Exhibit 1.1
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$40,000,000
CREDIT AGREEMENT
among
RED XXXXX INTERNATIONAL, INC.,
as Borrower,
RED XXXXX GOURMET BURGERS, INC.
as Parent,
THE DOMESTIC SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTIES HERETO,
as Guarantors,
THE LENDERS PARTIES HERETO,
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and
U.S. BANK NATIONAL ASSOCIATION
as Documentation Agent
Dated as of July 24, 2002
WACHOVIA SECURITIES, INC.
as Lead Arranger
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS ..................................................... 1
Section 1.1 Defined Terms ............................................ 1
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Section 1.2 Other Definitional Provisions; Time References ........... 25
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Section 1.3 Accounting Terms ......................................... 25
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ARTICLE II THE LOANS; AMOUNT AND TERMS .................................... 26
Section 2.1 Revolving Loans .......................................... 26
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Section 2.2 Letter of Credit Subfacility ............................. 28
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Section 2.3 Swingline Loan Subfacility ............................... 31
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Section 2.4 Fees ..................................................... 32
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Section 2.5 Commitment Reductions .................................... 33
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Section 2.6 Prepayments .............................................. 34
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Section 2.7 Minimum Principal Amount of Tranches ..................... 36
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Section 2.8 Default Rate and Payment Dates ........................... 36
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Section 2.9 Conversion Options ....................................... 36
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Section 2.10 Computation of Interest and Fees ......................... 36
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Section 2.11 Pro Rata Treatment and Payments .......................... 38
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Section 2.12 Non-Receipt of Funds by the Administrative Agent ......... 40
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Section 2.13 Inability to Determine Interest Rate ..................... 40
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Section 2.14 Illegality ............................................... 41
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Section 2.15 Requirements of Law ...................................... 41
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Section 2.16 Indemnity ................................................ 43
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Section 2.17 Taxes .................................................... 43
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Section 2.18 Indemnification; Nature of Issuing Lender's Duties ....... 45
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ARTICLE III REPRESENTATIONS AND WARRANTIES ................................ 46
Section 3.1 Financial Condition ...................................... 46
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Section 3.2 No Change ................................................ 47
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Section 3.3 Corporate Existence; Compliance with Law ................. 47
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Section 3.4 Corporate Power; Authorization; Enforceable Obligations .. 47
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Section 3.5 Compliance with Laws; No Conflict; No Default ............ 48
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Section 3.6 No Material Litigation ................................... 48
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Section 3.7 Investment Company Act; PUHCA; Etc. ...................... 49
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Section 3.8 Margin Regulations ....................................... 49
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Section 3.9 ERISA .................................................... 49
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Section 3.10 Environmental Matters .................................... 50
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Section 3.11 Purpose of Loans ......................................... 50
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Section 3.12 Subsidiaries ............................................. 51
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Section 3.13 Ownership; Insurance ..................................... 51
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Section 3.14 Indebtedness ............................................. 51
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Section 3.15 Taxes .................................................... 51
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Section 3.16 Intellectual Property .................................... 52
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Section 3.17 Solvency ................................................. 52
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Section 3.18 Investments .............................................. 52
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Section 3.19 Location of Collateral ................................... 52
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Section 3.20 No Burdensome Restrictions ............................... 53
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Section 3.21 Brokers' Fees ............................................ 53
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i
Section 3.22 Labor Matters ............................................... 53
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Section 3.23 Security Documents .......................................... 53
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Section 3.24 Accuracy and Completeness of Information .................... 53
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Section 3.25 Consummation of IPO ......................................... 54
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Section 3.26 Absence of Certain Changes or Events ........................ 54
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Section 3.27 Material Contracts .......................................... 54
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Section 3.28 Capitalization .............................................. 54
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ARTICLE IV CONDITIONS PRECEDENT ............................................... 55
Section 4.1 Conditions to Closing and Initial Extensions of Credit ...... 55
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Section 4.2 Conditions to All Extensions of Credit ...................... 61
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ARTICLE V AFFIRMATIVE COVENANTS ............................................... 62
Section 5.1 Financial Statements ........................................ 62
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Section 5.2 Certificates; Other Information ............................. 63
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Section 5.3 Payment of Taxes and Other Obligations ...................... 65
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Section 5.4 Conduct of Business and Maintenance of Existence ............ 65
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Section 5.5 Maintenance of Property; Insurance .......................... 66
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Section 5.6 Inspection of Property; Books and Records; Discussions ...... 66
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Section 5.7 Notices ..................................................... 66
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Section 5.8 Environmental Laws .......................................... 68
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Section 5.9 Financial Covenants ......................................... 68
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Section 5.11 Compliance with Law ......................................... 70
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Section 5.12 Pledged Assets .............................................. 70
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Section 5.13 Covenants Regarding Intellectual Property ................... 70
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Section 5.14 Deposit and Securities Accounts ............................. 72
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Section 5.15 Further Assurances .......................................... 72
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Section 5.16 Post-Closing Requirements ................................... 72
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ARTICLE VI NEGATIVE COVENANTS ................................................. 72
Section 6.1 Indebtedness ................................................ 73
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Section 6.2 Liens ....................................................... 74
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Section 6.3 Guaranty Obligations ........................................ 74
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Section 6.4 Nature of Business .......................................... 74
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Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc. ..... 74
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Section 6.6 Advances, Investments and Loans ............................. 75
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Section 6.7 Transactions with Affiliates ................................ 76
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Section 6.8 Ownership of Subsidiaries; Restrictions ..................... 76
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Section 6.9 Fiscal Year; Organizational Documents; Material Contracts ... 76
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Section 6.10 Limitation on Restricted Actions ............................ 76
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Section 6.11 Restricted Payments ......................................... 77
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Section 6.12 Sale Leasebacks ............................................. 77
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Section 6.13 No Further Negative Pledges ................................. 77
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Section 6.14 Amendments to Subordinated Debt, etc. ....................... 78
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Section 6.15 Operating Lease Obligations ................................. 78
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Section 6.16 Management Fees ............................................. 78
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Section 6.17 Parent Holding Company/Maryland Subsidiaries ................ 78
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ARTICLE VII EVENTS OF DEFAULT ................................................. 79
Section 7.1 Events of Default ........................................... 79
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Section 7.2 Acceleration; Remedies ...................................... 81
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ARTICLE VIII THE AGENT ........................................................ 82
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Section 8.1 Appointment ................................................. 82
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Section 8.2 Delegation of Duties ........................................ 82
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Section 8.3 Exculpatory Provisions ...................................... 83
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Section 8.4 Reliance by Administrative Agent ............................ 83
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Section 8.5 Notice of Default ........................................... 83
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Section 8.6 Non-Reliance on Administrative Agent and Other Lenders ...... 84
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Section 8.7 Indemnification ............................................. 84
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Section 8.8 Administrative Agent in Its Individual Capacity ............. 85
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Section 8.9 Successor Administrative Agent .............................. 85
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Section 8.10 Nature of Duties ............................................ 85
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ARTICLE IX MISCELLANEOUS ...................................................... 86
Section 9.1 Amendments, Waivers and Release of Collateral ............... 86
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Section 9.2 Notices ..................................................... 87
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Section 9.3 No Waiver; Cumulative Remedies .............................. 88
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Section 9.4 Survival of Representations and Warranties .................. 89
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Section 9.5 Payment of Expenses and Taxes ............................... 89
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Section 9.6 Successors and Assigns; Participations; Purchasing Lenders .. 90
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Section 9.7 Adjustments; Set-off ........................................ 92
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Section 9.8 Table of Contents and Section Headings ...................... 93
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Section 9.9 Counterparts ................................................ 93
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Section 9.10 Effectiveness ............................................... 94
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Section 9.11 Severability ................................................ 94
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Section 9.12 Integration ................................................. 94
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Section 9.13 Governing Law ............................................... 94
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Section 9.14 Consent to Jurisdiction and Service of Process .............. 94
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Section 9.15 Confidentiality ............................................. 95
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Section 9.16 Acknowledgments ............................................. 95
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Section 9.17 Waivers of Jury Trial ....................................... 96
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ARTICLE X GUARANTY ............................................................ 96
Section 10.1 The Guaranty ................................................ 96
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Section 10.2 Bankruptcy .................................................. 96
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Section 10.3 Nature of Liability ......................................... 97
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Section 10.4 Independent Obligation ...................................... 97
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Section 10.5 Authorization ............................................... 97
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Section 10.6 Reliance .................................................... 98
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Section 10.7 Waiver ...................................................... 98
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Section 10.8 Limitation on Enforcement ................................... 99
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Section 10.9 Confirmation of Payment ..................................... 99
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iii
Schedules
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Schedule 1.1-1 Account Designation Letter
Schedule 1.1-2 Permitted Liens
Schedule 1.1-3 Inactive Corporations
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.3(d) Form of Swingline Note
Schedule 2.6(b)(ii) Excluded Properties
Schedule 2.9 Form of Notice of Conversion/Extension
Schedule 2.17 Section 2.17 Certificate
Schedule 3.6 Litigation
Schedule 3.9 ERISA
Schedule 3.12 Subsidiaries
Schedule 3.16 Intellectual Property
Schedule 3.19(a) Location of Real Property
Schedule 3.19(b) Location of Collateral
Schedule 3.19(c) Chief Executive Offices
Schedule 3.21 Broker's Fees
Schedule 3.22 Labor Matters
Schedule 3.27 Material Contracts
Schedule 3.28 Capitalization
Schedule 4.1-1 Form of Secretary's Certificate
Schedule 4.1-2 Mortgaged Properties
Schedule 4.1-3 Form of Solvency Certificate
Schedule 4.1-4 Pro Forma Covenant Compliance Worksheet
Schedule 5.1(c) Officer's Certificate
Schedule 5.5(b) Insurance
Schedule 5.10 Form of Joinder Agreement
Schedule 5.16 Post-Closing Requirements
Schedule 6.1(b) Indebtedness
Schedule 6.6 Investments
Schedule 9.2 Schedule of Lenders' Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
iv
CREDIT AGREEMENT, dated as of July 24, 2002, among RED XXXXX INTERNATIONAL,
INC., a Nevada corporation, (the "Borrower"), RED XXXXX GOURMET BURGERS, INC.
(the "Parent"), those Domestic Subsidiaries of the Borrower identified as a
"Guarantor" on the signature pages hereto and such other Domestic Subsidiaries
of the Borrower as may from time to time become a party hereto (together with
the Parent, each individually a "Guarantor" and collectively the "Guarantors"),
the several banks and other financial institutions as may from time to time
become parties to this Agreement (individually a "Lender" and collectively the
"Lenders") and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the Lenders hereunder (in such
capacity, the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower has requested that the Lenders make loans and other
financial accommodations to the Borrower in the amount of up to $40,000,000, as
more particularly described herein; and
WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms.
As used in this Agreement, terms defined in the preamble to this Agreement
have the meanings therein indicated, and the following terms have the following
meanings:
"ABR Default Rate" shall mean, as of any date of determination, the
Alternate Base Rate plus the Applicable Percentage for Alternate Base Rate Loans
in effect on such date plus 2%.
"Account Designation Letter" shall mean the Notice of Account Designation
Letter dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1-1.
"Additional Credit Party" shall mean each Person that becomes a Guarantor
by execution of a Joinder Agreement in accordance with Section 5.10.
"Administrative Agent" or "Agent" shall have the meaning set forth in the
first paragraph of this Agreement and any successors in such capacity.
"Affiliate" shall mean as to any Person, any other Person (excluding any
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition, a
Person shall be deemed to be "controlled by" a Person if such Person possesses,
directly or indirectly, power either (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or (b)
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise. Notwithstanding the foregoing, neither the
Administrative Agent nor any Lender shall be deemed an Affiliate of Borrower
solely by reason of the relationship created by the Credit Documents.
"Agreement" shall mean this Credit Agreement, as amended, modified or
supplemented from time to time in accordance with its terms.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean, at any time, the rate of interest per annum publicly
announced from time to time by Wachovia at its principal office in Charlotte,
North Carolina as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by
Wachovia as its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the opening of business on the date of such
change.
"Alternate Base Rate Loans" shall mean Loans that bear interest at an
interest rate based on the Alternate Base Rate.
"Applicable Percentage" shall mean, for any day, the rate per annum set
forth below opposite the applicable Level then in effect, it being understood
that the Applicable Percentage for (i) Alternate Base Rate Loans shall be the
percentage set forth under the column "Alternate
2
Base Rate Margin" and (ii) LIBOR Rate Loans and the Letter of Credit Fee shall
be the percentage set forth under the column "LIBOR Rate Margin/Letter of Credit
Fee":
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Alternate Base LIBOR Rate Margin/
Level Leverage Ratio Rate Margin Letter of Credit Fee
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I * 1.5 to 1.0 1.25% 2.25%
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II ** 1.5 to 1.0 but * 1.0 0.75% 1.75%
to 1.0
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III ** 1.0 to 1.0 0.50% 1.50%
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* represents greater than
** represents less than or equal to
The Applicable Percentage shall, in each case, be determined and adjusted
quarterly on the date five (5) Business Days after the date on which the
Administrative Agent has received from the Borrower the quarterly financial
information and certifications required to be delivered to the Administrative
Agent and the Lenders in accordance with the provisions of Sections 5.1(a) and
(b) and 5.2(b) (each an "Interest Determination Date"). Such Applicable
Percentage shall be effective from such Interest Determination Date until the
next Interest Determination Date. The initial Applicable Percentages shall be
based on Level II for the first two full fiscal quarters following the Closing
Date. If the Borrower shall fail to provide the financial information and
certifications in accordance with the provisions of Sections 5.1(a) and (b) and
5.2(b), the Applicable Percentage shall, on the date five (5) Business Days
after the date by which the Borrower was so required to provide such financial
information and certifications to the Administrative Agent and the Lenders, be
based on Level I until such time as such information and certifications are
provided, whereupon the Level shall be determined by the then current Leverage
Ratio.
"Approved Fund" shall mean, with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Arranger" shall mean Wachovia Securities, Inc.
"Asset Disposition" shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of any Credit Party or any Subsidiary
whether by sale, lease, transfer or otherwise. The term "Asset Disposition"
shall not include (i) Section 6.5(a)(i) hereof, (ii) Section 6.5(a)(iv) hereof
or (iii) any Equity Issuance.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Base Rent Expense" means, for any period, all rental expense of the Parent
and its Subsidiaries during such period, determined on a consolidated basis in
accordance with GAAP, incurred under any rental agreements or leases of real or
personal property, including space leases and ground leases and including
performance-based payments, if any, actually paid by the Parent and its
Subsidiaries under any rental agreements or leases but excluding obligations in
respect of Capital Leases, including performance-based payments, if any,
actually paid by the
3
Parent or any of its Subsidiaries under any rental agreements or leases and net
of rental income derived from subleases of such property.
"Borrower" shall have the meaning set forth in the first paragraph of this
Agreement.
"Borrowing Date" shall mean, in respect of any Loan, the date such Loan is
made.
"Business" shall have the meaning set forth in Section 3.10(b).
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term "Business Day" shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.
"Capital Lease" means any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Capital Stock" shall mean (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition ("Government Obligations"), (ii)
U.S. dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (y) any domestic commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (z) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Xxxxx'x is at least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more than 364 days from
the date of acquisition, (iii) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition,
(iv) repurchase agreements with a bank or trust company (including a Lender) or
a recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct
4
obligations issued by or fully guaranteed by the United States of America, (v)
obligations of any state of the United States or any political subdivision
thereof for the payment of the principal and redemption price of and interest on
which there shall have been irrevocably deposited Government Obligations
maturing as to principal and interest at times and in amounts sufficient to
provide such payment, (vi) auction preferred stock rated in the highest
short-term credit rating category by S&P or Xxxxx'x and (vii) shares of money
market mutual or similar funds that invest exclusively in assets satisfying the
requirements of clauses (i) through (vi) of this definition.
"Change of Control" shall mean the occurrence of any of the following
events: (a) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), other than Quad C Partners V,
L.P. and its Affiliates or the Xxxxxx Group, becomes the "beneficial owner" (as
defined in Rule l3d-3 under the Securities Exchange Act of 1934) of more than
20% of then outstanding Voting Stock of the Parent, measured by voting power
rather than the number of shares or (b) Continuing Directors shall cease for any
reason to constitute a majority of the members of the board of directors of the
Parent then in office.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean a collective reference to the collateral which is
identified in, and at any time will be covered by, the Security Documents.
"Commitment" or "Revolving Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to the amount of such Lender's
Revolving Commitment as specified on Schedule 2.1(a), as such amount may be
reduced from time to time in accordance with the provisions hereof.
"Commitment Fee" shall have the meaning set forth in Section 2.4(a).
"Commitment Period" shall mean the period from, the Closing Date to but not
including the Maturity Date.
"Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
5
"Consolidated" or "consolidated" means, with reference to any term defined
herein, such term as applied to the accounts of the Parent and its Subsidiaries,
consolidated in accordance with GAAP.
"Consolidated Capital Expenditures" shall mean, for any period, all capital
expenditures (including, without limitation, the Total Consideration for all
Permitted Acquisitions) of the Parent and its Subsidiaries on a consolidated
basis for such period, including without limitation Capital Lease Obligations,
as determined in accordance with GAAP. The term "Consolidated Capital
Expenditures" shall not include capital expenditures in respect of the
reinvestment of proceeds derived from Recovery Events received by the Parent and
its Subsidiaries to the extent that such reinvestment is permitted under the
Credit Documents.
"Consolidated Cash Flow" means, for any period, an amount equal to (i)
Consolidated EBITDA for such period, minus (ii) Maintenance Capital Expenditures
for such period.
"Consolidated Debt Service" means, with respect to the Parent and its
Subsidiaries and for any period, the sum, without duplication, of (i)
Consolidated Interest Expense for such period, plus (ii) any and all scheduled
repayments of principal during such period in respect of Indebtedness that
becomes due and payable during such period pursuant to any agreement or
instrument to which the Parent or any of its Subsidiaries is a party relating to
or in respect of (without duplication) (A) the borrowing of money, including the
issuance of notes or bonds, (B) the deferred purchase price of assets (other
than trade payables or accrued liabilities arising in the ordinary course of
business), (C) any Capital Leases, and (D) Indebtedness of another Person of the
type referred to in clauses (A) through (C) above guaranteed by the Parent or
any of its Subsidiaries. Demand obligations shall be deemed to be due and
payable during any fiscal period during which such obligations are outstanding.
"Consolidated EBITDA" means, with respect to any period, an amount equal to
the sum of (i) Consolidated Net Income for such period, plus (ii) in each case
to the extent deducted in the calculation of Consolidated Net Income and without
duplication, (A) depreciation and amortization for such period, plus (B) income
tax expense for such period, plus (C) Consolidated Interest Expense for such
period, plus (D) other noncash charges for such period that will not result in
cash payments in a subsequent period, plus (E) to the extent deducted from
Consolidated Net Income the amount of any prepayment penalties incurred as a
result of extraordinary debt extinguishment, all as determined in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest required to be paid or accrued by the Parent and its Subsidiaries
during such period on all Indebtedness (other than synthetic leases and other
similar off-balance sheet financing products) of the Parent and its Subsidiaries
outstanding during all or any part of such period (excluding amounts paid during
such period that were accrued in a prior period), whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of any Capital Lease and commitment
fees, agency fees, facility fees and similar fees or expenses in connection with
the borrowing of money (but excluding amortization of original issue discounts
and amortization of transaction fees in connection with the transaction
contemplated by the Transaction Documents).
6
"Consolidated Net Income" means, for any period, the consolidated net
income (or deficit) of the Parent and its Subsidiaries, after deduction of all
expenses, taxes, and other proper charges, determined in accordance with GAAP,
after eliminating therefrom (i) all extraordinary items of income and (ii) all
gains attributable to sales of assets outside the ordinary course of business.
"Continuing Directors" shall mean during any period of 24 consecutive
months commencing after the Closing Date, individuals who at the beginning of
such 24 month period were directors of the Parent (together with any new
director whose election by the Parent's board of directors or whose nomination
for election by the Parent's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved).
"Copyright Licenses" shall mean any agreement, whether written or oral,
providing for the grant by or to a Person of any right under any Copyright,
including, without limitation, any thereof referred to in Schedule 3.16 to this
Credit Agreement.
"Copyrights" shall mean all copyrights (other than copyrights of de minimus
value) of the Borrower and its Subsidiaries in all works, now existing or
hereafter created or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Copyright
Office or in any similar office or agency of the United States, any state
thereof or any other country or any political subdivision thereof, or otherwise,
including, without limitation, any thereof referred to in Schedule 3.16 and all
renewals thereof.
"Credit Documents" shall mean this Agreement, each of the Notes, any
Joinder Agreement, the Letters of Credit and any other LOC Documents, any
Commitment Transfer Supplement, the Security Documents and all other agreements,
documents, certificates and instruments (excluding any such agreements,
documents, certificates or instruments which are purely administrative in
nature) delivered to the Administrative Agent or any Lender by any Credit Party
in connection herewith or therewith.
"Credit Party" or "Credit Parties" shall mean any of the Borrower or the
Guarantors, individually or collectively, as appropriate.
"Credit Party Obligations" shall mean, without duplication, (i) all of the
obligations, indebtedness and liabilities of the Credit Parties to the Lenders
(including the Issuing Lender) and the Administrative Agent, whenever arising,
under this Agreement, the Notes or any of the other Credit Documents including
principal, interest, fees, reimbursements and indemnification obligations and
other amounts (including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code
with respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code) and (ii) all liabilities and
obligations, whenever arising, owing from any Credit Party to any Lender, or any
Affiliate of a Lender, arising under any Hedging Agreement permitted by Section
6.1(e).
7
"Debt Issuance" shall mean the issuance of any Indebtedness for borrowed
money by any Credit Party or any of its Subsidiaries (excluding, for purposes
hereof, any Indebtedness of the Borrower and its Subsidiaries permitted to be
incurred pursuant to Section 6.1 hereof).
"Default" shall mean any of the events specified in Section 7.1, whether or
not any requirement for the giving of notice or the lapse of time, or both, or
any other condition, has been satisfied.
"Defaulting Lender" shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Agreement,
including the funding of a Participation Interest in accordance with the terms
hereof, (b) has failed to pay to the Administrative Agent or any Lender an
amount owed by such Lender pursuant to the terms of this Agreement, or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's Domestic Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which Alternate Base Rate Loans of such Lender are to be made.
"Domestic Subsidiary" shall mean any Subsidiary that is organized and
existing under the laws of the United States or any state or commonwealth
thereof or under the laws of the District of Columbia.
"Environmental Laws" shall mean any and all applicable foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time be in effect during the term of this
Agreement.
"Equity Issuance" shall mean any issuance by any Credit Party or any
Subsidiary to any Person which is not a Credit Party of (a) shares of its
Capital Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants or (c) any shares of its Capital Stock pursuant to the
conversion of any debt securities to equity. The term "Equity Issuance" shall
not include (i) the IPO, (ii) any shares of its Capital Stock pursuant to the
exercise of stock options held by officers, directors or employees of the Credit
Parties, (iii) any Asset Disposition or (iv) any Debt Issuance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
8
"Eurodollar Reserve Percentage" shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.
"Event of Default" shall mean any of the events specified in Section 7.1;
provided, however, that any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.
"Extension of Credit" shall mean, as to any Lender, the making of a Loan by
such Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.
"Federal Funds Effective Rate" shall have the meaning set forth in the
definition of "Alternate Base Rate".
"Fee Letter" shall mean the letter agreement dated June 6, 2002 addressed
to the Borrower from the Administrative Agent and Wachovia Securities, Inc.
(formerly known as First Union Securities, Inc.) acting under the tradename
Wachovia Securities, as amended, modified or otherwise supplemented.
"Fixed Charge Coverage Ratio" means, for any Reference Period, the ratio of
(i) Consolidated Cash Flow for such Reference Period plus Base Rent Expense for
such Reference Period to (ii) Consolidated Debt Service for such Reference
Period plus Base Rent Expense for such Reference Period plus cash payments for
all income taxes paid by the Parent and its Subsidiaries during such Reference
Period. Notwithstanding the foregoing, for purposes of calculating the Fixed
Charge Coverage Ratio for the first three complete fiscal quarters to occur
after the Closing Date, the Fixed Charge Coverage Ratio shall be determined by
annualizing the components of the numerator and the denominator thereof (other
than Consolidated EBITDA which shall be determined using information for the
prior Reference Period) such that for the first complete fiscal quarter to occur
after the Closing Date such components would be divided by three (3) and
multiplied by thirteen (13), the first two complete fiscal quarters would be
divided by six (6) and multiplied by thirteen (13) and the first three fiscal
quarters would be divided by ten (10) and multiplied by thirteen (13).
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"Funded Debt" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person incurred, issued or
assumed as the deferred purchase price of property or
9
services purchased by such Person (other than trade debt incurred in the
ordinary course of business and due within six months of the incurrence thereof)
which would appear as liabilities on a balance sheet of such Person, (e) the
principal portion of all obligations of such Person under Capital Leases, (f)
the maximum amount of all letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (g) all preferred Capital
Stock issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration, (h) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product, (i) all
net payment obligations of such Person under Hedging Agreements, excluding any
portion thereof which would be accounted for as interest expense under GAAP, (j)
all Indebtedness of others of the type described in clauses (a) through (i)
hereof secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (k) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person of the type described in clauses (a) through (j) hereof, and (l) all
Indebtedness of the type described in clauses (a) through (j) hereof of any
partnership or unincorporated joint venture in which such Person is a general
partner or a joint venturer; provided, however, that Funded Debt shall not
include Indebtedness among the Credit Parties to the extent such Indebtedness
would be eliminated on a Consolidated basis.
"GAAP" shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.
"Government Acts" shall have the meaning set forth in Section 2.18.
"Governmental Approvals" shall have the meaning set forth in Section
3.5(a).
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty Obligations" shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an
10
amount equal to the lesser of (a) the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guaranty Obligation.
"Guarantor" shall mean any of the Domestic Subsidiaries identified as a
"Guarantor" on the signature pages hereto and the Additional Credit Parties
which execute a Joinder Agreement, together with their successors and permitted
assigns.
"Guaranty" shall mean the guaranty of the Guarantors set forth in Article
X.
"Hedging Agreements" shall mean, with respect to any Person, any agreement
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreement or similar arrangement between such Person
and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.
"Indebtedness" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person, (h) the principal portion of all Capital Lease Obligations of such
Person, (i) all net payment obligations of such Person under Hedging Agreements,
excluding any portion thereof which would be accounted for as interest expense
under GAAP, (j) the maximum amount of all letters of credit issued or bankers'
acceptances facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all
preferred Capital Stock issued by such Person and which by the terms thereof
could be (at the request of the holders thereof or otherwise) subject to
mandatory sinking fund payments, redemption or other acceleration, (l) the
principal balance outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product and
(m) the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer; provided however that
Indebtedness shall not include Indebtedness among the Credit Parties to the
extent such Indebtedness would be eliminated on a Consolidated basis.
11
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Insolvent" shall mean being in a condition of Insolvency.
"Intellectual Property" shall mean all Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks and Trademark Licenses except for standard,
off-the-shelf software, technology and similar Intellectual Property that costs
less than $5,000 per unit.
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate
Loan, the last day of each March, June, September and December and on the
Maturity Date, (b) as to any LIBOR Rate Loan having an Interest Period of three
months or less, the last day of such Interest Period, and (c) as to any LIBOR
Rate Loan having an Interest Period longer than three months, the day that is
three months after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period" shall mean, with respect to any LIBOR Rate Loan,
---------------
(i) initially, the period commencing on the Borrowing Date or
conversion date, as the case may be, with respect to such LIBOR Rate
Loan and ending one, two, three or six months thereafter, as selected by
the Borrower in the notice of borrowing or notice of conversion given
with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate Loan
and ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that the foregoing provisions are subject to the
following:
(A) if any Interest Period pertaining to a LIBOR Rate
Loan would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(B) any Interest Period pertaining to a LIBOR Rate
Loan that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the relevant calendar
month;
(C) if the Borrower shall fail to give notice as
provided above, the Borrower shall be deemed to have selected
an Alternate Base Rate Loan to replace the affected LIBOR Rate
Loan;
12
(D) no Interest Period in respect of any Loan shall extend
beyond the Maturity Date; and
(E) no more than five (5) LIBOR Rate Loans may be in effect at
any time. For purposes hereof, LIBOR Rate Loans with different
Interest Periods shall be considered as separate LIBOR Rate Loans,
even if they shall begin on the same date and have the same duration,
although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing
Interest Periods to constitute a new LIBOR Rate Loan with a single
Interest Period.
"Investment" shall mean all investments, in cash or by delivery of property
made, directly or indirectly in or to any Person, whether by acquisition of
shares of Capital Stock, property, assets, indebtedness or other obligations or
securities or by loan advance, capital contribution or otherwise.
"Issuing Lender" shall mean Wachovia.
"Issuing Lender Fees" shall have the meaning set forth in Section 2.4(c).
"IPO" shall mean an equity issuance on or before the Closing Date by the
Parent consisting of an underwritten primary public offering of the common
Capital Stock of the Parent (i) pursuant to the Transaction Documents (including
without limitation an effective registration statement filed with the Securities
and Exchange Commission in accordance with the Securities Act) and (ii)
resulting in net cash proceeds to the Parent of at least $43,000,000; and shall
include the exercise thereafter of any over-allotment option that exists based
on over-subscriptions as of the Closing Date.
"Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.
"Lender" shall have the meaning set forth in the first paragraph of this
Agreement.
"Letter of Credit Fee" shall have the meaning set forth in Section 2.4(b).
"Letters of Credit" shall mean any letter of credit issued by the Issuing
Lender pursuant to the terms hereof, as such Letters of Credit may be amended,
modified, extended, renewed or replaced from time to time.
"Leverage Ratio" means, for any Reference Period, as of the end of any
fiscal quarter of the Parent the ratio of (i) Funded Debt outstanding on such
date to (ii) Consolidated EBITDA for the Reference Period ending on such date.
"LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page
13
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "LIBOR" shall
mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). If, for any reason,
neither of such rates is available, then "LIBOR" shall mean the rate per annum
at which, as determined by the Administrative Agent, Dollars in an amount
comparable to the Loans then requested are being offered to leading banks at
approximately 11:00 A.M. London time, two (2) Business Days prior to the
commencement of the applicable Interest Period for settlement in immediately
available funds by leading banks in the London interbank market for a period
equal to the Interest Period selected.
"LIBOR Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.
"LIBOR Rate" shall mean a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" shall mean Loans the rate of interest applicable to which
is based on the LIBOR Rate.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment for
security purposes, deposit arrangement, encumbrance, lien (statutory or other),
charge or other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement and any Capital Lease having substantially the same economic effect as
any of the foregoing).
"Loan" shall mean a Revolving Loan and/or a Swingline Loan as appropriate.
"LOC Commitment" shall mean the commitment of the Issuing Lender to issue
Letters of Credit and with respect to each Lender, the commitment of such Lender
to purchase participation interests in the Letters of Credit up to such Lender's
LOC Committed Amount as specified in
14
Schedule 2.1(a), as such amount may be reduced from time to time in accordance
with the provisions hereof.
"LOC Commitment Percentage" shall mean, for each Lender, the percentage
identified as its LOC Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in accordance
with the provisions of Section 9.6(c).
"LOC Committed Amount" shall have the meaning set forth in Section 2.4(a).
"LOC Documents" shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments, guarantees
or other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (i) the rights and obligations of
the parties concerned or (ii) any collateral security for such obligations.
"LOC Obligations" shall mean, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be drawn
under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Lender but not theretofore reimbursed.
"Maintenance Capital Expenditures" means Consolidated Capital Expenditures
which are not New Store Capital Expenditures, including without limitation,
facility upgrades for existing stores operated by the Parent or any of its
Subsidiaries.
"Mandatory Borrowing" shall have the meaning set forth in Section 2.2(d),
Section 2.2(e) and Section 2.3(b)(ii), as the context may require.
"Maryland Subsidiaries" shall mean a collective reference to Red Xxxxx of
Xxxx Arundel, Inc., Red Xxxxx of Baltimore County, Inc., Red Xxxxx of Xxxxxxxxxx
County, Inc., Red Xxxxx of Xxxxxx County, Inc. and any other subsidiary of a
Credit Party incorporated in the state of Maryland for the purpose of holding
liquor licenses.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower
or any Guarantor to perform its obligations, when such obligations are required
to be performed, under this Agreement, any of the Notes or any other Credit
Document or (c) the validity or enforceability of this Agreement, any of the
Notes or any of the other Credit Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder or the perfection or
priority of any Lien on any material property or material assets in favor of the
Administrative Agent.
"Material Contract" shall mean any contract or agreement, whether written
or oral, to which any Credit Party or any of its Subsidiaries is a party as to
which the breach, nonperformance, cancellation or failure to renew by any party
thereto could reasonably be
15
expected to have a Material Adverse Effect, including the contracts and
agreements set forth on Schedule 3.27.
"Materials of Environmental Concern" shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" shall mean July 24, 2005.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Mortgage Instruments" shall have the meaning set forth in Section
4.1(f)(i).
"Mortgage Policies" shall have the meaning set forth in Section
4.1(f)(iii).
"Mortgaged Properties" shall have the meaning set forth in Section
4.1(f)(i).
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds received by any
Credit Party or any Subsidiary in respect of any Asset Disposition, Equity
Issuance or Debt Issuance, net of (a) direct costs (including, without
limitation, reasonable legal, accounting and investment banking fees, sales
commissions underwriting discounts and commissions and other customary fees and
expenses) and (b) taxes paid or payable as a result thereof; it being understood
that "Net Cash Proceeds" shall include, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received by any
Credit Party or any Subsidiary in any Asset Disposition, Equity Issuance or Debt
Issuance.
"New Store Capital Expenditures" means Consolidated Capital Expenditures
relating to Permitted Acquisitions and/or the construction after the Closing
Date of new stores to be operated by the Parent or any of its Subsidiaries.
"Notes" or "Revolving Notes" shall mean the promissory notes of the
Borrower in favor of each of the Lenders evidencing the Revolving Loans provided
pursuant to Section 2.1(e), individually or collectively, as appropriate, as
such promissory notes may be amended, modified, supplemented, extended, renewed
or replaced from time to time.
"Notice of Borrowing" shall mean the written notice of borrowing as
referenced and defined in Section 2.1(b)(i) or 2.3(b)(i), as appropriate.
"Notice of Conversion" shall mean the written notice of extension or
conversion as referenced and defined in Section 2.9.
16
"Obligations" shall mean, collectively, Loans and LOC Obligations and all
other obligations of the Credit Parties to the Administrative Agent and the
Lenders under the Credit Documents.
"Operating Lease" shall mean, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease in which that Person is the lessor.
"Parent" shall mean Red Xxxxx Gourmet Burgers, Inc., a Delaware
corporation.
"Participant" shall have the meaning set forth in Section 9.6(b).
"Participation Interest" shall mean the purchase by a Lender of a
participation interest in Letters of Credit as provided in Section 2.2 and in
Swingline Loans as provided in Section 2.3.
"Patent Licenses" shall mean all agreements, whether written or oral,
providing for the grant by or to a Person of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 3.16 to the Credit Agreement.
"Patents" shall mean all letters patent of the United States or any other
country, now existing or hereafter arising, and all improvement patents,
reissues, reexaminations, patents of additions, renewals and extensions thereof,
including, without limitation, any thereof referred to in Schedule 3.16 to this
Credit Agreement, and (ii) all applications for letters patent of the United
States or any other country, now existing or hereafter arising, and all
provisionals, divisions, continuations and continuations-in-part and substitutes
thereof, including, without limitation, any thereof referred to in Schedule 3.16
to this Credit Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Acquisition" shall mean an acquisition or any series of related
acquisitions by a Credit Party of the assets or all of the Capital Stock of a
Person that is incorporated, formed or organized in the United States or any
division, line of business or other business unit of a Person that is
incorporated, formed or organized in the United States (such Person or such
division, line of business or other business unit of such Person referred to
herein as the "Target"), in each case that is a purchase or repurchase of a Red
Xxxxx franchise, so long as (a) no Default or Event of Default shall then exist
or will exist after giving effect thereto, (b) the Credit Parties shall
demonstrate to the reasonable satisfaction of the Administrative Agent that the
Credit Parties will be in compliance on a pro forma basis upon the consummation
of any such acquisition with all of the terms and provisions of the financial
covenants set forth in Section 5.9, (c) the Administrative Agent, on behalf of
the Lenders, shall have received (or shall receive in connection with the
closing of such acquisition) a first priority perfected security interest in all
property (including, without limitation, Capital Stock) acquired with respect to
the Target, subject to Permitted Liens and the Target, if a Person, shall have
executed a Joinder Agreement in accordance with the terms of Section 5.10, (d)
the Target has earnings before interest, taxes,
17
depreciation and amortization for the four fiscal quarter prior to the
acquisition date in an amount greater than $0 and (e) such acquisition is not a
"hostile" acquisition and has been approved by the applicable Credit Party and
the Target.
"Permitted Investments" shall mean:
(i) cash and Cash Equivalents not to exceed at any time $10,000,000
in the aggregate over any period of five (5) consecutive Business Days if,
during such period, there are borrowings outstanding under Section 2.1
hereof;
(ii) receivables owing to any Credit Party or any of its
Subsidiaries, and advances to suppliers and other extensions of trade
credit, in each case if created, acquired or made in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms;
(iii) Investments or loans (pursuant to Section 6.1(d)) made by a
Credit Party in or to another Credit Party;
(iv) loans and advances to officers, directors and employees in an
aggregate amount not to exceed $500,000 at any time outstanding;
(v) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of franchisees, suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with franchisees, customers and suppliers arising in the ordinary
course of business;
(vi) non-cash consideration received in connection with sales of
property or assets permitted under Section 6.4(a);
(vii) Permitted Acquisitions;
(viii) Guaranty Obligations permitted by Section 6.3;
(ix) loans to officers, directors and employees to finance purchases
of Capital Stock of the Parent in an aggregate amount not to exceed
$500,000;
(x) Investments existing as of the Closing Date as set forth on
Schedule 6.6;
(xi) Investments to the extent permitted under Section 6.11(d); and
(xii) in addition to the Investments otherwise expressly permitted by
this definition, other Investments by any Credit Party in an aggregate
amount not to exceed $250,000 during the term of this Agreement.
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"Permitted Liens" shall mean:
(i) Liens created by or otherwise existing, under or in connection
with this Agreement or the other Credit Documents in favor of the Lenders;
(ii) purchase money Liens securing purchase money indebtedness (and
refinancings thereof) to the extent permitted under Section 6.1(c);
(iii) Liens for taxes, assessments, charges or other governmental
levies not yet due or as to which the period of grace (not to exceed 60
days), if any, related thereto has not expired or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves
with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP (or, in the case
of Subsidiaries with significant operations outside of the United States of
America, generally accepted accounting principles in effect from time to
time in their respective jurisdictions of incorporation);
(iv) carriers', warehousemen's, mechanics', materialmen's,
repairmen's inchoate, unperfected or other like Liens arising in the
ordinary course of business which are not overdue for a period of more than
30 days or which are being contested in good faith by appropriate
proceedings; provided that a reserve, bond or other appropriate provision
shall have been made therefor;
(v) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements in an aggregate amount not to exceed $250,000;
(vi) any interest or title of a lessor under any lease entered into
by any Credit Party or any Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(vii) Liens existing on any property or asset (i) prior to the
acquisition thereof by any Credit Party or any Subsidiary; provided that
(A) such Lien is not created in contemplation of such acquisition and (B)
such Lien does not apply to any other property or assets of the Credit
Party or Subsidiary, or (ii) belonging to any Person prior to such Person
becoming a Subsidiary pursuant to an acquisition permitted by the terms of
this Agreement; provided that (A) such Lien is not created in contemplation
of such acquisition and (B) such Lien does not apply to any other property
or assets of a Credit Party or Subsidiary;
(viii) Liens consisting of conditional sale or other title retention
agreements entered into in the ordinary course of business in an aggregate
amount not to exceed $1,000,000;
19
(ix) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(x) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses (i)-(vi); provided that such
extension, renewal or replacement Lien shall be limited to all or a part of
the property which secured the Lien so extended, renewed or replaced (plus
improvements on such property);
(xi) Liens existing on the Closing Date and set forth on Schedule
1.1-2; provided that (a) no such Lien shall at any time be extended to
cover property or assets other than the property or assets subject thereto
on the Closing Date and (b) the principal amount of the Indebtedness
secured by such Liens shall not be increased, extended, renewed, refunded
or refinanced;
(xii) Liens arising in connection with Indebtedness permitted under
Section 6.1(c);
(xiii) easements, rights-of-way, zoning restrictions, minor defects or
irregularities in title and other similar encumbrances not interfering in
any material respect with the value or use of the property to which such
lien is attached;
(xiv) Liens of Securities Intermediaries (as defined in the UCC),
banks and other financial institutions in Deposit Accounts (as defined in
the UCC), Securities Accounts (as defined in the UCC) and similar accounts;
(xv) any Lien with respect to judgments, orders or awards to the
extent such judgments, orders or awards secured thereby shall not, either
individually or in the aggregate, result in an Event of Default under
Section 7.1(f); and
(xvi) other Liens in addition to those permitted by the foregoing
clauses securing Indebtedness in an aggregate amount not to exceed
$500,000.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" shall mean, at any particular time, any employee benefit plan which
is covered by Title IV of ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements" shall mean (i) the Pledge Agreement dated as of the
Closing Date to be executed in favor of the Administrative Agent by the Borrower
and each of the other Credit
20
Parties and (ii) any other Pledge Agreement executed by a Credit Party to secure
the Credit Party Obligations, in each case as amended, modified, restated or
supplemented from time to time.
"Prime Rate" shall have the meaning set forth in the definition of
Alternate Base Rate.
"Properties" shall have the meaning set forth in Section 3.10(a).
"Purchasing Lenders" shall have the meaning set forth in Section 9.6(c).
"Recovery Event" shall mean theft, loss, physical destruction or damage,
taking or similar event with respect to any property or assets owned by any
Credit Party or any of its Subsidiaries which results in the receipt by any
Credit Party or any of its Subsidiaries of any cash insurance proceeds or
condemnation award payable by reason thereof.
"Reference Period" means, as of any date of determination, the period of
four consecutive fiscal quarters of the Parent and its Subsidiaries ending on
such date.
"Register" shall have the meaning set forth in Section 9.6(d).
"Related Fund" shall mean, with respect to any Lender or other Person who
invests in commercial bank loans in the ordinary course of business, any other
fund or trust or entity that invests in commercial bank loans in the ordinary
course of business and is advised or managed by such or any other Lender, by an
Affiliate of such or any other Lender or other Persons or the same investment
advisor as such or any other Lender or by an Affiliate of such or any other
Lender or investment advisor.
"Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under PBGC Reg. ss.4043.
"Required Lenders" shall mean Lenders holding in the aggregate greater than
50% of (i) the Commitments (and Participation Interests therein) or (ii) if the
Commitments have been terminated, the outstanding Loans and Participation
Interests (including the Participation Interests of the Issuing Lender in any
Letters of Credit and of the Swingline Lender in Swingline Loans) provided,
however, that if any Lender shall be a Defaulting Lender at such time, then
there shall be excluded from the determination of Required Lenders, Obligations
(including Participation Interests) owing to such Defaulting Lender and such
Defaulting Lender's Commitments, or after termination of the Commitments, the
principal balance of the Obligations owing to such Defaulting Lender.
"Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty,
21
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Responsible Officer" shall mean, as to (a) the Borrower, any of the
President, the Chief Executive Officer or the Chief Financial Officer or (b) any
other Credit Party, any duly authorized officer thereof.
"Restricted Payment" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Parent or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of the Parent or any of its Subsidiaries, now or hereafter outstanding,
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Parent or any of its Subsidiaries, now or hereafter outstanding,
(d) any payment or prepayment of principal or premium, if any, or interest on
redemption purchase, retirement, defeasance, sinking fund or similar payment
with respect to any Subordinated Debt, or (e) the payment by the Parent or any
of its Subsidiaries of any management or consulting fee to any Person or of any
salary, bonus or other form of compensation to any Person who is directly or
indirectly a significant partner, shareholder, owner or executive officer of any
such Person, to the extent such salary, bonus or other form of compensation is
not included in the corporate overhead of the Parent, the Borrower or such
Subsidiary.
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate principal
amount at any time outstanding up to such Lender's Revolving Committed Amount.
"Revolving Commitment Percentage" shall mean, for each Lender, the
percentage identified as its Revolving Commitment Percentage on Schedule 2.1(a),
as such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c).
"Revolving Committed Amount" shall have the meaning set forth in Section
2.1.
"Revolving Loans" shall have the meaning set forth in Section 2.1.
"S&P" shall mean Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc.
"Sale Leaseback Property" shall have the meaning set forth in Section 6.12.
"Securities Act" shall mean the Securities Act of 1933, together with any
amendment thereto or replacement thereof and any rules or regulations
promulgated thereunder.
22
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
together with any amendment thereto or replacement thereof and any rules or
regulations promulgated thereunder.
"Security Agreements" shall mean (i) the Security Agreement dated as of the
Closing Date given by the Borrower and the other Credit Parties to the
Administrative Agent and (ii) any other Security Agreement executed by a Credit
Party to secure the Credit Party Obligations, in each case as amended, modified
or supplemented from time to time in accordance with its terms.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement, the Mortgage Instruments and any other documents executed and
delivered in connection with the granting, attachment and perfection of the
Administrative Agent's security interests and liens arising thereunder,
including, without limitation, UCC financing statements.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan.
"Xxxxxx Group" shall mean, individually or collectively, Xxxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, any trust established by or for the benefit of Xxxxxxx X.
Xxxxxx or Xxxxxxx X. Xxxxxx or their respective families and any other Affiliate
thereof.
"Specified Sales" shall mean (a) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of business and
(b) the sale, transfer or other disposition of cash or Cash Equivalents.
"Subordinated Debt" shall mean any Indebtedness incurred by any Credit
Party which by its terms is specifically subordinated in right of payment to the
prior payment of the Credit Party Obligations.
"Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower. Notwithstanding the foregoing
the term "Subsidiary" shall not include the inactive corporations set forth on
Schedule 1.1-3 to the extent such corporations shall remain inactive or be
dissolved after the Closing Date.
"Swingline Commitment" shall mean the commitment of the Swingline Lender to
make Swingline Loans in an aggregate principal amount at any time outstanding up
to the Swingline Committed Amount, and the commitment of the Lenders to purchase
participation interests in the Swingline Loans as provided in Section
2.3(b)(ii), as such amounts may be reduced from time to time in accordance with
the provisions hereof.
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"Swingline Committed Amount" shall mean the amount of the Swingline
Lender's Swingline Commitment as specified in Section 2.3(a).
"Swingline Lender" shall mean Wachovia.
"Swingline Loan" or "Swingline Loans" shall have the meaning set forth in
Section 2.3(a).
"Swingline Note" shall mean the promissory note of the Borrower in favor of
the Swingline Lender evidencing the Swingline Loans provided pursuant to Section
2.3(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
"Target" shall have the meaning set forth in the definition of "Permitted
Acquisitions."
"Taxes" shall have the meaning set forth in Section 2.17.
"Total Consideration" shall mean the total consideration paid or payable in
connection with any Permitted Acquisition including, without limitation,
payments made in cash, Capital Stock, assumed debt and earnout obligations."
"Trademark License" shall mean any agreement, whether written or oral,
providing for the grant by or to a Person of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 3.16 to this
Credit Agreement.
"Trademarks" shall mean all trademarks, trade names, corporate names,
company names, business names, fictitious business names, service marks,
elements of package or trade dress of goods or services, logos and other source
or business identifiers (other than such items that are of de minimus value),
together with the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including, without limitation, any thereof referred to in Schedule 3.16 to this
Credit Agreement, and (ii) all renewals thereof including, without limitation,
any thereof referred to in Schedule 3.16.
"Tranche" shall mean the collective reference to LIBOR Rate Loans whose
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a "LIBOR Tranche".
"Transaction Documents" shall mean the Form S-1 Registration Statement
filed by the Parent which became effective on July 19, 2002, as amended and in
effect as of the Closing Date.
"Transfer Effective Date" shall have the meaning set forth in each
Commitment Transfer Supplement.
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"2.17 Certificate" shall have the meaning set forth in Section 2.17.
"Type" shall mean, as to any Loan, its nature as an Alternate Base Rate
Loan or LIBOR Rate Loan, as the case may be.
"Voting Stock" shall mean, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Wachovia" shall mean Wachovia Bank, National Association.
"Works" shall mean all works which are subject to copyright protection
pursuant to Title 17 of the United States Code.
Section 1.2 Other Definitional Provisions; Time References.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Notes or other
Credit Documents or any certificate or other document made or delivered
pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(d) Unless otherwise expressly indicated, each time reference in any
Credit Document shall be to Charlotte, North Carolina time.
Section 1.3 Accounting Terms.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Parent delivered to the Lenders;
provided that, if the Borrower shall notify the Administrative Agent that it
wishes to amend any covenant in Section 5.9 to eliminate the effect of any
change in GAAP on the operation of such covenant (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend Section 5.9 for
such purpose), then compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Borrower and the Required Lenders.
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The Borrower shall deliver to the Administrative Agent and each Lender at
the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (a) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (b) a reasonable estimate of the effect on the financial statements on
account of such changes in application.
For purposes of computing the financial covenants set forth in Section 5.9
for any applicable test period, any Permitted Acquisition or permitted sale of
assets (including a stock sale) shall have been deemed to have taken place as of
the first day of such applicable test period.
ARTICLE II
THE LOANS; AMOUNT AND TERMS
Section 2.1 Revolving Loans.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans ("Revolving Loans") to the Borrower from time to time in an
aggregate principal amount of up to such Lender's Revolving Commitment
Percentage of FORTY MILLION DOLLARS ($40,000,000) (as such aggregate maximum
amount may be reduced from time to time as provided in Section 2.5, the
"Revolving Committed Amount") for the purposes hereinafter set forth; provided,
however, that (i) with regard to each Lender individually, the sum of such
Lender's share of outstanding Revolving Loans plus such Lender's Revolving
Commitment Percentage of outstanding Swingline Loans plus such Lender's LOC
Commitment Percentage of LOC Obligations shall not exceed such Lender's
Revolving Commitment, and (ii) with regard to the Lenders collectively, the sum
of the outstanding Revolving Loans plus outstanding Swingline Loans plus
outstanding LOC Obligations shall not exceed the Revolving Committed Amount.
Revolving Loans may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or
a combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof. LIBOR Rate Loans shall be
made by each Lender at its LIBOR Lending Office and Alternate Base Rate Loans at
its Domestic Lending Office.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower may request a Revolving Loan
borrowing by written notice (or telephone notice promptly confirmed in
writing which confirmation may be by facsimile) to the Administrative Agent
not later than 11:00 a.m. on the date of the requested borrowing in the
case of Alternate Base Rate Loans, and on the third Business Day prior to
the date of the requested borrowing in the case of LIBOR
26
Rate Loans. Each such request for borrowing shall be irrevocable and shall
specify (A) that a Revolving Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, (D) whether the borrowing shall be
comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a combination
thereof, and if LIBOR Rate Loans are requested, the Interest Period(s)
therefor. A form of Notice of Borrowing (a "Notice of Borrowing") is
attached as Schedule 2.1(b)(i). If the Borrower shall fail to specify in
any such Notice of Borrowing (I) an applicable Interest Period in the case
of a LIBOR Rate Loan, then such notice shall be deemed to be a request for
an Interest Period of one month, or (II) the type of Revolving Loan
requested, then such notice shall be deemed to be a request for an
Alternate Base Rate Loan hereunder. The Administrative Agent shall give
notice to each Lender promptly upon receipt of each Notice of Borrowing,
the contents thereof and each such Lender's share thereof. All Revolving
Loans made on the Closing Date and on any of the three Business Days
following the Closing Date shall bear interest at the Alternate Base Rate.
(ii) Minimum Amounts. Each Revolving Loan which is an Alternate Base
Rate Loan shall be in a minimum aggregate amount of $500,000 and in
integral multiples of $100,000 in excess thereof (or the remaining amount
of the Revolving Committed Amount, if less). Each Revolving Loan which is a
LIBOR Rate Loan shall be in a minimum aggregate amount of $1,000,000 and in
integral multiples of $500,000 in excess thereof.
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the Administrative
Agent for the account of the Borrower at the office of the Administrative
Agent specified in Schedule 9.2, or at such other office as the
Administrative Agent may designate in writing, by 1:00 p.m. on the date
specified in the applicable Notice of Borrowing in Dollars and in funds
immediately available to the Administrative Agent. Such borrowing will then
be made available to the Borrower by the Administrative Agent by crediting
the account of the Borrower on the books of such office with the aggregate
of the amounts made available to the Administrative Agent by the Lenders
and in like funds as received by the Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be due and
payable in full on the Maturity Date.
(d) Interest. Subject to the provisions of Section 2.8, Revolving Loans
shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as Revolving Loans
shall be comprised of Alternate Base Rate Loans, each such Alternate Base
Rate Loan shall bear interest at a per annum rate equal to the sum of the
Alternate Base Rate plus the Applicable Percentage; and
27
(ii) LIBOR Rate Loans. During such periods as Revolving Loans shall
be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear
interest at a per annum rate equal to the sum of the LIBOR Rate plus the
Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.
(e) Revolving Notes. At the request of any Lender, such Lender's Revolving
Commitment shall be evidenced by a duly executed promissory note of the Borrower
to such Lender in substantially the form of Schedule 2.1(e).
Section 2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Lender
may reasonably require, during the Commitment Period the Issuing Lender shall
issue, and the Lenders shall participate in, Letters of Credit for the account
of the Borrower from time to time upon request in a form acceptable to the
Issuing Lender; provided, however, that (i) the aggregate amount of LOC
Obligations shall not at any time exceed ONE MILLION DOLLARS ($1,000,000) (the
"LOC Committed Amount"), (ii) the sum of outstanding Revolving Loans plus
outstanding Swingline Loans plus outstanding LOC Obligations shall not at any
time exceed the Revolving Committed Amount, (iii) all Letters of Credit shall be
denominated in U.S. Dollars and (iv) Letters of Credit shall be issued for
lawful corporate purposes and may be issued as standby letters of credit,
including in connection with workers' compensation and other insurance programs.
Except as otherwise expressly agreed upon by all the Lenders, no Letter of
Credit shall have an original expiry date more than one year from the date of
issuance; provided, however, so long as no Default or Event of Default has
occurred and is continuing and subject to the other terms and conditions to the
issuance of Letters of Credit hereunder, the expiry dates of Letters of Credit
may be extended annually or periodically from time to time on the request of the
Borrower or by operation of the terms of the applicable Letter of Credit to a
date not more than one year from the date of extension; provided, further, that
no Letter of Credit, as originally issued or as extended, shall have an expiry
date extending beyond the date that is thirty (30) days prior to the Maturity
Date. Each Letter of Credit shall comply with the related LOC Documents. The
issuance and expiry date of each Letter of Credit shall be a Business Day. Any
Letters of Credit issued hereunder shall be in a minimum original face amount of
$100,000. Wachovia shall be the Issuing Lender on all Letters of Credit issued
after the Closing Date.
(b) Notice and Reports. The request for the issuance of a Letter of Credit
shall be submitted to the Issuing Lender at least five (5) Business Days prior
to the requested date of issuance. The Issuing Lender will promptly upon request
provide to the Administrative Agent for dissemination to the Lenders a detailed
report specifying the Letters of Credit which are then issued and outstanding
and any activity with respect thereto which may have occurred since the date of
any prior report, and including therein, among other things, the account party,
the beneficiary, the face amount, expiry date as well as any payments or
expirations which may have occurred. The Issuing Lender will further provide to
the Administrative Agent promptly upon request copies of the Letters of Credit.
The Issuing Lender will provide to the Administrative
28
Agent promptly upon request a summary report of the nature and extent of LOC
Obligations then outstanding.
(c) Participations. Each Lender with a Revolving Commitment, upon issuance
of a Letter of Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and the
obligations arising thereunder and any collateral relating thereto, in each case
in an amount equal to its LOC Commitment Percentage of the obligations under
such Letter of Credit and shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and be obligated to pay to the
Issuing Lender therefor and discharge when due, its LOC Commitment Percentage of
the obligations arising under such Letter of Credit. Without limiting the scope
and nature of each Lender's participation in any Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required hereunder or under
any LOC Document, each such Lender shall pay to the Issuing Lender its LOC
Commitment Percentage of such unreimbursed drawing in same day funds on the day
of notification by the Issuing Lender of an unreimbursed drawing pursuant to and
in accordance with the provisions of subsection (d) hereof. The obligation of
each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an Event
of Default or any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the Borrower to reimburse the
Issuing Lender under any Letter of Credit, together with interest as hereinafter
provided.
(d) Reimbursement. In the event of any drawing under any Letter of Credit,
the Issuing Lender will promptly notify the Borrower and the Administrative
Agent. The Borrower shall reimburse the Issuing Lender on the day of drawing
under any Letter of Credit (with the proceeds of a Revolving Loan obtained
hereunder or otherwise) in same day funds as provided herein or in the LOC
Documents. If the Borrower shall fail to reimburse the Issuing Lender as
provided herein, the unreimbursed amount of such drawing shall bear interest at
a per annum rate equal to the ABR Default Rate for so long as such amount shall
be unreimbursed. Unless the Borrower shall immediately notify the Issuing Lender
and the Administrative Agent of its intent to otherwise reimburse the Issuing
Lender, the Borrower shall be deemed to have requested a Revolving Loan (a
"Mandatory Borrowing") in the amount of the drawing as provided in subsection
(e) hereof, the proceeds of which will be used to satisfy the reimbursement
obligations. The Borrower's reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of any rights of
set-off, counterclaim or defense to payment the Borrower may claim or have
against the Issuing Lender, the Administrative Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person, including
without limitation any defense based on any failure of the Borrower to receive
consideration or the legality, validity, regularity or unenforceability of the
Letter of Credit. The Issuing Lender will promptly notify the other Lenders of
the amount of any unreimbursed drawing and each Lender shall promptly pay to the
Administrative Agent for the account of the Issuing Lender in Dollars and in
immediately available funds, the amount of such Lender's LOC Commitment
Percentage of such unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Lender from the Issuing Lender if such notice is
received at or before 2:00 p.m., otherwise such payment shall be made at or
before 12:00 Noon on the Business Day next succeeding the day such notice is
received. If such Lender does not pay such amount to the Issuing Lender in full
upon such request, such Lender shall, on demand,
29
pay to the Administrative Agent for the account of the Issuing Lender interest
on the unpaid amount during the period from the date of such drawing until such
Lender pays such amount to the Issuing Lender in full at a rate per annum equal
to, if paid within two (2) Business Days of the date of drawing, the Federal
Funds Effective Rate and thereafter at a rate equal to the Alternate Base Rate.
Each Lender's obligation to make such payment to the Issuing Lender, and the
right of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and without
regard to the termination of this Agreement or the Commitments hereunder, the
existence of a Default or Event of Default or the acceleration of the Credit
Party Obligations hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the Borrower shall
have requested, or been deemed to have requested, a Revolving Loan to reimburse
a drawing under a Letter of Credit, the Administrative Agent shall give notice
to the Lenders that a Revolving Loan has been requested or deemed requested in
connection with a drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised entirely of Alternate Base Rate Loans (each such
borrowing, a "Mandatory Borrowing") shall be immediately made (without giving
effect to any termination of the Commitments pursuant to Section 7.2) pro rata
based on each Lender's respective Revolving Commitment Percentage (determined
before giving effect to any termination of the Commitments pursuant to Section
7.2). The proceeds of such Mandatory Borrowing shall be paid directly to the
Issuing Lender for application to the respective LOC Obligations. Each Lender
hereby irrevocably agrees to make such Revolving Loans immediately upon any such
request or deemed request on account of each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not comply with the
minimum amount (or integral amount in excess thereof) for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event
of Default then exists, (iv) failure for any such request or deemed request for
Revolving Loan to be made by the time otherwise required in Section 2.1(b), (v)
the date of such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory Borrowing should be less
than the minimum amount for borrowings of Revolving Loans otherwise provided in
Section 2.1(b)(ii), the Borrower shall pay to the Administrative Agent for its
own account an administrative fee of $500. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code), then each such Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or after
such date and prior to such purchase) its Participation Interests in the
outstanding LOC Obligations; provided, further, that in the event any Lender
shall fail to fund its Participation Interest on the day the Mandatory Borrowing
would otherwise have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable by such Lender to the
Issuing Lender upon demand, at the rate equal to, if paid within two (2)
Business Days of such date, the Federal Funds Effective Rate, and thereafter at
a rate equal to the Alternate Base Rate.
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(f) Modification, Extension. The issuance of any supplement, modification,
amendment, renewal, or extension to any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new Letter of
Credit hereunder.
(g) Uniform Customs and Practices/ISP 98. The Issuing Lender shall have
the Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits (the "UCP") or the International Standby Practices 1998 (the
"ISP98"), in either case as published as of the date of issue by the
International Chamber of Commerce, in which case the UCP or the ISP98, as
applicable may be incorporated therein and deemed in all respects to be a part
thereof.
Section 2.3 Swingline Loan Subfacility.
(a) Swingline Commitment. During the Commitment Period, subject to the
terms and conditions hereof, the Swingline Lender, in its individual capacity,
agrees to make certain revolving credit loans to the Borrower (each a "Swingline
Loan" and, collectively, the "Swingline Loans") for the purposes hereinafter set
forth; provided, however, (i) the aggregate amount of Swingline Loans
outstanding at any time shall not exceed THREE MILLION DOLLARS ($3,000,000) (the
"Swingline Committed Amount"), and (ii) the sum of the outstanding Revolving
Loans plus outstanding Swingline Loans plus outstanding LOC Obligations shall
not exceed the Revolving Committed Amount. Swingline Loans hereunder may be
repaid and reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Borrowings.
(i) Notice of Borrowing and Disbursement. The Swingline Lender will
make Swingline Loans available to the Borrower on any Business Day upon
request made by the Borrower not later than 12:00 Noon on such Business
Day. A notice of request for Swingline Loan borrowing shall be made in the
form of Schedule 2.1(b)(i) with appropriate modifications. Swingline Loan
borrowings hereunder shall be made in minimum amounts of $100,000 and in
integral amounts of $50,000 in excess thereof.
(ii) Repayment of Swingline Loans. Each Swingline Loan borrowing
shall be due and payable on the earlier of (A) the seventh day after the
date of such Swingline Loan borrowing and (B) the Maturity Date. The
Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the Administrative Agent, demand repayment of
its Swingline Loans by way of a Revolving Loan borrowing, in which case the
Borrower shall be deemed to have requested a Revolving Loan borrowing
comprised entirely of Alternate Base Rate Loans in the amount of such
Swingline Loans; provided, however, that, in the following circumstances,
any such demand shall also be deemed to have been given one Business Day
prior to each of (w) the Maturity Date, (x) the occurrence of any Event of
Default described in Section 7.1(e), (y) upon acceleration of the Credit
Party Obligations hereunder, whether on account of an Event of Default
described in Section 7.1(e) or any other Event of Default, and (z) the
exercise of remedies in accordance with the provisions of Section 7.2
hereof (each such Revolving Loan borrowing made on account of any such
deemed request therefor as provided herein being hereinafter referred to as
"Mandatory Borrowing"). Each Lender hereby
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irrevocably agrees to make such Revolving Loans promptly upon any such
request or deemed request on account of each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and on the
same such date notwithstanding (I) the amount of Mandatory Borrowing may
not comply with the minimum amount for borrowings of Revolving Loans
otherwise required hereunder, (II) whether any conditions specified in
Section 4.2 are then satisfied, (III) whether a Default or an Event of
Default then exists, (IV) failure of any such request or deemed request for
Revolving Loans to be made by the time otherwise required in Section
2.1(b)(i), (V) the date of such Mandatory Borrowing, or (VI) any reduction
in the Revolving Commitment or termination of the Revolving Commitments
immediately prior to such Mandatory Borrowing or contemporaneously
therewith. In the event that any Mandatory Borrowing cannot for any reason
be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code), then each Lender hereby agrees that it shall forthwith
purchase (as of the date the Mandatory Borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Swingline Lender such
participations in the outstanding Swingline Loans as shall be necessary to
cause each such Lender to share in such Swingline Loans ratably based upon
its respective Revolving Commitment Percentage (determined before giving
effect to any termination of the Commitments pursuant to Section 7.2)
provided that (A) all interest payable on the Swingline Loans shall be for
the account of the Swingline Lender until the date as of which the
respective participation is purchased, and (B) at the time any purchase of
participations pursuant to this sentence is actually made, the purchasing
Lender shall be required to pay to the Swingline Lender interest on the
principal amount of such participation purchased for each day from and
including the day upon which the purchase occurs hereunder to but excluding
the date of payment for such participation, at the rate equal to, if paid
within two (2) Business Days of the date of the Mandatory Borrowing, the
Federal Funds Effective Rate, and thereafter at a rate equal to the
Alternate Base Rate.
(c) Interest on Swingline Loans. Subject to the provisions of Section 2.8,
Swingline Loans shall bear interest at a per annum rate equal to the Alternate
Base Rate plus the applicable Percentage for Revolving Loans that are Alternate
Base Rate Loans. Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in the original
amount of the Swingline Committed Amount and substantially in the form of
Schedule 2.3(d).
Section 2.4 Fees.
(a) Commitment Fee. In consideration of the Revolving Commitments, the
Borrower agrees to pay to the Administrative Agent, for the ratable benefit of
the Lenders, a commitment fee (the "Commitment Fee") in an amount equal to 0.50%
per annum on the average daily unused portion of the Revolving Committed Amount.
For purposes of computing the Commitment Fee, LOC Obligations shall be
considered usage of the Revolving Committed
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Amount but Swingline Loans shall not be considered usage of the Revolving
Committed Amount. The Commitment Fee shall be payable quarterly in arrears on
the 15th day following the last day of each calendar quarter for the prior
calendar quarter.
(b) Letter of Credit Fees. In consideration of the LOC Commitments, the
Borrower agrees to pay to the Issuing Lender, for the benefit of the Lenders, a
fee (the "Letter of Credit Fee") equal to the Applicable Percentage per annum on
the average daily maximum amount available to be drawn under each Letter of
Credit from the date of issuance to the date of expiration. In addition to such
Letter of Credit Fee, the Issuing Lender may charge, and retain for its own
account without sharing by the other Lenders, an additional facing fee of
one-eighth of one percent (1/8%) per annum on the average daily maximum amount
available to be drawn under each such Letter of Credit issued by it. The Issuing
Lender shall promptly pay over to the Administrative Agent for the ratable
benefit of the Lenders, for the benefit of all Lenders having a Revolving
Commitment (including the Issuing Lender), the Letter of Credit Fee. The Letter
of Credit Fee shall be payable quarterly in arrears on the 15th day following
the last day of each calendar quarter for such calendar quarter.
(c) Issuing Lender Fees. In addition to the Letter of Credit Fees payable
pursuant to subsection (b) hereof, the Borrower shall pay to the Issuing Lender,
for its own account without sharing by the other Lenders, the reasonable and
customary charges from time to time of the Issuing Lender with respect to the
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the "Issuing Lender
Fees").
(d) Administrative Fee. The Borrower agrees to pay to the Administrative
Agent the annual administrative fee as described in the Fee Letter.
Section 2.5 Commitment Reductions.
(a) Voluntary Reductions. The Borrower shall have the right to terminate
or permanently reduce the unused portion of the Revolving Committed Amount at
any time or from time to time upon not less than five Business Days' prior
notice to the Administrative Agent (which shall notify the Lenders thereof as
soon as practicable) of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction which
shall be in a minimum amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof and shall be irrevocable and effective upon receipt by the
Administrative Agent; provided that no such reduction or termination shall be
permitted if after giving effect thereto, and to any prepayments of the Loans
made on the effective date thereof, the sum of the outstanding Revolving Loans
plus outstanding Swingline Loans plus outstanding LOC Obligations would exceed
the Revolving Committed Amount.
(b) Mandatory Reductions. On any date that the Revolving Loans are
required to be prepaid pursuant to the terms of Section 2.6(b)(ii) - (iv), the
Revolving Committed Amount shall be automatically permanently reduced by the
amount of such required prepayment and/or reduction.
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(c) Maturity Date. The Revolving Commitment, the Swingline Commitment and
the LOC Commitment shall automatically terminate on the Maturity Date.
Section 2.6 Prepayments.
(a) Optional Prepayments. The Borrower shall have the right to prepay
Loans in whole or in part from time to time; provided, however, that (i) each
partial prepayment of an Alternate Base Rate Loan shall be in a minimum
principal amount of $500,000 and integral multiples of $100,000 in excess
thereof or, if less, the unpaid balance thereof, (ii) each partial prepayment of
a LIBOR Rate Loan shall be in a minimum principal amount of $1,000,000 and
integral multiples of $500,000 in excess thereof or, if less, the unpaid balance
thereof, and (iii) each partial prepayment of a Swingline Loan shall be in a
minimum principal amount of $100,000 and integral multiples of $50,000 in excess
thereof or the unpaid balance thereof, if less. The Borrower shall give three
Business Days' irrevocable notice in the case of LIBOR Rate Loans and one
Business Day's irrevocable notice in the case of Alternate Base Rate Loans to
the Administrative Agent (which shall notify the Lenders thereof as soon as
practicable). Each prepayment pursuant to this Section 2.6(a) shall be applied
to the outstanding Loans as the Borrower may elect; provided, however, each
prepayment shall be applied first to Alternate Base Rate Loans and then to LIBOR
Rate Loans in direct order of Interest Period maturities. All prepayments under
this Section 2.6(a) shall be subject to Section 2.16, but otherwise without
premium or penalty. Interest on the principal amount prepaid shall be payable on
the next occurring Interest Payment Date that would have occurred had such Loan
not been prepaid or, at the request of the Administrative Agent, interest on the
principal amount prepaid shall be payable on any date that a prepayment is made
hereunder through the date of prepayment.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time after the Closing
Date, the sum of the outstanding Revolving Loans plus outstanding Swingline
Loans plus outstanding LOC Obligations shall exceed the Revolving Committed
Amount, the Borrower immediately shall prepay the Revolving Loans in an
amount sufficient to eliminate such excess (such prepayment to be applied
as set forth in clause (v) below).
(ii) Asset Dispositions. Promptly following one or more Asset
Dispositions in excess of $500,000 in the aggregate in any fiscal year, the
Borrower shall prepay the Loans in an aggregate amount equal to the Net
Cash Proceeds derived from such Asset Disposition (such prepayment to be
applied as set forth in clause (v) below); provided, however, that such Net
Cash Proceeds shall not be required to be so applied to the extent the
Borrower delivers to the Administrative Agent a certificate stating that
the Borrower (or a Guarantor) intends to use such Net Cash Proceeds to
acquire fixed or capital assets useful in its business within 180 days of
the receipt of such Net Cash Proceeds, it being expressly agreed that any
Net Cash Proceeds not so reinvested shall be applied to repay the Loans
(such prepayment to be applied as set forth in clause (v) below)
immediately following the 180th day occurring after the receipt by a Credit
Party of such Net Cash Proceeds; provided, however that Net Cash Proceeds
received from the sale of the
34
properties set forth on Schedule 2.6(b)(ii) shall not be required to be so
applied and no reduction in the Revolving Commitment shall occur as a
result thereof.
(iii) Issuances. Immediately upon receipt by any Credit Party or any
of its Subsidiaries of proceeds from any Debt Issuance, the Borrower shall
prepay the Loans in an aggregate amount equal to one hundred percent (100%)
of the Net Cash Proceeds of such Debt Issuance to the Lenders (such
prepayment to be applied as set forth in clause (v) below).
(iv) Recovery Event. To the extent of cash proceeds received in
connection with all Recovery Events in any fiscal year exceeds $500,000 in
the aggregate and are not used to acquire or repair fixed or capital assets
useful in its business within 180 days of the receipt of such cash
proceeds, immediately following the 180th day occurring after the receipt
of such cash proceeds, the Borrower shall prepay the Loans in an aggregate
amount equal to one hundred percent (100%) of such cash proceeds (such
prepayment to be applied as set forth in clause (v) below).
(v) Application of Mandatory Prepayments. All amounts required to
be paid pursuant to this Section 2.6(b) shall be applied as follows: (A)
with respect to all amounts prepaid pursuant to Section 2.6(b)(i), (1)
first to the outstanding Swingline Loans (without any reduction in the
Revolving Commitments), (2) second to the outstanding Revolving Loans
(without any reduction in the Revolving Commitments) and (3) third to a
cash collateral account in respect of outstanding LOC Obligations, (B) with
respect to all amounts prepaid pursuant to Sections 2.6(b)(ii) through
(iv), (1) first to the outstanding Swingline Loans (with a corresponding
reduction in the Revolving Commitments), (2) second to the outstanding
Revolving Loans (with a corresponding reduction in the Revolving
Commitments) and (3) third to a cash collateral account in respect of
outstanding LOC Obligations. Within the parameters of the applications set
forth above, prepayments shall be applied first to Alternate Base Rate
Loans and then to LIBOR Rate Loans in direct order of Interest Period
maturities. All prepayments under this Section 2.6(b) shall be subject to
Section 2.16 and be accompanied by interest on the principal amount prepaid
through the date of prepayment.
Notwithstanding the foregoing provisions of this Section 2.6, if at
any time any prepayment of the Loans pursuant to Section 2.6 would result,
after giving effect to the LIBOR Rate Loans being prepaid other than on the
last day of an Interest Period with respect thereto, then the Borrower, so
long as no Event of Default shall have occurred and be continuing, may
deposit the amount that otherwise would have been paid in respect of such
LIBOR Rate Loans with the Administrative Agent to be held as security for
the obligation of the Borrower to make such prepayment pursuant to a cash
collateral agreement to be entered into on terms reasonably satisfactory to
the Administrative Agent, with such cash collateral to be directly applied
upon the first occurrence thereafter of the last day of any Interest Period
with respect to such LIBOR Rate Loans.
35
Section 2.7 Minimum Principal Amount of Tranches.
All borrowings, payments and prepayments (except as required by Section
2.6(b)) in respect of Revolving Loans shall be in such amounts and be made
pursuant to such elections so that after giving effect thereto the aggregate
principal amount of the Revolving Loans shall be (a) with respect to Alternate
Base Rate Loans, in an outstanding amount equal to $500,000 and integral
multiples of $100,000 in excess thereof and (b) with respect to LIBOR Rate
Loans, in an outstanding amount equal to $1,000,000 and integral multiples of
$500,000 in excess thereof.
Section 2.8 Default Rate and Payment Dates.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than the rate which
would otherwise be applicable (or if no rate is applicable, whether in respect
of interest, fees or other amounts, then at the ABR Default Rate).
Section 2.9 Conversion Options.
(a) The Borrower may, in the case of Revolving Loans, elect from time to
time to convert Alternate Base Rate Loans to LIBOR Rate Loans, by giving the
Administrative Agent at least three Business Days' prior irrevocable written
notice of such election. A form of Notice of Conversion/ Extension is attached
as Schedule 2.9. If the date upon which an Alternate Base Rate Loan is to be
converted to a LIBOR Rate Loan is not a Business Day, then such conversion shall
be made on the next succeeding Business Day and during the period from such last
day of an Interest Period to such succeeding Business Day such Loan shall bear
interest as if it were an Alternate Base Rate Loan. All or any part of
outstanding Alternate Base Rate Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a LIBOR Rate Loan when any
Default or Event of Default has occurred and is continuing and (ii) partial
conversions shall be in an aggregate principal amount of $1,000,000 or a whole
multiple of $500,000 in excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the expiration
of an Interest Period with respect thereto by compliance by the Borrower with
the notice provisions contained in Section 2.9(a); provided, that no LIBOR Rate
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, in which case such Loan shall be automatically converted to
an Alternate Base Rate Loan at the end of the applicable Interest Period with
respect thereto. If the Borrower shall fail to give timely notice of an election
to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not
permitted hereunder, such LIBOR Rate Loans shall be automatically converted to
Alternate Base Rate Loans at the end of the applicable Interest Period with
respect thereto.
Section 2.10 Computation of Interest and Fees.
(a) Interest payable hereunder with respect to Alternate Base Rate
Loans based on the Prime Rate shall be calculated on the basis of a year of 365
days (or 366 days, as applicable) for
36
the actual days elapsed. All other fees, interest and all other amounts payable
hereunder shall be calculated on the basis of a 360 day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Borrower and the Lenders of each determination of a LIBOR Rate on the Business
Day of the determination thereof. Any change in the interest rate on a Loan
resulting from a change in the Alternate Base Rate shall become effective as of
the opening of business on the day on which such change in the Alternate Base
Rate shall become effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the computations used by the Administrative Agent
in determining any interest rate.
(c) It is the intent of the Lenders and the Credit Parties to conform to
and contract in strict compliance with applicable usury law from time to time in
effect. All agreements between the Lenders and the Credit Parties are hereby
limited by the provisions of this paragraph which shall override and control all
such agreements, whether now existing or hereafter arising and whether written
or oral. In no way, nor in any event or contingency (including but not limited
to prepayment or acceleration of the maturity of any Obligation), shall the
interest taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount
permissible under applicable law. If, from any possible construction of any of
the Credit Documents or any other document, interest would otherwise be payable
in excess of the maximum nonusurious amount, any such construction shall be
subject to the provisions of this paragraph and such interest shall be
automatically reduced to the maximum nonusurious amount permitted under
applicable law, without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value which is
characterized as interest on the Loans under applicable law and which would,
apart from this provision, be in excess of the maximum nonusurious amount, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on
the Loans and not to the payment of interest, or refunded to the Borrower or the
other payor thereof if and to the extent such amount which would have been
excessive exceeds such unpaid principal amount of the Loans. The right to demand
payment of the Loans or any other Indebtedness evidenced by any of the Credit
Documents does not include the right to receive any interest which has not
otherwise accrued on the date of such demand, and the Lenders do not intend to
charge or receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect to the Loans
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal or
extension) of the Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law.
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Section 2.11 Pro Rata Treatment and Payments.
(a) Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Revolving
Commitment Percentages of the Lenders. Each payment (other than prepayments) of
principal or interest under this Agreement or any Note shall be applied pro
rata, first, to any fees then due and owing by the Borrower pursuant to Section
2.4, second, to interest then due and owing hereunder and under the Notes and,
third, to principal then due and owing hereunder and under the Notes. Each
payment on account of any fees pursuant to Section 2.4 shall be made pro rata in
accordance with the respective amounts due and owing (except as to the portion
of the Letter of Credit retained by the Issuing Lender and the Issuing Lender
Fees). Each optional prepayment of the Loans shall be applied in accordance with
Section 2.6(a) and each mandatory prepayment of the Loans shall be applied in
accordance with Section 2.6(b). Prepayments made pursuant to Section 2.14 shall
be applied in accordance with such section. All payments (including prepayments)
to be made by the Borrower on account of principal, interest and fees shall be
made without defense, set-off or counterclaim (except as provided in Section
2.17(b)) and shall be made to the Administrative Agent for the account of the
Lenders at the Administrative Agent's office specified on Schedule 9.2 in
Dollars and in immediately available funds not later than 12:00 Noon on the date
when due. The Administrative Agent shall distribute such payments to the Lenders
entitled thereto promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a LIBOR Rate Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Administrative Agent or any Lender on account
of the Credit Party Obligations or any other amounts outstanding under any
of the Credit Documents or in respect of the Collateral shall be paid over
or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Administrative Agent in connection with enforcing the rights of
the Lenders under the Credit Documents and any protective advances
made by the Administrative Agent with respect to the Collateral under
or pursuant to the terms of the Security Documents;
SECOND, to payment of any fees owed to the Administrative Agent;
38
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' and
consultants' fees) of each of the Lenders in connection with enforcing
its rights under the Credit Documents or otherwise with respect to the
Credit Party Obligations owing to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest, and including with respect to
any Hedging Agreement between any Credit Party and any Lender, or any
Affiliate of a Lender, to the extent such Hedging Agreement is
permitted by Section 6.1(e), any fees, premiums and scheduled periodic
payments due under such Hedging Agreement and any interest accrued
thereon;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations and the payment or cash collateralization of
the outstanding LOC Obligations, and including with respect to any
Hedging Agreement between any Credit Party and any Lender, or any
Affiliate of a Lender, to the extent such Hedging Agreement is
permitted by Section 6.1(e), any breakage, termination or other
payments due under such Hedging Agreement and any interest accrued
thereon;
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whomever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding
Loans, LOC Obligations and obligations outstanding under the Hedge
Agreements (if any) permitted by Section 6.1(e) held by such Lender (and
its Affiliates in the case of Hedge Agreement obligations) bears to the
aggregate then outstanding Loans, LOC Obligations and obligations
outstanding under the Hedge Agreements between any Credit Party and any
Lender or any Affiliate of a Lender that are permitted by Section 6.1(e))
of amounts available to be applied pursuant to clauses "FOURTH" and "FIFTH"
above; and (iii) to the extent that any amounts available for distribution
pursuant to clause "FIFTH" above are attributable to the issued but undrawn
amount of outstanding Letters of Credit, such amounts shall be held by the
Administrative Agent in a cash collateral account and applied (A) first, to
reimburse the Issuing Lender from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH"
and "SIXTH" above in the manner provided in this Section 2.12(b).
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Section 2.12 Non-Receipt of Funds by the Administrative Agent.
(a) Unless the Administrative Agent shall have been notified in writing by
a Lender prior to the date a Loan is to be made by such Lender (which notice
shall be effective upon receipt) that such Lender does not intend to make the
proceeds of such Loan available to the Administrative Agent, the Administrative
Agent may assume that such Lender has made such proceeds available to the
Administrative Agent on such date, and the Administrative Agent may in reliance
upon such assumption (but shall not be required to) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent, the Administrative Agent shall be
able to recover such corresponding amount from such Lender. If such Lender does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, in accordance with the terms hereof, the Administrative Agent
will promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for the applicable borrowing pursuant to the Notice of Borrowing
and (ii) from a Lender at the Federal Funds Effective Rate.
(b) Unless the Administrative Agent shall have been notified in writing by
the Borrower, prior to the date on which any payment is due from it hereunder
(which notice shall be effective upon receipt) that the Borrower does not intend
to make such payment, the Administrative Agent may assume that the Borrower has
made such payment when due, and the Administrative Agent may in reliance upon
such assumption (but shall not be required to) make available to each Lender on
such payment date an amount equal to the portion of such assumed payment to
which such Lender is entitled hereunder, and if the Borrower has not in fact
made such payment to the Administrative Agent, such Lender shall, on demand,
repay to the Administrative Agent the amount made available to such Lender. If
such amount is repaid to the Administrative Agent on a date after the date such
amount was made available to such Lender, such Lender shall pay to the
Administrative Agent on demand interest on such amount in respect of each day
from the date such amount was made available by the Administrative Agent to such
Lender to the date such amount is recovered by the Administrative Agent at a per
annum rate equal to the Federal Funds Effective Rate.
(c) A certificate of the Administrative Agent submitted to the Borrower or
any Lender with respect to any amount owing under this Section 2.12 shall be
conclusive in the absence of manifest error.
Section 2.13 Inability to Determine Interest Rate.
Notwithstanding any other provision of this Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (ii) the Required Lenders
40
shall reasonably determine (which determination shall be conclusive and binding
absent manifest error) that the LIBOR Rate does not adequately and fairly
reflect the cost to such Lenders of funding LIBOR Rate Loans that the Borrower
has requested be outstanding as a LIBOR Tranche during such Interest Period, the
Administrative Agent shall forthwith give telephone notice of such
determination, confirmed in writing, to the Borrower, and the Lenders at least
two Business Days prior to the first day of such Interest Period. Unless the
Borrower shall have notified the Administrative Agent upon receipt of such
telephone notice that they wish to rescind or modify their request regarding
such LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate
Loans shall be made as Alternate Base Rate Loans and any Loans that were
requested to be converted into or continued as LIBOR Rate Loans shall remain as
or be converted into Alternate Base Rate Loans. Until any such notice has been
withdrawn by the Administrative Agent, no further Loans shall be made as,
continued as, or converted into, LIBOR Rate Loans for the Interest Periods so
affected.
Section 2.14 Illegality.
Notwithstanding any other provision of this Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof by the relevant Governmental Authority to any Lender shall make it
unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR
Rate Loans as contemplated by this Agreement or to obtain in the interbank
eurodollar market through its LIBOR Lending Office the funds with which to make
such Loans, (a) such Lender shall promptly notify the Administrative Agent and
the Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR
Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended
until the Administrative Agent shall give notice that the condition or situation
which gave rise to the suspension shall no longer exist, and (c) such Lender's
Loans then outstanding as LIBOR Rate Loans, if any, shall be converted on the
last day of the Interest Period for such Loans or within such earlier period as
required by law as Alternate Base Rate Loans. The Borrower hereby agrees to
promptly pay any Lender, upon its demand, any additional amounts necessary to
compensate such Lender for actual and direct costs (but not including
anticipated profits) reasonably incurred by such Lender in making any repayment
in accordance with this Section including, but not limited to, any interest or
fees payable by such Lender to lenders of funds obtained by it in order to make
or maintain its LIBOR Rate Loans hereunder. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize
any amounts which may otherwise be payable pursuant to this Section; provided,
however, that such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such Lender in its
sole discretion to be material.
Section 2.15 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
41
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to any Letter of Credit or any application relating thereto,
any LIBOR Rate Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for tax on the overall net income
of such Lender and changes in the rate of such tax);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making or maintaining LIBOR Rate Loans or the Letters of Credit or to
reduce any amount receivable hereunder or under any Note, LIBOR Rate Loan or
Letter of Credit, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amount receivable which such Lender
reasonably deems to be material as determined by such Lender with respect to its
LIBOR Rate Loans or Letters of Credit. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR Lending
Office, as the case may be) to avoid or to minimize any amounts which might
otherwise be payable pursuant to this paragraph of this Section; provided,
however, that such efforts shall not cause the imposition on such Lender of any
additional costs or other disadvantages deemed by such Lender to be material.
(b) If any Lender shall have reasonably determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount reasonably
deemed by such Lender to be material, then from time to time, within fifteen
(15) days after demand by such Lender, the Borrower shall pay to such Lender
such additional amount as shall be certified by such Lender as being required to
compensate it for such reduction. Such a certificate as to any additional
amounts payable under this Section submitted by a Lender (which certificate
shall include a description of the basis for the computation), through the
Administrative Agent, to the Borrower shall be conclusive absent manifest error.
42
(c) The agreements in this Section 2.15 shall survive the termination of
this Agreement and payment of the Notes and all other amounts payable hereunder.
Section 2.16 Indemnity.
The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or interest on any Loan by such Lender in accordance with the terms
hereof, (b) default by the Borrower in accepting a borrowing after the Borrower
has given a notice in accordance with the terms hereof, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. The agreements in
this Section shall survive termination of this Agreement and payment of the
Notes and all other amounts payable hereunder.
Section 2.17 Taxes.
(a) All payments made by the Borrower hereunder or under any Note shall
be, except as provided in Section 2.17(b), made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any Governmental Authority or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding any
tax imposed on or measured by the net income or profits of a Lender pursuant to
the laws of the jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of such Lender is
located or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. The
Borrower will furnish to the Administrative Agent as soon as practicable after
the date the payment of any Taxes is due pursuant to applicable law certified
copies (to the extent reasonably available and required by law) of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Closing Date, or in the case of
a Lender that is an assignee or transferee of an interest under this Agreement
pursuant to Section 9.6(d) (unless the respective Lender was
43
already a Lender hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Lender, (i) if the Lender is a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, two accurate and
complete original signed copies of Internal Revenue Service Form W-8BEN or
W-8ECI (or successor forms) certifying such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments to be made
under this Agreement and under any Note, or (ii) if the Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, either Internal Revenue
Service Form W-8BEN or W-8ECI as set forth in clause (i) above, or (x) a
certificate substantially in the form of Schedule 2.17 (any such certificate, a
"2.17 Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor form) certifying such Lender's
entitlement to an exemption from United States withholding tax with respect to
payments of interest to be made under this Agreement and under any Note. In
addition, each Lender agrees that it will deliver upon the Borrower's request
updated versions of the foregoing, as applicable, whenever the previous
certification has become obsolete or inaccurate in any material respect,
together with such other forms as may be required in order to confirm or
establish the entitlement of such Lender to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note. Notwithstanding anything to the contrary contained in
Section 2.17(a), but subject to the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold Taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Lender which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Lender has not provided
to the Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 2.17(a) hereof to gross-up payments to be made to
a Lender in respect of Taxes imposed by the United States if (I) such Lender has
not provided to the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 2.17(b) or (II) in the case of
a payment, other than interest, to a Lender described in clause (ii) above, to
the extent that such Forms do not establish a complete exemption from
withholding of such Taxes. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 2.17, the Borrower agrees to
pay additional amounts and to indemnify each Lender in the manner set forth in
Section 2.17(a) (without regard to the identity of the jurisdiction requiring
the deduction or withholding) in respect of any amounts deducted or withheld by
it as described in the immediately preceding sentence as a result of any changes
after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of Taxes.
(c) Each Lender agrees to use reasonable efforts (including reasonable
efforts to change its Domestic Lending Office or LIBOR Lending Office, as the
case may be) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or other
disadvantages deemed by such Lender in its sole discretion to be material.
(d) If the Borrower pays any additional amount pursuant to this Section
2.17 with respect to a Lender, such Lender shall use reasonable efforts to
obtain a refund of tax or credit
44
against its tax liabilities on account of such payment; provided that such
Lender shall have no obligation to use such reasonable efforts if either (i) it
is in an excess foreign tax credit position or (ii) it believes in good faith,
in its sole discretion, that claiming a refund or credit would cause adverse tax
consequences to it. In the event that such Lender receives such a refund or
credit, such Lender shall pay to the Borrower an amount that such Lender
reasonably determines is equal to the net tax benefit obtained by such Lender as
a result of such payment by the Borrower. In the event that no refund or credit
is obtained with respect to the Borrower's payments to such Lender pursuant to
this Section 2.17, then such Lender shall upon request provide a certification
that such Lender has not received a refund or credit for such payments. Nothing
contained in this Section 2.17(d) shall require a Lender to disclose or detail
the basis of its calculation of the amount of any tax benefit or any other
amount or the basis of its determination referred to in the proviso to the first
sentence of this Section 2.17(d) to the Borrower or any other party.
(e) The agreements in this Section 2.17 shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder.
Section 2.18 Indemnification; Nature of Issuing Lender's Duties.
(a) In addition to its other obligations under Section 2.2, the Borrower
hereby agrees to protect, indemnify, pay and save each Issuing Lender harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) that the
Issuing Lender may incur or be subject to as a consequence, direct or indirect,
of (i) the issuance of any Letter of Credit or (ii) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions, herein
called "Government Acts").
(b) As between the Borrower and the Issuing Lender, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of a
Letter of Credit to comply fully with conditions required in order to draw upon
a Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (vii) for any consequences arising from causes beyond
the control of the Issuing Lender, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting of the
Issuing Lender's rights or powers hereunder.
45
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put such Issuing
Lender under any resulting liability to the Borrower. It is the intention of the
parties that this Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in the issuance
of the Letters of Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any Government Authority. The Issuing Lender
shall not, in any way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.
(d) Nothing in this Section 2.18 is intended to limit the reimbursement
obligation of the Borrower contained in Section 2.2(d) hereof. The obligations
of the Borrower under this Section 2.18 shall survive the termination of this
Agreement. No act or omissions of any current or prior beneficiary of a Letter
of Credit shall in any way affect or impair the rights of the Issuing Lender to
enforce any right, power or benefit under this Agreement.
(e) Notwithstanding anything to the contrary contained in this Section
2.18, the Borrower shall have no obligation to indemnify any Issuing Lender in
respect of any liability incurred by such Issuing Lender arising out of the
gross negligence or willful misconduct of the Issuing Lender (including action
not taken by an Issuing Lender), as determined by a court of competent
jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, the Credit Parties hereby represent
and warrant to the Administrative Agent and to each Lender that:
Section 3.1 Financial Condition.
(a) (i) The audited consolidated financial statements of the Parent and its
Subsidiaries for the fiscal years ended December 26, 1999, December 31, 2000 and
December 30, 2001, together with the related consolidated statements of income
or operations, equity and cash flows for the fiscal years ended on such dates
and the footnotes thereto, (ii) the unaudited consolidated financial statements
of the Parent and its Subsidiaries for the period from December 30, 2001 through
April 21, 2002 and (iii) the pro forma balance sheet of the Parent and its
Subsidiaries for the month ending immediately prior to the Closing Date:
(A) were prepared in accordance with GAAP (to the extent applicable)
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, by an independent nationally recognized
accounting firm (except with respect to the unaudited financial
statements);
46
(B) fairly present the financial condition of the Parent and its
Subsidiaries as of the date or dates thereof (subject, in the case of the
unaudited financial statements, to normal year-end adjustments) and results
of operations for the period covered thereby; and
(C) show all Indebtedness and other liabilities in excess of $500,000
in aggregate principal amount, direct or contingent, of the Parent and its
Subsidiaries as of the date thereof, including liabilities for taxes,
commitments and other contingent obligations.
(b) The 2002 annual budget of the Parent and its Subsidiaries and the
projections of the Parent and its Subsidiaries through December 25, 2005 have
been prepared in good faith based upon reasonable assumptions.
Section 3.2 No Change.
Since December 30, 2001 (and, after delivery of annual audited financial
statements in accordance with Section 5.1(a), from the date of the most recently
delivered annual audited financial statements) there has been no development or
event which, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
Section 3.3 Corporate Existence; Compliance with Law.
Each of the Credit Parties (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the requisite corporate power, authority and right to own and operate all its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified to conduct
business and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that the failure to so qualify
or be in good standing could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 3.4 Corporate Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has full corporate power, authority and right to
execute, deliver and perform the Credit Documents to which it is party and has
taken all necessary limited liability company or corporate action to authorize
the execution, delivery and performance by it of the Credit Documents to which
it is party. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery or
performance of any Credit Document by the Credit Parties (other than those which
have been obtained) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit
47
Documents). Each Credit Document to which it is a party has been duly executed
and delivered on behalf of each of the Credit Parties. Each Credit Document to
which it is a party constitutes a legal, valid and binding obligation of each of
the Credit Parties, enforceable against such Credit Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
Section 3.5 Compliance with Laws; No Conflict; No Default.
(a) The execution, delivery and performance by each Credit Party of the
Credit Documents to which such Credit Party is a party, in accordance with their
respective terms, the borrowings hereunder and the transactions contemplated
hereby do not and will not, by the passage of time, the giving of notice or
otherwise, (i) violate any Requirement of Law relating to such Credit Party,
(ii) conflict with, result in a breach of or constitute a default under the
articles of incorporation, bylaws, articles of organization, operating agreement
or other organizational documents of such Credit Party or any material
indenture, agreement or other instrument to which such Person is a party or by
which any of its properties may be bound or any license, permit or other
approval required by any Governmental Authority (collectively "Governmental
Approvals") relating to such Person, except to the extent that such conflict,
breach or default with respect to any such indenture, agreement or instrument
could not, individually or in the aggregate reasonably be expected to have a
Material Adverse Effect, or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Person other than Liens arising under the Credit
Documents.
(b) Each Credit Party (i) (x) has all Governmental Approvals required by
law for it to conduct its business in all material respects, each of which is in
full force and effect, (y) each such Governmental Approval is final and not
subject to review on appeal and (z) each such Governmental Approval is not the
subject of any pending or, to the best of its knowledge, threatened attack by
direct or collateral proceeding, and (ii) is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Requirements of Law relating to it or any of its respective properties, in each
case except to the extent the failure to obtain such Governmental Approval or
failure to comply with such Governmental Approval or Requirement of Law could
not reasonably be expected to have a Material Adverse Effect.
(c) None of the Credit Parties is in default under or with respect to
any of its Material Contracts, or any judgment, order or decree to which it is a
party, in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
Section 3.6 No Material Litigation.
No litigation, investigation, bankruptcy or insolvency, injunction, order
or claim affecting or relating to any Credit Party or any of its Subsidiaries,
any such Person's properties or revenues, or any Credit Document is pending or,
to the best knowledge of the Credit Parties, threatened by or against any Credit
Party or any of its Subsidiaries or against any of its or their
48
respective properties or revenues that has not been settled, dismissed, vacated,
discharged or terminated which could reasonably be expected to have a Material
Adverse Effect, and no judgments are outstanding which could reasonably be
expected to have a Material Adverse Effect.
Section 3.7 Investment Company Act; PUHCA; Etc.
No Credit Party is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. No Credit Party is a subject to regulation under the Public Utility
Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate
Commerce Act, or any federal or state statute or regulation limiting its ability
to incur the Credit Party Obligations.
Section 3.8 Margin Regulations.
No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Credit
Parties (a) are not engaged, principally or as one of their important
activities, in the business of extending credit for the purpose of "purchasing"
or "carrying" "margin stock" within the respective meanings of each of such
terms under Regulation U and (b) taken as a group do not own "margin stock"
except as identified in the financial statements referred to in Section 3.1 and
the aggregate value of all "margin stock" owned by the Credit Parties taken as a
group does not exceed 25% of the value of their assets.
Section 3.9 ERISA.
Except as set forth in Schedule 3.9, neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such occurrence
or failure to comply would not reasonably be expected to have a Material Adverse
Effect. No termination of a Single Employer Plan has occurred resulting in any
liability that has remained underfunded, and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period which could reasonably be expected
to have a Material Adverse Effect. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by an amount which, as determined
in accordance with GAAP, could reasonably be expected to have a Material Adverse
Effect. Neither any Credit Party, nor any of its Subsidiaries nor any Commonly
Controlled Entity is currently subject to any liability for a complete or
partial withdrawal from a Multiemployer Plan which could reasonably be expected
to have a Material Adverse Effect.
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Section 3.10 Environmental Matters.
Except for exceptions to the following which, either individually or in the
aggregate, could not be reasonably expected to result in a Material Adverse
Effect:
(a) The facilities and properties owned, leased or operated by the Credit
Parties or any of their Subsidiaries (the "Properties") do not contain any
Materials of Environmental Concern in amounts or concentrations which (i)
constitute a violation of, or (ii) could give rise to liability under, any
Environmental Law.
(b) The Properties and all operations of the Credit Parties and their
Subsidiaries at the Properties are in compliance, and have in the last five
years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by the Credit Parties or any of their Subsidiaries (the
"Business").
(c) No Credit Party nor any Subsidiary thereof has received any written
or actual notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business, nor
does any Credit Party nor any Subsidiary thereof have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of any Credit Party or any Subsidiary thereof,
threatened, under any Environmental Law to which the Borrower or any other
Credit Party or any Subsidiary is or will be named as a party with respect to
the Properties or the Business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any other Credit Party or any Subsidiary in
connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws.
Section 3.11 Purpose of Loans.
The proceeds of the Extensions of Credit shall be used solely by the
Borrower as follows:
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(a) with respect to the Revolving Loans and Swingline Loans, to (i)
finance certain post IPO restaurant construction costs, (ii) pay certain costs,
fees and expenses in connection with such new restaurant construction, (iii)
refinance certain existing Indebtedness of the Borrower, (iv) pay any fees and
expenses in connection with this Agreement, (v) provide for the working capital
and general corporate requirements of the Borrower and its subsidiaries and (vi)
to finance Permitted Acquisitions; and
(b) the Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions and
obligations not otherwise aforementioned relating to transactions entered into
by the applicable account party in the ordinary course of business.
Section 3.12 Subsidiaries.
Set forth on Schedule 3.12 is a complete and accurate list of all
Subsidiaries of the Credit Parties as of the Closing Date. Information on the
attached Schedule includes state of incorporation or organization; the number of
authorized shares of each class of Capital Stock or other equity interests; the
number of outstanding shares of each class of Capital Stock or other equity
interests, the owner thereof and the percentage of such ownership; and the
number and effect, of all outstanding options, warrants, rights of conversion or
purchase and similar rights. The outstanding Capital Stock and other equity
interests of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents).
Section 3.13 Ownership; Insurance.
Each of the Credit Parties is the owner of, and has good and, to the
extent applicable, marketable title to, and adequate insurance coverage for, all
of its respective assets that, together with assets leased or licensed by the
Credit Parties, represents all assets individually or in the aggregate material
to the conduct of the businesses of the Credit Parties taken as a whole, and
none of such assets is subject to any Lien other than Permitted Liens. Each
Credit Party enjoys peaceful and undisturbed possession under all of its leases
and all such leases are valid and subsisting and in full force and effect other
than exceptions to the foregoing that could not reasonably be expected to have a
Material Adverse Effect. The Credit Parties have delivered, or made available
for review, complete and accurate copies of all material leases to the
Administrative Agent as of the Closing Date.
Section 3.14 Indebtedness.
Except as otherwise permitted under Section 6.1, the Credit Parties and
their Subsidiaries have no Indebtedness.
Section 3.15 Taxes.
Each of the Credit Parties and their Subsidiaries has filed, or caused
to be filed, all tax returns (federal, state, local and foreign) required to be
filed and paid (a) all amounts of taxes
51
shown thereon to be due (including interest and penalties) and (b) all other
taxes, fees, assessments and other governmental charges (including mortgage
recording taxes, documentary stamp taxes and intangibles taxes) owing by it,
except for such taxes (i) which are not yet delinquent or (ii) that are being
contested in good faith and by proper proceedings, and against which adequate
reserves are being maintained in accordance with GAAP. None of the Credit
Parties is aware as of the Closing Date of any proposed tax assessments against
it or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
Section 3.16 Intellectual Property.
Each of the Credit Parties and its Subsidiaries owns, or has the legal
right to use, all trademarks, tradenames, copyrights, patents, technology,
know-how and processes necessary for each of them to conduct its business as
currently conducted. Set forth on Schedule 3.16 is a list of all Intellectual
Property owned by the Credit Parties and their Subsidiaries or that any Credit
Party or any of its Subsidiaries has the right to use. Except as provided on
Schedule 3.16, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property owned by a
Credit Party or the validity or effectiveness of any such Intellectual Property
owned by a Credit Party, nor do any Credit Party or any of its Subsidiaries know
of any such claim, and, to the knowledge of any Credit Party and its
Subsidiaries, the use of such Intellectual Property by any Credit Party or any
of its Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements that in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Schedule 3.16 may be updated from
time to time by the Borrower to include new Intellectual Property by giving
written notice thereof to the Administrative Agent.
Section 3.17 Solvency.
The fair saleable value of each Credit Party's assets, measured on a
going concern basis, exceeds all probable liabilities including those to be
incurred pursuant to this Agreement. None of the Credit Parties (a) has
unreasonably small capital in relation to the business in which it is or
proposes to be engaged or (b) has incurred, or believes that it will incur after
giving effect to the transactions contemplated by this Agreement, debts beyond
its ability to pay such debts as they become due.
Section 3.18 Investments.
All Investments of each of the Credit Parties and their Subsidiaries
are Permitted Investments.
Section 3.19 Location of Collateral.
Set forth on Schedule 3.19(a) is a list of the Properties of the Credit
Parties and their Subsidiaries with street address, county and state where
located as of the Closing Date. Set forth on Schedule 3.19(b) is a list of all
locations where any tangible personal property of the Credit Parties and their
Subsidiaries is located, including county and state where located as of the
52
Closing Date. Set forth on Schedule 3.19(c) is the chief executive office and
principal place of business of the Credit Parties and their Subsidiaries as of
the Closing Date.
Section 3.20 No Burdensome Restrictions.
None of the Credit Parties or any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
Section 3.21 Brokers' Fees.
None of the Credit Parties or any of its Subsidiaries have any
obligation to any Person in respect of any finder's, broker's, investment
banking or other similar fee in connection with any of the transactions
contemplated under the Credit Documents other than the closing and other fees
payable pursuant to this Agreement.
Section 3.22 Labor Matters.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Credit Parties or any of its Subsidiaries as of
the Closing Date, other than as set forth in Schedule 3.22 hereto. As of the
Closing Date none of the Credit Parties or any of its Subsidiaries (i) has
suffered any strikes, walkouts, work stoppages or other material labor
difficulty within the five years preceding the Closing Date, other than as set
forth in Schedule 3.22 hereto or (ii) has knowledge of any pending strike,
walkout or work stoppage that could, in either case, reasonably be expected to
have a Material Adverse Effect.
Section 3.23 Security Documents.
The Security Documents create valid security interests in, and Liens
on, the Collateral purported to be covered thereby, which security interests and
Liens are currently (or will be, upon the filing of appropriate financing
statements and grants of security in Intellectual Property, and the recordation
of the applicable Mortgage Instruments, in each case in favor of the
Administrative Agent) perfected security interests and Liens, prior to all other
Liens other than Permitted Liens.
Section 3.24 Accuracy and Completeness of Information.
All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of any Credit Party or any of its Subsidiaries to the
Administrative Agent or any Lender for purposes of or in connection with this
Agreement or any other Credit Document, or any transaction contemplated hereby
or thereby, is or will be true and accurate in all material respects and not
incomplete by omitting to state any material fact necessary to make such
information not misleading. There is no fact now known to any Credit Party or
any of its Subsidiaries which has, or could reasonably be expected to have, a
Material Adverse Effect.
53
Section 3.25 Consummation of IPO.
The IPO has been consummated substantially in accordance with the terms
of the Transaction Documents. As of the Closing Date, the Transaction Documents
have not been altered, amended or otherwise modified or supplemented in any
material respect nor has any material condition thereof been waived without the
prior written consent of the Administrative Agent.
Section 3.26 Absence of Certain Changes or Events.
Since December 30, 2001, except as set forth on Schedule 3.26, as of
the Closing Date, none of the Credit Parties has (i) issued any stock, bonds or
other corporate securities, (ii) borrowed any amount or incurred any liabilities
(absolute or contingent), other than in the ordinary course of business, in
excess of $100,000, (iii) discharged or satisfied any Lien or incurred or paid
any obligation or liability (absolute or contingent), other than in the ordinary
course of business in excess of $100,000, (iv) declared or made any payment or
distribution to stockholders or purchased or redeemed any shares of its Capital
Stock or other securities, (v) mortgaged, pledged or subjected to Lien any of
its assets, tangible or intangible, (vi) sold, assigned or transferred any of
its tangible assets, or canceled any debts or claims, (vii) sold, assigned or
transferred any Intellectual Property or other intangible assets, (viii)
suffered any losses of property, or waived any rights of substantial value, (ix)
expended any material amount, granted any bonuses to executive officers in
excess of $500,000 in the aggregate or extraordinary salary increases, (x)
entered into any transaction involving consideration in excess of $100,000
except as otherwise contemplated hereby or (xi) entered into any agreement or
transaction, or amended or terminated any agreement with any Affiliate. To the
knowledge of the Credit Parties, no material adverse change in the business,
operations, property or condition (financial or otherwise) of the Credit
Parties, taken as a whole, could reasonably be expected to occur.
Section 3.27 Material Contracts.
Schedule 3.27 sets forth a complete and accurate list of all Material
Contracts of the Borrowers and their Subsidiaries in effect as of the Closing
Date. As of the Closing Date, other than as set forth in Schedule 3.27, each
such Material Contract is, and after giving effect to the transactions
contemplated by the Credit Documents will be, in full force and effect in
accordance with the terms thereof and no Borrower or Subsidiary thereof has
violated in any material respect any such Material Contract. The Borrowers have
delivered to the Administrative Agent for its review a correct and complete copy
of each written agreement listed in Schedule 3.27 (as amended to date) and a
written summary setting forth the terms and conditions of each oral agreement
referred to in such Schedule.
Section 3.28 Capitalization.
As of the Closing Date, after giving effect to the IPO and the
transactions contemplated herein, the capitalization of the Borrower shall be as
set forth on Schedule 3.28.
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ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions to Closing and Initial Extensions of Credit.
This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Extensions of Credit on the Closing Date is subject
to, the satisfaction of the following conditions precedent:
(a) Execution of Credit Documents. The Administrative Agent shall have
received (i) counterparts of this Agreement, (ii) for the account of each
applicable Lender, a Revolving Note, (iii) for the account of the Swingline
Lender, the Swingline Note, and (iv) counterparts of the Security Agreement, the
Pledge Agreement and each Mortgage Instrument, in each case conforming to the
requirements of this Agreement and executed by a duly authorized officer of each
party thereto, and in each case in form and substance reasonably satisfactory to
the Lenders.
(b) Authority Documents. The Administrative Agent shall have received
the following:
(i) Articles of Incorporation/Charter Documents. Copies of the
articles of incorporation or other charter documents, as applicable, of
each Credit Party certified to be true and complete as of a recent date
by the appropriate Governmental Authority of the state of its
incorporation.
(ii) Resolutions. Copies of resolutions of the board of directors
of each Credit Party approving and adopting the Credit Documents, the
transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary of
such Credit Party (pursuant to a secretary's certificate in
substantially the form of Schedule 4.1-1 attached hereto) as of the
Closing Date to be true and correct and in force and effect as of such
date.
(iii) Bylaws/Operating Agreement. A copy of the bylaws or
comparable operating agreement of each Credit Party certified by a
secretary or assistant secretary of such Credit Party (pursuant to a
secretary's certificate in substantially the form of Schedule 4.1-1
attached hereto) as of the Closing Date to be true and correct and in
force and effect as of such date.
(iv) Good Standing. Copies of certificates of good standing,
existence or its equivalent with respect to each Credit Party certified
as of a recent date by the appropriate Governmental Authorities of the
state of incorporation or organization and each other state in which
the failure to so qualify and be in good standing could reasonably be
expected to have a Material Adverse Effect on the business or
operations of the Credit Parties and their Subsidiaries in such state.
55
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary (pursuant to a
secretary's certificate in substantially the form of Schedule 4.1-1
attached hereto) to be true and correct as of the Closing Date.
(c) Legal Opinions of Counsel. The Administrative Agent shall have
received opinions of legal counsel (including local counsel to the extent
required by the Administrative Agent) for the Credit Parties, dated the Closing
Date and addressed to the Administrative Agent and the Lenders in form and
substance reasonably acceptable to the Administrative Agent.
(d) Reliance. The Administrative Agent shall have received a copy of
each opinion, report, agreement, and other document required to be delivered
pursuant to the Transaction Documents in connection with the IPO and related
transactions all in form and substance reasonably satisfactory to the
Administrative Agent.
(e) Personal Property Collateral. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of each Credit Party, the
state of incorporation or organization of each Credit Party and each
jurisdiction where any Collateral is located or where a filing would
need to be made in order to perfect the Administrative Agent's security
interest in the Collateral and copies of the financing statements on
file in such jurisdictions;
(ii) UCC financing statements for each appropriate jurisdiction
as is necessary, in the Administrative Agent's sole discretion, to
perfect the Administrative Agent's security interest in the Collateral;
(iii) searches of ownership of Intellectual Property in the
appropriate governmental offices and such patent/trademark/copyright
filings as reasonably requested by the Administrative Agent in order to
perfect the Administrative Agent's security interest in the
Intellectual Property;
(iv) all stock or membership certificates, if any, evidencing the
Capital Stock pledged to the Administrative Agent pursuant to the
Pledge Agreement, together with duly executed in blank undated stock or
transfer powers attached thereto;
(v) all instruments and chattel paper individually in excess of
$250,000 in the possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or appropriate to perfect
the Administrative Agent's security interest in such instruments and
chattel paper;
(vi) with respect to any Collateral with a fair market value in
excess of $250,000 in the aggregate held by a warehouseman or a bailee,
such estoppel letter, consent and waiver from such warehousemen or
bailee as may be required by the Administrative Agent;
56
(vii) in the case of any warehouse, plant or other real property
material to the Credit Parties' business that is leased by a Credit
Party, such estoppel letters, consents and waivers from the landlords
on such real property as may be required by the Administrative Agent;
(viii) with respect to the deposit accounts and securities
accounts of the Credit Parties, such control agreements as may be
reasonably required by the Administrative Agent;
(ix) with respect to any Material Contract, such collateral
assignment and consent to collateral assignment as may be required by
the Administrative Agent; and
(x) such other duly executed agreements or consents as are
necessary, in the Administrative Agent's reasonable discretion, to
perfect the Administrative Agent's security interest in the Collateral.
(f) Real Property Collateral. The Administrative Agent shall have
received, in form and substance reasonably satisfactory to the Administrative
Agent:
(i) fully executed and notarized mortgages, deeds of trust or
deeds to secure debt (each, as the same may be amended, modified,
restated or supplemented from time to time, a "Mortgage Instrument" and
collectively the "Mortgage Instruments") encumbering the fee interest
in the properties listed in Schedule 4.1-2 as properties owned by the
Credit Parties (each a "Mortgaged Property" and collectively the
"Mortgaged Properties");
(ii) a title report in respect of each of the Mortgaged
Properties;
(iii) with respect to each Mortgaged Property, an ALTA mortgagee
title insurance policy issued by a title insurance company (the "Title
Insurance Company") selected by the Borrower and reasonably acceptable
to the Administrative Agent (the "Mortgage Policies"), in amounts
reasonably satisfactory to the Administrative Agent, assuring the
Administrative Agent that each of the Mortgage Instruments creates a
valid and enforceable first priority mortgage lien on the applicable
Mortgaged Property, free and clear of all defects and encumbrances
except Permitted Liens, which Mortgage Policies shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall
provide for affirmative insurance and such reinsurance as the
Administrative Agent may reasonably request, all of the foregoing in
form and substance reasonably satisfactory to the Administrative Agent;
(iv) evidence as to (A) whether any Mortgaged Property is in an
area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards (a "Flood Hazard Property") and (B)
if any Mortgaged Property is a Flood Hazard Property, (1) whether the
community in which such Mortgaged Property is located is participating
in the National Flood Insurance Program, (2) the applicable Credit
Party's written acknowledgment of receipt of written notification from
the Administrative
57
Agent (y) as to the fact that such Mortgaged Property is a Flood Hazard
Property and (z) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood
Insurance Program and (3) copies of insurance policies or certificates
of insurance of the Credit Parties and their Subsidiaries evidencing
flood insurance reasonably satisfactory to the Administrative Agent and
naming the Administrative Agent as loss payee on behalf of the Lenders;
(v) maps or plats of an as-built survey of the sites of the
owned Mortgaged Properties certified to the Administrative Agent and
the Title Insurance Company in a manner reasonably satisfactory to
them, dated a date reasonably satisfactory to each of the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor selected by the Borrower and
reasonably satisfactory to each of the Administrative Agent and the
Title Insurance Company, which maps or plats and the surveys on which
they are based shall be sufficient to delete any standard printed
survey exception contained in the applicable Mortgage Policy and be
made in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the American Land
Title Association and the American Congress on Surveying and Mapping in
1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback
lines; (B) the lines of streets abutting the sites and width thereof;
(C) all access and other easements appurtenant to the sites necessary
to use the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (F) if the site is described as being on
a filed map, a legend relating the survey to such map;
(vi) satisfactory environmental reviews of all owned
Mortgaged Properties, including but not limited to Phase I
environmental assessments, together with reliance letters in favor of
the Lenders;
(vii) opinions of counsel to the Credit Parties for each
jurisdiction in which the Mortgaged Properties are located;
(viii) to the extent readily available, zoning letters from
each municipality or other Governmental Authority for each jurisdiction
in which the Mortgaged Properties are located; and
(ix) to the extent requested by the Administrative Agent,
with respect to each leased Mortgaged Property, a landlord waiver in
form and substance reasonably satisfactory to the Administrative Agent.
(g) Liability, Casualty and Business Interruption Insurance. The
Administrative Agent shall have received copies of insurance policies or
certificates of insurance evidencing
58
liability and casualty insurance meeting the requirements set forth herein or in
the Security Documents and business interruption insurance satisfactory to the
Administrative Agent. The Administrative Agent shall be named as loss payee or
mortgagee, as its interest may appear, and/or additional insured with respect to
such insurance, and each provider of any such insurance shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Administrative Agent, that it will give the
Administrative Agent thirty (30) days prior written notice before any such
policy or policies shall be altered or canceled.
(h) Fees. The Administrative Agent and the Lenders shall have received
all fees, if any, owing pursuant to the Fee Letter and Section 2.4.
(i) Litigation. Except for litigation disclosed on Schedule 3.6, there
shall not exist any material litigation, investigation, bankruptcy or
insolvency, injunction, order or claim affecting or relating to any Credit Party
or any of its Subsidiaries or with respect to this Agreement and the other
Credit Documents or the IPO, that has not been settled, dismissed, vacated,
discharged or terminated prior to the Closing Date.
(j) Solvency Certificate. The Administrative Agent shall have received
an officer's certificate prepared by the chief financial officer of the Parent
as to the financial condition, solvency and related matters of each Credit
Party, in each case after giving effect to the IPO and the initial borrowings
under the Credit Documents, in substantially the form of Schedule 4.1-2 hereto.
(k) Account Designation Letter. The Administrative Agent shall have
received the executed Account Designation Letter in the form of Schedule 1.1-1
hereto.
(l) Corporate Structure. The corporate, capital and ownership structure
of the Credit Parties and their Subsidiaries (after giving effect to the IPO)
shall be as described in Schedule 3.12, and shall otherwise be reasonably
satisfactory to the Administrative Agent and the Lenders. The Administrative
Agent and the Lenders shall be satisfied with all legal, tax, accounting,
business and other matters relating to the IPO or to the Credit Parties and
their Subsidiaries, in each case after giving effect to the IPO.
(m) Transaction Documents. The Administrative Agent shall have reviewed
and approved in its reasonable discretion all of the Transaction Documents and
the IPO shall have been consummated in accordance with the terms of the
Transaction Documents (without waiver of any conditions precedent to the
obligations of any party thereto). The Administrative Agent shall be reasonably
satisfied with the aggregate amount of fees and expenses payable in connection
with the consummation of the IPO. The Administrative Agent shall have received a
copy, certified by an officer of the Borrower as true and complete, of each
Transaction Document as originally executed and delivered, together with all
exhibits and schedules thereto.
(n) IPO Proceeds. The Parent shall have received (or simultaneously
with the closing of the Loans hereunder, the Parent will receive) cash equity
proceeds from the IPO in an amount
59
not less than $43,000,000 on terms and conditions reasonably acceptable to the
Administrative Agent.
(o) Consents. The Administrative Agent shall have received evidence
that all material governmental, shareholder, board of director and third party
consents and approvals necessary in connection with the financings and other
transactions contemplated hereby (including the IPO) have been obtained and all
applicable waiting periods have expired without any action being taken by any
authority that could restrain, prevent or impose any material adverse conditions
on such transactions.
(p) Due Diligence. The Administrative Agent and the Arranger shall have
completed in form and scope reasonably satisfactory thereto their business,
legal, financial and environmental due diligence of the Credit Parties and their
Subsidiaries (including due diligence relating to management, strategy, material
customers and contracts).
(q) Compliance with Laws. The financings and other transactions
contemplated hereby shall be in compliance with all applicable laws and
regulations (including all applicable securities and banking laws, rules and
regulations).
(r) Bankruptcy. There shall be no bankruptcy or insolvency proceedings
with respect to any Credit Party or any of its Subsidiaries.
(s) Material Adverse Effect. No material adverse change shall have
occurred since December 31, 2001 in the business, properties, operations or
financial condition of the Parent or any of its Subsidiaries.
(t) Minimum Consolidated EBITDA. The Administrative Agent shall have
received evidence reasonably satisfactory thereto provided by the Borrower that
Consolidated EBITDA of the Parent and its Subsidiaries is not less than
$30,000,000 for the Reference Period ending as of the fiscal quarter end most
recently occurring prior to the Closing Date for which such information is
available.
(u) Maximum Leverage Ratio. The Administrative Agent shall have
received evidence reasonably satisfactory thereto provided by the Borrower that
the Leverage Ratio of the Parent and its Subsidiaries on a pro forma basis as of
the Closing Date after giving effect to the consummation of the IPO shall not
exceed 1.35 to 1.00.
(v) Financial Statements. The Administrative Agent shall have received
copies of the financial statements and other financial information referred to
in Section 3.1 hereof, each in form and substance reasonably satisfactory to it.
(w) Termination of Existing Indebtedness. All existing Indebtedness for
borrowed money of the Credit Parties and their Subsidiaries (other than the
Indebtedness listed on Schedule 6.1(b)) shall have been repaid in full and
terminated and all Liens relating thereto shall have been terminated.
60
(x) Officer's Certificates. The Administrative Agent shall have received
a certificate executed by a Responsible Officer of the Parent as of the Closing
Date stating that (i) no pending or, to the knowledge of any Credit Party,
threatened litigation, investigation, bankruptcy or insolvency, injunction,
order or claim affecting or relating to any Credit Party or any of its
Subsidiaries, this Agreement and the other Credit Documents or the IPO, that has
not been settled, dismissed, vacated, discharged or terminated prior to the
Closing Date and (ii) immediately after giving effect to this Credit Agreement
(including the initial Extensions of Credit hereunder), the other Credit
Documents, the IPO and the Transaction Documents and all the transactions
contemplated therein to occur on such date, (A) no Default or Event of Default
exists, (B) all representations and warranties contained herein and in the other
Credit Documents are true and correct in all material respects, and (C) the
Credit Parties are in compliance with each of the financial covenants set forth
in Section 5.9 on a pro forma basis (which for purposes hereof shall be
calculated in the manner set forth on Schedule 4.1-4).
(y) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Administrative Agent and
its counsel.
Section 4.2 Conditions to All Extensions of Credit.
The obligation of each Lender to make any Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent on the date of
making such Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein, in the Security Documents or
which are contained in any certificate furnished at any time under or in
connection herewith shall be true and correct on and as of the date of such
Extension of Credit as if made on and as of such date, except for
representations and warranties expressly stated to relate to a specific
earlier date.
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect
to such Extension of Credit.
(c) Compliance with Commitments. Immediately after giving effect
to the making of any such Extension of Credit (and the application of the
proceeds thereof), (i) the sum of outstanding Revolving Loans plus
outstanding Swingline Loans plus LOC Obligations shall not exceed the
Revolving Committed Amount, (ii) the LOC Obligations shall not exceed the
LOC Committed Amount and (iii) the Swingline Loans shall not exceed the
Swingline Committed Amount.
(d) Additional Conditions to Revolving Loans. If a Revolving Loan
is requested, all conditions set forth in Section 2.1 shall have been
satisfied.
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(e) Additional Conditions to Swingline Loans. If a Swingline Loan
is requested, all conditions set forth in Section 2.3 shall have been
satisfied.
(f) Additional Conditions to Letters of Credit. If the issuance of
a Letter of Credit is requested, all conditions set forth in Section 2.2
shall have been satisfied.
Each request for an Extension of Credit and each acceptance by the Borrower
of any such Extension of Credit shall be deemed to constitute representations
and warranties by the Borrower as of the date of such Extension of Credit that
the applicable conditions in paragraphs (a) through (f) of this Section have
been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
The Credit Parties hereby covenant and agree that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations together with interest, Commitment Fee and all other amounts owing
to the Administrative Agent or any Lender hereunder, are paid in full, the
Credit Parties shall, and shall cause each of their Subsidiaries (other than in
the case of Sections 5.1, 5.2 or 5.7 hereof), to:
Section 5.1 Financial Statements.
Furnish to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, but in any event
within ninety (90) days after the end of each fiscal year of the Parent, a copy
of the consolidated balance sheet of the Parent and its consolidated
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows of the Parent and
its consolidated Subsidiaries for such year which, shall be audited by a firm of
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification indicating that
the scope of the audit was inadequate to permit such independent certified
public accountants to certify such financial statements without such
qualification;
(b) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each fiscal quarter of the
Parent, a copy of the consolidated balance sheet of the Parent and its
consolidated Subsidiaries as at the end of such period and related consolidated
statements of income and retained earnings and of cash flows for the Parent and
its consolidated Subsidiaries for such quarterly period and for the portion of
the fiscal year ending with such period, in each case setting forth in
comparative form consolidated figures for the corresponding period or periods of
the preceding fiscal year and current year budget (subject to normal recurring
year-end audit adjustments);
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(c) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 5.1(a) and 5.1(b) above, a certificate of a
Responsible Officer of the Parent substantially in the form of Schedules 5.1(c),
(i) demonstrating compliance with the financial covenants contained in Section
5.9 by calculation thereof as of the end of each such fiscal period and (iii)
stating that no Default or Event of Default exists, or if any Default or Event
of Default does exist, specifying the nature and extent thereof and what action
the Credit Parties propose to take with respect thereto.
(d) Annual Operating Budget and Cash Flow. As soon as available, but in
any event within thirty (30) days following the end of each fiscal year, a copy
of the detailed annual operating budget or plan including cash flow projections
of the Parent and its Subsidiaries for the next four fiscal quarter period
prepared on a quarterly basis, in form and detail reasonably acceptable to the
Administrative Agent, together with a summary of the material assumptions made
in the preparation of such annual budget or plan;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.
Section 5.2 Certificates; Other Information.
Furnish to the Administrative Agent and each of the Lenders:
(a) concurrently with the delivery of the financial statements referred
to in Section 5.1(a) above, a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default with respect to the provisions of Section 5.9, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements referred
to in Sections 5.1(a) and (b) above, a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer's knowledge, each of the
Credit Parties during such period observed or performed in all material respects
all of its covenants and other agreements, and satisfied in all material
respects every condition contained in this Agreement to be observed, performed
or satisfied by it, and that such Responsible Officer has obtained no knowledge
of any Default or Event of Default except as specified in such certificate and
such certificate shall include the calculations in reasonable detail required to
indicate compliance with Section 5.9 as of the last day of such period
(provided, however with respect to the financial covenants contained in Section
5.9 and contained in any such compliance certificate delivered for a period that
is not as of the last day of a fiscal quarter, such calculations shall be for
informational purposes only and shall not measure compliance (or lack of
compliance) with such financial covenants) and that the
63
financial information provided have been prepared in accordance with GAAP
applied consistently for the periods related thereto;
(c) within ninety (90) days after the end of each fiscal year of the
Borrower, a certificate containing information regarding the amount of all Asset
Dispositions, Debt Issuances, and Equity Issuances that were made during the
prior fiscal year and amounts received in connection with any Recovery Event
during the prior fiscal year;
(d) promptly upon receipt thereof, a copy of any other report or
"management letter" submitted by independent accountants to the Borrower or any
of its Subsidiaries in connection with any annual, interim or special audit of
the books of such Person;
(e) concurrently with the delivery of the financial statements referred
to in Sections 5.1(a) and 5.1(b) above, a management report (i) describing the
operations and financial condition of the Credit Parties for the quarter then
ended and the portion of the current fiscal year then elapsed (or for the fiscal
year then ended in the case of year-end financials), (ii) setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the most recent
projections for the current fiscal year, and (iii) discussing the reasons for
any significant variations. The information above shall be presented in
reasonable detail and shall be certified by the chief financial officer of the
Borrower to the effect that such information fairly presents the results of
operations and financial condition of the Credit Parties as at the dates and for
the periods indicated (subject to normal year-end audit adjustments);
(f) promptly after the same are sent or upon their becoming available,
copies of (i) all Securities and Exchange Commission reports of the Credit
Parties, (ii) all financial statements, reports, notices and proxy statements
sent or made available by the Credit Parties to their equityholders, (iii) all
regular and periodic reports and all registration statements and prospectuses,
if any, filed by any of the Credit Parties with any securities exchange or with
the Securities and Exchange Commission or any governmental or private regulatory
authority, and (iv) all press releases and other statements made available by
any of the Credit Parties to the public concerning material developments in the
business of any of the Credit Parties;
(g) not less than twenty (20) Business Days prior to the consummation of
any Permitted Acquisition with Total Consideration in excess of $1,000,000:
(i) a reasonably detailed description of the material terms of
such Permitted Acquisition (including, without limitation, the purchase
price and method and structure of payment) and of each Target;
(ii) audited (to the extent available) financial statements of the
Target for its two (2) most recent fiscal years prepared by independent
certified public accountants acceptable to the Administrative Agent and
unaudited fiscal year-to-date statements for the two (2) most recent
interim periods;
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(iii) consolidated projected income statements of the Parent and its
consolidated Subsidiaries (giving effect to such Permitted Acquisition and
the consolidation with the Parent of each relevant Target) for the three
(3)-year period following the consummation of such Permitted Acquisition,
in reasonable detail, together with any appropriate statement of
assumptions and pro forma adjustments reasonably acceptable to the Required
Lenders;
(iv) a certificate, in form and substance reasonably satisfactory
to the Administrative Agent, executed by a Responsible Officer of the
Parent (A) setting forth the best good faith estimate of the Total
Consideration to be paid for each Target, (B) certifying that (y) such
Permitted Acquisition complies with the requirements of this Credit
Agreement and (z) after giving effect to such Permitted Acquisition and any
borrowings in connection therewith, the Parent believes in good faith that
it will have sufficient availability under the Revolving Commitments to
meet its ongoing working capital requirements and (C) demonstrating
compliance with clauses (b), (c), (d) and (e) of the definition of the
Permitted Acquisition; and
(v) any due diligence reports prepared by, or on behalf of, any
Credit Party with respect to the Target; and
(h) promptly, such additional financial and other information as the
Administrative Agent, or any Lender through the Administrative Agent, may from
time to time reasonably request.
Section 5.3 Payment of Taxes and Other Obligations.
Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its taxes (Federal, state, local and
any other taxes) and other material obligations and liabilities of whatever
nature and any additional costs that are imposed as a result of any failure to
so pay, discharge or otherwise satisfy such taxes, obligations and liabilities
(except where the failure to pay, discharge or satisfy such obligations and
liabilities (other than taxes) could not reasonably be expected to have a
Material Adverse Effect), except when the amount or validity of any such taxes,
obligations and liabilities is currently being contested in good faith by
appropriate proceedings and reserves, if applicable, in conformity with GAAP
with respect thereto have been provided on the books of the Credit Parties.
Section 5.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as conducted by it
on the Closing Date; preserve, renew and keep in full force and effect its
existence and good standing and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business and to maintain its goodwill; comply with all Material Contracts
and Requirements of Law applicable to it except to the extent that failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
65
Section 5.5 Maintenance of Property; Insurance.
(a) Keep all material property useful and necessary in its business in
good working order and condition (ordinary wear and tear and obsolescence
excepted).
(b) Maintain with financially sound and reputable insurance companies
(i) (A) insurance on all its property (including without limitation its tangible
Collateral) and (B) business interruption insurance or a similar type of
insurance coverage, in each case insuring against at least such risks as are
usually insured against in the same or a similar business and (ii) key man life
insurance on Xxxxxxx X. Xxxxxx in a minimum amount of $5,000,000; and furnish to
the Administrative Agent, upon written request, full information as to the
insurance carried. The Administrative Agent shall be named as loss payee or
mortgagee, as its interest may appear, or an additional insured, as applicable,
with respect to such insurance policies, and each provider of such insurance
policies shall agree, by endorsement upon the policy or policies issued by it or
by independent instruments furnished to the Administrative Agent, that it will
give the Administrative Agent thirty (30) days prior written notice before any
such policy or policies shall be altered or canceled, and that no act or default
of any Credit Party or any of its Subsidiaries or any other Person shall affect
the rights of the Administrative Agent or the Lenders under such policy or
policies. The present insurance coverage of the Credit Parties as of the Closing
Date is outlined as to carrier, policy number, expiration date, type and amount
on Schedule 5.5(b).
(c) In case of any material loss, damage to or destruction of the
Collateral of any Credit Party or any material part thereof, such Credit Party
shall promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. In case of any
loss, damage to or destruction of the Collateral of any Credit Party or any
material part thereof, such Credit Party, whether or not the insurance proceeds,
if any, received on account of such damage or destruction shall be sufficient
for that purpose, at such Credit Party's cost and expense, will promptly repair
or replace the Collateral of such Credit Party so lost, damaged or destroyed.
Section 5.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and accounts in which full, true and correct
entries (in all material respects) shall be made of all dealings and
transactions in relation to its businesses and activities, such entries to be in
conformity with GAAP and all Requirements of Law; and permit, during regular
business hours and upon reasonable notice by the Administrative Agent or any
Lender, the Administrative Agent or any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired, and to discuss
the business, operations, properties and financial and other condition of the
Credit Parties and their Subsidiaries with officers and employees of the Credit
Parties and with its independent certified public accountants.
Section 5.7 Notices.
Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:
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(a) promptly, but in any event within two (2) Business Days after any
Credit Party knows or has reason to know thereof, the occurrence of any Default
or Event of Default;
(b) promptly, the occurrence of any default or event of default under
any Material Contracts of any Credit Party or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect or involve a
monetary claim in excess of $1,000,000;
(c) promptly, any litigation, or any investigation or proceeding known
to any Credit Party (i) affecting any Credit Party or any of its Subsidiaries
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect or involve a monetary claim in excess of $1,000,000, (ii)
affecting or with respect to this Agreement or any other Credit Document or
(iii) involving an environmental claim or potential liability under
Environmental Laws in excess of $1,000,000;
(d) as soon as possible and in any event within thirty (30) days after
any Credit Party knows or has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in favor
of the PBGC (other than a Permitted Lien) or a Plan or any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
any Credit Party or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan;
(e) any notice of any material violation of any Requirement of Law
received by any Credit Party or any of its Subsidiaries from any Governmental
Authority including, without limitation, any notice of material violation of
Environmental Laws;
(f) any labor controversy that has resulted in, or threatens to result
in, a strike or other work action against any Credit Party or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect;
(g) any attachment, judgment, lien, levy or order exceeding $500,000
that may be assessed against any Credit Party other than Permitted Liens; and
(h) promptly, any other development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Credit Parties propose to take with respect thereto.
In the case of any notice of a Default or Event of Default, the Borrower shall
specify that such notice is a Default or Event of Default notice on the face
thereof.
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Section 5.8 Environmental Laws.
(a) Comply in all material respects with, and take reasonable steps to
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and take reasonable steps to ensure that
all tenants and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not
reasonably be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective employees, agents, officers and directors, from
and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Credit Parties or any of their Subsidiaries
or the Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorney's and consultant's fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that any of the
foregoing arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor as determined by a court of competent
jurisdiction in a final and non-appealable judgment. The agreements in this
paragraph shall survive repayment of the Credit Party Obligations.
Section 5.9 Financial Covenants.
Commencing on the day immediately following the Closing Date, the Credit
Parties shall comply with the following financial covenants:
(a) Leverage Ratio. The Leverage Ratio, as of the last day of each
fiscal quarter of the Parent occurring during the periods set forth below, shall
be less than or equal to the ratios corresponding to such periods:
---------------------------------------------------------------------------
Period Maximum Ratio
---------------------------------------------------------------------------
Closing Date through and including December 2.00 to 1.0
29, 2002
December 30, 2002 through and including 1.75 to 1.0
October 5, 2003
October 6, 2003 and thereafter 1.50 to 1.0
---------------------------------------------------------------------------
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(b) Consolidated EBITDA. Consolidated EBITDA, as of the last day of each
fiscal quarter of the Parent occurring during the periods set forth below, shall
be greater than or equal to the amount corresponding to such periods:
---------------------------------------------------------------------------
Period Minimum Amount
---------------------------------------------------------------------------
Closing Date through and including December $27,500,000
29, 2002
December 30, 2002 through and including July $28,500,000
13, 2003
July 14, 2003 through and including December $29,000,000
26, 2004
December 27, 2004 and thereafter $30,000,000
---------------------------------------------------------------------------
(c) Relative Consolidated EBITDA. Consolidated EBITDA, as of the last
day of each fiscal quarter of the Parent shall not be less than the product of
(i) Consolidated EBITDA for the Reference Period ending as of the end of the
immediately preceding fiscal quarter multiplied by (ii) .90.
(d) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as of
the last day of each fiscal quarter of the Parent shall be greater than or equal
to 1.25 to 1.0.
(e) Consolidated Capital Expenditures. Consolidated Capital Expenditures
made in cash by the Credit Parties shall not exceed the following amounts for
each of the annual periods set forth below:
---------------------------------------------------------------------------
Fiscal Year Amount
---------------------------------------------------------------------------
Closing Date through fiscal year end of 2002 $14,000,000
2003 $45,000,000
2004 $52,000,000
2005 $55,000,000
---------------------------------------------------------------------------
provided, however that the amount available for Consolidated Capital
Expenditures during any fiscal year shall be increased in an amount not to
exceed $10,000,000 in the aggregate by utilizing any unused amount which was
otherwise available to be used in accordance with the chart set forth above from
the immediately preceding fiscal year (excluding any carry-forward available
from any fiscal year occurring prior to such immediately preceding fiscal year).
Section 5.10 Additional Subsidiary Guarantors.
The Credit Parties will cause each of their Domestic Subsidiaries, whether
newly formed, after acquired or otherwise existing, to promptly become a
Guarantor hereunder by way of execution of a Joinder Agreement. In connection
therewith, the Credit Parties shall give notice to the Administrative Agent not
less than fifteen (15) days prior to creating a Subsidiary, or acquiring the
Capital Stock of any other Person. The guaranty obligations of any such
Additional Credit Party shall be secured by, among other things, the Collateral
of the Additional Credit Party and a pledge of 100% of the Capital Stock of its
Domestic Subsidiaries that such
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Additional Credit Party owns and 65% (or such higher percentage that would not
result in material adverse tax consequences for such Additional Credit Party) of
the voting Capital Stock and 100% of the non-voting Capital Stock of its
first-tier Foreign Subsidiaries. In connection with the foregoing, the Credit
Parties shall deliver to the Administrative Agent such charter and
organizational documents and opinions of counsel as the Administrative Agent may
reasonably request.
Section 5.11 Compliance with Law.
Each Credit Party will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction could
reasonably be expected to have a Material Adverse Effect.
Section 5.12 Pledged Assets.
(a) Each Credit Party will, and will cause each of its Subsidiaries to,
cause 100% of the Capital Stock of each of its direct or indirect Domestic
Subsidiaries that such Credit Party owns and 65% of the voting Capital Stock and
100% of the non-voting Capital Stock of each of its first-tier Foreign
Subsidiaries that such Credit Party owns to be subject at all times to a first
priority, perfected Lien in favor of the Administrative Agent pursuant to the
terms and conditions of the Security Documents or such other security documents
as the Administrative Agent shall reasonably request.
(b) If, subsequent to the Closing Date, a Credit Party shall acquire any
securities, instruments having a fair market value in excess of $250,000,
chattel paper evidencing obligations in excess of $250,000, owned real property
or other personal property having a fair market value in excess of
$250,000required for perfection to be delivered to the Administrative Agent as
Collateral hereunder or under any of the Security Documents or if any owned real
property which has previously been subject to a mortgage or deed of trust in
favor of a third party shall cease to be subject to such encumbrance, the
Borrower shall promptly (and in any event within three (3) Business Days) after
such acquisition or release of encumbrance notify the Administrative Agent of
same. Each Credit Party shall, and shall cause each of its Subsidiaries to, take
such action at its own expense as may be necessary or otherwise reasonably
requested by the Administrative Agent (including, without limitation, any of the
actions described in Section 4.1(e) hereof) to ensure that the Administrative
Agent has a first priority perfected Lien to secure the Credit Party Obligations
in (i) all Collateral of the Credit Parties located in the United States and
(ii) to the extent deemed to be material by the Administrative Agent in its
reasonable discretion, all other personal property (other than items of
Collateral that are excluded from the Security Documents) or owned real property
of the Credit Parties, subject in each case only to Permitted Liens.
Section 5.13 Covenants Regarding Intellectual Property.
(a) Each Credit Party shall notify the Administrative Agent promptly if
it knows that any application, letters patent or registration relating to any
material Patent or material
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Trademark of such Credit Party or any of its Subsidiaries may become abandoned,
or of any adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office or any court) regarding such
Credit Party's or any of its Subsidiary's ownership of any material Patent or
material Trademark, its right to patent or register the same, or to enforce,
keep and maintain the same, or its rights under any material Patent License or
material Trademark License.
(b) Each Credit Party shall notify the Administrative Agent promptly
after it knows of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in any court) regarding any material Copyright of such Credit Party
or any of its Subsidiaries, whether (i) such material Copyright may become
invalid or unenforceable prior to its expiration or termination, or (ii) such
Credit Party's or any of its Subsidiary's ownership of such material Copyright,
its right to register the same or to enforce, keep and maintain the same, or its
rights under such material Copyright License, may become affected.
(c) (i) Each Credit Party shall promptly notify the Administrative
Agent of any filing by such Credit Party or any of its Domestic Subsidiaries,
either itself or through any agent, employee, licensee or designee (but in no
event later than the fifth Business Day following the last day of the fiscal
quarter in which such filing occurs), of any application for registration of any
Intellectual Property with the United States Copyright Office or United States
Patent and Trademark Office or any similar office or agency in any other country
or any political subdivision thereof.
(ii) Concurrently with the delivery of the quarterly and annual
financial statements of the Borrower pursuant to Section 5.1(a) and (b)
hereof, the Borrower shall provide to the Administrative Agent and its
counsel a complete and correct list of all new Intellectual Property owned
by or licensed to the Borrower or any of its Domestic Subsidiaries with
respect to which the Administrative Agent has not filed a notice of grant
of security interest with the United States Patent and Trademark Office or
the United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, as applicable.
(iii) Upon request of the Administrative Agent, each Credit Party
shall execute and deliver any and all agreements, instruments, documents,
and papers as the Administrative Agent may reasonably request to evidence
the Administrative Agent's security interest in the Intellectual Property
and the general intangibles (including goodwill) related thereto or
represented thereby.
(d) The Credit Parties and their Subsidiaries will take all necessary
actions, including, without limitation, in any proceeding before the United
States Patent and Trademark Office or the United States Copyright Office, to
maintain the registration of each material registered Copyright, Patent and
Trademark owned by the Credit Parties and their Subsidiaries, including, without
limitation, payment of maintenance fees, filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings.
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(e) In the event that any Credit Party becomes aware that any
Intellectual Property is infringed, misappropriated or diluted by a third party
in any material respect, such Credit Party shall notify the Administrative Agent
promptly after it learns thereof and shall, unless such Credit Party shall
reasonably determine that such Intellectual Property is not material to the
business of such Credit Party or the Credit Parties and their Subsidiaries taken
as a whole, promptly xxx for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as such Credit Party shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property.
Section 5.14 Deposit and Securities Accounts.
The Credit Parties shall maintain each of their material deposit and
securities accounts with (a) a Lender or (b) a financial institution that has
entered into an account control agreement in form and substance reasonably
satisfactory to the Administrative Agent.
Section 5.15 Further Assurances.
Upon the request of the Administrative Agent promptly perform or cause
to be performed any and all acts and execute or cause to be executed any and all
documents which are necessary or advisable to create or maintain in favor of the
Administrative Agent, for the benefit of the Lenders, Liens on all Collateral of
the Credit Parties that are duly perfected in accordance with all applicable
Requirements of Law.
Section 5.16 Post-Closing Requirements.
As soon as practicable, but in any event within the time limitations
set forth on Schedule 5.16 related thereto, the Credit Parties shall have
performed and/or completed each of the items set forth on Schedule 5.16 in form
and substance reasonably satisfactory to the Administrative Agent.
ARTICLE VI
NEGATIVE COVENANTS
The Credit Parties hereby covenant and agree that on the Closing Date,
and thereafter for so long as this Agreement is in effect and until the
Commitments have terminated, no Note remains outstanding and unpaid and the
Credit Party Obligations together with interest, Commitment Fee and all other
amounts owing to the Administrative Agent or any Lender hereunder, are paid in
full that:
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Section 6.1 Indebtedness.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and the other
Credit Documents;
(b) Indebtedness existing as of the Closing Date as referenced in the
financial statements referenced in Section 3.1 (and set out more specifically in
Schedule 6.1(b)) hereto and renewals, refinancings or extensions thereof in a
principal amount not in excess of that outstanding as of the date of such
renewal, refinancing or extension;
(c) Indebtedness incurred after the Closing Date consisting of Capital
Leases or Indebtedness incurred to provide all or a portion of the purchase
price of furniture, fixtures and equipment provided that (i) such Indebtedness
when incurred shall not exceed the purchase price or cost of construction of
such furniture, fixtures and equipment; (ii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing; and (iii) the total amount of all such
Indebtedness shall not exceed $5,000,000 at any time outstanding and renewals,
refinancings or extensions thereof in a principal amount not in excess of that
outstanding as of the date of such renewal, refinancing or extension;
(d) Unsecured intercompany Indebtedness among the Credit Parties;
provided that any such Indebtedness shall be fully subordinated to the Credit
Party Obligations hereunder on terms reasonably satisfactory to the
Administrative Agent;
(e) Indebtedness and obligations owing under Hedging Agreements
relating to the Loans hereunder and other Hedging Agreements entered into in
order to manage existing or anticipated business risks and not for speculative
purposes;
(f) Indebtedness and obligations of Credit Parties owing under
documentary letters of credit for the purchase of goods or other merchandise
(but not under standby, direct pay or other letters of credit except for the
Letters of Credit hereunder) generally;
(g) Indebtedness in respect of Guaranty Obligations to the extent
permitted under Section 6.3;
(h) performance, surety, bid, appeal or similar bonds arising in the
ordinary course of business;
(i) any Indebtedness owing by any Person prior to such Person becoming
a Subsidiary of a Credit Party pursuant to a Permitted Acquisition; provided
that such Indebtedness is not created in contemplation of such acquisition; and
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(j) other Indebtedness of the Credit Parties and their Subsidiaries
which does not exceed $500,000 in the aggregate at any time outstanding.
Section 6.2 Liens.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, contract, create, incur, assume or permit to exist any Lien with respect to
any of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens. Notwithstanding the foregoing, if a Credit Party shall xxxxx x Xxxx on
any of its assets in violation of this Section 6.2, then it shall be deemed to
have simultaneously granted an equal and ratable Lien on any such assets in
favor of the Administrative Agent for the benefit of the Lenders, to the extent
such a Lien has not already been granted to the Administrative Agent.
Section 6.3 Guaranty Obligations.
The Credit Parties will not enter into or otherwise become or be liable
in respect of any Guaranty Obligations (excluding specifically therefrom
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) other than (a) those in favor of the Lenders in
connection herewith, (b) guaranties given by the Borrower or any of its
Subsidiaries in connection with obligations not constituting Indebtedness
including real property leases and other contracts entered into in the ordinary
course of business and (iii) Guaranty Obligations by the Credit Parties and
their Subsidiaries permitted under Section 6.1 (except, as regards Indebtedness
under subsection (b) thereof, only if and to the extent such Indebtedness was
guaranteed on the Closing Date).
Section 6.4 Nature of Business.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, alter its business in any material respect from that conducted as of the
Closing Date.
Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to:
(a) dissolve, liquidate or wind up its affairs, sell,
transfer, lease to a third party or otherwise dispose of its property
or assets or agree to do so at a future time except the following,
without duplication, shall be expressly permitted:
(i) Specified Sales;
(ii) the disposition of property or assets as a result
of a Recovery Event;
(iii) the sale, lease, transfer or other disposition of
(A) machinery, parts and equipment no longer used or useful in
the conduct of the business of the
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Borrower or any of its Subsidiaries and (B) property and
assets located at or used in connection with, or which are
otherwise associated with, restaurants that are not material
to the business of any Credit Party;
(iv) the sale, lease or transfer of property or
assets between Credit Parties, so long as the Liens of the
Administrative Agent with respect to such property or assets
remain in full force and effect and fully perfected after
giving effect to such transaction;
(v) the sale, lease or transfer of the properties
set forth on Schedule 2.6(b)(ii), and
(vi) the sale, lease or transfer of property or
assets not to exceed $1,000,000 in the aggregate in any fiscal
year and $5,000,000 in the aggregate during the term of this
Agreement;
provided, that in each case (other than with respect to clause (iv)
above) (A) at least 75% of the consideration received therefor by any
Credit Party or any such Subsidiary shall be in the form of cash or
Cash Equivalents, (B) after giving effect to the sale, lease, transfer
or other disposition of such property or assets and the repayment of
Indebtedness (if any) with the proceeds thereof, the Credit Parties
shall be in compliance on a pro forma basis with the financial
covenants set forth in Section 5.9 hereof and shall be in compliance
with all other terms and conditions of this Agreement, and (C) no
Event of Default shall exist or shall result from such sale, lease,
transfer or other disposition of property or assets; provided,
further, that with respect to any sale or transfer of property or
assets permitted hereunder to an unrelated third party, the
Administrative Agent shall be entitled, without the consent of the
Lenders or the Required Lenders, to release its Liens relating to the
particular property or assets sold; or
(b) (i) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) the property or
assets of any Person (other than purchases or other acquisitions of
inventory, materials, property and equipment in the ordinary course of
business, except as otherwise limited or prohibited herein) or (ii)
enter into any transaction of merger or consolidation, except for (A)
investments or acquisitions (including Permitted Acquisitions)
permitted pursuant to Section 6.6, and (B) the merger or consolidation
of a Credit Party with and into another Credit Party; provided that if
the Borrower is a party thereto, the Borrower will be the surviving
corporation.
Section 6.6 Advances, Investments and Loans.
-------------------------------
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, lend money or extend credit or make advances to any Person, or purchase or
acquire any Capital Stock, obligations or securities of, or any other interest
in, or make any capital contribution to, any Person except for Permitted
Investments.
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Section 6.7 Transactions with Affiliates.
Except as permitted in subsection (iv), subsection (ix) or subsection
(x) of the definition of Permitted Investments or as permitted under Section
6.11, each of the Credit Parties will not, nor will it permit any Subsidiary to,
enter into any transaction or series of transactions, whether or not in the
ordinary course of business, with any officer, director, shareholder or
Affiliate other than on terms and conditions substantially as favorable as would
be obtainable in a comparable arm's-length transaction with a Person other than
an officer, director, shareholder or Affiliate.
Section 6.8 Ownership of Subsidiaries; Restrictions.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, create, form or acquire any Subsidiaries, except for wholly-owned Domestic
Subsidiaries which are joined as Additional Credit Parties in accordance with
the terms hereof. Each of the Credit Parties will not, nor will it permit any
Subsidiary to, sell, transfer, pledge or otherwise dispose of any Capital Stock
or other equity interests in any of its Subsidiaries, nor will it, or permit any
Subsidiary to, issue, sell, transfer, pledge or otherwise dispose of any of its
Capital Stock or other equity interests, except as required by the Credit
Documents or pursuant to a transaction permitted by Section 6.5(a)(iv).
Section 6.9 Fiscal Year; Organizational Documents; Material Contracts.
Each of the Credit Parties will not, nor will it permit any of its
Subsidiaries to, change its fiscal year. Each of the Credit Parties will not,
nor will they permit any of its Subsidiaries to, amend, modify or change their
articles of incorporation (or corporate charter or other similar organizational
document), operating agreement or bylaws (or other similar document) in any
material respect without the prior written consent of the Required Lenders. Each
of the Credit Parties will not, nor will it permit any of its Subsidiaries to,
without the prior written consent of the Administrative Agent, amend, modify,
cancel or terminate or fail to renew or extend or permit the amendment,
modification, cancellation or termination of any of the Material Contracts
(other than in the ordinary course of business), except in the event that such
amendments, modifications, cancellations or terminations could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 6.10 Limitation on Restricted Actions.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any such
Person to (a) pay dividends or make any other distributions to any Credit Party
on its Capital Stock or with respect to any other interest or participation in,
or measured by, its profits, (b) pay any Indebtedness or other obligation owed
to any Credit Party, (c) make loans or advances to any Credit Party, (d) sell,
lease or transfer any of its properties or assets to any Credit Party, or (e)
act as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Agreement
and the other Credit Documents,
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(ii) applicable law, (iii) any document or instrument governing Indebtedness
maintained pursuant to Section 6.1(b) or incurred pursuant to Section 6.1(c),
provided that any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith or (iv) any Permitted
Lien or any document or instrument governing any Permitted Lien, provided that
any such restriction contained therein relates only to the asset or assets
subject to such Permitted Lien.
Section 6.11 Restricted Payments.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, directly or indirectly, declare, order, make or set apart any sum for or pay
any Restricted Payment, except (a) to make dividends payable solely in the
common stock or equivalent equity interests of such Person, (b) to make
dividends or other distributions payable to any Credit Party (directly or
indirectly through Subsidiaries), (c) so long as no Default or Event of Default
shall have occurred and be continuing, the Parent may redeem and/or repurchase
shares of its Capital Stock pursuant to the terms of any employment agreement of
any officer or director of the Parent or any Subsidiary in an aggregate amount
not to exceed $500,000 in cash during the term of this Agreement and (d) the
Parent may redeem or purchase shares of its Capital Stock from the estate, heirs
or beneficiaries of Xxxxxxx X. Xxxxxx pursuant to the terms of his employment
contract with proceeds received by the Parent directly from the key man life
insurance policy maintained by the Parent pursuant to Section 5.5 in an
aggregate amount not to exceed $5,000,000.
Section 6.12 Sale Leasebacks.
No Credit Party will, directly or indirectly, (i) sell or transfer any
property (whether real, personal or mixed and whether now owned or hereafter
acquired) to a Person that is not a Credit Party (for purposes of this Section
6.12, the "Sale Leaseback Property") and then (ii) promptly lease (whether as an
operating lease or a Capital Lease), or guaranty a lease of, the Sale Leaseback
Property and use the Sale Leaseback Property for substantially the same purpose
in existence prior to the sale or transfer.
Section 6.13 No Further Negative Pledges.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, enter into, assume or become subject to any agreement prohibiting or
otherwise restricting the creation or assumption of any Lien upon its properties
or assets, whether now owned or hereafter acquired, or requiring the grant of
any security to secure obligations under such agreement if security is given for
some other obligation, except (a) pursuant to this Agreement and the other
Credit Documents, (b) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 6.1(c), provided that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith, and (c) in connection with any Permitted Lien
or any document or instrument governing any Permitted Lien, provided that any
such restriction contained therein relates only to the asset or assets subject
to such Permitted Lien.
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Section 6.14 Amendments to Subordinated Debt, etc.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, after the issuance thereof, amend or modify (or permit the amendment or
modification of) any of the terms of any Subordinated Debt of such Credit Party
or Subsidiary if such amendment or modification would add or change any terms in
a manner adverse to the Lenders, or shorten the final maturity or average life
to maturity or require any payment to be made sooner than originally scheduled
or increase the interest rate applicable thereto or change any subordination
provision thereof.
Section 6.15 Operating Lease Obligations.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, enter into, assume or permit to exist any obligations for the payment of
rent under Operating Leases which (a) with respect to all new stores opened in
each fiscal year in the aggregate for all such Persons would exceed (i)
$1,500,000 during fiscal year 2002, (ii) $2,000,000 during fiscal year 2003,
(iii) $2,500,000 in fiscal year 2004 and (iv) $2,500,000 in fiscal year 2005 and
(b) permit such rent obligations with respect to any such Operating Lease to
increase, on a year to year basis, by more than 20% pursuant to the terms of
such Operating Lease.
Section 6.16 Management Fees.
Each of the Credit Parties will not, nor will it permit any Subsidiary
to, directly or indirectly, pay any management, consulting or similar fees to
any Affiliate or to any manager, director, officer or employee of the Credit
Parties or any of their Subsidiaries, other than those payments included in the
corporate overhead of the Parent or any Subsidiary or other payments made in the
ordinary course of business without the prior written consent of the Required
Lenders.
Section 6.17 Parent Holding Company/Maryland Subsidiaries.
The Parent shall not engage in any activities or operations whatsoever,
other than (a) general administrative and other functions required by law, (b)
owning all of the Capital Stock of the Borrower, (c) guaranteeing the Credit
Party Obligations pursuant to the terms of this Agreement and the other Credit
Documents and performing its obligations hereunder and thereunder and (d) those
activities or operations that are incidental to its status as a publicly held
parent holding company. None of the Maryland Subsidiaries shall engage in any
activities or operations whatsoever, other than (a) general administrative and
other functions required by law, (b) owning their respective liquor licenses and
(c) guaranteeing the Credit Party Obligations pursuant to the terms of this
Agreement and the other Credit Documents and performing their respective
obligations hereunder and thereunder.
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ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) The Borrower shall fail to pay any principal on any Loan
when due (whether at maturity, by reason of acceleration or otherwise)
in accordance with the terms hereof; or the Borrower shall fail to
reimburse the Issuing Lender for any LOC Obligations when due (whether
at maturity, by reason of acceleration or otherwise) in accordance with
the terms hereof; or the Borrower shall fail to pay any interest on any
Loan or other Credit Party Obligation or any fee or other amount
payable hereunder when due (whether at maturity, by reason of
acceleration or otherwise) in accordance with the terms hereof and such
failure to pay shall continue unremedied for three (3) Business Days;
or any Guarantor shall fail to pay on the Guaranty in respect of any of
the foregoing or in respect of any other Guaranty Obligations
hereunder; or
(b) Any representation or warranty made or deemed made herein,
in the Security Documents or in any of the other Credit Documents or
which is contained in any certificate, document or financial statement
furnished at any time under or in connection with this Agreement
provided by a Responsible Officer shall prove to have been incorrect,
false or misleading in any material respect on or as of the date made
or deemed made; or
(c) (i) Any Credit Party shall fail to perform, comply with or
observe any term, covenant or agreement applicable to it contained in
Sections 5.1, 5.2, 5.4, 5.6 (with respect to inspections), 5.7 or 5.9
or Article VI hereof; or (ii) any Credit Party shall fail to comply
with any other covenant, contained in this Agreement or the other
Credit Documents (other than as described in Sections 7.1(a) or
7.1(c)(i) above), and in the event such breach or failure to comply is
capable of cure, is not cured within the time prescribed therein, or to
the extent not prescribed therein, within thirty (30) days of its
occurrence; or
(d) Any Credit Party or any of its Subsidiaries shall (i)
default in any payment of principal of or interest on any Indebtedness
(other than the Indebtedness hereunder) in a principal amount
outstanding of at least $500,000 in the aggregate for the Credit
Parties and their Subsidiaries beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement under
which such Indebtedness was created; or (ii) default in the observance
or performance of any other agreement or condition relating to any
Indebtedness (other than the Indebtedness hereunder) in a principal
amount outstanding of at least $500,000 in the aggregate for the Credit
Parties and their Subsidiaries or contained in any instrument or
agreement evidencing, securing or relating
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thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due prior
to its stated maturity; or
(e) (i) Any Credit Party or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to have it
judged bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for
it or for all or any substantial part of its assets, or any Credit
Party or any of its Subsidiaries shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against
any Credit Party or any of its Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against any Credit
Party or any of its Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of their assets
which results in the entry of an order for any such relief which shall
not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) any Credit Party or any
of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) any Credit
Party or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(f) One or more judgments, orders, decrees or arbitration awards
shall be entered against any Credit Party or any of its Subsidiaries
involving in the aggregate a liability (to the extent not covered by
third-party insurance with respect to which coverage has not been
disputed by the insurer for a period in excess of ninety (90) days;
provided however that such ninety (90) day period shall no longer be in
effect to extent that any such judgment, order, decree or arbitration
award shall be executed upon at any time during such period by the
holder thereof) of $500,000 or more and all such judgments, orders,
decrees or arbitration awards shall not have been paid and satisfied,
vacated, discharged, stayed or bonded pending appeal within 10 Business
Days from the entry thereof or any injunction, temporary restraining
order or similar decree shall be issued against any Credit Party or any
of its Subsidiaries that could reasonably be expected to result in a
Material Adverse Effect; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
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(other than a Permitted Lien) shall arise on the assets of any Credit
Party, any of its Subsidiaries or any Commonly Controlled Entity, (iii)
a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
Trustee is, in the reasonable opinion of the Required Lenders, likely
to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA, (v) any Credit Party, any of its Subsidiaries or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, any
Multiemployer Plan or (vi) any other similar event or condition shall
occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other
such events or conditions, if any, could have a Material Adverse
Effect; or
(h) There shall occur a Change of Control; or
(i) The Guaranty or any provision thereof for any reason shall
cease to be in full force and effect or any Guarantor or any Person
acting by or on behalf of any Guarantor shall deny or disaffirm any
Guarantor's obligations under the Guaranty; or
(j) Any other Credit Document shall fail to be in full force
and effect or to give the Administrative Agent and/or the Lenders the
security interests, liens, rights, powers and privileges purported to
be created thereby in any material respect (except as such documents
may be terminated or no longer in force and effect in accordance with
the terms thereof, other than those indemnities and provisions which by
their terms shall survive) or any Lien shall fail to be perfected on a
material portion of the Collateral; or
(k) Any uninsured damage to or loss, theft or destruction or
any assets of any Credit Party or any of its Subsidiaries shall occur
that is in excess of $1,000,000.
Section 7.2 Acceleration; Remedies.
Upon the occurrence and during the continuation of an Event of Default,
then, (a) if such event is an Event of Default specified in Section 7.1(e)
above, automatically the Commitments shall immediately terminate and the Loans
(with accrued interest thereon), and all other Credit Party Obligations under
the Credit Documents (including without limitation the maximum amount of all
contingent liabilities under Letters of Credit) shall immediately become due and
payable, and the Borrower shall immediately pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit in an amount equal to the maximum amount
which may be drawn under Letters of Credit then outstanding and (b) if such
event is any other Event of Default, any of the following actions may be taken:
with the written consent of the Required Lenders, the Administrative Agent may,
or upon the written request of the Required Lenders, the Administrative Agent
shall, (i) by notice to the Borrower declare all or any portion of the
Commitments to be terminated forthwith, whereupon such Commitments shall
immediately terminate, (ii) by notice of default to the
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Borrower, declare the Loans (with accrued interest thereon) and all other Credit
Party Obligations under the Credit Documents (including without limitation the
maximum amount of all contingent liabilities under Letters of Credit) to be due
and payable forthwith and direct the Borrower to pay to the Administrative Agent
cash collateral as security for the LOC Obligations for subsequent drawings
under then outstanding Letters of Credit an amount equal to the maximum amount
of which may be drawn under Letters of Credit then outstanding, whereupon the
same shall immediately become due and payable, (iii) hire, at the expense of the
Credit Parties, one or more consultants and the Credit Parties agree to
cooperate with such consultants, (iv) exercise any rights or remedies of the
Administrative Agent or the Lenders under this Agreement or any other Credit
Document, including, without limitation, any rights or remedies with respect to
the Collateral, and (v) exercise any rights or remedies available to the
Administrative Agent or Lenders under applicable law.
ARTICLE VIII
THE AGENT
Section 8.1 Appointment.
Each Lender hereby irrevocably designates and appoints Wachovia as the
Administrative Agent of such Lender under this Agreement, and each such Lender
irrevocably authorizes Wachovia, as the Administrative Agent for such Lender, to
take such action on its behalf under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.
Section 8.2 Delegation of Duties.
The Administrative Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care. Without
limiting the foregoing, the Administrative Agent may appoint one of its
affiliates as its agent to perform its the functions of the Administrative Agent
hereunder relating to the advancing of funds to the Borrower and distribution of
funds to the Lenders and to perform such other related functions of the
Administrative Agent hereunder as are reasonably incidental to such functions.
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Section 8.3 Exculpatory Provisions.
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Borrower
to perform their obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Borrower of any of the agreements contained
in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrower.
Section 8.4 Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless (a) a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent and (b)
the Administrative Agent shall have received the written agreement of such
assignee to be bound hereby as fully and to the same extent as if such assignee
were an original Lender party hereto, in each case in form satisfactory to the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any of the Credit Documents in accordance with a request of the Required Lenders
or all of the Lenders, as may be required under this Agreement, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.
Section 8.5 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt
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notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
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 in the best interests of the Lenders except to the extent that
this Agreement expressly requires that such action be taken, or not taken, only
with the consent or upon the authorization of the Required Lenders, or all of
the Lenders, as the case may be.
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates has made any representation or warranty to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
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 analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
Section 8.7 Indemnification.
The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Revolving Commitment Percentages in effect on the date on which indemnification
is sought under this Section, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of any Credit Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided,
however, that no Lender shall be liable for the
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payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting from the Administrative Agent's gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. The agreements
in this Section 8.7 shall survive the termination of this Agreement and payment
of the Notes and all other amounts payable hereunder.
Section 8.8 Administrative Agent in Its Individual Capacity.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though the Administrative Agent were not the Administrative Agent hereunder.
With respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
Section 8.9 Successor Administrative Agent.
The Administrative Agent may resign as Administrative Agent upon 30
days' prior notice to the Borrower and the Lenders. If the Administrative Agent
shall resign as Administrative Agent under this Agreement and the Notes, then
the Required Lenders shall appoint from among the Lenders a successor agent for
the Lenders, which successor agent shall be approved by the Borrower with such
approval not to be unreasonably withheld (provided, however if an Event of
Default shall exist at such time, no approval of the Borrower shall be required
hereunder), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term "Administrative Agent"
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Notes. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Section 8.9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.
Section 8.10 Nature of Duties.
Except as otherwise expressly stated herein, any agent (other than the
Administrative Agent) or co-lead arranger listed from time to time on the cover
page of this Agreement shall have no obligations, responsibilities or duties
under this Agreement or under any other Credit Document other than obligations,
responsibilities and duties applicable to all Lenders in their capacity as
Lenders; provided, however, that such agents and co-lead arrangers shall be
entitled to the same rights, protections, exculpations and indemnifications
granted to the Administrative Agent under this Article VIII in their capacity as
an agent or co-lead arranger.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments, Waivers and Release of Collateral.
Neither this Agreement, nor any of the Notes, nor any of the other
Credit Documents, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this Section nor
may be released except as specifically provided herein or in the Security
Documents or in accordance with the provisions of this Section 9.1. The Required
Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Agreement or the
other Credit Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders may specify in such instrument, any of the requirements
of this Agreement or the other Credit Documents or any Default or Event of
Default and its consequences; provided, however, that no such waiver and no such
amendment, waiver, supplement, modification or release shall:
(i) (A) reduce the amount or extend the scheduled date
of maturity of any Loan or Note or any installment thereon or
waive any payment default, (B) extend the expiration date of a
Letter of Credit beyond the Maturity Date, (C) reduce the stated
rate of any interest or fee payable hereunder (other than
interest at the increased post-default rate) or extend the
scheduled date of any payment thereof, or (D) increase the amount
or extend the expiration date of any Lender's Commitment, in each
case without the written consent of each Lender directly affected
thereby, or
(ii) amend, modify or waive any provision of Section
2.11, Section 2.16, this Section 9.1 or change the percentage
specified in the definition of Required Lenders,without the
written consent of all the Lenders, or
(iii) amend, modify or waive any provision of Article VIII
without the written consent of the then Administrative Agent, or
(iv) release the Parent or the Borrower from its
obligations under the Credit Documents or any material Guarantor
from its obligations under the Guaranty, without the written
consent of all of the Lenders, or
(v) release all or any material portion of the
Collateral, without the written consent of all of the Lenders, or
(vi) amend, modify or waive any provision of the Credit
Documents requiring consent, approval or request of the Required
Lenders or all Lenders, without the written consent of all of the
Required Lenders or Lenders as
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appropriate and, provided, further, that no amendment, waiver
or consent affecting the rights or duties of the
Administrative Agent or the Issuing Lender under any Credit
Document shall in any event be effective, unless in writing
and signed by the Administrative Agent and/or the Issuing
Lender, as applicable, in addition to the Lenders required
hereinabove to take such action.
Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Credit Parties, the Lenders, the Issuing Lender,
the Administrative Agent and all future holders of the Notes. In the case of any
waiver, the Borrower, the other Credit Parties, the Lenders, the Issuing Lender
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the outstanding Loans and Notes and other Credit
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
Notwithstanding any of the foregoing to the contrary, the consent of
the Borrower shall not be required for any amendment, modification or waiver of
the provisions of Article VIII (other than the provisions of Section 8.9);
provided, however, that the Administrative Agent will provide written notice to
the Borrower of any such amendment, modification or waiver. In addition, the
Borrower and the Lenders hereby authorize the Administrative Agent to modify
this Agreement by unilaterally amending or supplementing Schedule 2.1(a) and
Section 9.2 from time to time in the manner requested by the Borrower, the
Administrative Agent or any Lender in order to reflect any assignments or
transfers of the Loans as provided for hereunder; provided, however, that the
Administrative Agent shall promptly deliver a copy of any such modification to
the Borrower and each Lender.
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender is
entitled to vote as such Lender sees fit on any bankruptcy reorganization plan
that affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or insolvency
proceeding.
Section 9.2 Notices.
Except as otherwise provided in Article II, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (a) when delivered by
hand, (b) when transmitted via telecopy (or other facsimile device) to the
number set out herein, (c) the next weekday following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case, addressed
as follows in the case of the Borrower, the other Credit Parties and the
Administrative Agent, and as set forth on Schedule 9.2 in the case of the
Lenders, or to such
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other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
The Borrower Red Xxxxx International, Inc.
and the other 0000 XXX Xxxxxxx, Xxxxx 000
Credit Parties: Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxx XxXxxxxxx, Chief Financial Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx, LLP
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxx Xxxxx, Esq.
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Wachovia Bank, National Association, as
Agent: Administrative Agent
Charlotte Plaza
000 Xxxxx Xxxxxxx Xxxxxx, XX-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Syndication Agency Services
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Wachovia Bank, National Association
000 Xxxxx Xxxxxxx Xxxxxx
XX0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
Section 9.3 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
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Section 9.4 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans, provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated and all
amounts owing hereunder and under any Notes have been paid in full.
Section 9.5 Payment of Expenses and Taxes.
The Borrower agrees (a) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation, negotiation, printing
and execution of, and any amendment, supplement or modification to, this
Agreement and the other Credit Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, together with the reasonable fees
and disbursements of counsel to each Lender and the Administrative Agent, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Notes and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and to the Lenders (including reasonable allocated costs of
in-house legal counsel), and (c) on demand, to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, the Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their Affiliates (collectively, the Indemnified
Parties") harmless from and against, any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (irrespective of whether the
Indemnified Party is named as a party to any litigation or proceeding) with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all of the foregoing, collectively, a "Third
Party Claim"; provided, however, that the Borrower shall not have any obligation
hereunder to the Administrative Agent or any Lender with respect to Third Party
Claims arising from the gross negligence or willful misconduct of the
Administrative Agent or any such Lender, as determined by a court of competent
jurisdiction in a final and non-appealable judgment; provided, further, that (i)
each Indemnified Party shall promptly notify the Borrower in writing upon
becoming aware of the initiation of any Third Party Claim against it, (ii) the
Borrower shall be entitled to participate in the defense of any such Third Party
Claim and, if the borrower so chooses, to assume the defense, at the Borrower's
expense, of any such Third Party Claim with counsel selected by the Borrower (it
being understood that any Indemnified Party shall have the right to participate
in such defense and employ counsel separate from the counsel employed by the
Borrower, and that such counsel shall be at the expense of such Indemnified
Party unless such
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Indemnified Party shall have been advised by counsel that there may be legal
defenses available to it that are inconsistent with or in addition to those
available to the Borrower, in which case such counsel shall be at the Borrower's
expense) and (iii) no Indemnified Party shall settle any Third Party Claim
without the Borrower's prior written consent (such consent not to be
unreasonably withheld). The agreements in this Section 9.5 shall survive
repayment of the Loans, Notes and all other amounts payable hereunder.
Section 9.6 Successors and Assigns; Participations; Purchasing
Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent, all future holders of the
Notes and their respective successors and assigns, except that the Borrower and
the Guarantors may not assign or transfer any of their rights or obligations
under this Agreement or the other Credit Documents without the prior written
consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, any Commitment of such
Lender, or any other interest of such Lender hereunder. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. No Lender shall
transfer or grant any participation under which the Participant shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
the scheduled maturity of any Loan or Note or any installment thereon in which
such Participant is participating, or reduce the stated rate or extend the time
of payment of interest or fees thereon (except in connection with a waiver of
interest at the increased post-default rate) or reduce the principal amount
thereof, or increase the amount of the Participant's participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without consent of any participant if the Participant's participation is not
increased as a result thereof), (ii) release all or substantially all of the
Guarantors from their obligations under the Guaranty, (iii) release all or
substantially all of the Collateral, or (iv) consent to the assignment or
transfer by the Borrower or the Guarantors of any of their rights and
obligations under this Agreement. In the case of any such participation, the
Participant shall not have any rights under this Agreement or any of the other
Credit Documents (the Participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation, provided that each Participant shall be entitled to the benefits
of Sections 2.15, 2.16, 2.17 and 9.5 with respect to its participation in the
Commitments and the Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to such
Sections than the
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transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time, sell or assign to
any Lender or any affiliate or Related Fund thereof and, with the consent of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower (in each case, which consent shall not be unreasonably
withheld), to one or more additional banks or financial institutions or entities
("Purchasing Lenders"), all or any part of its rights and obligations under this
Agreement and the Notes in minimum amounts of $5,000,000 (or, if less, the
entire amount of such Lender's interests and obligations), pursuant to a
Commitment Transfer Supplement, executed by such Purchasing Lender and such
transferor Lender (and, in the case of a Purchasing Lender that is not then a
Lender or an affiliate or Related Fund thereof, the Administrative Agent and, so
long as no Event of Default has occurred and is continuing, the Borrower), and
delivered to the Administrative Agent for its acceptance and recording in the
Register. Upon such execution, delivery, acceptance and recording, from and
after the Transfer Effective Date specified in such Commitment Transfer
Supplement, (x) the Purchasing Lender thereunder shall be a party hereto and, to
the extent provided in such Commitment Transfer Supplement, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein, and
(y) the transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this
Agreement (and, in the case of a Commitment Transfer Supplement covering all or
the remaining portion of a transferor Lender's rights and obligations under this
Agreement, such transferor Lender shall cease to be a party hereto). Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Revolving Commitment
Percentages arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement and the Notes. On or prior to the Transfer Effective Date specified in
such Commitment Transfer Supplement, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the Notes
delivered to the Administrative Agent pursuant to such Commitment Transfer
Supplement new Notes to the order of such Purchasing Lender in an amount equal
to the Commitment assumed by it pursuant to such Commitment Transfer Supplement
and, unless the transferor Lender has not retained a Commitment hereunder, new
Notes to the order of the transferor Lender in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be dated the Closing Date and
shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Administrative
Agent to the Borrower marked "canceled".
(d) The Administrative Agent shall maintain at its address referred to
in Section 9.2 a copy of each Commitment Transfer Supplement delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for
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inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of a duly executed Commitment Transfer Supplement,
together with payment to the Administrative Agent by the transferor Lender or
the Purchasing Lender, as agreed between them, of a registration and processing
fee of $3,500.00 for each Purchasing Lender (other than an affiliate of such
Lender or a Related Fund) listed in such Commitment Transfer Supplement and the
Notes subject to such Commitment Transfer Supplement, the Administrative Agent
shall (i) accept such Commitment Transfer Supplement, (ii) record the
information contained therein in the Register and (iii) give prompt notice of
such acceptance and recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered to
such Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement, in each case subject to Section 9.15.
(g) At the time of each assignment pursuant to this Section 9.6 to a
Person which is not already a Lender hereunder and which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Lender shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable, a 2.17 Certificate) described in Section 2.16.
(h) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Credit Agreement to secure
obligations of such Lender, including any such pledge or assignment to a Federal
Reserve Bank, and this Section 9.6 shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such assignee for such Lender as a party hereto.
Section 9.7 Adjustments; Set-off.
(a) Each Lender agrees that if any Lender (a "benefited Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7.1(e), or otherwise) in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender,
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such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. The Borrower agrees that
each Lender so purchasing a portion of another Lender's Loans may exercise all
rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law (including, without limitation, other rights of set-off), each Lender shall
have the right, without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, upon
the occurrence of any Event of Default, to setoff and appropriate and apply any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower, or any part thereof
in such amounts as such Lender may elect, against and on account of the
obligations and liabilities of the Borrower to such Lender hereunder and claims
of every nature and description of such Lender against the Borrower, in any
currency, whether arising hereunder, under the Notes or under any documents
contemplated by or referred to herein or therein, as such Lender may elect,
whether or not such Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
aforesaid right of set-off may be exercised by such Lender against the Borrower
or against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
the Borrower, or against anyone else claiming through or against the Borrower or
any such trustee in bankruptcy, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of any Event of Default. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.
Section 9.8 Table of Contents and Section Headings.
The table of contents and the Section and subsection headings herein
are intended for convenience only and shall be ignored in construing this
Agreement.
Section 9.9 Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.
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Section 9.10 Effectiveness.
This Agreement shall become effective on the date on which all of the
parties have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent pursuant to Section
9.2 or, in the case of the Lenders, shall have given to the Administrative Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
Section 9.11 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
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 9.12 Integration.
This Agreement and the Notes represent the agreement of the Borrower,
the Administrative Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent, the Borrower or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the Notes.
Section 9.13 Governing Law.
This Agreement and the Notes and the rights and obligations of the
parties under this Agreement and the Notes shall be governed by, and construed
and interpreted in accordance with, the law of the State of North Carolina.
Section 9.14 Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against the Borrower and/or any other
Credit Party with respect to this Agreement, any Note or any of the other Credit
Documents may be brought in any state or federal court of competent jurisdiction
in the State of North Carolina, and, by execution and delivery of this
Agreement, each of the Borrower and the other Credit Parties accepts, for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
from which no appeal has been taken or is available. Each of Borrower and the
other Credit Parties irrevocably agrees that all service of process in any such
proceedings in any such court may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto, such service being hereby acknowledged by the Borrower and the other
Credit Parties to be effective and binding service in every respect. Each of the
Borrower, the other Credit Parties, the Administrative Agent and the Lenders
irrevocably waives
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any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens which it may now or
hereafter have to the bringing of any such action or proceeding in any such
jurisdiction. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the Administrative
Agent or any Lender to bring proceedings against the Borrower or the other
Credit Parties in the court of any other jurisdiction.
Section 9.15 Confidentiality.
The Administrative Agent and each of the Lenders agrees that it will
use its commercially reasonable efforts not to disclose without the prior
consent of the Borrower (other than to its employees, affiliates, auditors or
counsel or to another Lender each of whom shall have been made aware of this
confidentiality requirement and shall have agreed to be bound by its provisions
and other than as prohibited by Regulation FD) any information with respect to
the Parent and its Subsidiaries which is furnished pursuant to this Agreement,
any other Credit Document or any documents contemplated by or referred to herein
or therein and which is designated by the Borrower to the Lenders in writing as
confidential or as to which it is otherwise reasonably clear such information is
not public, except that any Lender may disclose any such information (a) as has
become generally available to the public other than by a breach of this Section
9.15, (b) as may be required in any report, statement or testimony submitted to
any municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or the OCC or the NAIC or similar organizations
(whether in the United States or elsewhere) or their successors, (c) as may be
required in response to any summons or subpoena or any law, order, regulation or
ruling applicable to such Lender, (d) to any prospective Participant or assignee
in connection with any contemplated transfer pursuant to Section 9.6 (provided
that such prospective transferee shall have been made aware of this Section 9.15
and shall have agreed to be bound by its provisions as if it were a party to
this Agreement) or rating agencies and/or auditors, (e) to Gold Sheets and other
similar bank trade publications; such information to consist only of deal terms
and other information regarding the credit facilities evidenced by this
Agreement customarily found in such publications.
Section 9.16 Acknowledgments.
The Borrower and the other Credit Parties each hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of each Credit Document;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising out
of or in connection with this Agreement and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower and the other
Credit Parties, on the other hand, in connection herewith is solely that of
debtor and creditor; and
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(c) no joint venture exists among the Lenders or among the Borrower or
the other Credit Parties and the Lenders.
Section 9.17 Waivers of Jury Trial.
THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
ARTICLE X
GUARANTY
Section 10.1 The Guaranty.
In order to induce the Lenders to enter into this Agreement and to
extend credit hereunder and in recognition of the direct benefits to be received
by the Guarantors from the Extensions of Credit hereunder, each of the
Guarantors hereby agrees with the Administrative Agent and the Lenders as
follows: such Guarantor hereby unconditionally and irrevocably jointly and
severally guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all Credit Party Obligations, as a guaranty of payment and not of
collection. If any or all of the Credit Party Obligations becomes due and
payable hereunder, each Guarantor unconditionally promises to pay such
indebtedness to the Administrative Agent and the Lenders, on order, or demand,
together with any and all reasonable expenses which may be incurred by the
Administrative Agent or the Lenders in collecting any of the Credit Party
Obligations.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
Section 10.2 Bankruptcy.
Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all indebtedness of the
Borrower to the Lenders whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 7.1(e), and unconditionally
promises to pay such Credit Party Obligations to the Administrative Agent for
the account of the Lenders, or order, on demand, in lawful money of the United
States. Each of the Guarantors further agrees that to the extent that the
Borrower or a Guarantor shall make a payment or a transfer of an interest in any
property to the Administrative
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Agent or any Lender, which payment or transfer or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such avoidance or repayment, the
obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if said payment had not been made.
Section 10.3 Nature of Liability.
The liability of each Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the indebtedness of the Borrower
whether executed by any such Guarantor, any other guarantor or by any other
party, and no Guarantor's liability hereunder shall be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the indebtedness of the
Borrower, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or change
in personnel by the Borrower or any other Guarantor, or (e) any payment made to
the Administrative Agent or the Lenders on the indebtedness which the
Administrative Agent or such Lenders repay the Borrower pursuant to court order
in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and each of the Guarantors waives any right to the deferral
or modification of its obligations hereunder by reason of any such proceeding.
Section 10.4 Independent Obligation.
The obligations of each Guarantor hereunder are independent of the
obligations of any other guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.
Section 10.5 Authorization.
Each of the Guarantors authorizes the Administrative Agent and each
Lender without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to (a) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of the indebtedness or any part thereof in accordance with this Agreement,
including any increase or decrease of the rate of interest thereon, (b) take and
hold security from any guarantor or any other party for the payment of this
Guaranty or the indebtedness and exchange, enforce waive and release any such
security, (c) apply such security and direct the order or manner of sale thereof
as the Administrative Agent and the Lenders in their discretion may determine
and (d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors.
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Section 10.6 Reliance.
It is not necessary for the Administrative Agent or the Lenders to
inquire into the capacity or powers of the Borrower or the officers, directors,
members, partners or agents acting or purporting to act on their behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
Section 10.7 Waiver.
(a) Each of the Guarantors waives any right (except as shall be
required by applicable statute and cannot be waived) to require the
Administrative Agent or any Lender to (i) proceed against the Borrower, any
other guarantor or any other party, (ii) proceed against or exhaust any security
held from the Borrower, any other guarantor or any other party, or (iii) pursue
any other remedy in the Administrative Agent's or any Lender's power whatsoever.
Each of the Guarantors waives any defense based on or arising out of any defense
of the Borrower, any other guarantor or any other party other than payment in
full of the indebtedness, including without limitation any defense based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the indebtedness or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the indebtedness. The Administrative Agent or any of the
Lenders may, at their election, foreclose on any security held by the
Administrative Agent or a Lender by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Administrative Agent and any Lender may have against the Borrower or
any other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the indebtedness has
been paid. Each of the Guarantors waives any defense arising out of any such
election by the Administrative Agent and each of the Lenders, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of the Guarantors against the Borrower or
any other party or any security.
(b) Each of the Guarantors waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of acceptance of
this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the indebtedness
and the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that neither the Administrative Agent nor any
Lender shall have any duty to advise such Guarantor of information known to it
regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not exercise any
rights of subrogation which it may at any time otherwise have as a result of
this Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy
Code, or otherwise) to the claims of the Lenders against the Borrower or any
other guarantor of the indebtedness of the Borrower owing to the Lenders
(collectively, the "Other Parties") and all contractual, statutory or common law
rights of
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reimbursement, contribution or indemnity from any Other Party which it may at
any time otherwise have as a result of this Guaranty, until all Obligations
owing to the Administrative Agent and the Lenders by the Borrower are paid in
full and the Commitments are terminated. Each of the Guarantors hereby further
agrees not to exercise any right to enforce any other remedy which the
Administrative Agent and the Lenders now have or may hereafter have against any
Other Party, any endorser or any other guarantor of all or any part of the
indebtedness of the Borrower and any benefit of, and any right to participate
in, any security or collateral given to or for the benefit of the Lenders to
secure payment of the indebtedness of the Borrower.
Section 10.8 Limitation on Enforcement.
The Lenders agree that this Guaranty may be enforced only by the action
of the Administrative Agent acting upon the instructions of the Required Lenders
and that no Lender shall have any right individually to seek to enforce or to
enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent for the benefit of the
Lenders under the terms of this Agreement. The Lenders further agree that this
Guaranty may not be enforced against any director, officer, employee or
stockholder of the Guarantors.
Section 10.9 Confirmation of Payment.
The Administrative Agent and the Lenders will, upon request after
payment of the indebtedness and obligations which are the subject of this
Guaranty and termination of the Commitments relating thereto, confirm to the
Borrower, the Guarantors or any other Person that the such indebtedness and
obligations have been paid and the Commitments relating thereto terminated,
subject to the provisions of Section 10.2.
At such time as the Obligations have been paid in full and the
Commitments have been terminated, this Guaranty and all obligations of the
Guarantors, hereunder shall terminate and be of no further force and effect, all
without delivery of any instrument or performance of any act by any Person.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.
BORROWER: RED XXXXX INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title: Chief Financial Officer
GUARANTORS: RED XXXXX GOURMET BURGERS, INC.,
a Delaware corporation
RED XXXXX XXXX, INC.,
a Nevada corporation
RED XXXXX DISTRIBUTING COMPANY, INC.,
a Colorado corporation
WESTERN FRANCHISE DEVELOPMENT, INC.,
a California corporation
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title: Chief Financial Officer of each
of the foregoing Guarantors
RED XXXXX OF XXXX ARUNDEL COUNTY, INC.,
a Maryland corporation
RED XXXXX OF BALTIMORE COUNTY, INC.,
a Maryland corporation
RED XXXXX OF XXXXXXXXXX COUNTY, INC.,
a Maryland corporation
By: /s/ Xxxxx X. XxXxxxxxx
----------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title: Secretary & Treasurer of each
of the foregoing Guarantors
[signature pages continue]
ADMINISTRATIVE AGENT
AND LENDERS: WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as a Lender
By: /s/ Xxxxx Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxx Xxxxxxx
Title: Vice President
[signature pages continue]
U.S. BANK NATIONAL ASSOCIATION,
as Documentation Agent and as a Lender
By: /s/ Xxxxxx Xxxxxx
------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Vice President
[signature pages continue]
BANK OF AMERICA, N.A.,
as a Lender
By: Chitt Swamidasan
----------------------
Name: Chitt Swamidasan
Title: Principal
[signature pages continue]
XXXXX FARGO BANK, N.A.,
as a Lender
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
List of Omitted Schedules
-------------------------
The following Schedules to the Credit Agreement have been omitted and shall be
furnished supplementally to the Commission upon request:
Schedule 1.1-1 Account Designation Letter
Schedule 1.1-2 Permitted Liens
Schedule 1.1-3 Inactive Corporations
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.3(d) Form of Swingline Note
Schedule 2.6(b)(ii) Excluded Properties
Schedule 2.9 Form of Notice of Conversion/Extension
Schedule 2.17 Section 2.17 Certificate
Schedule 3.6 Litigation
Schedule 3.9 ERISA
Schedule 3.12 Subsidiaries
Schedule 3.16 Intellectual Property
Schedule 3.19(a) Location of Real Property
Schedule 3.19(b) Location of Collateral
Schedule 3.19(c) Chief Executive Offices
Schedule 3.21 Broker's Fees
Schedule 3.22 Labor Matters
Schedule 3.27 Material Contracts
Schedule 3.28 Capitalization
Schedule 4.1-1 Form of Secretary's Certificate
Schedule 4.1-2 Mortgaged Properties
Schedule 4.1-3 Form of Solvency Certificate
Schedule 4.1-4 Pro Forma Covenant Compliance Worksheet
Schedule 5.1(c) Officer's Certificate
Schedule 5.5(b) Insurance
Schedule 5.10 Form of Joinder Agreement
Schedule 5.16 Post-Closing Requirements
Schedule 6.1(b) Indebtedness
Schedule 6.6 Investments
Schedule 9.2 Schedule of Lenders' Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
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