of Borrower or any other Loan Party. Borrower shall reasonably consider
the execution and delivery of any amendment or other modification or restatement
of this Agreement or any Loan Document as may be requested by such member of the
Lender Group to reflect any such sale or assignment; provided, that Borrower
shall have no obligation to proceed with such amendment, modification or
restatement.
(c) Borrower shall maintain, or cause to be maintained, a register (the
"Register") on which it enters the name of each Lender as the registered owner
of the Loans held by such Lender. A Registered Loan (and the Registered Note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any evidencing the same),
Borrower shall treat the Person in whose name such Loan (and the Registered
Note, if any, evidencing the same) is registered as the owner thereof for the
purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
(d) In the event that any Lender sells participations in the Registered
Loan, such Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the "Participant Register"). A
Registered Loan (and the Registered Note, if any, evidencing the same) may be
participated in whole or in part only by registration of such participation on
the Participant Register (and each Registered Note shall expressly so provide).
Any participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
(e) Any foreign Person who purchases or is assigned or participates in any
portion of such Loan shall provide Borrower and Administrative Agent (in the
case of a purchase or assignment) or the applicable Lender (in the case of a
participation) with a completed Internal Revenue Service Form W-8 (Certificate
of Foreign Status) or a substantially similar form for such purchaser,
participant or any other affiliate who is a holder of beneficial interests in
the Loan.
(f) Any Lender may, with the written consent of Borrower and Collateral
Agent (which consent shall not be unreasonably withheld or delayed), assign and
delegate to one or more assignees (provided that no written consent of
Collateral Agent or Borrower shall be required in connection with any assignment
and delegation by a Lender to an Eligible Transferee or in connection with an
assignment in an amount less than $5,000,000) (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 $1,000,000; provided, however, that Borrower, Collateral
Agent, and Administrative 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, shall have been given to
Borrower, Collateral Agent, and Administrative Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to Borrower,
Collateral Agent, and Administrative Agent an assignment and acceptance
agreement, in substantially in the form of Exhibit A ("Assignment and
Acceptance"); and (iii) the assignor Lender or Assignee has paid to Collateral
Agent for Collateral Agent's sole and separate account a processing fee in the
amount of $2,500. Anything contained herein to the contrary notwithstanding, the
consent of Collateral Agent shall not be required if such assignment is in
connection with any merger, consolidation, sale, transfer, or other disposition
of more than 50% of the loan portfolio of such Lender.
(g) From and after the date that Collateral Agent notifies the assignor
Lender that it has received an executed Assignment and Acceptance and payment of
the above referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except rights granted pursuant to Section
9.15 with respect claims, losses, demands, settlements, damages, liabilities,
obligations, penalties, fines, fees reasonable costs and expenses incurred with
respect to the period of time that the assignor Lender was a party to this
Agreement) and be released from its obligations under this Agreement (except
with respect to Section 10.05) (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 effect a
novation among Borrower, the assignor Lender, and the Assignee.
(h) 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,
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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 Borrower or the
performance or observance by Borrower of any of its 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 Administrative
Agent, Collateral 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 each of Administrative
Agent and Collateral Agent to take such action as Administrative Agent or
Collateral Agent (as the case may be) on its behalf and to exercise such powers
under this Agreement as are delegated to Administrative Agent or Collateral
Agent (as the case may be) by the terms hereof, together with such powers as are
reasonably incidental thereto; and (6) such Assignee agrees that it will perform
in accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(i) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance and the effectiveness of such 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 Commitments
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(j) Subject to Section 9.07(d), any Lender may at any time, with the
written consent of Collateral Agent, sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of such Lender (a
"Participant") participating interests in the Obligations, the Commitments, and
the other rights and interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents (provided that no written consent
of Collateral Agent shall be required in connection with any sale of any such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) 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) Borrower, Collateral
Agent, and Administrative Agent shall continue to deal solely and directly with
the originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the sole and exclusive right to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment to, or consent or waiver with respect to, this Agreement
or of any other Loan Document would (A) extend the final maturity date of the
Obligations hereunder in which such Participant is participating; (B) reduce the
interest rate applicable to the Obligations hereunder in which such Participant
is participating; (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating; (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender; or (E) reduce
the amount or extend due dates of scheduled principal repayments or prepayments
or premiums; (v) all amounts payable by Borrower hereunder shall be determined
as if such Lender had not sold such participation and (vi) any such
participation shall be in a minimum amount of $5,000,000. The rights of any
Participant only shall be derivative through the originating Lender with whom
such Participant participates and no Participant shall have any direct rights as
to the other Lenders, Administrative Agent, Collateral Agent, Borrower, 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 Lender Group among themselves.
(k) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to Borrower or Borrower's business;
provided in each case that such assignee or participant (or prospective assignee
or participant) shall agree to maintain the confidentiality of such information
pursuant to Section 9.19(e).
(l) 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.
(m) Notwithstanding anything in this Section 9.07 to the contrary, no
Lender may assign or participate to Borrower or any of its Affiliates or
Subsidiaries, if any, any interest in any Obligation or Commitment (or any
related rights, remedies, powers or privileges) without the prior written
consent of each Lender, Collateral Agent, and Administrative Agent.
SECTION 9.08. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
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SECTION 9.09. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
SECTION 9.10. CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ IN THE COUNTY OF
NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY
IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. BORROWER FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS FOR NOTICES AS SET
FORTH IN SECTION 9.01, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH
MAILING. BORROWER HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE
STATE OF NEW YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER GROUP
TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 9.11. WAIVER OF JURY TRIAL, ETC. BORROWER AND EACH MEMBER OF THE
LENDER GROUP HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES OR OTHER
LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR
OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. BORROWER CERTIFIES THAT NO
OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER GROUP HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER GROUP WOULD NOT, IN THE EVENT OF ANY
ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.
BORROWER HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE LENDER GROUP'S ENTERING INTO THIS AGREEMENT.
SECTION 9.12. Consent by the Lender Group. Except as otherwise expressly
set forth herein to the contrary, if the consent, approval, satisfaction,
determination, judgment, acceptance or similar action (an "Action") of the
Lender Group or one or more members thereof, shall be permitted or required
pursuant to any provision hereof or any provision of any other agreement to
which Borrower or any other Loan Party are parties and to which the Lender Group
has succeeded thereto, such Action shall be required to be in writing and may be
withheld or denied by the applicable member or members of the Lender Group with
or without any reason in its sole and absolute discretion.
SECTION 9.13. Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrower, 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.
SECTION 9.14. Reinstatement; Certain Payments. If any claim is ever made
upon the Lender Group for repayment or recovery of any amount or amounts
received by the Lender Group in payment or received on account of any of the
Obligations, the Lender Group shall give prompt notice of such claim to
Borrower, and if the Lender Group repays all or part of such amount by reason of
(i) any judgment, decree or order of any court or administrative body having
jurisdiction over the Lender Group or any of its property, or (ii) any good
faith settlement or compromise of any such claim effected by the Lender Group
with any such claimant, then and in such event Borrower agrees that (A) any such
judgment, decree, order, settlement or compromise shall be binding upon it
notwithstanding the cancellation of any instrument evidencing the Obligations or
the other Loan Documents or the termination of this Agreement or the other Loan
Documents, and (B) it shall be and remain liable to the Lender Group hereunder
for the amount so repaid or recovered to the same extent as if such amount had
never originally been received by the Lender Group.
SECTION 9.15. Indemnification. In addition to Borrower's other Obligations
under this Agreement, Borrower agrees to defend, protect, indemnify and hold
harmless the Lender Group, the Agent-Related Persons, the Lender-Related
Persons, any Securitization Party and all of their respective officers,
directors, employees, attorneys, consultants and agents (collectively called the
"Indemnitees") from and against any and all claims, losses, demands,
settlements, damages, liabilities, obligations, penalties, fines, fees,
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses, but excluding income, franchise and similar
taxes of an Indemnitee) incurred by such Indemnitees, whether prior to or from
and after the Effective Date, as a result of or arising from or relating to or
in connection with any of the following: (i) the negotiation, preparation,
execution or performance or enforcement of this Agreement, any other Loan
Document or of any other document executed in connection with the transactions
61
contemplated by this Agreement (including without limitation any taxes or other
payments required to be made in connection with the Former Mortgages, the
Mortgage Assignments, the New Mortgages or the Mortgage Amendments), (ii) the
Lender Group's furnishing of funds to Borrower under this Agreement, including,
without limitation, the management of any such Loans, (iii) any matter relating
to the financing transactions contemplated by this Agreement or the other Loan
Documents or by any document executed in connection with the transactions
contemplated by this Agreement or the other Loan Documents, or (iv) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, including without limitation,
claims, litigations, investigations or other proceedings arising out of (A) the
presence, disposal, Release or threatened Release of any Hazardous Materials on
any property at any time owned or occupied by Borrower or any of its
Subsidiaries (or its respective predecessors in interest or title) or at any
disposal facility which received hazardous materials generated by Borrower or
any predecessor in Interest, (B) any personal injury (including wrongful death)
or property damage (real or personal) arising out of or related to such
Hazardous Materials, (C) any investigation, lawsuit brought or threatened,
settlement reached or government order relating to such Hazardous Materials, (D)
any violation of any Environmental Law, and/or (E) any Environmental Action
(collectively, the "Indemnified Matters"); provided, however, that Borrower
shall not have any obligation to any Indemnitee under this Section 9.15 for any
Indemnified Matter to the extent resulting from the gross negligence or willful
misconduct of such Indemnitee, as determined by a final judgment of a court of
competent jurisdiction. Such indemnification for all of the foregoing losses,
damages, fees, costs and expenses of the Indemnitees are chargeable against the
Loan Account. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 9.15 may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
This Indemnity shall survive the repayment of the Obligations and the discharge
of the Liens granted under the Loan Documents.
SECTION 9.16. Records. The unpaid principal of and interest on the
Obligations, the interest rate or rates applicable to such unpaid principal and
interest, the duration of such applicability, the Revolving Credit Commitment,
the Term Loan Commitment, and the accrued and unpaid fees payable pursuant to
Section 2.06 hereof, including without limitation the Fee Letter Fees, shall at
all times be ascertained from the records of the Lender Group, which shall be
conclusive and binding absent manifest or demonstrable error.
SECTION 9.17. Binding Effect. This Agreement shall become effective when it
shall have been executed by Borrower and the Lender Group and thereafter shall
be binding upon and inure to the benefit of Borrower and the Lender Group, and
their respective successors and assigns, except that Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender Group, and any assignment by the Lender Group
shall be governed by Section 9.07 hereof.
SECTION 9.18. Former Loan Documents. From and after the Effective Date, the
Indebtedness previously evidenced by the Former Notes and the Former Credit
Agreement, together with the other Obligations, shall be evidenced solely by the
Credit Agreement and shall not be evidenced by any promissory notes, except to
the extent evidenced by Registered Notes.
SECTION 9.19. Confidentiality. Each member of the Lender Group agrees (on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature and in accordance with safe and sound practices of comparable
commercial finance companies, any non-public information supplied to it by
Borrower pursuant to this Agreement or the other Loan Documents (and which at
the time is not, and does not thereafter become, publicly available (other than
as a result of a breach by a member of the Lender Group of this Section 9.19) or
available to such Person from another source not known to be subject to a
confidentiality obligation to such Person not to disclose such information),
provided that nothing herein shall limit the disclosure of any such information
(a) to the extent required by statute, rule, regulation or judicial process, (b)
to any other member of the Lender Group, to counsel, accountants, auditors and
other advisors for such member of the Lender Group, or to counsel for any other
member of the Lender Group, (c) to examiners, auditors, or accountants, (d)
Securitization Parties who have executed a confidentiality agreement
substantially in the form of Exhibit C (a "Confidentiality Agreement"), (e) to
the extent required by any court, governmental or administrative agency,
pursuant to any subpoena or other legal process, or by any law, statute,
regulation or court order, or (f) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first executes a Confidentiality Agreement. The Lender
Group agrees that, upon receipt of a request or identification of the
requirement for disclosure pursuant to clause (e) hereof (unless prohibited by
applicable law, statute, regulation or court order, it will make reasonable
efforts to keep Borrower informed of such request or identification; provided
that Borrower acknowledges that the Lender Group may make disclosure as required
by any Governmental Authority or representative thereof.
SECTION 9.20. [Intentionally Omitted]
SECTION 9.21. Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes, and appoints Collateral Agent (and all Persons designated by
Collateral Agent) as Borrower's true and lawful attorney (and agent-in-fact),
and Collateral Agent, or Collateral Agent's agent, may, without notice to
Borrower and in either Borrower's or Collateral Agent's name, but at the cost
62
and expense of Borrower:
(a) During the continuance of an Event of Default as Collateral Agent or
said agent (including Administrative Agent), in its sole discretion, may
determine, endorse Borrower's name on any checks or any other evidence of
payment or proceeds of the Collateral which come into the possession of the
Lender Group or under the Lender Group's control and shall deposit such item of
payment into the Administrative Agent's Account and credit the amount thereof
(in accordance with the provisions of this Agreement, including without
limitation, Section 3.03) to the Obligations.
(b) During the continuance of (i) a Payment Event of Default or (ii) an
Event of Default created by a violation of Section 6.02(g) or Section 6.03, do
any of the following, at its election in its Permitted Discretion: (A) sell or
assign any Collateral, and settle any legal proceedings brought to collect any
Collateral (except legal proceedings involving, on the one hand, Borrower or any
of its Subsidiaries, and on the other hand, any member of the Lender Group), in
each case, upon such terms, for such amounts, and at such time or times as
Collateral Agent deems advisable, subject to the provisions of any Loan Document
applicable thereto and to standards of commercial reasonableness, (B) upon the
reasonable request of Collateral Agent, upon the premises of Borrower and its
Subsidiaries (but, without disruption to the business activities of Borrower and
its Subsidiaries), review and obtain copies of all mail related to the
Collateral which is addressed to Borrower or any of its Subsidiaries, (C)
prepare, file, and sign Borrower's name to any notice of lien, assignment, or
satisfaction of lien or similar document, which in each case are sent to account
debtors (as such term is defined in the Code) of Borrower or any of its
Subsidiaries in connection with any portion of the Collateral, (D) endorse the
name of Borrower upon any chattel paper, instrument, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document relating to the Collateral (including without
limitation any items of payment or proceeds relating to any Collateral) and,
shall in all such instances involving an instrument or other items, deposit the
same to the account of Collateral Agent on account of the Obligations, and (E)
to the extent permitted by Borrower's license agreements, use the information
recorded on or contained in any data processing equipment, computer hardware,
and software relating to the Accounts Receivable, Inventory, Equipment, and any
other Collateral.
(c) During the continuance of (i) a Payment Event of Default or (ii) an
Event of Default created by a violation of Section 6.02(g) or Section 6.03, make
and adjust claims under policies of casualty, property, boiler and machinery,
business interruption insurance and other similar policies of insurance with
respect to the Collateral (but excluding policies of liability or worker's
compensation insurance) involving amounts greater than $50,000.
SECTION 9.22. Concerning the Collateral and Related Loan Documents. Each
Lender authorizes and directs Collateral Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lenders. Each Lender agrees that any action taken by Collateral Agent or
Required Lenders, as applicable, in accordance with the terms of this Agreement
or the other Loan Documents relating to the Collateral and the exercise by
Collateral Agent or Required Lenders, as applicable, of their respective powers
set forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
SECTION 9.23. Field Audits and Examination Reports, Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By
signing this Agreement, each Lender:
(a) is deemed to have requested that Administrative Agent or Collateral
Agent, as the case may be, 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 such Agent, and such Agent shall so furnish
each Lender with such Reports;
(b) expressly agrees and acknowledges that neither Foothill Capital
Corporation and Administrative Agent nor Ableco Finance LLC and Collateral Agent
(i) makes any representation or warranty as to the accuracy of any Report, or
(ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the applicable Agent or other party
performing any audit or examination will inspect only specific information
regarding Borrower and will rely significantly upon Borrower's and its
Subsidiaries' books and records, as well as on representations of Borrower's
personnel;
(d) agrees to keep all Reports and other non-public information regarding
Borrower and its Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner in accordance with Section
9.19; and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold any Agent and any such 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 Borrower, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend and hold any Agent
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses and other amounts
(including reasonable attorneys fees) incurred by any such 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
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Lender.
In addition to the foregoing: (x) any Lender may from time to time request
of any Agent in writing that such Agent provide to such Lender a copy of any
report or document provided by Borrower to such Agent that has not been
contemporaneously provided by Borrower to such Lender, and, upon receipt of such
request, such Agent shall provide a copy of same to such Lender promptly upon
receipt thereof from Borrower; (y) to the extent that any Agent is entitled,
under any provision of the Loan Documents, to request additional reports or
information from Borrower, any Lender may, from time to time, reasonably request
such Agent to exercise such right as specified in such Lender's notice to such
Agent, whereupon such Agent promptly shall request of Borrower the additional
reports or information specified by such Lender, and, upon receipt thereof from
Borrower, such Agent promptly shall provide a copy of same to such Lender; and
(z) any time that Administrative Agent renders to Borrower a statement regarding
the Loan Account, Administrative Agent shall send a copy of such statement to
each Lender and Collateral Agent.
SECTION 9.24. 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.
SECTION 9.25. Miscellaneous. Notwithstanding anything to the contrary set
forth in this Agreement (a) nothing contained herein shall be interpreted to
prevent or restrict the sale of disposition of the assets and related
transactions set forth on Schedule 2.05(c)(v) hereof, and (b) in the event that
the encumbrances and restrictions on the ability of any Restricted Subsidiary
(as such term is defined in the Senior Note Documents or in the Senior
Subordinated Note Documents) set forth in this Agreement or in any other Loan
Document to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock (as defined in the Senior Note Documents or
in the Senior Subordinated Note Documents) of such Restricted Subsidiary owned
by Borrower or any other Restricted Subsidiary, (ii) pay any Indebtedness (as
defined in the Senior Note Documents or in the Senior Subordinated Note
Documents) or other obligation owed to Borrower or any other Restricted
Subsidiary, (iii) make loans or advances to Borrower or any Restricted
Subsidiary, or (iv) transfer any property or assets to Borrower or any other
Restricted Subsidiary are less favorable in any material respect to the holders
of Senior Notes or of Senior Subordinated Notes than those encumbrances and
restrictions that were in effect pursuant to that certain Credit Agreement,
dated as of June 22, 1999, among Borrower, Former Administrative Agent, Bank
Boston, N.A., as syndication agent, Wachovia Securities, Inc., as arranger,
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc., as coarranger and the lenders from time to
time party thereto and other documents delivered on June 22, 1999 pursuant
thereto (the "1999 Documents"), and the existence of such encumbrances and
restrictions are asserted in writing by any Person as constituting, and would
actually constitute, but for the provisions of this Section 9.25, an event of
default under the Senior Note Documents or under the Senior Subordinated Note
Documents, then the terms and conditions of this Agreement and the other Loan
Documents (solely to the extent applicable with respect to the matters described
in clauses (i) through (iv) above) shall be modified to incorporate, mutatis
mutandis, the terms and conditions, in respect of clauses (i) through (iv)
above, contained in the 1999 Documents in substitution of and replacement for
the comparable terms and conditions set forth in this Agreement and the other
Loan Documents; provided, however, that if Borrower or any of its Subsidiaries
make Intercompany Advances which, as of any date in the aggregate, exceed the
amount of Permitted Intercompany Advances, Borrower shall promptly make an
immediate prepayment in immediately available funds of the outstanding principal
balance of the Term Loans to the extent of such excess.
ARTICLE X
THE AGENTS
SECTION 10.01. Appointment Powers and Immunities; Delegation of Duties,
Liability of Agents.
(a) Each member of the Lender Group hereby designates and appoints
Administrative Agent as its administrative agent under this Agreement and the
other Loan Documents and Collateral Agent as its collateral agent under this
Agreement and the other Loan Documents. Each member of the Lender Group hereby
irrevocably authorizes each such 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 it by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Each such Agent agrees to act as such on the
express conditions contained in this Article X. The provisions of this Article X
are solely for the benefit of the Administrative Agent, Collateral Agent, and
the Lenders. Borrower shall not have any rights as a third party beneficiary of
any of the provisions contained herein; provided, however, that certain of the
provisions of Section 10.13 hereof also shall be for the benefit of Borrower.
Any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document notwithstanding, each such Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall each
such Agent have or be deemed to have any fiduciary relationship with any other
member of the Lender Group, 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 each such Agent;
it being expressly understood and agreed that the use of the word "Agent" is for
convenience only and that each such Agent is merely the representative of the
other members of the Lender Group, and has only the contractual duties set forth
in this Agreement and the other Loan Documents. Except as expressly otherwise
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provided in this Agreement, each such 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 which such
Agent is expressly entitled to take or assert under or pursuant to this
Agreement and the other Loan Documents. No member of the Lender Group shall have
any right of action whatsoever against each such Agent as a result of such Agent
acting or refraining from acting hereunder pursuant to such discretion and any
action taken or failure to act pursuant to such discretion shall be binding on
the Lender Group. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to
Administrative Agent or Collateral Agent, each of the members of the Lender
Group agree that, as long as this Agreement remains in effect: (i) (A)
Administrative Agent shall have the right to maintain, in accordance with its
customary business practices, ledgers and records reflecting the status of the
Obligations, the Revolving Loans, the Letter of Credit Accommodations, the Term
Loans, the Collections, and related matters, and (B) Collateral Agent shall have
the right to maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Collateral and related matters;
(ii) Collateral Agent shall have the right to 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; (iii) Administrative Agent shall have the
right to make the Revolving Loans and the Letter of Credit Accommodations, for
itself or on behalf of the applicable Lenders as provided in the Loan Documents;
(iv) Administrative Agent shall have the right to exclusively receive, apply,
and distribute the Collections as provided in the Loan Documents; (v)
Administrative Agent shall have the right to open and maintain such bank
accounts and lock boxes as Administrative Agent deems necessary and appropriate
in accordance with the Loan Documents for the foregoing purposes with respect to
the Collections and, on behalf of Collateral Agent, the Collateral; (vi) (A)
Administrative Agent shall have the right to perform, exercise, and enforce any
and all other rights and remedies of the Lender Group with respect to Borrower,
the Obligations, the Collections, or otherwise related to any of same as
provided in the Loan Documents, and (B) Collateral Agent shall have the right to
perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrower, the Obligations, the Collateral, or
otherwise related to any of same as provided in the Loan Documents; and (vii)
Administrative Agent and Collateral Agent each shall have the right to incur and
pay such fees, charges, and expenses under the Loan Documents as such Agent
reasonably may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents. Administrative Agent
may deem and treat the payee of any Obligation as the holder thereof for all
purposes of the Loan Documents unless and until a notice of the assignment or
transfer of such Obligation shall have been filed with Administrative Agent.
Each member of the Lender Group further consents to (y) the execution, delivery,
and performance by Administrative Agent or Collateral Agent of each Loan
Document entered into by such Agent on behalf of the Lender Group as
contemplated by this Agreement, and (z) the terms of such Loan Documents.
(b) Except as otherwise provided in this section, each of Administrative
Agent and Collateral 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. Each of Administrative Agent and Collateral 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 in compliance with this
section and without gross negligence or willful misconduct.
(c) 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 members of the Lender Group for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of 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
Administrative Agent or Collateral Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of 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 member of the Lender Group 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 properties, books or records of Borrower or any of its Subsidiaries.
(d) Borrower (i) acknowledges that, contemporaneously herewith, the Former
Administrative Agent and the Former Syndication Agent have resigned in their
respective capacities as administrative agent and syndication agent under the
Former Credit Agreement, and (ii) consents (A) to the appointment of
Administrative Agent in its capacity as administrative agent for the Lender
Group hereunder, and (B) to the appointment of Collateral Agent in its capacity
as collateral agent for the Lender Group hereunder.
SECTION 10.02. Reliance by Agents. Each 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,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any member of the Lender Group), independent accountants and other
experts selected by such Agent. Each Agent shall be fully justified in failing
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or refusing to take any action under this Agreement or any other Loan Document
unless it first shall receive such advice or concurrence of the Lenders as it
deems appropriate and until such instructions are received, such Agent shall
act, or refrain from acting, as it deems advisable. If any Agent so requests, it
first shall be indemnified to its reasonable satisfaction by the Lender Group
against any and all liability and expense that may be incurred by it by reason
of taking or continuing to take any such action. Each Agent in all cases shall
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 Lender
Group and such request and any action taken or failure to act pursuant thereto
shall be binding upon all members of the Lender Group.
SECTION 10.03. Defaults. Administrative 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 Administrative Agent for the account of the
Lender Group, except with respect to Events of Default of which Administrative
Agent has actual knowledge, and unless Administrative Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Default or Event of Default, and stating that such notice is a "Notice of
Default." Administrative Agent promptly will notify the Lender Group of its
receipt of any such notice or of any Event of Default of which Administrative
Agent has actual knowledge. If any Lender obtains actual knowledge of any Event
of Default, such Lender promptly shall notify the other Lenders and each Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Sections 10.02 and 10.07, each
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 Article VIII;
provided, however, that unless and until such Agent has received any such
request, such 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.
SECTION 10.04. Rights as a Lender.
(a) With respect to its Commitments and the Loans made by it, Foothill
Capital Corporation (and any successor acting as Administrative Agent, if any,
as permitted by Section 10.08(a) hereof) in its capacity as a Lender under the
Loan Documents shall have the same rights, privileges and powers under the Loan
Documents as any other Lender and may exercise the same as though it were not
acting as Administrative Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include Administrative Agent in its individual
capacity. Foothill Capital Corporation (and any successor acting as
Administrative Agent) and its affiliates may (without having to account for the
same to any member of the Lender Group) accept deposits from, lend money to,
make investments in and generally engage in any kind of banking, trust or other
business with Borrower (and any of its Subsidiaries or Affiliates) as if it were
not acting as Administrative Agent, and Foothill Capital Corporation (and its
successors) and its affiliates may accept fees and other consideration from
Borrower for services in connection with this Agreement or otherwise without
having to account for the same to the Lender Group.
(b) With respect to its Commitments and the Loans made by it, Ableco
Finance LLC (and any successor acting as Collateral Agent, if any, as permitted
by Section 10.08(b) hereof) in its capacity as a Lender under the Loan Documents
shall have the same rights, privileges and powers under the Loan Documents as
any other Lender and may exercise the same as though it were not acting as
Collateral Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Collateral Agent in its individual capacity. Ableco
Finance LLC (and any successor acting as Collateral Agent) and its affiliates
may (without having to account for the same to any member of the Lender Group)
accept deposits from, lend money to, make investments in and generally engage in
any kind of banking, trust or other business with Borrower (and any of its
Subsidiaries or Affiliates) as if it were not acting as Collateral Agent, and
Ableco Finance LLC and its affiliates may accept fees and other consideration
from Borrower for services in connection with this Agreement or otherwise
without having to account for the same to the Lender Group.
SECTION 10.05. Costs and Expenses; Indemnification. Each Agent may incur
and pay fees, costs, and expenses under the Loan Documents to the extent such
Agent deems reasonably necessary or appropriate for the performance and
fulfillment of its functions, powers, and obligations pursuant to the Loan
Documents, including without limiting the generality of the foregoing, 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 Borrower is
obligated to reimburse the Lender Group for such expenses pursuant to the Loan
Agreement or otherwise. 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 (in accordance with its Total Commitments). Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (without limiting the obligation of
Borrower to do so), according to their Pro Rata Shares (in accordance with their
respective Total Commitments), from and against any and all Indemnified
Liabilities (including without limitation Indemnified Liabilities arising under
any Environmental Law as provided in Section 9.15); provided, however, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse Administrative Agent or Collateral Agent, as the
case may be, upon demand for such Lender's ratable share of any costs or
out-of-pocket expenses (including attorneys fees and expenses) incurred by such
Agent in connection with the preparation, execution, delivery, administration,
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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 . The undertaking in this section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of any Agent.
SECTION 10.06. Non-Reliance on Agents and Other Lenders. Each Lender
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by any Agent hereinafter taken, including any
review of the affairs or Property of Borrower and its Subsidiaries, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender. Each Lender represents to each Agent that it has, independently
and without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower 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 Borrower. 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 Borrower 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 Lender Group by
Agent, no Agent shall have any duty or responsibility to provide any member of
the Lender Group with any credit or other information concerning the business,
prospects, operations, Property, financial and other condition or
creditworthiness of Borrower and any other Person party to a Loan Document that
may come into the possession of any of the Agent-Related Persons.
SECTION 10.07. Failure to Act. Except for action expressly required of any
Agent under the Loan Documents, such Agent shall in all cases be fully justified
in failing or refusing to act under any Loan Document unless it shall receive
further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.05 against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.
SECTION 10.08. Resignation of Agent.
(a) Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, Administrative Agent may resign at any time by notice
to the Lender Group and Borrower. Upon any such resignation, Required Lenders
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been appointed by Required Lenders and
have accepted such appointment within 30 days after the retiring Administrative
Agent's giving of notice of resignation, then the retiring Administrative Agent
may, on behalf of Lenders, appoint a successor Administrative Agent. Upon the
acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, remedies, powers, privileges,
duties and obligations of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations, under
the Loan Documents. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Article X shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent.
(b) Subject to the appointment and acceptance of a successor Collateral
Agent as provided below, Collateral Agent may resign at any time by notice to
the Lender Group and Borrower. Upon any such resignation, Required Lenders shall
have the right to appoint a successor Collateral Agent. If no successor
Collateral Agent shall have been appointed by Required Lenders and have accepted
such appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation, then the retiring Collateral Agent may, on behalf of
Lenders, appoint a successor Collateral Agent. Upon the acceptance of any
appointment as Collateral Agent by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, remedies, powers, privileges, duties and obligations of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations, under the Loan Documents. After any retiring Collateral
Agent's resignation as Collateral Agent, the provisions of this Article X shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Collateral Agent.
SECTION 10.09. Collateral Sub-Agents. Each member of the Lender Group by
its execution and delivery of this Agreement (or any joinder hereto or any
Assignment and Acceptance hereunder) agrees that, in the event it shall hold any
monies or other investments on account of Borrower, such monies or other
investments shall be held in the name and under the control of such member of
the Lender Group, and such member of the Lender Group shall hold such monies or
other investments as a collateral sub-agent for Collateral Agent under this
Agreement and the other Loan Documents. Borrower by its execution and delivery
of this Agreement hereby consents to the foregoing.
SECTION 10.10. Communications by Borrower. Except as otherwise provided in
this Agreement, Borrower's communications with respect to the Loan Documents
shall be with Administrative Agent or Collateral Agent, as the case may be, and
Borrower shall be under no obligation to communicate directly with the Lenders.
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SECTION 10.11. Collateral Matters.
(a) The Lenders hereby irrevocably authorize Collateral 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
Borrower of all Obligations; (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if Borrower
certifies in writing to Collateral Agent that the sale or disposition is
permitted under this Agreement or the other Loan Documents (and Collateral Agent
may rely conclusively on any such certificate, without further inquiry); (iii)
constituting property in which Borrower owned no interest at the time the
security interest was granted or at any time thereafter; (iv) constituting
property leased to Borrower under a lease that has expired or is terminated in a
transaction permitted under this Agreement, or (v) which, in the aggregate with
all other dispositions of Equipment, has a fair market value or book value,
whichever is less, of $1,000,000 or less. Except as provided above or expressly
provided in any other Loan Document, Collateral Agent will not execute and
deliver a release of any Lien on any Collateral without the prior written
authorization of all of the Lenders. Upon request by Collateral Agent or
Borrower at any time, Administrative Agent and the Lenders will confirm in
writing Collateral Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 10.11; provided, however,
that (1) Collateral Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Collateral Agent's opinion,
would expose Collateral 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 Borrower in respect of) all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Collateral Agent shall have no obligation whatsoever to any other
member of the Lender Group to assure that the Collateral exists or is owned by
Borrower or is cared for, protected, or insured or has been encumbered, or that
the Lender Group'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 Collateral 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, Collateral Agent may act in any manner it may
deem appropriate, in its sole discretion given Collateral Agent's own interest
in the Collateral in its capacity as one of the Lenders and that Collateral
Agent shall have no other duty or liability whatsoever to any other member of
the Lender Group as to any of the foregoing, except as otherwise provided
herein.
SECTION 10.12. Restrictions on Actions by Administrative Agent and the
Lenders; Sharing Payments.
(a) Administrative Agent and each of the Lenders agrees that it shall not,
without the express consent of Collateral Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of Administrative
Agent and Collateral Agent, set off against the Obligations, any amounts owing
by such member of the Lender Group to Borrower or any accounts of Borrower now
or hereafter maintained with such member of the Lender Group. Administrative
Agent and each of the Lenders further agrees that it shall not, unless
specifically requested to do so by Collateral 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 member of the
Lender group any preference or priority against the other members of the Lender
group with respect to the Collateral.
(b) Subject to Section 10.04, if, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from Administrative Agent pursuant
to the terms of this Agreement, or (ii) payments from Administrative Agent in
excess of such Lender's ratable portion of all such distributions by
Administrative Agent, such Lender promptly shall turn the same over to
Administrative Agent, in kind, and with such endorsements as may be required to
negotiate the same to Administrative Agent, or in same day funds, as applicable,
for the account of the Lender Group and for apportionment and application to the
Obligations in accordance with Section 3.03 hereof.
SECTION 10.13. Withholding Tax.
(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 Administrative Agent and Borrower, to deliver to
Administrative Agent and Borrower:
(i) if such Lender claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, properly completed IRS Forms 1001 and W-8
before the payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
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(ii) 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 4224 before the payment of any interest is due
in the first taxable year of such Lender and in each succeeding taxable year of
such Lender during which interest may be paid under this Agreement, and IRS Form
W-9; and
(iii) 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 Administrative Agent and 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 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of Borrower to such Lender, such Lender agrees to notify
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender. To the extent of
such percentage amount, Administrative Agent will treat such Lender's IRS Form
1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding tax by
filing IRS Form 4224 with Administrative Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the IRC.
(d) If any Lender is entitled to a reduction in the applicable withholding
tax, Administrative Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by clause (a) of
this Section are not delivered to Administrative Agent, then Administrative
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.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Administrative 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 Administrative 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 Administrative Agent fully for
all amounts paid, directly or indirectly, by Administrative Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Administrative Agent under this
Section, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this Section shall survive the
payment of all Obligations and the resignation or replacement of Administrative
Agent.
SECTION 10.14. 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 an Agent in its capacity as such, and not by or in favor
of the Lenders, any and all obligations on the part of Administrative Agent (if
any) to make any credit available hereunder shall constitute the several (and
not joint) obligations of the respective Lenders on a ratable basis, according
to their respective Commitments, to make an amount of such credit not to exceed,
in principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any member of the Lender
Group any interest in, or subject any member of the Lender Group to any
liability for, or in respect of, the business, assets, profits, losses, or
liabilities of any other member of the Lender Group. 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 member of the
Lender Group shall have any obligation, duty, or liability to any Participant of
any other Lender. Except as provided in Section 10.05, no Agent or any Lender
shall have any liability for the acts of the other Agent or any other Lender. No
Lender shall be responsible to 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
--------
AVADO BRANDS, INC.,
a Georgia corporation
By:
--------------------------------
Name:
Title:
COLLATERAL AGENT:
----------------
ABLECO FINANCE LLC,
a Delaware limited liability company
as Collateral Agent
By:
--------------------------------
Name:
Title:
ADMINISTRATIVE AGENT:
--------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Administrative Agent
By:
--------------------------------
Name
Title:
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LENDERS:
-------
ABLECO FINANCE LLC,
a Delaware limited liability company
By:
--------------------------------
Name:
Title:
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:
--------------------------------
Name:
Title:
REGIMENT CAPITAL II, L.P.,
a Delaware limited partnership
By:
--------------------------------
Name:
Title:
Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 10-Q, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
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