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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 24, 1997
E-Z SERVE CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 1-10717
Delaware 75-2168773
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2550 N. Loop West, Suite 600, Houston, TX 77092
(Address of principal executive offices, including ZIP code)
713/684-4300
(Registrant's telephone number, including area code)
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Item 5. Other Events
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In the first quarter of 1997, EZ Serve Corporation (the "Company")
implemented a plan to divest itself of its Marketer operations and of
various convenience stores that did not fit its strategic plan, or were
outside of its primary market area. The plan included the sale of the
Company's wholly owned subsidiary, EZ Serve Petroleum Marketing Company
and 170 convenience stores located primarily in Texas, Florida, Kansas
and Missouri. Sales from this divestiture program began closing in
April 1997 and were completed in January 1998. The completion of the
divestiture program enabled the Company to refinance its Term Debt,
which was to mature on October 1, 1998.
On December 24, 1997, the Company entered into a term credit facility
with FFCA Acquisition Corporation ("FFCA"). The FFCA credit facility
provided for a $51,912,000 mortgage loan (the "Mortgage Loan") and an
$8,088,000 equipment loan (the "Equipment Loan"). The Mortgage Loan is
comprised of individual floating interest rate mortgages on 100 fee
properties and fixed rate mortgages on 48 fee properties. The floating
interest rate, which was set at 9.46% at closing, is adjusted monthly
and is equal to LIBOR plus 3.5%. The fixed rate is 9.27%. The Mortgage
Loan is amortized over 20 years. The Equipment Loan is secured by
equipment located at 104 leasehold sites and mortgages on 49 fee
properties. The Equipment Loan also has a floating interest rate with
the same terms as the Mortgage Loan and is amortized over 7 years. The
FFCA credit facility requires monthly payments on the first day of each
month. These monthly payments currently total approximately $613,000.
Also, on December 24, 1997 the Company entered into a credit facility
with Congress Financial Corporation and Madeleine L.L.C. The facility
provides a $25,000,000 Revolving Line of Credit ("Revolver") for working
capital and letters of credit subject to a borrowing base limitation.
The Revolver is secured by substantially all of the Company's
inventories and receivables and some store equipment. The Revolver
matures on December 23, 1999. The Revolver bears interest on
outstanding cash draws at 2.5% plus the greater of the prime lending
rate or 8.5%.
Proceeds from the credit facilities were used (i) to retire the
$45,600,000 balance outstanding under the Company's term loan, (ii) to
retire the $3,500,000 outstanding under the Company's revolving line of
credit, (iii) to redeem for approximately $15,700,000 all of the
outstanding shares of the Company's Series H Preferred Stock and (iv) to
pay costs associated with the financing transactions.
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Item 7. Financial Statements and Exhibits
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(c) Exhibits.
Exhibit
Number Description of Exhibit
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4.1 Certificate of Elimination for Series H Preferred
Stock filed December 29,1997.
99.1 Equipment Loan Agreement dated December 24, 1997
between E-Z Serve Corporation and FFCA Acquisition
Corporation.
99.2 Unconditional Guaranty of Payment and Performance
dated December 24, 1997 between E-Z Serve Corporation
and FFCA Corporation.
99.3 Unconditional Guaranty of Payment and Performance
dated December 24, 1997 between E-Z Serve Corporation
and FFCA Corporation.
99.4 Loan Agreement dated December 24, 1997 between
E-Z Serve Corporation and FFCA Acquisition
Corporation.
99.5 Guarantee Agreement dated December 24, 1997 between
E-Z Serve Corporation and Congress Financial
Corporation and Madeleine L.L.C.
99.6 Loan and Security Agreement dated December 24, 1997
between E-Z Serve Corporation and Madeleine L.L.C.
and Congress Financial Corporation (Southwest).
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E-Z SERVE CORPORATION
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
E-Z SERVE CORPORATION
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(Registrant)
DATE: March 4, 1998 /s/ Elizabeth L. Marshall
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Elizabeth L. Marshall
Controller
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EXHIBIT INDEX
4.1 Certificate of Elimination for Series H Preferred
Stock filed December 29,1997.
99.1 Equipment Loan Agreement dated December 24, 1997
between E-Z Serve Corporation and FFCA Acquisition
Corporation.
99.2 Unconditional Guaranty of Payment and Performance
dated December 24, 1997 between E-Z Serve Corporation
and FFCA Corporation.
99.3 Unconditional Guaranty of Payment and Performance
dated December 24, 1997 between E-Z Serve Corporation
and FFCA Corporation.
99.4 Loan Agreement dated December 24, 1997 between
E-Z Serve Corporation and FFCA Acquisition
Corporation.
99.5 Guarantee Agreement dated December 24, 1997 between
E-Z Serve Corporation and Congress Financial
Corporation and Madeleine L.L.C.
99.6 Loan and Security Agreement dated December 24, 1997
between E-Z Serve Corporation and Madeleine L.L.C.
and Congress Financial Corporation (Southwest).
CERTIFICATE OF ELIMINATION
FOR SERIES H PREFERRED STOCK
OF E-Z SERVE CORPORATION
E-Z Serve Corporation, a Delaware corporation (the "Company"),
hereby certifies that:
FIRST: At a meeting of the Board of Directors of the Company,
a resolution was duly adopted concerning the elimination of the
Company's Series H Preferred Stock, Series H ("Series H Preferred
Stock"). The resolution is as follows:
WHEREAS, upon the redemption of the Series H Preferred
Stock, there shall be no shares of Series H Preferred Stock
outstanding, no shares of Series H Preferred Stock will be
issued, and pursuant to the terms of the Certificate of
Designation, Preferences and Rights of the Series H Preferred
Stock ("Series H Certificate") all shares of Series H
Preferred Stock will have the status of authorized but
unissued shares of the Company=s preferred stock, unclassified
as to series;
NOW, THEREFORE, IT IS RESOLVED, that the Board of
Directors directs the President or any Vice President of the
Company to file a Certificate of Elimination with the
Secretary of State of Delaware after the redemption of all of
the shares of the Series H Preferred Stock to eliminate from
the Company=s Amended and Restated Certificate of
Incorporation, as amended, all matters set forth in the Series
H Certificate.
SECOND: Pursuant to the provisions of Section 151(g) of the
Delaware General Corporation Law, upon the effective date of the
filing of this certificate, the elimination of all matters set forth
in the Series H Certificate from the Company's Amended and Restated
Certificate of Incorporation, as amended, shall be effected.
IN WITNESS WHEREOF, the Company has caused this certificate to
be signed by John T. Miller, its Senior Vice President, on December
19, 1997.
E-Z SERVE CORPORATION
By: /s/ John T. Miller
John T. Miller
Senior Vice
President
EQUIPMENT LOAN AGREEMENT
THIS EQUIPMENT LOAN AGREEMENT (this "Agreement") is made as
of December 24, 1997, by and between FFCA ACQUISITION CORPORATION,
a Delaware corporation ("FFCA"), whose address is 17207 North
Perimeter Drive, Scottsdale, Arizona 85255, and E-Z SERVE
CONVENIENCE STORES, INC., a Delaware corporation ("Debtor"), whose
address is 2550 North Loop West, Suite 600, Houston, Texas 77092.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined
terms used in this Agreement shall have the meanings set forth in
Section 1. Debtor has requested from FFCA, and applied for, the
Equipment Loan to provide long-term financing for the Equipment,
and for no other purpose whatsoever. The Equipment Loan will be
evidenced by the Equipment Note and secured by a first priority
security interest in the Equipment and the Additional Premises.
FFCA has committed to make the Equipment Loan pursuant to the
terms and conditions of the Commitment, this Agreement and the
other Loan Documents.
AGREEMENT:
In consideration of the mutual covenants and provisions of
this Agreement, the parties agree as follows:
1. Definitions. The following terms shall have the
following meanings for all purposes of this Agreement:
"Action" has the meaning set forth in Section 10.A(4).
"Additional Mortgages" means those deeds of trust, deeds to
secure debt and mortgages to be executed by Debtor for the benefit
of FFCA with respect to the Additional Premises.
"Additional Premises" means the parcel or parcels of real
estate corresponding to the addresses identified on Exhibit A-
1 attached hereto, together with all rights, privileges and
appurtenances associated therewith, and all buildings, fixtures and
other improvements now or hereafter located thereon (whether or not
affixed to such real estate). As used herein, the term "Additional
Premises" shall mean either a particular property or all of the
properties collectively, as the context may require.
"Affiliate" means any Person which directly or indirectly
controls, is under common
control with, or is controlled by any other Person. For purposes
of this definition, "controls", "under common control with" and
"controlled by" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such person or entity, whether through ownership of
voting securities or otherwise.
"Closing" shall have the meaning set forth in Section 4.
"Closing Date" shall have the meaning set forth in
Section 4.
"Code" means the United States Bankruptcy Code, 11 U.S.C.
Sec. 101 et seq., as amended.
"Commitment" means that certain Commitment Letter dated
October 22, 1997 between FFCA and Guarantor, and any amendments or
supplements thereto.
"Counsel" means legal counsel to Debtor and Guarantor,
licensed in the states in which (i) the Equipment and the
Additional Premises are located, and (ii) Debtor and Guarantor
maintain their respective chief executive offices, as applicable,
as selected by Debtor and Guarantor and approved by FFCA.
"Debtor Entities" means, collectively, Debtor, Guarantor and
any Affiliate of Debtor or Guarantor.
"De Minimis Amounts" shall mean, with respect to any given
level or Hazardous Materials, that level or quantity of Hazardous
Materials in any form or combination of forms which does not
constitute a material violation of any Environmental Laws and is
customarily employed in, or associated with, similar businesses
located in the states in which the Additional Premises are located,
including, without limitation, the retail sale of petroleum
products by Debtor in the ordinary course of business.
"Disclosures" has the meaning set forth in Section 14.P.
"Environmental Condition" means any condition with respect
to soil, surface waters, groundwaters, land, stream sediments,
surface or subsurface strata, ambient air and any environmental
medium comprising the Additional Premises, whether or not yet
discovered, which could or does result in any damage, loss, cost,
expense, claim, demand, order or liability to or against Debtor or
FFCA by any third party (including, without limitation, any
Governmental Authority, including, without limitation, any
condition resulting from the operation of Debtor's business,
business at the Additional Premises and/or any activity or
operation formerly conducted by any person or entity on the
Additional Premises.
"Environmental Indemnity Agreement" or "Environmental
Indemnity Agreements" means, as the context may require, the
environmental indemnity agreement dated as of the date of this
Agreement to be executed by Debtor for the benefit of FFCA with
respect to each Additional Premises or the environmental indemnity
agreements dated as of the date of this Agreement to be executed
by Debtor for the benefit of FFCA with respect to all of the
Additional Premises, as the same may be amended from time to time.
An Environmental Indemnity Agreement will be executed for each
Additional Premises.
"Environmental Insurer" means such environmental insurance
company as FFCA may select in its sole discretion.
"Environmental Laws" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations and
the like, as well as common law, relating to Hazardous Materials,
Regulated Substances or USTs and/or the protection of human health
or the environment by reason of a Release or a Threatened Release
of Hazardous Materials or relating to liability for or costs of
Remediation or prevention of Releases. "Environmental Laws"
includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated
pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability
Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Materials Transportation Act; the Resource Conservation
and Recovery Act (including but not limited to Subtitle I relating
to USTs); the Solid Waste Disposal Act; the Clean Water Act; the
Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal
Water Pollution Control Act; the Federal Insecticide, Fungicide and
Rodenticide Act; the Endangered Species Act; the National
Environmental Policy Act; and the River and Harbors Appropriation
Act. "Environmental Laws" also includes, but is not limited to,
any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law:
conditioning transfer of property upon a negative declaration or
other approval of a Governmental Authority with respect to
Hazardous Materials; requiring notification or disclosure of
Releases or other environmental condition of the Additional
Premises to any Governmental Authority or other person or entity,
whether or not in connection with transfer of title to or interest
in property; imposing conditions or requirements relating to
Hazardous Materials, Regulated Substances or USTs in connection
with permits or other authorization for lawful activity; relating
to the handling and disposal of solid or hazardous waste; relating
to nuisance, trespass or other causes of action related to
Hazardous Materials, Regulated Substances or USTs; and relating to
wrongful death, personal injury, or property or other damage in
connection with the physical condition or use of the Additional
Premises by reason of the presence of Hazardous Materials,
Regulated Substances or USTs in, on, under or above the Additional
Premises.
"Environmental Policies" means those certain environmental
insurance policies issued by Environmental Insurer to FFCA with
respect to the Additional Premises, which Environmental Policies
shall be in form and substance satisfactory to FFCA in its sole
discretion.
"Equipment" means the equipment, trade fixtures, appliances
and other personal property defined in the Equipment Security
Agreement as "Collateral".
"Equipment Loan" means the loan in the Equipment Loan Amount
and described in Section 2.
"Equipment Loan Amount" means $8,088,000.00.
"Equipment Note" means the promissory note dated as of the
date of this Agreement to be executed by Debtor in favor of FFCA
in the Equipment Loan Amount, as the same may be amended from time
to time.
"Equipment Security Agreement" means the equipment security
agreement dated as of the date of this Agreement between Debtor and
FFCA with respect to the Equipment, as the same may be amended from
time to time.
"Escrow Agent" means Lawyers Title Insurance Corporation.
"Event of Default" has the meaning set forth in Section 10.
"Excluded Property" means any books, records or computer
systems other than those located at the Additional Premises and
related specifically to the Additional Premises, any inventory
wherever located, any Intangibles (as defined in the Additional
Mortgages) relating to or necessary or desirable in connection with
the sale or other disposition of inventory and any leases of
equipment at the Additional Premises with third-parties.
"E-Z Serve Facility" means the convenience store and
gasoline station concepts operated by Debtor at the Premises and
the Additional Premises as of the Closing Date, or such other
concept of convenience store and gasoline station owned or operated
by Debtor and approved by FFCA as contemplated by Section 14.Q.
"Fee" means an underwriting, site assessment, valuation,
processing and commitment fee equal to 1% of the Equipment Loan
Amount, which Fee shall be payable as set forth in Section 3.
"FFCA Entities" means, collectively, FFCA, Franchise Finance
and any Affiliate of FFCA or Franchise Finance.
"Franchise Finance" means Franchise Finance Corporation of
America, a Delaware corporation, and its successors.
"Governmental Authority" means any governmental authority,
agency, department, commission, bureau, board, instrumentality,
court or quasi-governmental authority of the United States, the
states where the Equipment and the Additional Premises are located
or any political subdivision thereof.
"Guarantor" means E-Z Serve Corporation, a Delaware
corporation.
"Guaranty" means the unconditional guaranty of payment and
performance dated as of the date of this Agreement with respect to
the Equipment Loan to be executed by Guarantor for the benefit of
FFCA, as the same may be amended from time to time.
"Hazardous Materials" means (a) any toxic substance or
hazardous waste, substance, solid waste or related material, or any
pollutant or contaminant; (b) radon gas, asbestos in any form which
is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment which contains dielectric fluid
containing levels of polychlorinated biphenyls in excess of
federal, state or local safety guidelines, whichever are more
stringent, or any petroleum product; (c) any substance, gas,
material or chemical which is or may be defined as or included in
the definition of "hazardous substances," "toxic substances,"
"hazardous materials," hazardous wastes", "regulated substances"
or words of similar import under any Environmental Laws; and (d)
any other chemical, material, gas or substance the exposure to or
release of which is or may be prohibited, limited or regulated by
any Governmental Authority that asserts or may assert jurisdiction
over the Additional Premises or the operations or activity at the
Additional Premises, or any chemical, material, gas or substance
that does or may pose a hazard to the health and/or safety of the
occupants of the Additional Premises or the owners and/or occupants
of property adjacent to or surrounding the Additional Premises.
"Indemnified Parties" has the meaning set forth in Section
12.
"Leases" means the leases of the Premises by Debtor, as
lessee.
"Lessors" means the landlords under the Leases.
"Loan Agreement" means that certain Loan Agreement dated as
of the date of this Agreement between FFCA and Debtor with respect
to certain mortgage loan financing, as the same may be amended from
time to time.
"Loan Documents" means, collectively, this Agreement, the
Equipment Note, the Equipment Security Agreement, the Guaranty, the
Additional Mortgages, the UCC Financing Statements and all other
documents executed in connection therewith or contemplated thereby.
"Material Adverse Effect" means a material adverse effect on
(i) the contemplated business, condition, worth or operations of
Debtor or the Equipment at any Premises or the Additional Premises,
including, without limitation, the use of the Equipment in
connection with the operation of an E-Z Serve Facility, the
operation of an Additional Premises as an E-Z Serve Facility and/or
the value of the Equipment at any Premises or any Additional
Premises, or (ii) Debtor's ability to perform its obligations under
the Loan Documents.
"Mortgage Loan Documents" means the "Loan Documents" as
defined in the Loan Agreement.
"Mortgage Notes" means the "Notes" as defined in the Loan
Agreement.
"Other Agreements" means, collectively, all agreements and
instruments between, among or by (1) any of the Debtor Entities,
and, or for the benefit of, (2) any of the FFCA Entities,
including, without limitation, promissory notes and guaranties but
excluding the Loan Documents and the Mortgage Loan Documents.
"Participation" has the meaning set forth in Section 14.P.
"Paydown Amount" means the product of (i) the then
outstanding principal amount of the Equipment Note multiplied by
(ii) a fraction, the numerator of which shall be 1 and the
denominator of which shall be the number of Premises which are then
subject to the Equipment Security Agreement.
"Permitted Encumbrances" means
(a) liens for taxes, assessments or other
governmental charges not yet due and payable or being
contested in good faith, for which appropriate reserves have
been made or indemnities provided (which reserves and
indemnities shall be subject to FFCA's reasonable approval)
and the failure to pay such taxes, assessments and/or
governmental charges or levies will not result in imminent
danger of any Equipment or Additional Premises being sold,
foreclosed upon, forfeited or lost; and
(b) liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens for sums not
more than 60 days delinquent or which are being contested in
good faith, have been satisfactorily bonded over or for
which appropriate reserves have been made or indemnities
provided (which reserves and indemnities shall be subject to
FFCA's reasonable approval) and the failure to pay such sums
will not result in imminent danger of any Equipment or
Additional Premises being sold, foreclosed upon, forfeited
or lost.
"Permitted Exception" means (i) those recorded easements,
restrictions, liens and encumbrances set forth as exceptions in the
title insurance policies issued by Escrow Agent to FFCA and
approved by FFCA in connection with the Equipment Loan, and (ii)
PMSI Liens.
"Person" means any individual, corporation, partnership,
limited liability company, trust, unincorporated organization,
Governmental Authority or any other form of entity.
"Premises" means the parcel or parcels of real estate
corresponding to the addresses identified on Exhibit A attached
hereto, together with all rights, privileges and appurtenances
associated therewith, and all buildings, fixtures and other
improvements now or hereafter located thereon (whether or not
affixed to such real estate). As used herein, the term "Premises"
shall mean either a particular property or all of the properties
collectively, as the context may require.
"PMSI Liens" means purchase money security interests in
equipment located at the Premises in favor of third party lenders
or vendors.
"Questionnaires" means the environmental questionnaires
completed by Debtor with respect to the Additional Premises and
submitted to Environmental Insurer in connection with the issuance
of the Environmental Policies.
"Release Amount" means the sum of (a) the Paydown Amount,
plus (b) all accrued and unpaid interest with respect to the
Equipment Note.
"Securitization" has the meaning set forth in Section 14.P.
"Securitized Loan Pool" means any pool or group of loans
which are a part of any Securitization transaction.
"Transfer" has the meaning set forth in Section 14.P.
"UCC Financing Statements" means such UCC Financing
Statements as FFCA shall require to be executed and delivered by
Debtor with respect to the transactions contemplated by this
Agreement.
2. Transaction. On the terms and subject to the
conditions set forth in the Loan Documents, FFCA shall make the
Equipment Loan. The Equipment Loan will be evidenced by the
Equipment Note and secured by the Equipment Security Agreement.
Guarantor will provide further security for the Equipment Loan by
executing and delivering the Guaranty, and Debtor shall provide
further security for the Equipment Loan by executing and delivering
the Additional Mortgages. Debtor shall repay the outstanding
principal amount of the Equipment Loan together with interest
thereon in the manner and in accordance with the terms and
conditions of the Equipment Note and the other Loan Documents. The
Loan shall be advanced at the Closing in cash or otherwise
immediately available funds subject to the terms and conditions of
this Agreement.
3. Underwriting, Site Assessment, Valuation, Processing
and Commitment Fee. Debtor paid FFCA a portion of the Fee pursuant
to the Commitment, and such portion was deemed fully earned when
received. The remainder of the Fee shall be paid at the Closing
and shall be deemed nonrefundable and fully earned upon the
Closing. The Fee shall be applied by FFCA in payment of FFCA's in
house site inspection costs and fees. The balance of the Fee
remaining after payment of such costs and fees constitutes FFCA's
underwriting, site assessment, valuation, processing and commitment
fee.
4. Closing. (a) The Equipment Loan shall be closed (the
"Closing") within 30 days following the satisfaction of all of the
terms and conditions contained in this Agreement, but in no event
shall the date of the Closing be extended beyond December 31, 1997,
unless such extension shall be approved by FFCA in its sole
discretion (the date on which the Closing shall occur is referred
to herein as the "Closing Date").
(b) Except for the costs and fees to be paid from the Fee
by FFCA pursuant to Section 3, all costs of the transaction
contemplated by this Agreement shall be borne by Debtor, including,
without limitation, the attorneys' fees of Debtor, attorneys' fees
and expenses of FFCA, stamp taxes, transfer fees, and escrow,
filing and recording fees. All personal property and other
applicable taxes and assessments and other charges relating to the
Equipment which are due and payable on or prior to the Closing Date
shall be paid by Debtor at or prior to the Closing. The Closing
documents shall be dated as of the Closing Date.
Debtor and FFCA hereby engage Escrow Agent to act as escrow
agent in connection with the transaction described in this
Agreement. Escrow Agent shall not cause the transactions described
in this Agreement to close unless and until it has received written
instructions from FFCA and Debtor to do so. Debtor and FFCA will
deliver to Escrow Agent all documents, pay to Escrow Agent all sums
and do or cause to be done all other things necessary or required
by this Agreement, in the reasonable judgment of Escrow Agent, to
enable Escrow Agent to comply herewith. Escrow Agent is authorized
to pay, from any funds held by it for FFCA's or Debtor's respective
credit all amounts necessary to procure the delivery of such
documents and to pay, on behalf of FFCA and Debtor, all charges and
obligations payable by them, respectively. Debtor will pay all
charges payable by it to Escrow Agent. Escrow Agent is authorized,
in the event any conflicting demand is made upon it concerning
these instructions or the escrow, at its election, to hold any
documents and/or funds deposited hereunder until an action shall
be brought in a court of competent jurisdiction to determine the
rights of Debtor and FFCA or to interplead such documents and/or
funds in an action brought in any such court. Deposit by Escrow
Agent of such documents and funds, after deducting therefrom its
charges and its expenses and attorneys' fees incurred in connection
with any such court action, shall relieve Escrow Agent of all
further liability and responsibility for such documents and funds.
Escrow Agent's receipt of this Agreement and opening of an escrow
pursuant to this Agreement shall be deemed to constitute conclusive
evidence of Escrow Agent's agreement to be bound by the terms and
conditions of this Agreement pertaining to Escrow Agent.
Disbursement of any funds shall be made by check, certified check
or wire transfer, as directed by FFCA. Escrow Agent shall be under
no obligation to disburse any funds represented by check or draft,
and no check or draft shall be payment to Escrow Agent in
compliance with any of the requirements hereof, until it is advised
by the bank in which such check or draft is deposited that such
check or draft has been honored. Escrow Agent is authorized to act
upon any statement furnished by the holder or payee, or a
collection agent for the holder or payee, of any lien on or charge
or assessment in connection with the Equipment, concerning the
amount of such charge or assessment or the amount secured by such
lien, without liability or responsibility for the accuracy of such
statement.
5. Representations and Warranties of FFCA. The
representations and warranties of FFCA contained in this Section
are being made by FFCA as of the date of this Agreement and the
Closing Date to induce Debtor to enter into this Agreement and
consummate the transaction contemplated herein, and Debtor has
relied, and will continue to rely, upon such representations and
warranties from and after the execution of this Agreement and the
Closing. FFCA represents and warrants to Debtor as follows:
A. Organization of FFCA. FFCA has been duly
formed, is validly existing and has taken all necessary
action to authorize the execution, delivery and performance
by FFCA of this Agreement.
B. Authority of FFCA. The person who has executed
this Agreement on behalf of FFCA is duly authorized so to
do.
C. Enforceability. Upon execution by FFCA, this
Agreement shall constitute the legal, valid and binding
obligation of FFCA, enforceable against FFCA in accordance
with its terms.
All representations and warranties of FFCA made in this
Agreement shall survive the Closing.
6. Representations and Warranties of Debtor. The
representations and warranties of Debtor contained in this Section
are being made by Debtor as of the date of this Agreement and the
Closing Date to induce FFCA to enter into this Agreement and
consummate the transaction contemplated herein, and FFCA has
relied, and will continue to rely, upon such representations and
warranties from and after the execution of this Agreement and the
Closing. Debtor represents and warrants to FFCA as follows:
A. Information and Financial Statements. Debtor
has delivered to FFCA audited financial statements
concerning itself and Guarantor and certain other
information concerning itself and Guarantor, which financial
statements and other information are true, correct and
complete in all material respects; and no material adverse
change has occurred with respect to any such financial
statements and other information provided to FFCA since the
date such financial statements and other information were
prepared or delivered to FFCA. Debtor understands that FFCA
is relying upon such financial statements and information
and Debtor represents that such reliance is reasonable. All
such financial statements were prepared in accordance with
generally accepted accounting principles consistently
applied and accurately reflect as of the date of this
Agreement and the Closing Date, the financial condition of
each individual or entity to which they pertain.
B. Organization and Authority. (1) Debtor is duly
organized, validly existing and in good standing under the
laws of its state of incorporation, and qualified as a
foreign corporation to do business in each of the states
where the Premises and the Additional Premises are located.
All necessary corporate action has been taken to authorize
the execution, delivery and performance of this Agreement
and of the other documents, instruments and agreements
provided for herein.
(2) The person(s) who have executed this Agreement
on behalf of Debtor are duly authorized so to do.
C. Enforceability of Documents. Upon execution by
Debtor and Guarantor, this Agreement and the other
documents, instruments and agreements to be executed in
connection with this Agreement, shall constitute the legal,
valid and binding obligations of Debtor and Guarantor,
enforceable against Debtor and Guarantor in accordance with
their respective terms, except as may be effected by any
bankruptcy, insolvency, moratorium, fraudulent conveyance or
similar laws now or hereafter in effect for the benefit of
creditors and general principles of equity.
D. Litigation. There are no suits, actions,
proceedings or investigations pending or threatened against
or involving Debtor, Guarantor, the Equipment, the Premises
or the Additional Premises before any arbitrator or
Governmental Authority which might reasonably result in any
material adverse change in the contemplated business,
condition, worth or operations of Debtor, Guarantor, the
Equipment or the Additional Premises.
E. Absence of Breaches or Defaults. Neither Debtor
nor Guarantor is, and the authorization, execution, delivery
and performance of this Agreement and the documents,
instruments and agreements provided for herein will not
result, in any breach or default under any other document,
instrument or agreement to which Debtor or Guarantor is a
party or by which Debtor, Guarantor, the Equipment, the
Premises, or the Additional Premises or any of the property
of Debtor or Guarantor is subject or bound. The
authorization, execution, delivery and performance of this
Agreement and the documents, instruments and agreements
provided for herein will not violate any applicable law,
statute, regulation, rule, ordinance, code, rule or order.
F. Compliance With Laws. Debtor intends the
Equipment and the Additional Premises to be used solely in
connection with the operation of E-Z Serve Facilities. The
Equipment and the Additional Premises are in material
compliance with all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders and approvals
of each Governmental Authority having jurisdiction over the
Equipment and the Additional Premises, including, without
limitation, all health, building, fire, safety and other
codes, ordinances and requirements, all applicable standards
of the National Board of Fire Underwriters and the Americans
With Disabilities Act of 1990 and all policies or rules of
common law, in each case, as amended, and any judicial or
administrative interpretation thereof, including any
judicial order, consent, decree or judgment applicable to
Debtor, except such failures to comply as would not have a
Material Adverse Effect.
G. Licenses and Permits. Debtor has all required
licenses and permits, both governmental and private, to use
and operate the Equipment and the Additional Premises in the
intended manner, except such licenses and permits the
failure of which to maintain would not have a Material
Adverse Effect.
H. Condition of Equipment and Additional Premises.
The Equipment and Additional Premises are of such
workmanship and materials, fully operational and in such
condition and repair as is consistent with Debtor's
standards currently in effect for E-Z Serve convenience
stores and gasoline stations.
I. Title; First Priority Lien. Debtor is (i) the
holder of a leasehold interest in each Premises, and (ii)
the holder of fee title to each Additional Premises, free
and clear of all liens, encumbrances, charges and security
interests of any nature whatsoever except the Permitted
Exceptions. Debtor is the owner of all equipment, trade
fixtures, appliances and other tangible personal property
located on or at each of the Premises and each Additional
Premises, free and clear of all liens, encumbrances, charges
and security interests of any nature whatsoever, including,
without limitation, mechanics' liens, except PMSI Liens,
Permitted Encumbrances, Excluded Property and liens on
inventory. Upon Closing, FFCA shall have a first priority
lien on and security interest in the Equipment and each of
the Additional Premises subject only to the PMSI Liens,
Permitted Encumbrances and the Permitted Exceptions,
respectively.
J. No Other Agreements and Options. Neither
Debtor, Guarantor, the Equipment nor the Additional Premises
are subject to any commitment, obligation, or agreement,
including, without limitation, any right of first refusal,
option to purchase or lease granted to a third party, which
could or would prevent or hinder FFCA in making the
Equipment Loan or prevent or hinder Debtor or Guarantor from
fulfilling its obligations under this Agreement or the other
Loan Documents.
K. Environmental. The information and disclosures
in the Questionnaires are true, correct and complete in all
material respects, FFCA and Environmental Insurer may rely
on such information and disclosures, and the person or
persons executing the Questionnaires were duly authorized to
do so.
L. Leases. Debtor has delivered to FFCA true,
correct and complete copies of the Leases. The Leases have
not been modified, amended, supplemented or otherwise
revised. The Leases are the only leases or agreements
between the Lessors and Debtor with respect to the Premises.
The Leases are in full force and effect and constitute the
legal, valid and binding obligations of Debtor and the
Lessors, enforceable against Debtor and the Lessors in
accordance with their terms, except as may be effected by
any bankruptcy, insolvency, moratorium, fraudulent
conveyance, or similar laws now or hereafter in effect for
the benefit of creditors and general principles of equity.
Debtor has not assigned, transferred, mortgaged or
hypothecated any of the Leases or any interest therein, and
Debtor has not received any written notice that any of the
Lessors have made any assignment, pledge or hypothecation of
all or any part of their interests in the Leases. All rent
due under the Leases has been paid by Debtor through the end
of the month in which this Agreement is dated. Debtor has
not received any notice of default from any of the Lessors
which has not been cured or given any notice of default to
any of the Lessors which has not been cured. No event has
occurred and no condition exists which, with the giving of
notice or the lapse of time or both, would constitute a
default by Debtor or, to the best of Debtor's knowledge,
Lessor, under any of the Leases. Each of the Leases has a
remaining term which is at least equal in duration to the
term of the Equipment Note. No consents are required from
any of the Lessors to (a) Debtor granting a security
interest in the Equipment, or (b) FFCA entering the Premises
for the purpose of exercising its rights and remedies under
the Equipment Security Agreement including, without
limitation, removing the Equipment from the Premises. None
of the Lessors have any liens against or security interests
in the Equipment, including, without limitation, any liens
provided for in the Leases or any statutory or possessory
liens, or rights of levy or distraint for rent, which liens
or security interests would have priority over the security
interest in the Equipment to be granted by Debtor to FFCA at
Closing, except as otherwise disclosed on the attached
Schedule I. There are no mortgages encumbering the Premises
which grant the mortgagees thereunder a lien against or
security interest in any of the Equipment, which lien or
security interest would have priority over the security
interest in the Equipment to be granted by Debtor to FFCA at
Closing or would in any manner limit or restrict the
exercise of FFCA's rights and remedies under the Loan
Documents.
M. No Mechanics' or Construction Liens. There are
no outstanding past due accounts payable in favor of any
materialman, laborer, or any other person or entity in
connection with labor or materials furnished to or performed
on any portion of the Additional Premises; Debtor shall be
responsible for any and all claims for mechanics' or
construction liens and accounts payable that have arisen or
may subsequently arise due to agreements entered into for
and/or any work performed on, or materials supplied to the
Additional Premises prior to the Closing Date; and Debtor
shall and does hereby agree to defend, indemnify and forever
hold FFCA and FFCA's designees harmless from and against any
and all such mechanics' and construction lien claims,
accounts payable or other commitments relating to the
Additional Premises.
All representations and warranties of Debtor made in this
Agreement shall be and will remain true and complete as of and
subsequent to the Closing Date as if made and restated in full as
of such time and shall survive the Closing. Debtor acknowledges
and agrees that Environmental Insurer may rely on the environmental
representations and warranties set forth in the preceding
subsection K, that Environmental Insurer is an intended third-party
beneficiary of such representations and warranties and that
Environmental Insurer shall have all rights and remedies available
at law or in equity as a result of a breach of such representations
and warranties, including, to the extent applicable, the right of
subrogation.
7. Covenants. Debtor covenants to FFCA from and after
the Closing Date as follows:
A. Inspections. Debtor shall, at all reasonable
times, (i) provide FFCA and FFCA's officers, employees,
agents, advisors, attorneys, accountants, architects, and
engineers with access to the Premises, the Additional
Premises and the Equipment, and the financial books and
records, including lists of delinquencies, relating to the
ownership, operation, and maintenance of the Equipment and
the Additional Premises, and (ii) allow such persons to make
such inspections, tests, copies, and verifications as FFCA
considers necessary.
B. Removal of Equipment. Debtor shall not remove
or allow to be removed from the Premises the Equipment, or
any part thereof, other than in the ordinary course of
business. Debtor shall promptly give written notice to FFCA
of any substantial change in the character of business
conducted at the Premises and of the cessation of all or any
part thereof and of any loss or damage by fire or other
casualty to any substantial part of the Equipment.
C. No Additional Encumbrances; Perfected Security
Interest. Debtor is and shall remain the owner of the
Equipment (whether acquired prior to or after the date
hereof), unless removed or replaced in accordance with the
provisions of this Agreement, free from any lien, security
interest or encumbrance except those in favor of FFCA and
Debtor shall not execute or permit the filing of any
financing statement thereon other than the UCC Financing
Statements. Debtor shall defend the Equipment against all
claims and demands of all persons. Debtor shall take no
action which would adversely affect the value of the
Equipment or which would encumber, dilute or cloud Debtor's
title or interest therein. FFCA shall at all times have a
perfected security interest in the Equipment which shall be
prior to any other interests therein. Debtor shall do all
acts and things, shall execute and file all instruments
(including security agreements, UCC financing statements,
continuation statements, etc.) requested by FFCA to
establish, maintain and continue the perfected security
interest of FFCA in the Equipment, and shall promptly on
demand pay all costs and expenses of (a) filing and
recording, including the costs of any searches deemed
necessary by FFCA from time to time to establish and
determine the validity and the continuing priority of the
security interest of FFCA, and (b) all other claims and
charges that in the opinion of FFCA might prejudice, imperil
or otherwise affect the Equipment, or the security interest
therein of FFCA. Debtor agrees that a carbon, photographic
or other reproduction of a security agreement or financing
statement shall be sufficient as a financing statement.
FFCA is hereby irrevocably appointed Debtor's attorney-in-
fact to take any of the foregoing actions requested of
Debtor by FFCA if Debtor should fail to take such actions,
which appointment shall be deemed coupled with an interest.
D. Maintenance and Repair. Debtor shall at all
times keep and maintain the Equipment, or shall cause the
Equipment to be kept and maintained, in good order, repair
and condition and shall promptly replace, or cause the
prompt replacement of, any part thereof that from time to
time may become obsolete, dilapidated, badly worn or in a
state of disrepair. FFCA shall have a lien on and security
interest in all replacements and all replacements shall be
free of any other lien, security interest or encumbrance of
any nature, provided that, FFCA's lien on and security
interest in such replacements shall be subordinate to any
purchase money security interests granted by Debtor with
respect to such replacements and shall not apply to any
replacements which are leased by Debtor. Except as
expressly provided herein, Debtor shall not transfer or
permit any transfer of any part of the Equipment to be made
or any interest therein to be created by way of a sale, by
way of a grant of a security interest, or by way of a levy
or other judicial process. Debtor may sell or dispose of
only that part of the Equipment that Debtor is obliged to
replace, provided the proceeds are invested in replacement
property of like kind and of equal or greater value unless
such sold or disposed of Equipment is not longer used or
useful in the operation of E-Z Serve Facilities.
E. Notices. Debtor shall promptly notify FFCA of
any levy, distraint or other seizure by legal process or
otherwise of any part of the Equipment and of any threatened
or filed claims or proceedings that might in any way affect
or impair any of the Equipment.
F. Insurance. Debtor shall obtain and maintain in
force insurance policies, naming FFCA as sole loss payee and
as additional insured, covering losses or damage to the
Equipment due to fire (with extended coverage), theft,
physical damage and other such risks at its full replacement
cost from time to time. FFCA is hereby irrevocably
appointed Debtor's attorney-in-fact to endorse any check or
draft that may be payable to Debtor, alone or jointly with
other payees, so that FFCA may collect the proceeds payable
for any loss under such insurance, which appointment shall
be deemed coupled with an interest. The proceeds of such
insurance, less any costs and expenses incurred or paid by
FFCA in the collection thereof, shall be applied toward the
cost of repair or replacement of the items damaged or
destroyed, unless an Event of Default shall have occurred
and be continuing, in which event FFCA may, in its sole
discretion, elect to apply all or a portion of such
insurance proceeds toward any sums secured by the Equipment
Security Agreement, whether or not then due or payable.
G. Actions by FFCA. (i) Debtor agrees that FFCA
may, at its option, and without any obligation to do so,
pay, perform, and discharge any and all amounts, costs,
expenses and liabilities that are the responsibility of
Debtor under the Loan Documents if Debtor fails to timely,
pay, perform or discharge the same, and all amounts expended
by FFCA in so doing or in respect of or in connection with
the Equipment shall become part of the obligations secured
by the Loan Documents and shall be immediately due and
payable by Debtor to FFCA upon demand therefor and shall
bear interest at the Default Rate (as defined in the
Equipment Note).
(ii) Debtor agrees that the Loan Documents shall
remain in full force and effect, without waiver or surrender
of any of FFCA's rights thereunder, notwithstanding any one
or more of the following:
(1) Extension of the time of payment of the
whole or any part of the Equipment Note;
(2) Any change in the terms and conditions of
the Equipment Note;
(3) Substitution of any indebtedness for the
Equipment Note;
(4) Acceptance by FFCA of any collateral or
security of any kind for the payment of the Equipment
Note;
(5) Surrender, release, exchange or alteration
of any Equipment, collateral or other security, either
in whole or in part; or
(6) Release, settlement, discharge,
compromise, change or amendment, in whole or in part,
of any claim of FFCA against Debtor or of any claim
against any guarantor or other party secondarily or
additionally liable for the payment of the Equipment
Note.
H. Net Worth. At all times while the obligations
of Debtor to FFCA pursuant to the Loan Documents and the
Mortgage Loan Documents are outstanding, Debtor and
Guarantor shall maintain a consolidated net worth of at
least $25,000,000.00, as determined in accordance with
generally accepted accounting principles consistently
applied.
I. Leases. Debtor shall (i) fulfill, perform and
observe in all respects each and every condition and
covenant of Debtor contained in the Leases; (ii) give prompt
notice to FFCA of any claim or event of default under any of
the Leases given to Debtor by any of the Lessors or given by
Debtor to any of the Lessors, together with a complete copy
or statement of any information submitted or referenced in
support of such claim or event of default; (iii) at the sole
cost and expense of Debtor, enforce the performance and
observance of each and every covenant and condition of the
Leases to be performed or observed by any other party to the
Leases unless such enforcement is waived in writing by FFCA;
and (iv) appear in and defend any action challenging the
validity or enforceability of any of the Leases. The Leases
shall not be cancelled or surrendered by Debtor without
FFCA's prior written consent. The Leases shall not be
modified or amended without FFCA's prior written consent if
such modification or amendment would reduce the remaining
term of any of the Leases or otherwise affect the Equipment
or the security interests of FFCA in such Equipment.
Debtor shall not assign, transfer, mortgage, pledge or
hypothecate any of the Leases or any interest therein
without FFCA's prior written consent.
IF ANY LEASE REQUIRES DEBTOR TO DELIVER A NOTICE TO
THE LESSOR EXTENDING THE TERM OF SUCH LEASE, AND DEBTOR
FAILS TO DELIVER SUCH NOTICE AT LEAST THIRTY DAYS BEFORE THE
DATE BY WHICH THE EXTENSION NOTICE MUST BE DELIVERED, OR IF
NO SUCH DATE IS SET FORTH IN SUCH LEASE, IF DEBTOR FAILS TO
DELIVER SUCH NOTICE AT LEAST THIRTY DAYS BEFORE THE
EXPIRATION OF THE THEN CURRENT TERM OF SUCH LEASE, FFCA
SHALL HAVE, AND IS HEREBY GRANTED, A POWER OF ATTORNEY ON
BEHALF OF DEBTOR TO EXECUTE AND DELIVER SUCH EXTENSION
NOTICE, IT BEING STIPULATED THAT SUCH POWER OF ATTORNEY IS
COUPLED WITH AN INTEREST AND IRREVOCABLE. UPON THE REQUEST
OF FFCA, DEBTOR SHALL EXECUTE ANY DOCUMENTS OR INSTRUMENTS
REASONABLY REQUIRED BY FFCA OR LESSOR IN ORDER TO CONFIRM
THE EXISTENCE OF THE POWER OF ATTORNEY SET FORTH IN THIS
SUBSECTION I, INCLUDING, WITHOUT LIMITATION, A SEPARATE
POWER OF ATTORNEY IN RECORDABLE FORM WITH RESPECT TO THE
MATTERS COVERED BY THIS SUBSECTION I.
8. Transaction Characterization. This Agreement is a
contract to extend a financial accommodation (as such term is used
in the Code) for the benefit of Debtor. It is the intent of the
parties hereto that the business relationship created by this
Agreement, the Equipment Note, the Equipment Security Agreement,
the Additional Mortgages and the other Loan Documents is solely
that of creditor and debtor and has been entered into by both
parties in reliance upon the economic and legal bargains contained
in the Loan Documents. None of the agreements contained in the
Loan Documents is intended, nor shall the same be deemed or
construed, to create a partnership between Debtor and FFCA, to make
them joint venturers, to make Debtor an agent, legal
representative, partner, subsidiary or employee of FFCA, nor to
make FFCA in any way responsible for the debts, obligations or
losses of Debtor.
9. Conditions of Closing. The obligation of FFCA to
consummate the transaction contemplated by this Agreement is
subject to the fulfillment or waiver of each of the following
conditions:
A. Title. Debtor shall be the holder of a
leasehold interest in each Premises and the holder of a fee
interest in each of the Additional Premises. Debtor shall
be the owner of all equipment, trade fixtures, appliances
and other personal property located on or at each of the
Premises and the Additional Premises, free of all liens,
encumbrances, restrictions, encroachments and easements,
except the liens created by the Equipment Security
Agreement, the Additional Mortgages, the UCC Financing
Statements, PMSI Liens, Permitted Encumbrances, Excluded
Property and liens on inventory. Upon Closing, FFCA will
obtain a valid and perfected first priority lien upon and
security interest in the Equipment and each of the
Additional Premises, subject to, as applicable, Permitted
Exceptions, PMSI Liens, Permitted Encumbrances and liens on
inventory.
B. Condition of Equipment. FFCA shall have
inspected and approved the Equipment and the Additional
Premises and the Equipment and the Additional Premises shall
be in such condition and repair and of such workmanship and
materials as is consistent with Debtor's standards currently
in effect for E-Z Serve convenience stores and gasoline
stations.
C. Compliance With Representations, Warranties and
Covenants. All obligations of Debtor under this Agreement
shall have been fully performed and complied with, and no
event shall have occurred or condition shall exist which
would, upon the Closing Date, or, upon the giving of notice
and/or passage of time, constitute a breach or default
hereunder or under the other Loan Documents, or any other
agreement between or among FFCA, Debtor and Guarantor
pertaining to the subject matter hereof, and no event shall
have occurred or condition shall exist or information shall
have been disclosed by Debtor or discovered by FFCA which
has had or would have a material adverse effect on the
Premises, the Additional Premises, the Equipment, Debtor,
Guarantor or FFCA's willingness to consummate the
transaction contemplated by this Agreement, as determined by
FFCA in its sole and absolute discretion.
D. Proof of Insurance. Debtor shall have delivered
to FFCA copies of insurance policies showing that all
insurance required by the Loan Documents and providing
coverage and limits satisfactory to FFCA are in full force
and effect.
E. Opinion of Counsel to Debtor and Guarantor.
Debtor and Guarantor shall have caused Counsel to prepare
and deliver an opinion in form and substance satisfactory to
FFCA and its counsel.
F. Availability of Funds. FFCA presently has
sufficient funds to discharge its obligations under this
Agreement. In the event that the transaction contemplated
by this Agreement does not close on or before the date
established for Closing under Section 4(a) hereof, FFCA does
not warrant that it will thereafter have sufficient funds to
consummate the transaction contemplated by this Agreement.
G. Closing of Loan Agreement. The transaction
described in the Loan Agreement shall have closed prior to
or concurrently with the Closing of the transactions
described in this Agreement.
H. Invoices. To the extent requested by FFCA and
available, Debtor shall have provided FFCA with invoices
issued by all of the vendors for the Equipment and copies of
all contracts with such vendors with respect to the
Equipment.
I. Evidence of Ownership. Debtor shall have
provided FFCA with evidence reasonably satisfactory to FFCA
that the Equipment is owned by Debtor free and clear of all
liens and encumbrances, which evidence shall include,
without limitation, certified UCC financing statement
searches, and to the extent requested by FFCA and
obtainable, bills of sale executed and delivered by the
vendors of the Equipment.
J. Leases. Each of the Leases shall be in full
force and effect and shall entitle Debtor to occupy the
Premises corresponding thereto. FFCA shall have approved
each Lease in its sole discretion.
K. Evidence of Title. FFCA shall have received for
each of the Additional Premises a preliminary title report
and irrevocable commitment to insure title by means of a
mortgagee's, ALTA extended coverage policy of title
insurance (or its equivalent, in the event such form is not
issued in the jurisdiction where the Additional Premises is
located) issued by Escrow Agent showing good and marketable
fee, in such Additional Premises in Debtor, committing to
insure FFCA's first priority lien upon and security interest
in such Additional Premises subject only to liens,
encumbrances, restrictions and easements approved by FFCA,
containing such endorsements as FFCA may require, and
deleting the standard survey and mechanics' lien exceptions.
FFCA shall also have received evidence reasonably
satisfactory to FFCA that Debtor is the owner of all of the
equipment, trade fixtures, appliances and other personal
property located on or at each of the Additional Premises
free and clear of all liens, encumbrances, charges and
security interests, except the liens created by the
Additional Mortgages and the UCC Financing Statements, PMSI
Liens, Permitted Encumbrances, Excluded Property and liens
in inventory.
L. Survey. FFCA shall have received a current ALTA
survey of each of the Additional Premises, the form and
substance of which shall be satisfactory to FFCA in its sole
discretion. Debtor shall have provided FFCA with evidence
satisfactory to FFCA that the location of each of the
Additional Premises is not within the 100-year flood plain
or identified as a special flood hazard area as defined by
the Federal Insurance Administration (which evidence may
include a satisfactory statement to that effect on the face
of each ALTA survey described in the preceding sentence), or
if any Additional Premises is in such a flood plain or
special flood hazard area, Debtor shall provide FFCA with
evidence of flood insurance maintained on such Additional
Premises in amounts and on terms and conditions satisfactory
to FFCA.
M. Environmental. FFCA shall have received (i) a
Phase I environmental report (and a Phase II environmental
report, if necessary, as determined by FFCA in its sole
discretion) for each of the Additional Premises, the form,
substance and conclusions of which shall be satisfactory to
FFCA in its sole discretion, and/or (ii) an Environmental
Policy with respect to each of the Additional Premises.
N. Zoning. Debtor shall have provided FFCA with
evidence satisfactory to FFCA that each of the Additional
Premises is properly zoned for use as a E-Z Serve Facility
and that such use constitutes a legal, conforming use under
applicable zoning requirements.
O. Guaranty. Debtor shall have caused to be
delivered to FFCA the Guaranty executed by Guarantor with
respect to the Equipment Loan.
P. Closing Documents. At or prior to the Closing
Date, FFCA and/or Debtor, as may be appropriate, shall
execute and deliver or cause to be executed and delivered to
Escrow Agent or FFCA, as may be appropriate, all documents
required to be delivered by this Agreement, and such other
documents, payments, instruments and certificates, as FFCA
may require in form acceptable to FFCA, including, without
limitation, the following:
(1) Equipment Note;
(2) Equipment Security Agreement;
(3) Additional Mortgages;
(4) Guaranty;
(5) Proof of Insurance;
(6) Opinion of Counsel to Debtor; and
(7) UCC Financing Statements.
Upon fulfillment or waiver of all of the above conditions, FFCA
shall deposit funds necessary to close this transaction with the
Escrow Agent and this transaction shall close in accordance with
the terms and conditions of this Agreement.
10. Default and Remedies. A. Each of the following shall
be deemed an event of default by Debtor (each, an "Event of
Default"):
(1) If any representation or warranty of Debtor or
Guarantor set forth in any of the Loan Documents is false in
any material respect, or if Debtor or Guarantor renders any
false statement or account.
(2) If any principal, interest or other monetary sum
due under the Equipment Note, the Equipment Security
Agreement or any other Loan Document is not paid within five
days after the date when due; provided, however,
notwithstanding the occurrence of such an Event of Default,
FFCA shall not be entitled to exercise its rights and
remedies set forth below unless and until FFCA shall have
given Debtor notice thereof and a period of five days from
the delivery of such notice shall have elapsed without such
Event of Default being cured.
(3) If Debtor fails to observe or perform any of the
other covenants, conditions, or obligations of this
Agreement; provided, however, if any such failure does not
involve the payment of any monetary sum, is not willful or
intentional, does not place any rights or property of FFCA
in immediate jeopardy, and is within the reasonable power of
Debtor to promptly cure after receipt of notice thereof, all
as determined by FFCA in its reasonable discretion, then
such failure shall not constitute an Event of Default
hereunder, unless otherwise expressly provided herein,
unless and until FFCA shall have given Debtor notice thereof
and a period of 30 days shall have elapsed, during which
period Debtor may correct or cure such failure, upon failure
of which an Event of Default shall be deemed to have
occurred hereunder without further notice or demand of any
kind being required. If such failure cannot reasonably be
cured within such 30-day period, as determined by FFCA in
its reasonable discretion, and Debtor is diligently pursuing
a cure of such failure, then Debtor shall have a reasonable
period to cure such failure beyond such 30-day period, which
shall not exceed 90 days after receiving notice of the
failure from FFCA. If Debtor shall fail to correct or cure
such failure within such 90-day period, an Event of Default
shall be deemed to have occurred hereunder without further
notice or demand of any kind being required.
(4) If Debtor or Guarantor becomes insolvent within
the meaning of the Code, files or notifies FFCA that it
intends to file a petition under the Code, initiates a
proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or
adjustment of debts (collectively, an "Action"), becomes the
subject of either a petition under the Code or an Action, or
is not generally paying its debts as the same become due.
(5) If there is an "Event of Default" under any Loan
Document other than the monetary defaults described in
subitem (2) above.
(6) If there is an "Event of Default" under the Loan
Agreement.
(7) If any Lease terminates or expires prior to the
scheduled maturity date of the Equipment Note and Debtor
does not pay FFCA the Release Amount for the Premises
corresponding to such terminated or expired Lease within 30
days of such termination or expiration.
Notwithstanding the foregoing, the occurrence of the events
described in subitems (1), (3) and (5) above shall constitute an
Event of Default under this Agreement only if such events are
continuing and involve, in the aggregate, at any one time more than
10% in number of the Premises and the Additional Premises;
provided, however, such limitation shall not limit the occurrence
of an "Event of Default" as expressly provided for under any
document described in such subitems nor FFCA's ability to exercise
its rights and remedies under any such document following such an
"Event of Default."
B. Upon the occurrence of an Event of Default, subject to
the limitations set forth in subsection A, FFCA may declare all or
any part of the obligations of Debtor under the Equipment Note, the
Equipment Security Agreement, this Agreement, any other Loan
Document and any Mortgage Loan Documents to be due and payable, and
the same shall thereupon become due and payable without any
presentment, demand, protest or notice of any kind, and Debtor
hereby waives notice of intent to accelerate the obligations
secured by such documents and notice of acceleration. Thereafter,
FFCA may exercise, at its option, concurrently, successively or in
any combination, all remedies available at law or in equity,
including without limitation any one or more of the remedies
available under the Equipment Note, the Equipment Security
Agreement or any other Loan Document or any Mortgage Loan Document.
Neither the acceptance of this Agreement nor its enforcement shall
prejudice or in any manner affect FFCA's right to realize upon or
enforce any other security now or hereafter held by FFCA, it being
agreed that FFCA shall be entitled to enforce this Agreement and
any other security now or hereafter held by FFCA in such order and
manner as it may in its absolute discretion determine. No remedy
herein conferred upon or reserved to FFCA is intended to be
exclusive of any other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy
given by any of the Loan Documents to FFCA, or to which FFCA may
be otherwise entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed
expedient by FFCA.
11. Assignments. A. FFCA may assign in whole or in part
its rights under this Agreement, including, without limitation, in
connection with any Transfer, Participation and/or Securitization.
Upon any unconditional assignment of FFCA's entire right and
interest hereunder, FFCA shall automatically be relieved, from and
after the date of such assignment, of liability for the performance
of any obligation of FFCA contained herein.
B. Debtor shall not, without the prior written consent of
FFCA, sell, assign, transfer, mortgage, pledge, hypothecate,
convey, encumber or grant any easements or other rights or
interests of any kind in the Equipment, any of Debtor's rights
under this Agreement or any interest in Debtor, whether
voluntarily, involuntarily or by operation of law or otherwise,
including, without limitation, by merger, consolidation,
dissolution or otherwise, except as contemplated by Section 7.B,
and FFCA's prior written consent shall not be required (i) for a
transfer by devise, descent or by operation of law upon the death
of a stockholder of Debtor, or (ii) for Debtor to convey the
Equipment and the Additional Premises to a wholly owned subsidiary
of Debtor or Guarantor provided Debtor complies with the following:
(1) Debtor shall give FFCA prior notice of any such proposed
conveyance, (2) Debtor shall not be released from the Obligations
(as defined in the Equipment Security Agreement) and Guarantor
shall not be released from any of its obligations under the
Guaranty as a result of such conveyance, as evidenced by the
acknowledgment of Debtor and Guarantor in an assignment and
assumption agreement between Debtor and the grantee of the
Equipment and Additional Premises in form and substance reasonably
acceptable to FFCA, (3) the grantee of the Equipment and Additional
Premises shall assume the Obligations with respect to the Equipment
and Additional Premises pursuant to such assignment and assumption
agreement and other documents, and in such forms, as FFCA shall
reasonably request, (4) Debtor shall have caused the delivery of
such legal opinions as FFCA shall reasonably request with respect
to the formation and authority of such grantee and the
enforceability of the Loan Documents assumed by such grantee, which
opinion shall be in form and substance substantially similar to
those delivered to FFCA simultaneously with the closing of the
Equipment Loan, and (5) Debtor and such grantee shall have
satisfied such other reasonable requirements as FFCA may impose
with respect to such conveyance. FFCA shall not unreasonably
withhold or delay its consent to the (i) grant of any easement
affecting any of the Additional Premises or license to access a
portion of any Additional Premises provided any such easement or
license does not have a Material Adverse Effect (as defined in the
Additional Mortgages) on such Additional Premises, or (ii) the
lease of a portion of any Additional Premises to a third-party
provided such lease is subordinate to the applicable Additional
Mortgage.
12. Indemnity. Debtor agrees to indemnify, hold harmless
and defend FFCA and its directors, officers, shareholders,
employees, successors, assigns, agents, contractors,
subcontractors, experts, licensees, affiliates, lessees, lenders,
mortgagees, trustees and invitees, as applicable (collectively, the
"Indemnified Parties"), from and against any and all losses, costs,
claims, liabilities, damages and expenses, including, without
limitation, reasonable attorneys' fees, arising as the result of
a breach of any of the representations, warranties, covenants,
agreements or obligations of Debtor set forth in this Agreement.
Without limiting the generality of the foregoing, such indemnity
shall include, without limitation, any engineering, governmental
inspection and reasonable attorneys' fees and expenses that the
Indemnified Parties may incur by reason of any representation set
forth in this Agreement being false, or by reason of any
investigation or claim of any Governmental Authority in connection
therewith.
13. Release. Provided that no Event of Default shall have
occurred under any of the Loan Documents or the Mortgage Loan
Documents, Debtor shall have the right to obtain the release of the
security interest encumbering the Equipment located at any
Premises, by paying to FFCA the Release Amount, in which case, FFCA
will credit the Paydown Amount towards the outstanding principal
balance of the Equipment Note and will release, or cause to be
released, at Debtor's sole cost and expense, the Equipment relating
to the corresponding Premises from the lien of the Equipment
Security Agreement.
14. Miscellaneous Provisions.
A. Notices. All notices, consents, approvals or
other instruments required or permitted to be given by
either party pursuant to this Agreement shall be in writing
and given by (i) hand delivery, (ii) facsimile,
(iii) express overnight delivery service or (iv) certified
or registered mail, return receipt requested, and shall be
deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c)
the next business day, if delivered by express overnight
delivery service, or (d) the third business day following
the day of deposit of such notice with the United States
Postal Service, if sent by certified or registered mail,
return receipt requested. Notices shall be provided to the
parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Debtor: E-Z Serve Corporation
2550 North Loop West
Suite 600
Houston, TX 77092
Attention: Mr. Bob E. Bailey
Treasurer
Telephone: (713) 684-4318
Telecopy: (713) 684-4367
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and
General Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
B. Brokerage Commission. FFCA and Debtor represent
and warrant to each other that they have dealt with no
broker, agent, finder or other intermediary in connection
with the transactions contemplated by this Agreement. FFCA
and Debtor shall indemnify and hold each other harmless from
and against any costs, claims or expenses, including
attorneys' fees, arising out of the breach of their
respective representations and warranties contained within
this Section.
C. Waiver and Amendment. No provisions of this
Agreement shall be deemed waived or amended except by a
written instrument unambiguously setting forth the matter
waived or amended and signed by the party against which
enforcement of such waiver or amendment is sought. Waiver
of any matter shall not be deemed a waiver of the same or
any other matter on any future occasion.
D. Captions. Captions are used throughout this
Agreement for convenience of reference only and shall not be
considered in any manner in the construction or
interpretation hereof.
E. FFCA's Liability. Notwithstanding anything to
the contrary provided in this Agreement, it is specifically
understood and agreed, such agreement being a primary
consideration for the execution of this Agreement by FFCA,
that (i) there shall be absolutely no personal liability on
the part of any shareholder, director, officer or employee
of FFCA, with respect to any of the terms, covenants and
conditions of this Agreement or the other Loan Documents,
(ii) Debtor waives all claims, demands and causes of action
against FFCA's officers, directors, employees and agents in
the event of any breach by FFCA of any of the terms,
covenants and conditions of this Agreement or the other Loan
Documents to be performed by FFCA and (iii) Debtor shall
look solely to the assets of FFCA for the satisfaction of
each and every remedy of Debtor in the event of any breach
by FFCA of any of the terms, covenants and conditions of
this Agreement or the other Loan Documents to be performed
by FFCA, such exculpation of liability to be absolute and
without any exception whatsoever.
F. Severability. The provisions of this Agreement
shall be deemed severable. If any part of this Agreement
shall be held unenforceable, the remainder shall remain in
full force and effect, and such unenforceable provision
shall be reformed by such court so as to give maximum legal
effect to the intention of the parties as expressed therein.
G. Construction Generally. This is an agreement
between parties who are experienced in sophisticated and
complex matters similar to the transaction contemplated by
this Agreement and is entered into by both parties in
reliance upon the economic and legal bargains contained
herein and shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party
which prepared the instrument, the relative bargaining
powers of the parties or the domicile of any party. Debtor
and FFCA were each represented by legal counsel competent in
advising them of their obligations and liabilities
hereunder.
H. Other Documents. Each of the parties agrees to
sign such other and further documents as may be appropriate
to carry out the intentions expressed in this Agreement.
I. Attorneys' Fees. In the event of any judicial
or other adversarial proceeding between the parties
concerning this Agreement, the prevailing party shall be
entitled to recover its attorneys' fees and other costs in
addition to any other relief to which it may be entitled.
References in this Agreement to the attorneys' fees and/or
costs of FFCA shall mean both the fees and costs of
independent outside counsel retained by FFCA with respect to
this transaction and the fees and costs of FFCA's in-house
counsel incurred in connection with this transaction.
J. Entire Agreement. This Agreement and the other
Loan Documents, together with any other certificates,
instruments or agreements to be delivered in connection
therewith, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there
are no other representations, warranties or agreements,
written or oral, between Debtor and FFCA with respect to the
subject matter of this Agreement. Notwithstanding anything
in this Agreement to the contrary, upon the execution and
delivery of this Agreement by Debtor and FFCA, the
Commitment shall be deemed to be null and void and of no
further force and effect and the terms and conditions of
this Agreement shall control notwithstanding that such terms
and conditions may be inconsistent with or vary from those
set forth in the Commitment.
K. Forum Selection; Jurisdiction; Venue; Choice of
Law. Debtor acknowledges that this Agreement was
substantially negotiated in the State of Arizona, this
Agreement was signed by FFCA and Debtor in the State of
Arizona and delivered by Debtor in the State of Arizona, all
payments under the Equipment Note will be delivered in the
State of Arizona and there are substantial contacts between
the parties and the transactions contemplated herein and the
State of Arizona. For purposes of any action or proceeding
arising out of this Agreement, the parties hereto hereby
expressly submit to the jurisdiction of all federal and
state courts located in the State of Arizona and Debtor
consents that it may be served with any process or paper by
registered mail or by personal service within or without the
State of Arizona in accordance with applicable law.
Furthermore, Debtor waives and agrees not to assert in any
such action, suit or proceeding that it is not personally
subject to the jurisdiction of such courts, that the action,
suit or proceeding is brought in an inconvenient forum or
that venue of the action, suit or proceeding is improper.
It is the intent of the parties hereto that all provisions
of this Agreement shall be governed by and construed under
the laws of the State of Arizona. To the extent that a
court of competent jurisdiction finds Arizona law
inapplicable with respect to any provisions hereof, then, as
to those provisions only, the laws of the states where the
Equipment is located shall be deemed to apply. Nothing in
this Section shall limit or restrict the right of FFCA to
commence any proceeding in the federal or state courts
located in the states in which the Equipment is located to
the extent FFCA deems such proceeding necessary or advisable
to exercise remedies available under this Agreement or the
other Loan Documents.
L. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original.
M. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of Debtor and FFCA and their
respective successors and permitted assigns, including,
without limitation, any United States trustee, any debtor in
possession or any trustee appointed from a private panel.
N. Survival. Except for the conditions of Closing
set forth in Section 9, which shall be satisfied or waived
as of the Closing Date, all representations, warranties,
agreements, obligations and indemnities of Debtor and FFCA
set forth in this Agreement shall survive the Closing.
O. Waiver of Jury Trial and Punitive,
Consequential, Special and Indirect Damages. DEBTOR AND
FFCA HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO
ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND
IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE,
DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM FFCA WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY DEBTOR AGAINST
FFCA OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT
CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY DEBTOR
OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
P. Transfers, Participations and Securitization.
(1) A material inducement to FFCA's willingness to
complete the transaction contemplated by the Loan Documents
is Debtor's agreement that FFCA may, at any time, sell,
transfer or assign the Equipment Note, the Equipment
Security Agreement and any of the other Loan Documents, and
any or all servicing rights with respect thereto (each, a
"Transfer"), or grant participations therein (each, a
"Participation"), or complete an asset securitization
vehicle selected by FFCA, in accordance with all
requirements which may be imposed by the investors or the
rating agencies involved in such securitized financing
transaction, as selected by FFCA, or which may be imposed by
applicable securities, tax or other laws or regulations,
including, without limitation, laws relating to FFCA's
status as a real estate investment trust (each, a
"Securitization").
(2) Debtor agrees to cooperate in good faith with
FFCA in connection with any Transfer, Participation and/or
Securitization, including, without limitation, (i) providing
such documents, financial and other data, and other
information and materials (the "Disclosures") which would
typically be required with respect to Debtor and Guarantor
by a purchaser, transferee, assignee, servicer, participant,
investor or rating agency involved with respect to such
Transfer, Participation and/or the Securitization, as
applicable; provided, however, Debtor and Guarantor shall
not be required to make Disclosures of any confidential
information or any information which has not previously been
made public unless required by applicable federal or state
securities laws; and (ii) amending the terms of the
transaction evidenced by the Loan Documents to the extent
necessary so as to satisfy the requirements of purchasers,
transferees, assignees, servicers, participants, investors
or selected rating agencies involved in any such Transfers,
Participations or Securitization, so long as such amendments
would not alter in any manner the economic terms of the
transactions contemplated by this Agreement or have a
material adverse effect upon Debtor or Guarantor or the
transaction contemplated hereunder.
(3) Debtor consents to FFCA providing the
Disclosures, as well as any other information which FFCA may
now have or hereafter acquire with respect to the Premises,
the Equipment or the financial condition of Debtor or
Guarantor, to each purchaser, transferee, assignee,
servicer, participant, investor or rating agency involved
with respect to each Transfer, Participation and/or
Securitization, as applicable. FFCA and Debtor (and their
respective Affiliates) shall each pay their own attorneys
fees and other out-of-pocket expenses incurred in connection
with the performance of their respective obligations under
this Section.
(4) Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents,
from and after the Closing of a Securitization with respect
to the Equipment Loan or any loan evidenced by any Mortgage
Loan Document or Other Agreement:
(a) in the event that the Equipment Loan
becomes the subject of a Securitization, a breach or
default, after the passage of all applicable notice
and cure or grace periods, under any Mortgage Loan
Document or Other Agreement which relates to any loan
and/or sale/leaseback transaction which is not part of
the same Securitized Loan Pool as the Equipment Loan
shall not constitute an Event of Default under the
Loan Documents;
(b) in the event that any loan between any of
the Debtor Entities on the one hand and any of the
FFCA Entities on the other hand (other than the
Equipment Loan) becomes the subject of a
Securitization transaction, an Event of Default under
the Loan Documents shall not constitute a breach or
default under any Mortgage Loan Document or Other
Agreement which relates to such loan unless the
Equipment Loan is part of the same Securitized Loan
Pool as such loan;
(c) in the event that the Equipment Loan
becomes the subject of a Securitization transaction,
the Loan Documents shall only secure indebtedness and
obligations relating to the Equipment Loan and any
other loans between any of the Debtor Entities on the
one hand and any of the FFCA Entities on the other
hand which are part of the same Securitized Loan Pool
as the Equipment Loan; and
(d) in the event that any loans between any of
the Debtor Entities on the one hand and any of the
FFCA Entities on the other hand (other than the
Equipment Loan) becomes the subject of a
Securitization transaction, the Loan Documents shall
not secure any indebtedness and obligations relating
to such loans unless the Equipment Loan is part of the
same Securitized Loan Pool as such loans.
Q. Change of Use. FFCA agrees that,
notwithstanding the terms of any Loan Document, it will not
unreasonably withhold or delay its consent to a request from
Debtor to change the use of any of the Premises or
Additional Premises from the concept of convenience store
and gasoline station operated by Debtor at such Premises or
Additional Premises as of the Closing Date to another
concept of convenience store and gasoline station owned or
operated by Debtor; provided, however, such consent, if
granted, shall be granted on the condition that such change
in use shall not cause any of the rating agencies to
withdraw or downgrade the ratings initially granted to the
certificates issued in connection with any securitized
financing transaction involving the Equipment Loan (it being
understood and agreed that, if FFCA's consent is granted and
such a withdrawal or downgrading shall occur, FFCA's consent
shall be of no force and effect).
IN WITNESS WHEREOF, Debtor and FFCA have entered into this
Agreement as of the date first above written.
FFCA:
FFCA ACQUISITION CORPORATION,
a Delaware corporation
By
Stephen Y. Schwanz
Vice President
DEBTOR:
E-Z SERVE CONVENIENCE STORES,
INC.
a Delaware corporation
By
John T. Miller
Senior Vice President
WITNESS
In accordance with the requirements of Arizona Revised
Statutes Section 14-5503, the undersigned has executed this
Agreement for the purpose of witnessing the grant of the powers of
attorney by Debtor to FFCA.
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December , 1997 by Stephen Y. Schwanz, Vice President of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the
corporation.
Notary Public
My Commission Expires:
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December , 1997 by John T. Miller, Senior Vice President of E-Z
Serve Convenience Stores, Inc., a Delaware corporation, on behalf
of the corporation.
Notary Public
My Commission Expires:
EXHIBIT A
DESCRIPTION OF PREMISES
EXHIBIT A-1
DESCRIPTION OF ADDITIONAL PREMISES
SCHEDULE I
05/58881.4
FFCA No. 8000-5853
Rev. 01/29/97
05/58881.4
FFCA No. 8000-5853
30
Rev. 01/29/97
05/58881.4
FFCA No. 8000-5853
Rev. 01/29/97
05/58881.4
FFCA No. 8000-5853
Rev. 01/29/97
05/58881.4
FFCA No. 8000-5853
Rev. 01/29/97
UNCONDITIONAL GUARANTY
OF PAYMENT AND PERFORMANCE
1. FOR VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, the undersigned ("Guarantor"), unconditionally,
absolutely and irrevocably guarantees and promises to pay to FFCA
ACQUISITION CORPORATION, a Delaware corporation ("FFCA"), or order,
any and all amounts, including, without limitation, principal and
interest, taxes, insurance premiums, impounds, reimbursements, late
charges, default interest, damages and all other amounts, costs,
fees, expenses and charges of any kind or type whatsoever, which may
or at any time be due to FFCA pursuant to the following agreements
(collectively, the "Documents"):
A. Equipment Loan Agreement (the "Loan Agreement"),
dated as of the date hereof, between FFCA and E-Z SERVE
CONVENIENCE STORES, INC., a Delaware corporation ("Debtor");
B. Promissory Note (the "Note"), dated as of the date
hereof, in the principal amount of $8,088,000.00 executed by
Debtor and payable to FFCA;
C. Equipment Security Agreement (the "Equipment
Security Agreement"), dated as of the date hereof, executed by
Debtor for the benefit of FFCA, providing a lien upon and
security interest in the personal property described therein
(the "Equipment");
D. (49) Deeds of Trust, Deeds to Secure Debt or
Mortgages, as applicable, Assignment of Rents and Leases,
Security Agreement and Fixture Filing (collectively, the
"Mortgages"), dated as of the date hereof, executed by Debtor
for the benefit of FFCA, providing a lien upon and security
interest in the property described therein (the "Additional
Premises");
E. (49) Environmental Indemnity Agreements, dated as
of the date hereof, executed by Debtor for the benefit of FFCA
with respect to the Additional Premises;
F. Any other document, agreement, instrument or
certificate contemplated by any of the foregoing agreements,
or any other documents, agreements, instruments or certificates
now or hereafter entered into between FFCA and Debtor; and
G. Any amendment of the foregoing agreements or other
documents, agreements, instruments or certificates now or
hereafter entered into between FFCA and Debtor.
2. Guarantor also unconditionally guarantees the
truthfulness and accuracy of all representations, warranties and
certifications of Debtor, the satisfaction of all conditions by
Debtor and the full and timely performance of all obligations to be
performed by Debtor, under or pursuant to the Documents (the matters
that are guaranteed pursuant to Sections 1 and 2 are hereinafter
collectively referred to as the "Obligations").
3. The obligations of Guarantor under this Guaranty are
primary, joint and several and independent of the obligations of
Debtor and any and every other guarantor of the Obligations, and a
separate action or actions may be brought and executed against
Guarantor or any other such guarantor, whether or not such action is
brought against Debtor or any other such guarantor and whether or not
Debtor or any other such guarantor be joined in such action or
actions.
4. This is an absolute and unconditional guaranty of payment
and performance and not of collection and Guarantor unconditionally
(a) waives any requirement that FFCA first make demand upon, or seek
to enforce or exhaust remedies against, Debtor or any other person
or entity (including any other guarantor) or any of the collateral
or property of Debtor or such other person or entity before demanding
payment from, or seeking to enforce this Guaranty against, Guarantor;
(b) waives and agrees not to assert any and all rights, benefits and
defenses which might otherwise be available under the provisions of
Ariz. Rev. Stat. '' 12-1641 et seq., 44-141, 44-142 or 47-3605,
Arizona Rules of Civil Procedure Rule 17(f), or any other Arizona
statutes or rules (including any statutes or rules amending,
supplementing or supplanting same) which might operate, contrary to
Guarantor's agreements in this Guaranty, to limit Guarantor's
liability under, or the enforcement of, this Guaranty; (c) covenants
that this Guaranty will not be discharged until all of the
Obligations are fully satisfied; and (d) agrees that this Guaranty
shall remain in full effect without regard to, and shall not be
affected or impaired by, any invalidity, irregularity or
unenforceability in whole or in part of any of the Documents, or any
limitation of the liability of Debtor or Guarantor thereunder, or any
limitation on the method or terms of payment thereunder which may now
or hereafter be caused or imposed in any manner whatsoever.
Guarantor stipulates and agrees not to terminate this Guaranty,
whether as contemplated by Louisiana Statutes Article 3061 or
otherwise, and Guarantor unconditionally waives and agrees not to
assert any or all rights, benefits and defenses which may be
available under Louisiana Statutes Articles 3061 and 3062. Guarantor
further agrees that to the extent a court of competent jurisdiction
does not recognize the validity of all or any of the stipulations,
agreements and waivers set forth in the preceding sentence, any
purported termination of the Guaranty by Guarantor shall not be
effective unless such termination is delivered in writing to FFCA in
accordance with the notice provision of this Guaranty and a period
of 60 days has elapsed following such delivery without such
termination notice being withdrawn. Guarantor further acknowledges
and agrees that FFCA is making the loan evidenced by the Equipment
Note in reliance on the stipulations, agreements and waivers of
Guarantors set forth in this Guaranty and that it is Guarantor's
intention that Debtor, by executing and delivering the documents
evidencing such loan, has presently incurred the Obligations and that
a termination of this Guaranty by Guarantor shall not affect
Guarantor's liability to pay FFCA the Obligations, upon acceleration
or otherwise.
5. This Guaranty is a continuing guaranty, and the
obligations, undertakings and conditions to be performed or observed
by Guarantor under this Guaranty shall not be affected or impaired
by reason of the happening from time to time of the following with
respect to the Documents, all without notice to, or the further
consent of, Guarantor:
(a) the waiver by FFCA of the observance or
performance by Debtor or Guarantor of any of the obligations,
undertakings, conditions or other provisions contained in any
of the Documents, except to the extent of such waiver;
(b) the extension, in whole or in part, of the time
for payment of any amount owing or payable under the Documents;
(c) the modification or amendment (whether material or
otherwise) of any of the obligations of Debtor under, or any
other provisions of, any of the Documents, except to the extent
of such modification or amendment;
(d) the taking or the omission of any of the actions
referred to in any of the Documents (including, without
limitation, the giving of any consent referred to therein);
(e) any failure, omission, delay or lack on the part
of FFCA to enforce, assert or exercise any provision of the
Documents, including any right, power or remedy conferred on
FFCA in any of the Documents or any action on the part of FFCA
granting indulgence or extension in any form;
(f) the assignment to or assumption by any third party
of any or all of the rights or obligations of Debtor under all
or any of the Documents;
(g) the release or discharge of Debtor from the
performance or observance of any obligation, undertaking or
condition to be performed by Debtor under any of the Documents
by operation of law, including any rejection or disaffirmance
of any of the Documents in any bankruptcy or similar
proceedings;
(h) the receipt and acceptance by FFCA or any other
person or entity of notes, checks or other instruments for the
payment of money and extensions and renewals thereof;
(i) any action, inaction or election of remedies by
FFCA which results in any impairment or destruction of any
subrogation rights of Guarantor, or any rights of Guarantor to
proceed against any other person or entity for reimbursement;
(j) any setoff, defense, counterclaim, abatement,
recoupment, reduction, change in law or any other event or
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor, indemnitor or
surety under the laws of the State of Arizona, the states in
which the Equipment and the Additional Premises are located or
any other jurisdiction; and
(k) the termination or renewal of any of the
Obligations or any other provision thereof.
6. Guarantor represents and warrants to FFCA that:
(a) Neither the execution nor delivery of this
Guaranty nor fulfillment of nor compliance with the terms and
provisions hereof will conflict with, or result in a breach of
the terms or conditions of, or constitute a default under, any
agreement or instrument to which Guarantor is now a party or
by which Guarantor may be bound, or result in the creation of
any lien, charge or encumbrance upon any property or assets of
Guarantor, which conflict, breach, default, lien, charge or
encumbrance could result in a material adverse change in the
financial condition of Guarantor;
(b) No further consents, approvals or authorizations
are required for the execution and delivery of this Guaranty
by Guarantor or for Guarantor's compliance with the terms and
provisions of this Guaranty;
(c) This Guaranty is the legal, valid and binding
agreement of Guarantor and is enforceable against Guarantor in
accordance with its terms, except as may be affected by any
bankruptcy, insolvency, moratorium, fraudulent conveyance or
similar laws now or hereafter in effect for the benefit of
creditors and general principles of equity;
(d) Guarantor has the full power, authority, capacity
and legal right to execute and deliver this Guaranty, and, to
the extent Guarantor is a corporation, partnership, limited
liability company or other form of entity, the parties
executing this Guaranty on behalf of Guarantor are fully
authorized and directed to execute the same to bind Guarantor;
(e) Guarantor is not a "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate," as those
terms are defined in the U.S. Internal Revenue Code and the
regulations promulgated thereunder. Guarantor's Social
Security Number or Federal Tax Identification Number is
accurately set forth herein next to the signature of Guarantor;
(f) Guarantor has delivered to FFCA either audited
financial statements or, if Guarantor does not have audited
financial statements, certified financial statements. Such
financial statements and other information relating to
Guarantor heretofore delivered to FFCA are true, correct and
complete in all material respects as of the date of this
Guaranty. Guarantor understands that FFCA is relying upon such
information, and Guarantor represents that such reliance is
reasonable. The financial statements of Guarantor delivered
by Debtor to FFCA pursuant to the Loan Agreement have been
prepared in accordance with generally accepted accounting
principles consistently applied and accurately reflect, as of
the date of such financial statements, the financial condition
of Guarantor;
(g) During the term of this Guaranty, (i) Guarantor
will not transfer or dispose of any material part of its assets
except in the ordinary course of business for full and fair
consideration and reasonably equivalent value and (ii)
Guarantor shall not, without the prior written consent of FFCA,
sell, assign, transfer, mortgage, pledge, convey or encumber
any interest in Guarantor (or the interest of any entity
directly or indirectly controlling Guarantor), whether
voluntarily, involuntarily or by operation of law or otherwise,
including, without limitation, by merger, consolidation,
dissolution, voluntary or involuntary sale or by the creation
or issuance of new stock of Guarantor by which an aggregate of
more than 10% of the stock in Guarantor shall be vested in a
party or parties who are not stockholders on the date of this
Guaranty; notwithstanding the foregoing, a transfer by devise
or descent or by operation of law upon the death of a
stockholder of Guarantor shall not be deemed to be a violation
of this paragraph.
(h) Guarantor will furnish FFCA annually, within
ninety (90) days after the close of each calendar year, a
financial statement consisting of a balance sheet and such
other financial information as FFCA may reasonably request; and
(i) The Documents are conclusively presumed to have
been signed in reliance on this Guaranty, and the assumption
by Guarantor of its obligations under this Guaranty results in
direct financial benefit to Guarantor.
7. This Guaranty shall commence upon execution and delivery
of any of the Documents and shall continue in full force and effect
until all of the Obligations are duly, finally and permanently paid,
performed and discharged and are not subject to any right of
reborrowing or extension by Debtor, and FFCA gives Guarantor written
notice of the full and final satisfaction of the Obligations. The
Obligations shall not be considered fully paid, performed and
discharged unless and until all payments by Debtor to FFCA are no
longer subject to any right on the part of any person whomsoever,
including but not limited to Debtor, Debtor as a debtor-in-possession
and/or any trustee in bankruptcy, to disgorge such payments or seek
to recoup the amount of such payments or any part thereof. The
foregoing shall include, by way of example and not by way of
limitation, all rights to recover preferences voidable under Title
11 of the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et seq.,
as amended (the "Code"). In the event that any such payments by
Debtor to FFCA are disgorged after the making thereof, in whole or
in part, or settled without litigation, to the extent of such
disgorgement or settlement, Guarantor shall be liable for the full
amount FFCA is required to repay plus interest, late charges,
attorney's fees and any and all expenses paid or incurred by FFCA in
connection therewith.
8. Guarantor shall neither have any right of subrogation,
indemnity or reimbursement nor hold any other claim against Debtor,
and Guarantor does hereby release Debtor from any and all claims by
Guarantor now or hereafter arising against Debtor. Furthermore,
Guarantor hereby unconditionally and irrevocably waives (a) any right
to participate in any security now or hereafter held by FFCA or in
any claim or remedy of FFCA or any other person against Debtor with
respect to the Obligations, (b) any statute of limitations affecting
Guarantor's liability hereunder, (c) all principles and provisions
of law which conflict with the terms of this Guaranty, and
(d) diligence, presentment, protest, demand for performance, notice
of nonperformance, notice of intent to accelerate and acceleration,
notice of protest, notice of dishonor, notice of execution of any
Documents, notice of extension, renewal, alteration or amendment,
notice of acceptance of this Guaranty, notice of defaults under any
of the Documents and all other notices whatsoever.
9. Notwithstanding the preceding Section 8, in the event
that Guarantor shall have any claims against Debtor, any indebtedness
of Debtor now or hereafter held by Guarantor is hereby subordinated
to the indebtedness of Debtor to FFCA. Any such indebtedness of
Debtor to Guarantor, if FFCA so requests, shall be collected,
enforced and received by Guarantor as trustee for FFCA and be paid
over to FFCA on account of the Obligations, but without reducing or
affecting in any manner the liability of Guarantor under the other
provisions of this Guaranty.
10. It is not necessary for FFCA to inquire into the powers
of Debtor or its officers, directors, partners or agents acting or
purporting to act on its behalf, and Guarantor shall be liable for
the obligations of Debtor in accordance with their terms
notwithstanding any lack of authorization or defect in execution or
delivery by Debtor.
11. In addition to the amounts guaranteed under this
Guaranty, Guarantor agrees to pay (i) all of FFCA's attorneys' fees
and other costs and expenses which may be incurred by FFCA in the
enforcement of this Guaranty and (ii) interest (including
postpetition interest to the extent a petition is filed by or against
Debtor under the Code) at the Default Rate (as defined in the Note)
on any Obligations not paid when due.
12. This Guaranty shall apply to the parties hereto and their
successors and assigns according to the context hereof and without
regard to the number or gender of words or expressions used herein.
13. Guarantor hereby agrees to indemnify and hold harmless
FFCA from any loss, cause of action, claim, cost, expense or fee,
including but not limited to attorney's fees, suffered or occasioned
by the failure of Debtor to satisfy its obligations under the
Documents. The agreement to indemnify FFCA contained in this
paragraph shall be enforceable notwithstanding the invalidity or
unenforceability of the Documents or any of them or the invalidity
or unenforceability of any other paragraph contained in this
Guaranty.
14. All moneys available to FFCA for application in payment
or reduction of the liabilities of Debtor under the Documents may be
applied by FFCA to the payment or reduction of such liabilities of
Debtor, in such manner, in such amounts and at such time or times as
FFCA may elect.
15. All notices, demands, requests, consents, approvals or
other instruments required or permitted to be given pursuant to this
Guaranty shall be in writing and given by (i) hand delivery,
(ii) facsimile, (iii) express overnight delivery service or (iv)
certified or registered mail, return receipt requested, and shall be
deemed to have been delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next business
day, if delivered by express overnight delivery service or (d) the
third business day following the day of deposit of such notice with
the United States Postal Service, if sent by certified or registered
mail, return receipt requested. Notices shall be provided to the
addresses (or facsimile numbers, as applicable) specified below:
If to Guarantor: E-Z Serve Corporation
2550 North Loop West
Suite 600
Houston, TX 77092
Attention: Mr. Bob E. Bailey
Treasurer
Telephone: (713) 684-4318
Telecopy: (713) 684-4367
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and General
Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either Guarantor or
FFCA may from time to time hereafter specify to the other party in
a notice delivered in the manner provided above.
16. This Guaranty is made, executed and delivered in the
State of Arizona, and it is the intent of Guarantor and FFCA that
this Guaranty shall be deemed to be a contract made under and
governed by the internal laws of the State of Arizona. For purposes
of any action or proceeding involving this Guaranty, Guarantor
submits to the jurisdiction of all federal and state courts located
in the State of Arizona and consents that it may be served with any
process or paper by registered mail or by personal service within or
without the State of Arizona in accordance with applicable law.
Furthermore, Guarantor waives and agrees not to assert in any such
action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is
brought in an inconvenient forum or that venue of the action, suit
or proceeding is improper. Nothing contained in this section shall
limit or restrict the right of FFCA to commence any proceeding in the
federal or state courts located in the states in which the Equipment
and the Additional Premises are located and/or where Guarantor
maintains its chief executive office to the extent FFCA deems such
proceeding necessary or advisable to exercise remedies available
under the Documents.
17. Guarantor intends that the business relationship created
between Debtor and FFCA by the Loan Agreement, the Note, the
Equipment Security Agreement, the Mortgages and the other Documents
is solely that of creditor and debtor and has been entered into by
such parties in reliance upon the economic and legal bargains
contained in the Documents. Furthermore, Guarantor shall support the
intent of Guarantor, Debtor and FFCA that the loan evidenced by the
Documents (the "Loan") does not create a joint venture, partnership,
trust, trust agreement or the like, if, and to the extent that, any
challenge occurs, and Guarantor shall not assert that the Loan
creates a joint venture, partnership, trust, trust agreement or the
like.
18. Guarantor acknowledges that FFCA did not prepare or
assist in the preparation of any of the projected financial figures
used by Debtor in analyzing the economic viability and feasibility
of the transactions contemplated by the Loan Agreement. Furthermore,
Guarantor acknowledges that Debtor has not relied upon, nor may it
hereafter rely upon, the analysis undertaken by FFCA in determining
the amount of the Loan and that such analysis will not be made
available to Debtor.
19. All of FFCA's rights and remedies under the Documents and
this Guaranty are intended to be distinct, separate and cumulative
and no such right and remedy is intended to be in exclusion of or a
waiver of any of the others.
20. This Guaranty is solely for the benefit of FFCA, its
successors and assigns and is not intended to nor shall it be deemed
to be for the benefit of any third party, including, without
limitation, Debtor.
21. If any provision of this Guaranty is unenforceable, the
enforceability of the other provisions shall not be affected and they
shall remain in full force and effect.
22. Guarantor agrees to take such action and to sign such
other documents as may be appropriate to carry out the intent of this
Guaranty.
23. Guarantor shall be liable under this Guaranty for the
maximum amount of such liability that can be incurred hereby without
rendering this Guaranty, as it relates to Guarantor, voidable under
applicable laws relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount. Guarantor agrees that the
Obligations may at any time and from time to time exceed the amount
of the liability of Guarantor hereunder without impairing this
Guaranty or affecting the rights and remedies of FFCA hereunder.
24. FFCA, BY ACCEPTING THIS GUARANTY, AND GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY
HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED
IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY FFCA OR
GUARANTOR AGAINST THE OTHER OR THEIR SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY, THE
RELATIONSHIP OF FFCA, DEBTOR AND/OR GUARANTOR, DEBTOR'S USE OR
OCCUPANCY OF THE EQUIPMENT OR THE ADDITIONAL PREMISES, AND/OR ANY
CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY.
THIS WAIVER BY FFCA AND GUARANTOR OF ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS A MATERIAL INDUCEMENT FOR
FFCA ACCEPTING THIS GUARANTY. FURTHERMORE, GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE
TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM
FFCA WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY GUARANTOR AGAINST FFCA
OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY OR ANY DOCUMENTS CONTEMPLATED HEREIN
OR RELATED HERETO. THE WAIVER BY GUARANTOR OF ANY RIGHT IT MAY HAVE
TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS
BEEN NEGOTIATED AND IS A MATERIAL INDUCEMENT FOR FFCA ACCEPTING THIS
GUARANTY.
25. At all times while the Obligations are outstanding,
Guarantor and Debtor shall maintain a consolidated net worth of at
least $25,000,000.00, as determined in accordance with generally
accepted accounting principles consistently applied.
The laws of the State of South Carolina provide that in any real
estate foreclosure proceeding, a defendant against whom a personal
judgement is taken or asked may within thirty (30) days after the
sale of the Additional Premises apply to the court for an order of
appraisal. The statutory appraisal value as approved by the court
would be substituted for the high bid and may decrease the amount of
any deficiency owing in connection with the transaction. THE
UNDERSIGNED HEREBY WAIVES AND RELINQUISHES THE STATUTORY APPRAISAL
RIGHTS WHICH MEANS THE HIGH BID AT THE JUDICIAL FORECLOSURE SALE WILL
BE APPLIED TO THE OBLIGATIONS REGARDLESS OF ANY APPRAISED VALUE OF
THE ADDITIONAL PREMISES.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty effective as of the day of December, 1997.
GUARANTOR:
Federal Tax I.D. Number: E-Z SERVE CORPORATION, a
Delaware
75-2168773 corporation
By
Bob E. Bailey
Treasurer
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on this
day of December, 1997, by Bob E. Bailey, Treasurer of E-Z Serve
Corporation, a Delaware corporation, on behalf of the corporation.
Notary Public
My Commission Expires:
05/60196.2
FFCA No. 8000-5853
05/60196.2
FFCA No. 8000-5853
10
05/60196.2
FFCA No. 8000-5853
UNCONDITIONAL GUARANTY
OF PAYMENT AND PERFORMANCE
1. FOR VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, the undersigned ("Guarantor"), unconditionally,
absolutely and irrevocably guarantees and promises to pay to FFCA
ACQUISITION CORPORATION, a Delaware corporation ("FFCA"), or order,
any and all amounts, including, without limitation, principal and
interest, taxes, insurance premiums, impounds, reimbursements, late
charges, default interest, damages and all other amounts, costs, fees,
expenses and charges of any kind or type whatsoever, which may or at
any time be due to FFCA pursuant to the following agreements
(collectively, the "Documents"):
A. Loan Agreement (the "Loan Agreement"), dated as of
the date hereof, between FFCA and E-Z SERVE CONVENIENCE STORES,
INC., a Delaware corporation ("Debtor");
B. Promissory Note (the "Note"), dated as of the date
hereof, executed by Debtor and payable to FFCA, corresponding to
the real property legally described on the attached Exhibit A
(the "Premises");
C. Deed of Trust, Deed to Secure Debt or Mortgage, as
applicable, Assignment of Rents and Leases, Security Agreement
and Fixture Filing (the "Mortgage"), dated as of the date
hereof, executed by Debtor for the benefit of FFCA, providing a
lien upon and security interest in the Premises;
D. Environmental Indemnity Agreement, dated as of the
date hereof, executed by Debtor for the benefit of FFCA;
E. Any other document, agreement, instrument or
certificate contemplated by any of the foregoing agreements, or
any other documents, agreements, instruments or certificates now
or hereafter entered into between FFCA and Debtor; and
F. Any amendment of the foregoing agreements or other
documents, agreements, instruments or certificates now or
hereafter entered into between FFCA and Debtor.
2. Guarantor also unconditionally guarantees the truthfulness
and accuracy of all representations, warranties and certifications of
Debtor, the satisfaction of all conditions by Debtor and the full and
timely performance of all obligations to be performed by Debtor, under
or pursuant to the Documents (the matters that are guaranteed pursuant
to Sections 1 and 2 are hereinafter collectively referred to as the
"Obligations").
3. The obligations of Guarantor under this Guaranty are
primary, joint and several and independent of the obligations of
Debtor and any and every other guarantor of the Obligations, and a
separate action or actions may be brought and executed against
Guarantor or any other such guarantor, whether or not such action is
brought against Debtor or any other such guarantor and whether or not
Debtor or any other such guarantor be joined in such action or
actions.
4. This is an absolute and unconditional guaranty of payment
and performance and not of collection and Guarantor unconditionally
(a) waives any requirement that FFCA first make demand upon, or seek
to enforce or exhaust remedies against, Debtor or any other person or
entity (including any other guarantor) or any of the collateral or
property of Debtor or such other person or entity before demanding
payment from, or seeking to enforce this Guaranty against, Guarantor;
(b) waives and agrees not to assert any and all rights, benefits and
defenses which might otherwise be available under the provisions of
Ariz. Rev. Stat. '' 12-1641 et seq., 44-141, 44-142 or 47-3605,
Arizona Rules of Civil Procedure Rule 17(f), or any other Arizona
statutes or rules (including any statutes or rules amending,
supplementing or supplanting same) which might operate, contrary to
Guarantor's agreements in this Guaranty, to limit Guarantor's
liability under, or the enforcement of, this Guaranty; (c) covenants
that this Guaranty will not be discharged until all of the Obligations
are fully satisfied; and (d) agrees that this Guaranty shall remain in
full effect without regard to, and shall not be affected or impaired
by, any invalidity, irregularity or unenforceability in whole or in
part of any of the Documents, or any limitation of the liability of
Debtor or Guarantor thereunder, or any limitation on the method or
terms of payment thereunder which may now or hereafter be caused or
imposed in any manner whatsoever.
5. This Guaranty is a continuing guaranty, and the
obligations, undertakings and conditions to be performed or observed
by Guarantor under this Guaranty shall not be affected or impaired by
reason of the happening from time to time of the following with
respect to the Documents, all without notice to, or the further
consent of, Guarantor:
(a) the waiver by FFCA of the observance or performance
by Debtor or Guarantor of any of the obligations, undertakings,
conditions or other provisions contained in any of the
Documents, except to the extent of such waiver;
(b) the extension, in whole or in part, of the time for
payment of any amount owing or payable under the Documents;
(c) the modification or amendment (whether material or
otherwise) of any of the obligations of Debtor under, or any
other provisions of, any of the Documents, except to the extent
of such modification or amendment;
(d) the taking or the omission of any of the actions
referred to in any of the Documents (including, without
limitation, the giving of any consent referred to therein);
(e) any failure, omission, delay or lack on the part of
FFCA to enforce, assert or exercise any provision of the
Documents, including any right, power or remedy conferred on
FFCA in any of the Documents or any action on the part of FFCA
granting indulgence or extension in any form;
(f) the assignment to or assumption by any third party
of any or all of the rights or obligations of Debtor under all
or any of the Documents;
(g) the release or discharge of Debtor from the
performance or observance of any obligation, undertaking or
condition to be performed by Debtor under any of the Documents
by operation of law, including any rejection or disaffirmance of
any of the Documents in any bankruptcy or similar proceedings;
(h) the receipt and acceptance by FFCA or any other
person or entity of notes, checks or other instruments for the
payment of money and extensions and renewals thereof;
(i) any action, inaction or election of remedies by FFCA
which results in any impairment or destruction of any
subrogation rights of Guarantor, or any rights of Guarantor to
proceed against any other person or entity for reimbursement;
(j) any setoff, defense, counterclaim, abatement,
recoupment, reduction, change in law or any other event or
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor, indemnitor or
surety under the laws of the State of Arizona, the state in
which the Premises is located or any other jurisdiction; and
(k) the termination or renewal of any of the Obligations
or any other provision thereof.
6. Guarantor represents and warrants to FFCA that:
(a) Neither the execution nor delivery of this Guaranty
nor fulfillment of nor compliance with the terms and provisions
hereof will conflict with, or result in a breach of the terms or
conditions of, or constitute a default under, any agreement or
instrument to which Guarantor is now a party or by which
Guarantor may be bound, or result in the creation of any lien,
charge or encumbrance upon any property or assets of Guarantor,
which conflict, breach, default, lien, charge or encumbrance
could result in a material adverse change in the financial
condition of Guarantor;
(b) No further consents, approvals or authorizations are
required for the execution and delivery of this Guaranty by
Guarantor or for Guarantor's compliance with the terms and
provisions of this Guaranty;
(c) This Guaranty is the legal, valid and binding
agreement of Guarantor and is enforceable against Guarantor in
accordance with its terms, except as may be affected by any
bankruptcy, insolvency, moratorium, fraudulent conveyance or
similar laws now or hereafter in effect for the benefit of
creditors and general principles of equity;
(d) Guarantor has the full power, authority, capacity
and legal right to execute and deliver this Guaranty, and, to
the extent Guarantor is a corporation, partnership, limited
liability company or other form of entity, the parties executing
this Guaranty on behalf of Guarantor are fully authorized and
directed to execute the same to bind Guarantor;
(e) Guarantor is not a "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate," as those
terms are defined in the U.S. Internal Revenue Code and the
regulations promulgated thereunder. Guarantor's Social Security
Number or Federal Tax Identification Number is accurately set
forth herein next to the signature of Guarantor;
(f) Guarantor has delivered to FFCA either audited
financial statements or, if Guarantor does not have audited
financial statements, certified financial statements. Such
financial statements and other information relating to Guarantor
heretofore delivered to FFCA are true, correct and complete in
all material respects as of the date of this Guaranty.
Guarantor understands that FFCA is relying upon such
information, and Guarantor represents that such reliance is
reasonable. The financial statements of Guarantor delivered by
Debtor to FFCA pursuant to the Loan Agreement have been prepared
in accordance with generally accepted accounting principles
consistently applied and accurately reflect, as of the date of
such financial statements, the financial condition of Guarantor;
(g) During the term of this Guaranty, (i) Guarantor will
not transfer or dispose of any material part of its assets
except in the ordinary course of business for full and fair
consideration and reasonably equivalent value and (ii) Guarantor
shall not, without the prior written consent of FFCA, sell,
assign, transfer, mortgage, pledge, convey or encumber any
interest in Guarantor (or the interest of any entity directly or
indirectly controlling Guarantor), whether voluntarily,
involuntarily or by operation of law or otherwise, including,
without limitation, by merger, consolidation, dissolution,
voluntary or involuntary sale or by the creation or issuance of
new stock of Guarantor by which an aggregate of more than 10% of
the stock in Guarantor shall be vested in a party or parties who
are not stockholders on the date of this Guaranty;
notwithstanding the foregoing, a transfer by devise or descent
or by operation of law upon the death of a stockholder of
Guarantor shall not be deemed to be a violation of this
paragraph.
(h) Guarantor will furnish FFCA annually, within ninety
(90) days after the close of each calendar year, a financial
statement consisting of a balance sheet and such other financial
information as FFCA may reasonably request; and
(i) The Documents are conclusively presumed to have been
signed in reliance on this Guaranty, and the assumption by
Guarantor of its obligations under this Guaranty results in
direct financial benefit to Guarantor.
7. This Guaranty shall commence upon execution and delivery
of any of the Documents and shall continue in full force and effect
until all of the Obligations are duly, finally and permanently paid,
performed and discharged and are not subject to any right of
reborrowing or extension by Debtor, and FFCA gives Guarantor written
notice of the full and final satisfaction of the Obligations. The
Obligations shall not be considered fully paid, performed and
discharged unless and until all payments by Debtor to FFCA are no
longer subject to any right on the part of any person whomsoever,
including but not limited to Debtor, Debtor as a debtor-in-possession
and/or any trustee in bankruptcy, to disgorge such payments or seek to
recoup the amount of such payments or any part thereof. The foregoing
shall include, by way of example and not by way of limitation, all
rights to recover preferences voidable under Title 11 of the United
States Bankruptcy Code, 11 U.S.C. Sec. 101 et seq., as amended (the
"Code"). In the event that any such payments by Debtor to FFCA are
disgorged after the making thereof, in whole or in part, or settled
without litigation, to the extent of such disgorgement or settlement,
Guarantor shall be liable for the full amount FFCA is required to
repay plus interest, late charges, attorney's fees and any and all
expenses paid or incurred by FFCA in connection therewith.
8. Guarantor shall neither have any right of subrogation,
indemnity or reimbursement nor hold any other claim against Debtor,
and Guarantor does hereby release Debtor from any and all claims by
Guarantor now or hereafter arising against Debtor. Furthermore,
Guarantor hereby unconditionally and irrevocably waives (a) any right
to participate in any security now or hereafter held by FFCA or in any
claim or remedy of FFCA or any other person against Debtor with
respect to the Obligations, (b) any statute of limitations affecting
Guarantor's liability hereunder, (c) all principles and provisions of
law which conflict with the terms of this Guaranty, and (d) diligence,
presentment, protest, demand for performance, notice of
nonperformance, notice of intent to accelerate and acceleration,
notice of protest, notice of dishonor, notice of execution of any
Documents, notice of extension, renewal, alteration or amendment,
notice of acceptance of this Guaranty, notice of defaults under any of
the Documents and all other notices whatsoever.
9. Notwithstanding the preceding Section 8, in the event that
Guarantor shall have any claims against Debtor, any indebtedness of
Debtor now or hereafter held by Guarantor is hereby subordinated to
the indebtedness of Debtor to FFCA. Any such indebtedness of Debtor
to Guarantor, if FFCA so requests, shall be collected, enforced and
received by Guarantor as trustee for FFCA and be paid over to FFCA on
account of the Obligations, but without reducing or affecting in any
manner the liability of Guarantor under the other provisions of this
Guaranty.
10. It is not necessary for FFCA to inquire into the powers of
Debtor or its officers, directors, partners or agents acting or
purporting to act on its behalf, and Guarantor shall be liable for the
obligations of Debtor in accordance with their terms notwithstanding
any lack of authorization or defect in execution or delivery by
Debtor.
11. In addition to the amounts guaranteed under this Guaranty,
Guarantor agrees to pay (i) all of FFCA's attorneys' fees and other
costs and expenses which may be incurred by FFCA in the enforcement of
this Guaranty and (ii) interest (including postpetition interest to
the extent a petition is filed by or against Debtor under the Code) at
the Default Rate (as defined in the Note) on any Obligations not paid
when due.
12. This Guaranty shall apply to the parties hereto and their
successors and assigns according to the context hereof and without
regard to the number or gender of words or expressions used herein.
13. Guarantor hereby agrees to indemnify and hold harmless
FFCA from any loss, cause of action, claim, cost, expense or fee,
including but not limited to attorney's fees, suffered or occasioned
by the failure of Debtor to satisfy its obligations under the
Documents. The agreement to indemnify FFCA contained in this
paragraph shall be enforceable notwithstanding the invalidity or
unenforceability of the Documents or any of them or the invalidity or
unenforceability of any other paragraph contained in this Guaranty.
14. All moneys available to FFCA for application in payment or
reduction of the liabilities of Debtor under the Documents may be
applied by FFCA to the payment or reduction of such liabilities of
Debtor, in such manner, in such amounts and at such time or times as
FFCA may elect.
15. All notices, demands, requests, consents, approvals or
other instruments required or permitted to be given pursuant to this
Guaranty shall be in writing and given by (i) hand delivery,
(ii) facsimile, (iii) express overnight delivery service or (iv)
certified or registered mail, return receipt requested, and shall be
deemed to have been delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next business
day, if delivered by express overnight delivery service or (d) the
third business day following the day of deposit of such notice with
the United States Postal Service, if sent by certified or registered
mail, return receipt requested. Notices shall be provided to the
addresses (or facsimile numbers, as applicable) specified below:
If to Guarantor: E-Z Serve Corporation
2550 North Loop West
Suite 600
Houston, TX 77092
Attention: Mr. Bob E. Bailey
Treasurer
Telephone: (713) 684-4318
Telecopy: (713) 684-4367
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and General
Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either Guarantor or
FFCA may from time to time hereafter specify to the other party in a
notice delivered in the manner provided above.
16. This Guaranty is made, executed and delivered in the State
of Arizona, and it is the intent of Guarantor and FFCA that this
Guaranty shall be deemed to be a contract made under and governed by
the internal laws of the State of Arizona. For purposes of any action
or proceeding involving this Guaranty, Guarantor submits to the
jurisdiction of all federal and state courts located in the State of
Arizona and consents that it may be served with any process or paper
by registered mail or by personal service within or without the State
of Arizona in accordance with applicable law. Furthermore, Guarantor
waives and agrees not to assert in any such action, suit or proceeding
that it is not personally subject to the jurisdiction of such courts,
that the action, suit or proceeding is brought in an inconvenient
forum or that venue of the action, suit or proceeding is improper.
Nothing contained in this section shall limit or restrict the right of
FFCA to commence any proceeding in the federal or state courts located
in the state in which the Premises is located and/or where Guarantor
maintains its chief executive office to the extent FFCA deems such
proceeding necessary or advisable to exercise remedies available under
the Documents.
17. Guarantor intends that the business relationship created
between Debtor and FFCA by the Loan Agreement, the Note, the Mortgage
and the other Documents is solely that of creditor and debtor and has
been entered into by such parties in reliance upon the economic and
legal bargains contained in the Documents. Furthermore, Guarantor
shall support the intent of Guarantor, Debtor and FFCA that the loan
as evidenced by the Documents (the "Loan") does not create a joint
venture, partnership, trust, trust agreement or the like, if, and to
the extent that, any challenge occurs, and Guarantor shall not assert
that the Loan creates a joint venture, partnership, trust, trust
agreement or the like.
18. Guarantor acknowledges that FFCA did not prepare or assist
in the preparation of any of the projected financial figures used by
Debtor in analyzing the economic viability and feasibility of the
transactions contemplated by the Loan Agreement. Furthermore,
Guarantor acknowledges that Debtor has not relied upon, nor may it
hereafter rely upon, the analysis undertaken by FFCA in determining
the amount of the Loan and that such analysis will not be made
available to Debtor.
19. All of FFCA's rights and remedies under the Documents and
this Guaranty are intended to be distinct, separate and cumulative and
no such right and remedy is intended to be in exclusion of or a waiver
of any of the others.
20. This Guaranty is solely for the benefit of FFCA, its
successors and assigns and is not intended to nor shall it be deemed
to be for the benefit of any third party, including, without
limitation, Debtor.
21. If any provision of this Guaranty is unenforceable, the
enforceability of the other provisions shall not be affected and they
shall remain in full force and effect.
22. Guarantor agrees to take such action and to sign such
other documents as may be appropriate to carry out the intent of this
Guaranty.
23. Guarantor shall be liable under this Guaranty for the
maximum amount of such liability that can be incurred hereby without
rendering this Guaranty, as it relates to Guarantor, voidable under
applicable laws relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount. Guarantor agrees that the
Obligations may at any time and from time to time exceed the amount of
the liability of Guarantor hereunder without impairing this Guaranty
or affecting the rights and remedies of FFCA hereunder.
24. FFCA, BY ACCEPTING THIS GUARANTY, AND GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY FFCA OR GUARANTOR
AGAINST THE OTHER OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP
OF FFCA, DEBTOR AND/OR GUARANTOR, DEBTOR'S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR
STATUTORY REMEDY. THIS WAIVER BY FFCA AND GUARANTOR OF ANY RIGHT THEY
MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS A MATERIAL
INDUCEMENT FOR FFCA ACCEPTING THIS GUARANTY. FURTHERMORE, GUARANTOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT
MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM FFCA WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY GUARANTOR AGAINST FFCA OR
ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY OR ANY DOCUMENTS CONTEMPLATED HEREIN OR
RELATED HERETO. THE WAIVER BY GUARANTOR OF ANY RIGHT IT MAY HAVE TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN
NEGOTIATED AND IS A MATERIAL INDUCEMENT FOR FFCA ACCEPTING THIS
GUARANTY.
25. At all times while the Obligations are outstanding,
Guarantor and Debtor shall maintain a consolidated net worth of at
least $25,000,000.00, as determined in accordance with generally
accepted accounting principles consistently applied.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this
Guaranty effective as of the day of December, 1997.
GUARANTOR:
Federal Tax I.D. Number: E-Z SERVE CORPORATION, a
Delaware
corporation
75-2168773
By
Bob E. Bailey
Treasurer
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on this
day of December, 1997, by Bob E. Bailey, Treasurer of E-Z Serve
Corporation, a Delaware corporation, on behalf of the corporation.
Notary Public
My Commission Expires:
05/58905.3
FFCA No. 8000-
Unit No.
[City, State]
05/58905.3
FFCA No. 8000-
Unit No.
10
[City, State]
05/58905.3
FFCA No. 8000-
Unit No.
[City, State]
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of
December 24, 1997, by and between FFCA ACQUISITION CORPORATION, a
Delaware corporation ("FFCA"), whose address is 17207 North Perimeter
Drive, Scottsdale, Arizona 85255, and E-Z SERVE CONVENIENCE STORES,
INC., a Delaware corporation ("Debtor"), whose address is 2550 North
Loop West, Suite 600, Houston, Texas 77092.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined terms
used in this Agreement shall have the meanings set forth in Section 1.
Debtor has requested from FFCA, and applied for, the Loans to provide
refinancing for the Premises, and for no other purpose whatsoever.
Each Loan will be evidenced by a Note and secured by a first priority
security interest in the corresponding Premises pursuant to a
Mortgage. FFCA has committed to make the Loans pursuant to the terms
and conditions of the Commitment, this Agreement and the other Loan
Documents.
AGREEMENT:
In consideration of the mutual covenants and provisions of this
Agreement, the parties agree as follows:
1. Definitions. The following terms shall have the
following meanings for all purposes of this Agreement:
"Action" has the meaning set forth in Section 10.A(4).
"Additional Premises" shall have the meaning set forth in the
Equipment Loan Agreement.
"Affiliate" means any Person which directly or indirectly
controls, is under common control with, or is controlled by any other
Person. For purposes of this definition, "controls", "under common
control with" and "controlled by" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such person or entity, whether through
ownership of voting securities or otherwise.
"Closing" shall have the meaning set forth in Section 4.
"Closing Date" shall have the meaning set forth in Section 4.
"Code" means the United States Bankruptcy Code, 11 U.S.C.
Sec. 101 et seq., as amended.
"Commitment" means that certain Commitment Letter dated
October 22, 1997 between FFCA and Guarantor, and any amendments or
supplements thereto.
"Counsel" means legal counsel to Debtor and Guarantor, licensed
in the states in which (i) the Premises are located and (ii) Debtor
and Guarantor maintain their respective chief executive offices, as
selected by Debtor and Guarantor and approved by FFCA.
"Debtor Entities" means, collectively, Debtor, Guarantor and
any Affiliate of Debtor or Guarantor.
"De Minimis Amounts" shall mean, with respect to any given
level of Hazardous Materials, that level or quantity of Hazardous
Materials in any form or combination of forms which does not
constitute a material violation of any Environmental Laws and is
customarily employed in, or associated with, similar businesses
located in the states in which the Premises are located, including,
without limitation, the retail sale of petroleum products by Debtor
in the ordinary course of business.
"Disclosures" has the meaning set forth in Section 14.P.
"Environmental Condition" means any condition with respect to
soil, surface waters, groundwaters, land, stream sediments, surface
or subsurface strata, ambient air and any environmental medium
comprising the Premises, whether or not yet discovered, which could
or does result in any damage, loss, cost, expense, claim, demand,
order or liability to or against Debtor or FFCA by any third party
(including, without limitation, any Governmental Authority),
including, without limitation, any condition resulting from the
operation of Debtor's business, business at the Premises and/or any
activity or operation formerly conducted by any person or entity on
or off the Premises.
"Environmental Disclosure" means that information set forth in
the attached Schedule I with respect to the Environmental Condition
of the Premises.
"Environmental Indemnity Agreement" or "Environmental Indemnity
Agreements" means, as the context may require, the environmental
indemnity agreement dated as of the date of this Agreement to be
executed by Debtor for the benefit of FFCA with respect to a Premises
or the environmental indemnity agreements dated as of the date of this
Agreement to be executed by Debtor for the benefit of FFCA with
respect to all of the Premises, as the same may be amended from time
to time. An Environmental Indemnity Agreement will be executed for
each Premises.
"Environmental Insurer" means such environmental insurance
company as FFCA may select in its sole discretion.
"Environmental Laws" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations and the
like, as well as common law, relating to Hazardous Materials,
Regulated Substances or USTs and/or the protection of human health or
the environment by reason of a Release or a Threatened Release of
Hazardous Materials or relating to liability for or costs of
Remediation or prevention of Releases. "Environmental Laws" includes,
but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant thereto,
and any state or local statutes, ordinances, rules, regulations and
the like addressing similar issues: the Comprehensive Environmental
Response, Compensation and Liability Act; the Emergency Planning and
Community Right-to-Know Act; the Hazardous Materials Transportation
Act; the Resource Conservation and Recovery Act (including but not
limited to Subtitle I relating to USTs); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances Control
Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide,
Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors
Appropriation Act. "Environmental Laws" also includes, but is not
limited to, any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as
common law: conditioning transfer of property upon a negative
declaration or other approval of a Governmental Authority with respect
to Hazardous Materials; requiring notification or disclosure of
Releases or other environmental condition of the Premises to any
Governmental Authority or other person or entity, whether or not in
connection with transfer of title to or interest in property; imposing
conditions or requirements relating to Hazardous Materials, Regulated
Substances or USTs in connection with permits or other authorization
for lawful activity; relating to the handling and disposal of solid
or hazardous waste; relating to nuisance, trespass or other causes of
action related to Hazardous Materials, Regulated Substances or USTs;
and relating to wrongful death, personal injury, or property or other
damage in connection with the physical condition or use of the
Premises by reason of the presence of Hazardous Materials, Regulated
Substances or USTs in, on, under or above the Premises.
"Environmental Policies" means those certain environmental
insurance policies issued by Environmental Insurer to FFCA with
respect to the Premises, which Environmental Policies shall be in form
and substance satisfactory to FFCA in its sole discretion.
"Equipment Loan Agreement" means that certain Equipment Loan
Agreement dated as of the date of this Agreement between FFCA and
Debtor, as the same may be amended from time to time.
"Equipment Loan" means the loan evidenced by the Equipment
Note.
"Equipment Loan Documents" means the "Loan Documents" as
defined in the Equipment Loan Agreement.
"Equipment Note" has the meaning set forth in the Equipment
Loan Agreement.
"Equipment Premises" means the "Premises" as defined in the
Equipment Loan Agreement.
"Event of Default" has the meaning set forth in Section 10.
"Excluded Property" means any books, records or computer
systems other than those located at the Premises related specifically
to the Premises, any inventory wherever located, any Intangibles (as
defined in the Mortgages) relating to or necessary or desirable in
connection with the sale or other disposition of inventory and any
leases of equipment at the Premises with third-parties.
"E-Z Serve Facility" means the convenience store and gasoline
station concepts operated by Debtor at the Premises as of the Closing
Date, or such other concept of convenience store and gasoline station
owned or operated by Debtor and approved by FFCA as contemplated by
Section 14.Q.
"FCCR Amount" has the meaning set forth in Section 10.A(6).
"Fee" means an underwriting, site assessment, valuation,
processing and commitment fee equal to 1% of the sum of the Loan
Amounts for all of the Premises, which Fee shall be payable as set
forth in Section 3.
"FFCA Entities" means, collectively, FFCA, Franchise Finance
and any Affiliate of FFCA or Franchise Finance.
"Franchise Finance" means Franchise Finance Corporation of
America, a Delaware corporation, and its successors.
"Governmental Authority" means any governmental authority,
agency, department, commission, bureau, board, instrumentality, court
or quasi-governmental authority of the United States, the states where
the Premises are located or any political subdivision thereof.
"Guarantor" means E-Z Serve Corporation, a Delaware
corporation.
"Guaranty" or "Guaranties" means, as the context may require,
the unconditional guaranty of payment and performance dated as of the
date of this Agreement to be executed by Guarantor for the benefit of
FFCA with respect to each Loan corresponding to a Premises or the
unconditional guaranties of payment and performance dated as of the
date of this Agreement to be executed by Guarantor for the benefit of
FFCA with respect to all of the Loans, as the same may be amended from
time to time. A Guaranty will be executed by Guarantor with respect
to each Loan.
"Hazardous Materials" means (a) any toxic substance or
hazardous waste, substance, solid waste or related material, or any
pollutant or contaminant; (b) radon gas, asbestos in any form which
is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment which contains dielectric fluid
containing levels of polychlorinated biphenyls in excess of federal,
state or local safety guidelines, whichever are more stringent, or any
petroleum product; (c) any substance, gas, material or chemical which
is or may be defined as or included in the definition of "hazardous
substances," "toxic substances," "hazardous materials," hazardous
wastes" or words of similar import under any Environmental Laws; and
(d) any other chemical, material, gas or substance the exposure to or
release of which is or may be prohibited, limited or regulated by any
Governmental Authority that asserts or may assert jurisdiction over
the Premises or the operations or activity at the Premises, or any
chemical, material, gas or substance that does or may pose a hazard
to the health and/or safety of the occupants of the Premises or the
owners and/or occupants of property adjacent to or surrounding the
Premises.
"Indemnified Parties" has the meaning set forth in Section 12.
"Loan" or "Loans" means, as the context may require, the loan
for each Premises, or the loans for all of the Premises, described in
Section 2.
"Loan Amount" or "Loan Amounts" means, as the context may
require, the aggregate amount set forth in Section 2 or, with respect
to each Premises, the individual amount set forth in Exhibit A.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Mortgages, the Environmental Indemnity Agreements, the UCC
Financing Statements, the Guaranties and all other documents executed
in connection therewith or contemplated thereby.
"Material Adverse Effect" means a material adverse effect on
(i) the contemplated business, condition, worth or operations of
Debtor or the Premises, or (ii) Debtor's ability to perform its
obligations under the Loan Documents.
"Modified FCCR Amount" has the meaning set forth in Section
10.A(6).
"Mortgage" or "Mortgages" means, as the context may require,
the deed of trust, deed to secure debt or mortgage dated as of the
date of this Agreement to be executed by Debtor for the benefit of
FFCA with respect to a Premises or the deeds of trust, deeds to secure
debt or mortgages dated as of the date of this Agreement to be
executed by Debtor for the benefit of FFCA with respect to all of the
Premises, as the same may be amended from time to time. A Mortgage
will be executed for each Premises.
"Note" or "Notes" means, as the context may require, the
promissory note dated as of the date of this Agreement to be executed
by Debtor in favor of FFCA with respect to a Premises or the
promissory notes dated as of the date of this Agreement to be executed
by Debtor in favor of FFCA with respect to all of the Premises, as the
same may be amended from time to time, including, without limitation,
as a result of the payment of the FCCR Amount or the Modified FCCR
Amount pursuant to Section 10. A Note will be executed for each
Premises in the Loan Amount corresponding to such Premises. Certain
of the Notes will provide for the calculation of interest at a fixed-
rate of interest and the remainder of the Notes will provide for the
calculation of interest at a variable rate of interest, as indicated
on the attached Exhibit A.
"Other Agreements" means, collectively, all agreements and
instruments between, among or by (1) any of the Debtor Entities, and,
or for the benefit of, (2) any of the FFCA Entities, including,
without limitation, promissory notes and guaranties, but excluding the
Loan Documents and the Equipment Loan Documents.
"Participation" has the meaning set forth in Section 14.P.
"Permitted Encumbrances" means
(a) liens for taxes, assessments or other governmental
charges not yet due and payable or being contested in good
faith, for which appropriate reserves have been made or
indemnities provided (which reserves and indemnities shall be
subject to FFCA's reasonable approval) and the failure to pay
such taxes, assessments and/or governmental charges or levies
will not result in imminent danger of any Premises being sold,
foreclosed upon, forfeited or lost; and
(b) liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens for sums not
more than 60 days delinquent or which are being contested in
good faith, have been satisfactorily bonded over or for which
appropriate reserves have been made or indemnities provided
(which reserves and indemnities shall be subject to FFCA's
reasonable approval) and the failure to pay such sums will not
result in imminent danger of any Premises being sold,
foreclosed upon, forfeited or lost.
"Permitted Exceptions" means (i) those recorded easements,
restrictions, liens and encumbrances set forth as exceptions in the
title insurance policies issued by Title Company to FFCA and approved
by FFCA in connection with the Loans, (ii) Permitted Encumbrances, and
(iii) PMSI Liens.
"Person" means any individual, corporation, partnership,
limited liability company, trust, unincorporated organization,
Governmental Authority or any other form of entity.
"PMSI Liens" means purchase money security interests in
equipment located at the Premises in favor of third party lenders or
vendors.
"Premises" means the parcel or parcels of real estate
corresponding to the FFCA File Numbers and addresses identified on
Exhibit A attached hereto, together with all rights, privileges and
appurtenances associated therewith and all buildings, fixtures and
other improvements, equipment, trade fixtures, appliances and other
tangible personal property now or hereafter located thereon (whether
or not affixed to such real estate), provided, that, the Premises
shall not include inventory or any other Excluded Property. As used
herein, the term "Premises" shall mean either a singular property or
all of the properties collectively, as the context may require.
"Questionnaires" means the environmental questionnaires
completed by Debtor with respect to the Premises and submitted to
Environmental Insurer in connection with the issuance of the
Environmental Policies.
"Regulated Substances" means "petroleum" and "petroleum-based
substances" or any similar terms described or defined in any
Environmental Laws and any applicable federal, state, county or local
laws applicable to or regulating USTs.
"Release" means any presence, release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of
Hazardous Materials, Regulated Substances or USTs.
"Remediation" means any response, remedial, removal, or
corrective action, any activity to cleanup, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Material, Regulated
Substances or USTs, any actions to prevent, cure or mitigate any
Release, any action to comply with any Environmental Laws or with any
permits issued pursuant thereto, any inspection, investigation, study,
monitoring, assessment, audit, sampling and testing, laboratory or
other analysis, or any evaluation relating to any Hazardous Materials,
Regulated Substances or USTs.
"Securitization" has the meaning set forth in Section 14.P.
"Securitized Loan Pool" means any pool or group of loans that
are a part of any Securitization transaction.
"Substitute Premises" means one or more parcels of real
property substituted for a Premises in accordance with the
requirements of Section 13, together with all rights, privileges and
appurtenances associated therewith, and all buildings, fixtures and
other improvements located thereon (whether or not affixed to such
real estate). Where two or more parcels of real property comprise a
Substitute Premises, such parcels or interests shall be aggregated and
deemed to constitute the Substitute Premises for all purposes of this
Agreement.
"Threatened Release" means a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the
soil, surface waters, groundwaters, land, stream sediments, surface
or subsurface strata, ambient air or any other environmental medium
comprising or surrounding the Premises which may result from such
Release.
"Title Company" means the title insurance company described in
Section 4.
"Transfer" has the meaning set forth in Section 14.P.
"UCC Financing Statements" means such UCC Financing Statements
as FFCA shall require to be executed and delivered by Debtor with
respect to the transactions contemplated by this Agreement.
"USTs" means any one or combination of tanks and associated
piping systems used in connection with the storage, dispensing and
general use of Regulated Substances.
2. Transaction; Prepayment of Notes. (a) On the terms and
subject to the conditions set forth in the Loan Documents, FFCA shall
make the Loans. The Loans will be evidenced by the Notes and secured
by the Mortgages. Guarantor will provide further security for the
Loans by executing and delivering the Guaranties. Debtor shall repay
the outstanding principal amount of the Loans together with interest
thereon in the manner and in accordance with the terms and conditions
of the Notes and the other Loan Documents. The aggregate Loan Amount
shall be $51,912,000.00, allocated among the Premises as set forth on
the attached Exhibit A. The Loans shall be advanced at the Closing
in cash or otherwise immediately available funds subject to the terms
and conditions of this Agreement.
(b) The Notes may be prepaid subject to the satisfaction of the
conditions precedent to prepayment set forth in the Notes and
provided:
(i) no Event of Default shall have occurred and be
continuing under this Agreement; and
(ii) except as contemplated by the following sentence,
all of Debtor's obligations under the Equipment Note and the
other Equipment Loan Documents shall have been satisfied and
discharged in full. FFCA agrees that if the conditions
precedent to prepayment set forth in the Notes and in the
preceding subitem (i) are satisfied, Debtor may (A) prepay up
to 30 of the Notes prior to Debtor's obligations under the
Equipment Note and the other Equipment Loan Documents being
satisfied and discharged in full; and (B) prepay up to an
additional 30 of the Notes prior to Debtor's obligations under
the Equipment Note and the other Equipment Loan Documents being
satisfied and discharged in full if Debtor shall have first
paid down at least $2,000,000.00 of the principal balance of
the Equipment Note prior to the prepayment of any such
additional 30 Notes.
3. Underwriting, Site Assessment, Valuation, Processing and
Commitment Fee. Debtor paid FFCA a portion of the Fee pursuant to the
Commitment, and such portion was deemed fully earned when received.
The remainder of the Fee shall be paid at the Closing and shall be
deemed nonrefundable and fully earned upon the Closing. The Fee shall
be applied by FFCA in payment of FFCA's in house site inspection costs
and fees. The balance of the Fee remaining after payment of such
costs and fees constitutes FFCA's underwriting, site assessment,
valuation, processing and commitment fee. In the event the
transaction set forth in this Agreement fails to close due to a breach
or default by Debtor under this Agreement, FFCA shall retain the
portion of the Fee received by FFCA (without affecting or limiting
FFCA's remedies set forth in this Agreement).
4. Closing. (a) The Loans shall be closed (the "Closing")
within 30 days following the satisfaction of all of the terms and
conditions contained in this Agreement, but in no event shall the date
of the Closing be extended beyond December 31, 1997, unless such
extension shall be approved by FFCA in its sole discretion (the date
on which the Closing shall occur is referred to herein as the "Closing
Date").
(b) FFCA has ordered a title insurance commitment for each
Premises from Lawyers Title Insurance Corporation ("Title Company").
Prior to the Closing Date, the parties hereto shall deposit with
Title Company all documents and moneys necessary to comply with their
obligations under this Agreement. Title Company shall not cause the
transaction to close unless and until it has received written
instructions from FFCA and Debtor to do so. Except for the fees,
expenses and costs to be paid from the Fee by FFCA pursuant to
Section 3, all costs of such transaction shall be borne by Debtor,
including, without limitation, the cost of title insurance and
endorsements, survey charges, the attorneys' fees of Debtor,
attorneys' fees and expenses of FFCA, the cost of the environmental
reports to be delivered pursuant to Section 9.E, stamp taxes, mortgage
taxes, transfer fees, escrow fees and recording fees. All real and
personal property and other applicable taxes and assessments and other
charges relating to the Premises which are due and payable on or prior
to the Closing Date as well as taxes and assessments due and payable
subsequent to the Closing Date but which Title Company requires to be
paid at Closing as a condition to the issuance of the title insurance
policy described in Section 9.C, shall be paid by Debtor at or prior
to the Closing. The Closing documents shall be dated as of the
Closing Date.
Debtor and FFCA hereby employ Title Company to act as escrow
agent in connection with this transaction. Debtor and FFCA will
deliver to Title Company all documents, pay to Title Company all sums
and do or cause to be done all other things necessary or required by
this Agreement, in the reasonable judgment of Title Company, to enable
Title Company to comply herewith and to enable any title insurance
policy provided for herein to be issued. Title Company is authorized
to pay, from any funds held by it for FFCA's or Debtor's respective
credit all amounts necessary to procure the delivery of such documents
and to pay, on behalf of FFCA and Debtor, all charges and obligations
payable by them, respectively. Debtor will pay all charges payable
by it to Title Company. Title Company is authorized, in the event any
conflicting demand is made upon it concerning these instructions or
the escrow, at its election, to hold any documents and/or funds
deposited hereunder until an action shall be brought in a court of
competent jurisdiction to determine the rights of Debtor and FFCA or
to interplead such documents and/or funds in an action brought in any
such court. Deposit by Title Company of such documents and funds,
after deducting therefrom its charges and its expenses and attorneys'
fees incurred in connection with any such court action, shall relieve
Title Company of all further liability and responsibility for such
documents and funds. Title Company's receipt of this Agreement and
opening of an escrow pursuant to this Agreement shall be deemed to
constitute conclusive evidence of Title Company's agreement to be
bound by the terms and conditions of this Agreement pertaining to
Title Company. Disbursement of any funds shall be made by check,
certified check or wire transfer, as directed by FFCA. Title Company
shall be under no obligation to disburse any funds represented by
check or draft, and no check or draft shall be payment to Title
Company in compliance with any of the requirements hereof, until it
is advised by the bank in which such check or draft is deposited that
such check or draft has been honored. Title Company is authorized to
act upon any statement furnished by the holder or payee, or a
collection agent for the holder or payee, of any lien on or charge or
assessment in connection with the Premises, concerning the amount of
such charge or assessment or the amount secured by such lien, without
liability or responsibility for the accuracy of such statement. The
employment of Title Company as escrow agent shall not affect any
rights of subrogation under the terms of any title insurance policy
issued pursuant to the provisions thereof.
5. Representations and Warranties of FFCA. The
representations and warranties of FFCA contained in this Section are
being made by FFCA as of the date of this Agreement and the Closing
Date to induce Debtor to enter into this Agreement and consummate the
transaction contemplated herein, and Debtor has relied, and will
continue to rely, upon such representations and warranties from and
after the execution of this Agreement and the Closing. FFCA
represents and warrants to Debtor as follows:
A. Organization of FFCA. FFCA has been duly formed,
is validly existing and has taken all necessary action to
authorize the execution, delivery and performance by FFCA of
this Agreement.
B. Authority of FFCA. The person who has executed
this Agreement on behalf of FFCA is duly authorized so to do.
C. Enforceability. Upon execution by FFCA, this
Agreement shall constitute the legal, valid and binding
obligation of FFCA, enforceable against FFCA in accordance with
its terms.
All representations and warranties of FFCA made in this
Agreement shall survive the Closing.
6. Representations and Warranties of Debtor. The
representations and warranties of Debtor contained in this Section are
being made by Debtor as of the date of this Agreement and the Closing
Date to induce FFCA to enter into this Agreement and consummate the
transaction contemplated herein, and FFCA has relied, and will
continue to rely, upon such representations and warranties from and
after the execution of this Agreement and the Closing. Debtor
represents and warrants to FFCA as follows:
A. Information and Financial Statements. Debtor has
delivered to FFCA audited financial statements concerning
itself and Guarantor and certain other information concerning
itself and Guarantor, which financial statements and other
information are true, correct and complete in all material
respects; and no material adverse change has occurred with
respect to any such financial statements and other information
provided to FFCA since the date such financial statements and
other information were prepared or delivered to FFCA. Debtor
understands that FFCA is relying upon such financial statements
and information and Debtor represents that such reliance is
reasonable. All such financial statements were prepared in
accordance with generally accepted accounting principles
consistently applied and accurately reflect as of the date of
this Agreement and the Closing Date, the financial condition of
each entity to which they pertain.
B. Organization and Authority. (1) Debtor is duly
organized, validly existing and in good standing under the laws
of its state of incorporation, and qualified as a foreign
corporation to do business in each of the states where the
Premises are located. All necessary corporate action has been
taken to authorize the execution, delivery and performance of
this Agreement and of the other documents, instruments and
agreements provided for herein.
(2) The person(s) who have executed this Agreement on
behalf of Debtor are duly authorized so to do.
C. Enforceability of Documents. Upon execution by
Debtor and Guarantor, as applicable, this Agreement and the
other documents, instruments and agreements to be executed in
connection with this Agreement, shall constitute the legal,
valid and binding obligations of Debtor and Guarantor, as
applicable, enforceable against Debtor and Guarantor, as
applicable, in accordance with their respective terms, except
as may be affected by any bankruptcy, insolvency, moratorium,
fraudulent conveyance or similar laws now or hereafter in
effect for the benefit of creditors and general principles of
equity.
D. Litigation. There are no suits, actions,
proceedings or investigations pending or threatened against or
involving Debtor, Guarantor or the Premises before any
arbitrator or Governmental Authority which could reasonably
result in any material adverse change in the contemplated
business, condition, worth or operations of Debtor, Guarantor
or the Premises.
E. Absence of Breaches or Defaults. Neither Debtor
nor Guarantor is, and the authorization, execution, delivery
and performance of this Agreement and the documents,
instruments and agreements provided for herein will not result,
in any breach or default under any other document, instrument
or agreement to which Debtor or Guarantor, as applicable, is a
party or by which Debtor, Guarantor, the Premises or any of the
property of Debtor or Guarantor is subject or bound, except
such breaches or defaults as would not have a Material Adverse
Effect. The authorization, execution, delivery and performance
of this Agreement and the documents, instruments and agreements
provided for herein will not violate any applicable law,
statute, regulation, rule, ordinance, code, rule or order.
F. Utilities. The Premises are served by ample public
utilities to permit full utilization of the Premises for their
intended purpose and all utility connection fees and use
charges due as of the Closing Date have been paid in full.
G. Intended Use and Zoning; Compliance With Laws.
Debtor intends to use the Premises solely for the operation of
E-Z Serve Facilities, and related ingress, egress and parking,
and for no other purposes. Each of the Premises is in material
compliance with all applicable zoning requirements and the use
of each of the Premises as an E-Z Serve Facility does not
constitute a nonconforming use under applicable zoning
requirements, except such nonconforming uses which have been
approved by all applicable Governmental Authorities. The
Premises comply with all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders and
approvals of each Governmental Authority having jurisdiction
over the Premises, including, without limitation, all health,
building, fire, safety and other codes, ordinances and
requirements, all applicable standards of the National Board of
Fire Underwriters and the Americans With Disabilities Act of
1990 and all policies or rules of common law, in each case, as
amended, and any judicial or administrative interpretation
thereof, including any judicial order, consent, decree or
judgment applicable to Debtor, except such failures to comply
as would not have a Material Adverse Effect.
H. Area Development; Wetlands. No condemnation or
eminent domain proceedings affecting the Premises have been
commenced or, to the best of Debtor's knowledge, are
contemplated. To the best of Debtor's knowledge, the areas
where the Premises are located have not been declared blighted
by any Governmental Authority. The Premises and/or the real
property bordering the Premises are not designated by any
Governmental Authority as a wetlands.
I. Access. There are adequate rights of access to
public roads and ways available to the Premises to permit full
utilization of the Premises for their intended purposes and, to
Debtor's knowledge, all such public roads and ways have been
completed and dedicated to public use.
J. Condition of Premises. The Premises, including the
equipment located thereon, are of such workmanship and
materials, fully equipped and operational, in good condition
and repair, free from material structural defects, orderly and
sanitary, safe, well-lit, decorated and well-maintained as is
consistent with Debtor's standards currently in effect for E-Z
Serve convenience stores and gasoline stations.
K. Environmental. The information and disclosures in
the Questionnaires are true, correct and complete in all
material respects, FFCA and Environmental Insurer may rely on
such information and disclosures, and the person or persons
executing the Questionnaires were duly authorized to do so.
L. Title to Premises; First Priority Lien. Fee title
to each of the Premises is vested in Debtor, free and clear of
all liens, encumbrances, charges and security interests of any
nature whatsoever, except the Permitted Exceptions. Debtor is
the owner of all equipment, trade fixtures, appliances and
other personal property located on or at each of the Premises
free and clear of all liens, encumbrances, charges and security
interests of any nature whatsoever except PMSI Liens, Permitted
Encumbrances and Excluded Property. Upon Closing, FFCA shall
have a first priority lien upon and security interest in each
of the Premises pursuant to the Mortgages and the UCC Financing
Statements, subject only to the Permitted Exceptions and
Permitted Encumbrances.
M. No Other Agreements and Options. Neither Debtor,
Guarantor nor the Premises are subject to any commitment,
obligation, or agreement, including, without limitation, any
right of first refusal, option to purchase or lease granted to
a third party, which could or would prevent or hinder FFCA in
making the Loans or prevent or hinder Debtor or Guarantor from
fulfilling their respective obligations under this Agreement or
the other Loan Documents.
N. No Mechanics' or Construction Liens. There are no
outstanding past due accounts payable in favor of any
materialman, laborer, or any other person or entity in
connection with labor or materials furnished to or performed on
any portion of the Premises; Debtor shall be responsible for
any and all claims for mechanics' or construction liens and
accounts payable that have arisen or may subsequently arise due
to agreements entered into for and/or any work performed on, or
materials supplied to the Premises prior to the Closing Date;
and Debtor shall and does hereby agree to defend, indemnify and
forever hold FFCA and FFCA's designees harmless from and
against any and all such mechanics' and construction lien
claims, accounts payable or other commitments relating to the
Premises.
O. No Reliance. Debtor acknowledges that FFCA did not
prepare or assist in the preparation of any of the projected
financial information used by Debtor in analyzing the economic
viability and feasibility of the transaction contemplated by
this Agreement. Furthermore, Debtor acknowledges that it has
not relied upon, nor may it hereafter rely upon, the analysis
undertaken by FFCA in determining the Loan Amounts, and such
analysis will not be made available to Debtor.
All representations and warranties of Debtor made in this
Agreement shall be and will remain true and complete as of and
subsequent to the Closing Date as if made and restated in full as of
such time and shall survive the Closing. Debtor acknowledges and
agrees that Environmental Insurer may rely on the environmental
representations and warranties set forth in the preceding
subsection K, that Environmental Insurer is an intended third-party
beneficiary of such representations and warranties and that
Environmental Insurer shall have all rights and remedies available at
law or in equity as a result of a breach of such representations and
warranties, including, to the extent applicable, the right of
subrogation.
7. Covenants. Debtor covenants to FFCA from and after the
Closing Date as follows:
A. Inspections. Debtor shall, at all reasonable
times, (i) provide FFCA and FFCA's officers, employees, agents,
advisors, attorneys, accountants, architects, and engineers
with access to the Premises, all drawings, plans, and
specifications for the Premises in possession of Debtor or
Guarantor, all engineering reports relating to the Premises in
the possession of Debtor or Guarantor, the files and
correspondence relating to the Premises, and the financial
books and records, including lists of delinquencies, relating
to the ownership, operation, and maintenance of the Premises,
and (ii) allow such persons to make such inspections, tests,
copies, and verifications as FFCA considers necessary.
B. Fixed Charge Coverage Ratio. Until such time as
all of Debtor's obligations under the Notes and the other Loan
Documents are paid, satisfied and discharged in full, Debtor
shall maintain an aggregate Fixed Charge Coverage Ratio at all
of the Premises and the Equipment Premises of at least 1.25:1,
as determined on the last day of each fiscal year of Debtor.
For purposes of this Section, the term "Fixed Charge Coverage
Ratio" shall mean with respect to the twelve month period of
time immediately preceding the last Sunday of each calendar
year, the ratio calculated for such period of time of (a) the
sum of Net Income, Depreciation and Amortization, Interest
Expense and Operating Lease Expense, less a corporate overhead
allocation in an amount equal to $30,000 per Premises and
Equipment Premises, to (b) the sum of, without duplication, the
FFCA Payments, Operating Lease Expense and the Equipment
Payment Amount.
For purposes of this Section, the following terms shall be
defined as set forth below:
"Capital Lease" shall mean any lease of any
property (whether real, personal or mixed) by Debtor with
respect to one or more of the Premises and the Equipment
Premises which lease would, in conformity with generally
accepted accounting principles consistently applied, be
required to be accounted for as a capital lease on the
balance sheet of Debtor. The term "Capital Lease" shall
not include any operating lease.
"Debt" shall mean as directly related to all of the
Premises and the Equipment Premises and the period of
determination (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, indentures, notes or
similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv)
obligations under leases which should be, in accordance
with generally accepted accounting principles
consistently applied, recorded as Capital Leases, and
(v) obligations under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses
(i) through (iv) above.
"Depreciation and Amortization" shall mean with
respect to all of the Premises and the Equipment Premises
the depreciation and amortization accruing during any
period of determination with respect to Debtor as
determined in accordance with generally accepted
accounting principles consistently applied.
"Equipment Payment Amount" shall mean for any
period of determination the sum of all amounts payable
during such period of determination under all (i) leases
for equipment located at one or more of the Premises and
the Equipment Premises and (ii) all loans secured by
equipment located at one or more of the Premises and the
Equipment Premises.
"FFCA Payments" shall mean with respect to the
period of determination, the sum of all amounts payable
under the Notes and the Equipment Note.
"Interest Expense" shall mean for any period of
determination, the sum of all interest accrued or which
should be accrued in respect of all Debt of Debtor
allocable to one or more of the Premises and the
Equipment Premises and all business operations thereon
during such period (including interest attributable to
Capital Leases), as determined in accordance with
generally accepted accounting principles consistently
applied.
"Net Income" shall mean with respect to the period
of determination, the net income or net loss of Debtor
allocable to all of the Premises and the Equipment
Premises. In determining the amount of Net Income, (i)
adjustments shall be made for nonrecurring gains and
losses allocable to the period of determination, (ii)
deductions shall be made for, among other things,
Depreciation and Amortization, Interest Expense and
Operating Lease Expense allocable to the period of
determination, and (iii) no deductions shall be made for
(x) income taxes or charges equivalent to income taxes
allocable to the period of determination, as determined
in accordance with generally accepted accounting
principles consistently applied, or (y) corporate
overhead expense allocable to the period of
determination.
"Operating Lease Expense" shall mean the expenses
incurred by Debtor under any operating leases with
respect to one or more of the Premises and the Equipment
Premises and the business operations thereon during the
period of determination, as determined in accordance with
generally accepted accounting principles consistently
applied.
Notwithstanding the foregoing, FFCA shall have the right to
divide the Loans (and the corresponding Loan Documents) and the
Equipment Loan (and the corresponding Equipment Loan Documents)
into one or more Securitized Loan Pools in connection with one
or more Securitizations. If any Securitized Loan Pool does not
include all of the Loans and the Equipment Loan, Debtor shall,
upon notice from FFCA, maintain with respect to each
Securitized Loan Pool for which such notice is given an
aggregate Fixed Charge Coverage Ratio, as determined on the
date set forth above, of at least 1.25:1 for all of the
Premises and the Equipment Premises corresponding to the Loans
and the Equipment Loan in such Securitized Loan Pool, which
Fixed Charge Coverage Ratio requirement shall be in addition to
the requirement to maintain an aggregate Fixed Charge Coverage
Ratio of at least 1:25:1 for all of the Premises and the
Equipment Premises which are not included in a Securitized Loan
Pool, and shall apply until such time as all of the Debtor's
obligations under the Notes, the Equipment Notes, the other
Loan Documents and the other Equipment Loan Documents, as
applicable, corresponding to such Loans and the Equipment Loan
are paid, satisfied and discharged in full; provided, however,
FFCA agrees that at the time of any Securitization, the Loans
included in the corresponding Securitized Loan Pool will not
have an aggregate Fixed Charge Coverage Ratio which is
materially different than the lesser of the aggregate Fixed
Charge Coverage Ratio with respect to the Premises and the
Equipment Premises corresponding to the Loans and Equipment
Loan, if applicable, which are not included in such Securitized
Loan Pool as of the Closing Date and the date of such
Securitization; provided further that, to the extent FFCA is
unable to include any Loan or the Equipment Loan in such
Securitized Loan Pool because of any problem relating to the
corresponding Premises or the Equipment Premises which is
beyond the control of FFCA, then such Loan or Equipment Loan,
if applicable, shall not be taken into account for purposes of
comparing the aggregate Fixed Charge Coverage Ratio for the
Premises and the Equipment Premises corresponding to the Loans
and Equipment Loan, if applicable, which are included in such
Securitized Loan Pool against the aggregate Fixed Charge
Coverage Ratio for the Premises and the Equipment Premises
corresponding to the Loans and Equipment Loan, if applicable,
which are not included in such Securitized Loan Pool. To the
extent that one or more such additional aggregate Fixed Charge
Coverage Ratio requirements are imposed by FFCA, for the
purposes of determining whether or not such Fixed Charge
Coverage Ratio requirements have been satisfied, the
definitions relating to the Fixed Charge Coverage Ratio shall
be deemed to be modified as applicable to provide for the
calculation of the aggregate Fixed Charge Coverage Ratio for
all of the Premises and the Equipment Premises corresponding to
each Securitized Loan Pool on the one hand and all of the
Premises and the Equipment Premises which are not included in
a Securitized Loan Pool on the other.
C. Lost Note. Debtor shall, if any Note is mutilated,
destroyed, lost or stolen (a "Lost Note"), promptly deliver to
FFCA, upon receipt of an affidavit from FFCA stipulating that
such Note has been mutilated, destroyed, lost or stolen, in
substitution therefor, a new promissory note containing the
same terms and conditions as such Lost Note with a notation
thereon of the unpaid principal and accrued and unpaid
interest. Debtor shall provide fifteen (15) days' prior notice
to FFCA before making any payments to third parties in
connection with a Lost Note. Except as a result of the gross
negligence or intentional misconduct of Debtor, FFCA shall
indemnify Debtor for all reasonable costs, expenses, damages,
claims and liabilities incurred by Debtor as a result of a Lost
Note.
D. Net Worth. At all times while the obligations of
Debtor to FFCA pursuant to the Loan Documents are outstanding,
Debtor and Guarantor shall maintain a consolidated net worth of
at least $25,000,000.00, as determined in accordance with
generally accepted accounting principles consistently applied.
E. Affiliate Transactions. Unless otherwise approved
by FFCA, all transactions between Debtor and any of its
Affiliates shall be on terms substantially as advantageous to
Debtor as those which could be obtained by Debtor in a
comparable arm's length transaction with a non-Affiliate of
Debtor.
8. Transaction Characterization. This Agreement is a
contract to extend a financial accommodation (as such term is used in
the Code) for the benefit of Debtor. It is the intent of the parties
hereto that the business relationship created by this Agreement, the
Notes, the Mortgages and the other Loan Documents is solely that of
creditor and debtor and has been entered into by both parties in
reliance upon the economic and legal bargains contained in the Loan
Documents. None of the agreements contained in the Loan Documents is
intended, nor shall the same be deemed or construed, to create a
partnership between Debtor and FFCA, to make them joint venturers, to
make Debtor an agent, legal representative, partner, subsidiary or
employee of FFCA, nor to make FFCA in any way responsible for the
debts, obligations or losses of Debtor.
9. Conditions of Closing. The obligation of FFCA to
consummate the transaction contemplated by this Agreement is subject
to the fulfillment or waiver of each of the following conditions:
A. Title. Fee title to each of the Premises shall be
vested in Debtor, free of all liens, encumbrances,
restrictions, encroachments and easements, except the Permitted
Exceptions and the liens created by the Mortgages and the UCC
Financing Statements. Debtor shall be the owner of all of the
equipment, trade fixtures, appliances and other personal
property located on or at each of the Premises free and clear
of all liens, encumbrances, charges and security interests,
except the liens created by the Mortgages and the UCC Financing
Statements, PMSI Liens, liens in inventory, Permitted
Encumbrances and Excluded Property. Upon Closing, FFCA will
obtain a valid and perfected first priority lien upon and
security interest in each of the Premises subject to the
Permitted Exceptions.
B. Condition of Premises. FFCA shall have inspected
and approved the Premises, and the Premises and the equipment
located thereon shall be in such condition and repair, of good
workmanship and materials, fully equipped and operational,
orderly, sanitary, safe, well-lit, decorated and with a
suitable layout, physical plant, traffic pattern and location
as is consistent with Debtor's standards currently in effect
for E-Z Serve convenience stores and gasoline stations.
C. Evidence of Title. FFCA shall have received for
each of the Premises a preliminary title report and irrevocable
commitment to insure title by means of a mortgagee's, ALTA
extended coverage policy of title insurance (or its equivalent,
in the event such form is not issued in the jurisdiction where
the Premises is located) issued by Title Company showing good
and marketable fee title in such Premises in Debtor, committing
to insure FFCA's first priority lien upon and security interest
in such Premises subject only to liens, encumbrances,
restrictions and easements approved by FFCA, deleting the
standard survey and mechanics' lien exceptions and containing
such endorsements as FFCA may require. FFCA shall also have
received evidence reasonably satisfactory to FFCA that Debtor
is the owner of all of the equipment, trade fixtures,
appliances and other personal property located on or at each of
the Premises free and clear of all liens, encumbrances, charges
and security interests, except the liens created by the
Mortgages and the UCC Financing Statements, PMSI Liens,
Permitted Encumbrances and Excluded Property.
D. Survey. FFCA shall have received a current ALTA
survey of each of the Premises, the form and substance of which
shall be satisfactory to FFCA in its sole discretion. Debtor
shall have provided FFCA with evidence satisfactory to FFCA
that the location of each of the Premises is not within the
100-year flood plain or identified as a special flood hazard
area as defined by the Federal Insurance Administration (a
statement to that effect on the face of each ALTA survey
described in the preceding sentence shall be sufficient
evidence), or if any Premises is in such a flood plain or
special flood hazard area, Debtor shall provide FFCA with
evidence of flood insurance maintained on such Premises in
amounts and on terms and conditions satisfactory to FFCA.
E. Environmental. FFCA shall have received (i) a
Phase I environmental report (and a Phase II environmental
report, if necessary, as determined by FFCA in its sole
discretion) for each of the Premises, the form, substance and
conclusions of which shall be satisfactory to FFCA in its sole
discretion, and/or (ii) an Environmental Policy with respect to
each of the Premises.
F. Zoning. FFCA shall have received evidence
satisfactory to FFCA that each of the Premises is properly
zoned for use as an E-Z Serve Facility and that such use
constitutes a legal, conforming use under applicable zoning
requirements.
G. Compliance With Representations, Warranties and
Covenants. All obligations of Debtor under this Agreement
shall have been fully performed and complied with, and no event
shall have occurred or condition shall exist which would, upon
the Closing Date, or, upon the giving of notice and/or passage
of time, constitute a breach or default hereunder or under the
Loan Documents or any other agreement between or among FFCA,
Debtor and Guarantor pertaining to the subject matter hereof,
and no event shall have occurred or condition shall exist or
information shall have been disclosed by Debtor or discovered
by FFCA which has had or would have a material adverse effect
on the Premises, Debtor, Guarantor or FFCA's willingness to
consummate the transaction contemplated by this Agreement, as
determined by FFCA in its sole and absolute discretion.
H. Proof of Insurance. Debtor shall have delivered to
FFCA copies of insurance policies showing that all insurance
required by the Loan Documents and providing coverage and
limits satisfactory to FFCA are in full force and effect.
I. Opinion of Counsel to Debtor and Guarantor. Debtor
and Guarantor shall have caused Counsel to prepare and deliver
an opinion to FFCA in form and substance satisfactory to FFCA
and its counsel.
J. Availability of Funds. FFCA presently has
sufficient funds to discharge its obligations under this
Agreement. In the event that the transaction contemplated by
this Agreement does not close on or before the date established
for Closing under Section 4(a) hereof, FFCA does not warrant
that it will thereafter have sufficient funds to consummate the
transaction contemplated by this Agreement.
K. Closing of Equipment Loan Agreement. All of the
transactions described in the Equipment Loan Agreement shall
have closed prior to or concurrently with the Closing of the
transaction described in this Agreement.
L. Divestitures. Debtor shall have substantially (i)
completed its divestiture of those certain 134 fee and
leasehold convenience store properties recently sold by Debtor
at auction, and (ii) closed the sale of 36 convenience store
properties located in the State of Florida.
M. Guaranty. Debtor shall have caused to be delivered
to FFCA a Guaranty executed by Guarantor with respect to each
of the Loans.
N. Closing Documents. At or prior to the Closing
Date, FFCA and/or Debtor, as may be appropriate, shall execute
and deliver or cause to be executed and delivered to Title
Company or FFCA, as may be appropriate, all documents required
to be delivered by this Agreement, and such other documents,
payments, instruments and certificates, as FFCA may require in
form acceptable to FFCA, including, without limitation, the
following:
(1) Notes;
(2) Mortgages;
(3) Guaranties;
(4) Proof of Insurance;
(5) Opinion of Counsel to Debtor;
(6) Evidence of satisfactory zoning;
(7) UCC Financing Statements; and
(8) Environmental Indemnity Agreements.
Upon fulfillment or waiver of all of the above conditions, FFCA shall
deposit funds necessary to close this transaction with the Title
Company and this transaction shall close in accordance with the terms
and conditions of this Agreement.
10. Default and Remedies. A. Each of the following shall be
deemed an event of default by Debtor (each, an "Event of Default"):
(1) If any representation or warranty of Debtor or
Guarantor set forth in any of the Loan Documents is false in
any material respect, or if Debtor or Guarantor renders any
false statement or account.
(2) If any principal, interest or other monetary sum
due under the Notes, the Mortgages, any other Loan Document or
the Equipment Note is not paid within five days after the date
when due; provided, however, notwithstanding the occurrence of
such an Event of Default, FFCA shall not be entitled to
exercise its rights and remedies set forth below unless and
until FFCA shall have given Debtor notice thereof and a period
of five days from the delivery of such notice shall have
elapsed without such Event of Default being cured.
(3) If Debtor fails to observe or perform any of the
other covenants (except with respect to a breach of the Fixed
Charge Coverage Ratio, which breach is addressed in subitem (6)
below), conditions, or obligations of this Agreement; provided,
however, if any such failure does not involve the payment of
any monetary sum, is not willful or intentional, does not place
any rights or property of FFCA in immediate jeopardy, and is
within the reasonable power of Debtor to promptly cure after
receipt of notice thereof, all as determined by FFCA in its
reasonable discretion, then such failure shall not constitute
an Event of Default hereunder, unless otherwise expressly
provided herein, unless and until FFCA shall have given Debtor
notice thereof and a period of 30 days shall have elapsed,
during which period Debtor may correct or cure such failure,
upon failure of which an Event of Default shall be deemed to
have occurred hereunder without further notice or demand of any
kind being required. If such failure cannot reasonably be
cured within such 30-day period, as determined by FFCA in its
reasonable discretion, and Debtor is diligently pursuing a cure
of such failure, then Debtor shall have a reasonable period to
cure such failure beyond such 30-day period, which shall not
exceed 90 days after receiving notice of the failure from FFCA.
If Debtor shall fail to correct or cure such failure within
such 90-day period, an Event of Default shall be deemed to have
occurred hereunder without further notice or demand of any kind
being required.
(4) If Debtor or Guarantor becomes insolvent within the
meaning of the Code, files or notifies FFCA that it intends to
file a petition under the Code, initiates a proceeding under
any similar law or statute relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either a
petition under the Code or an Action, or is not generally
paying its debts as the same become due.
(5) If there is an "Event of Default" under any Loan
Document other than the monetary defaults described in subitem
(2) above.
(6) If there is a breach of the Fixed Charge Coverage
Ratio requirement and FFCA shall have given Debtor notice
thereof and Debtor shall have failed within a period of 30 days
from the delivery of such notice (the "Cure Period") to:
(i) pay to FFCA the FCCR Amount (without premium
or penalty) with respect to such of the Premises
(starting with the Premises with the lowest Fixed Charge
Coverage Ratio and proceeding in ascending order to the
Premises with the next lowest Fixed Charge Coverage
Ratio) as is necessary to cure the breach of the Fixed
Charge Coverage Ratio requirement and for which the then
Fixed Charge Coverage Ratio (with the definitions in
Section 7.B being deemed to be modified as applicable to
provide for the calculation of the Fixed Charge Coverage
Ratio for each such Premises on an individual basis
rather than on an aggregate basis with the other
Premises) is below 1.25:1 (each, a "Subject Premises").
For purposes of the preceding sentence, "FCCR Amount"
means that sum of money which, when subtracted from the
outstanding principal amount of the Note corresponding to
a Subject Premises, and assuming the resulting principal
balance is reamortized over the remaining term of such
Note, will result in an adjusted aggregate Fixed Charge
Coverage Ratio for all of the Premises of at least 1.25:1
based on the prior year's operations. Promptly after
Debtor's payment of the FCCR Amount, Debtor and FFCA
agree to execute an amendment to each such Note in form
and substance reasonably acceptable to FFCA reducing the
principal amount payable to FFCA under such Note and
reamortizing the principal amount of such Note over the
then remaining term of such Note;
(ii) prepay the Note or Notes, in whole but not in
part (without premium or penalty), corresponding to the
Premises with the lowest Fixed Charge Coverage Ratio and
proceeding in ascending order to the Premises with the
next lowest Fixed Charge Coverage Ratio (with the
definitions relating to the Fixed Charge Coverage Ratio
being deemed to be modified as applicable to provide for
the calculation of the Fixed Charge Coverage Ratio for
each such Premises on an individual basis rather than on
an aggregate basis) as is necessary to cure the breach of
the aggregate Fixed Charge Coverage Ratio requirement; or
(iii) substitute a Substitute Premises in
accordance with the terms of Section 13 for each of the
Premises with the lowest Fixed Charge Coverage Ratio and
proceeding in ascending order to the Premises with the
next lowest Fixed Charge Coverage Ratio (with the
definitions relating to the Fixed Charge Coverage Ratio
being deemed to be modified as applicable to provide for
the calculation of the Fixed Charge Coverage Ratio for
each such Premises on an individual basis rather than on
an aggregate basis) as is necessary to cure the breach of
the aggregate Fixed Charge Coverage Ratio.
Notwithstanding the foregoing, to the extent that, in
accordance with the provisions of Section 7.B, FFCA shall have
imposed one or more additional aggregate Fixed Charge Coverage
Ratio requirements, then, in order to prevent an Event of
Default from occurring by reason of a breach of such additional
aggregate Fixed Charge Coverage Ratio requirement(s), Debtor
must, prior to the end of the Cure Period:
(i) pay to FFCA the Modified FCCR Amount (without
premium or penalty) with respect to such of the Premises
corresponding to the Loans in any Securitized Loan Pool
or which were not included in a Securitized Loan Pool
(starting with the Premises with the lowest Fixed Charge
Coverage Ratio and proceeding in ascending order to the
Premises with the next lowest Fixed Charge Coverage
Ratio) as is necessary to cure the breach of such
aggregate Fixed Charge Coverage Ratio requirement(s) and
for which the then Fixed Charge Coverage Ratio (with the
definitions relating to the Fixed Charge Coverage Ratio
being deemed to be modified as applicable to provide for
the calculation of the Fixed Charge Coverage Ratio for
each such Premises on an individual basis rather than on
an aggregate basis with the other Premises corresponding
to the Loans in such Securitized Loan Pool or which were
not included in a Securitized Loan Pool, as applicable)
is below 1.25:1 (each a "Selected Premises"). For
purposes of the preceding sentence, "Modified FCCR
Amount" means that sum of money which, when subtracted
from the outstanding principal amount of the Note
corresponding to a Selected Premises, and assuming the
resulting principal balance is reamortized over the
remaining term of such Note, will result in an adjusted
aggregate Fixed Charge Coverage Ratio for all of the
Premises corresponding to the Loans in such Securitized
Loan Pool or which were not included in a Securitized
Loan Pool, as applicable, of at least 1.25:1 based on the
prior year's operations. Promptly after Debtor's payment
of the Modified FCCR Amount, Debtor and FFCA agree to
execute an amendment to each such Note in form and
substance reasonably acceptable to FFCA reducing the
principal amount payable to FFCA under such Note and
reamortizing the principal amount of such Note over the
then remaining term of such Note;
(ii) prepay the Notes corresponding to such of the
Loans in any Securitized Loan Pool or which were not
included in a Securitized Loan Pool, as applicable, in
whole but not in part (without premium or penalty),
starting with the Premises with the lowest Fixed Charge
Coverage Ratio and proceeding in ascending order to the
Premises with the next lowest Fixed Charge Coverage Ratio
(with the definitions relating to the Fixed Charge
Coverage Ratio being deemed to be modified as applicable
to provide for the calculation of the Fixed Charge
Coverage Ratio for each such Premises on an individual
basis rather than on an aggregate basis with the other
Premises corresponding to the Loans in such Securitized
Loan Pool or which were not included in a Securitized
Loan Pool, as applicable), as is necessary to cure the
breach of such aggregate Fixed Charge Coverage Ratio
requirement(s); or
(iii) substitute a Substitute Premises in
accordance with the terms of Section 13 for such of the
Premises corresponding to the Loans in any Securitized
Loan Pool or which were not included in a Securitized
Loan Pool, as applicable with the lowest Fixed Charge
Coverage Ratio and proceeding in ascending order to the
Premises with the next lowest Fixed Charge Coverage Ratio
(with the definitions relating to the Fixed Charge
Coverage Ratio being deemed to be modified as applicable
to provide for the calculation of the Fixed Charge
Coverage Ratio for each such Premises on an individual
basis rather than on an aggregate basis with the other
Premises corresponding to the Loans in such Securitized
Loan Pool or which were not included in a Securitized
Loan Pool, as applicable) as is necessary to cure the
breach of such aggregate Fixed Charge Coverage Ratio
requirement(s).
(7) If there is a breach or default, after the passage
of all applicable notice and cure or grace periods, under any
of the Other Agreements, which breach or default could have a
Material Adverse Effect.
(8) If a final, nonappealable judgment is rendered by
a court against Debtor in the amount of $3,000,000 or more, and
which is not discharged or provision made for such discharge
within 60 days from the date of entry thereof.
(9) If there is an "Event of Default" under any
Mortgage as a result of a final, nonappealable judgment
rendered by a court against Debtor.
(10) If there is an "Event of Default" under that
certain Loan and Security Agreement dated on or about
December 23, 1997 by and among Debtor, Guarantor, Madeline
L.L.C., as Administrative Agent, and Congress Financial
Corporation (Southwest), as Collateral Agent, and The Financial
Institutions Named Therein, as Lenders, as such agreement may
be amended or supplemented from time to time.
Notwithstanding the foregoing, the occurrence of the events
described in subitems (1), (3), (5) and (9) above shall constitute an
Event of Default under this Agreement only if such events are
continuing and involve, in the aggregate, at any one time more than
10% of the number of:
(i) prior to a Securitization, all of the Premises; and
(ii) subsequent to a Securitization:
(A) the Premises corresponding to Loans
included in any Securitized Loan Pool; or
(B) the Premises corresponding to Loans not
included in any Securitized Loan Pool;
provided, however, the fact that this paragraph limits the
circumstances under which the occurrence of any event described in
subitems (1), (3), (5) and (9) above shall be deemed to be an Event
of Default under this Agreement is not intended to limit in any manner
the fact that the occurrence of such event may result in an "Event of
Default" under the terms of any Note, Mortgage or Environmental
Indemnity Agreement nor limit FFCA's rights and remedies under any
such documents following such an "Event of Default."
B. Upon and during the continuance of an Event of Default,
subject to the limitations set forth in subsection A, FFCA may declare
all or any part of the obligations of Debtor under the Notes, this
Agreement and any other Loan Document to be due and payable, and the
same shall thereupon become due and payable without any presentment,
demand, protest or notice of any kind except as otherwise expressly
provided herein, and Debtor hereby waives notice of intent to
accelerate the obligations secured by the Mortgages and notice of
acceleration. Thereafter, FFCA may exercise, at its option,
concurrently, successively or in any combination, all remedies
available at law or in equity, including without limitation any one
or more of the remedies available under the Notes, the Mortgages or
any other Loan Document. Neither the acceptance of this Agreement nor
its enforcement shall prejudice or in any manner affect FFCA's right
to realize upon or enforce any other security now or hereafter held
by FFCA, it being agreed that FFCA shall be entitled to enforce this
Agreement and any other security now or hereafter held by FFCA in such
order and manner as it may in its absolute discretion determine. No
remedy herein conferred upon or reserved to FFCA is intended to be
exclusive of any other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy
given by any of the Loan Documents to FFCA, or to which FFCA may be
otherwise entitled, may be exercised, concurrently or independently,
from time to time and as often as may be deemed expedient by FFCA.
11. Assignments. A. FFCA may assign in whole or in part its
rights under this Agreement, including, without limitation, in
connection with any Transfer, Participation and/or Securitization.
Upon any unconditional assignment of FFCA's entire right and interest
hereunder, FFCA shall automatically be relieved, from and after the
date of such assignment, of liability for the performance of any
obligation of FFCA contained herein.
B. Debtor shall not, without the prior written consent of
FFCA, sell, assign, transfer, mortgage, convey, encumber or grant any
easements or other rights or interests of any kind in the Premises,
any of Debtor's rights under this Agreement or any interest in Debtor,
whether voluntarily, involuntarily or by operation of law or
otherwise, including, without limitation, by merger, consolidation,
dissolution or otherwise, except, subsequent to the Closing, as
expressly permitted by the Mortgages. FFCA shall not unreasonably
withhold or delay its consent to the (i) grant of any easement
affecting any of the Premises or license to access a portion of any
Premises provided any such easement or license does not have a
Material Adverse Effect (as defined in the Mortgages) on such
Premises, or (ii) lease of a portion of any Premises to a third-party
provided such lease is subordinate to the applicable Mortgage.
12. Indemnity. Debtor agrees to indemnify, hold harmless and
defend FFCA and its directors, officers, shareholders, employees,
successors, assigns, agents, contractors, subcontractors, experts,
licensees, affiliates, lessees, lenders, mortgagees, trustees and
invitees, as applicable (collectively, the "Indemnified Parties"),
from and against any and all losses, costs, claims, liabilities,
damages and expenses, including, without limitation, reasonable
attorneys' fees, arising as the result of an Environmental Condition
and/or a breach of any of the representations, warranties, covenants,
agreements or obligations of Debtor set forth in this Agreement.
Without limiting the generality of the foregoing, such indemnity shall
include, without limitation, any engineering, governmental inspection
and reasonable attorneys' fees and expenses that the Indemnified
Parties may incur by reason of any representation set forth in this
Agreement being false, or by reason of any investigation or claim of
any Governmental Authority in connection therewith.
13. Substitution. Debtor shall have the right to obtain a
release of a Premises by substituting a Substitute Premises for such
Premises if permitted by the terms of Section 10.A(6), subject to
fulfillment of the following conditions:
(i) Debtor must provide for the substitution of a
Substitute Premises, and the proposed Substitute Premises must:
(1) be an E-Z Serve Facility, in good condition
and repair, ordinary wear and tear excepted;
(2) have for the twelve month period preceding
the date of the closing of such substitution a Fixed
Charge Coverage Ratio (with the definitions of Section
7.B being deemed to be modified if necessary and as
applicable to provide for a calculation of the Fixed
Charge Coverage Ratio for each of the Premises on an
individual basis rather than on an aggregate basis with
the other Premises) at least equal to the Fixed Charge
Coverage Ratio for the Premises being replaced and the
substitution must not cause a breach of any Fixed Charge
Coverage Ratio requirement otherwise set forth in this
Agreement;
(3) be owned by and vested in Debtor, free and
clear of all liens and encumbrances, except such matters
as are acceptable to FFCA (the "Substitute Premises
Permitted Exceptions"); and
(4) have a fair market value no less than the
greater of the then fair market value of the Premises to
be replaced or the fair market value of such Premises as
of the Closing, all as reasonably determined by FFCA's
in-house inspectors and underwriters.
(ii) FFCA shall have inspected and approved the
Substitute Premises utilizing FFCA customary site inspection
and underwriting approval criteria. Debtor shall have
reimbursed FFCA for all of its costs and expenses incurred with
respect to such proposed substitution, including, without
limitation, FFCA's third-party and/or in-house site inspectors'
costs and expenses with respect to the proposed Substitute
Premises. Debtor shall be solely responsible for the payment of
all costs and expenses resulting from such proposed
substitution, including, without limitation, the cost of title
insurance and endorsements, survey charges, stamp taxes,
mortgage taxes, transfer fees, escrow and recording fees, the
cost of environmental reports and the environmental policy, as
applicable, and the attorneys' fees and expenses of counsel to
Debtor and FFCA.
(iii) FFCA shall have received a preliminary title report
and irrevocable commitment to insure title by means of a
mortgagee's ALTA extended coverage policy of title insurance
(or its equivalent, in the event such form is not issued in the
jurisdiction where the proposed Substitute Premises is located)
for such proposed Substitute Premises issued by Title Company
showing good and marketable title in Debtor and committing to
insure FFCA's first priority lien upon and security interest in
the proposed Substitute Premises, subject only to the
Substitute Premises Permitted Exceptions and containing
endorsements substantially comparable to those required by FFCA
at the Closing.
(iv) FFCA shall have received a current ALTA survey of
such proposed Substitute Premises, the form of which shall be
comparable to those received by FFCA at the Closing and
sufficient to cause the standard survey exceptions set forth in
the title policy referred to in the preceding subsection to be
deleted.
(v) FFCA shall have received a Phase I environmental
report and/or an environmental insurance policy with respect to
such proposed Substitute Premises, which (A) phase I
environmental report shall conform in scope to the then
customary standards for lenders making loans secured by
commercial real estate, which shall conclude that there is no
Environmental Condition affecting the proposed Substitute
Premises, and (B) environmental insurance policy shall be in
form and substance and issued by such environmental insurance
company as are acceptable to FFCA in its sole discretion.
(vi) Debtor shall deliver, or cause to be delivered,
with respect to Debtor and the Substitute Premises, opinions of
Counsel in form and substance comparable to those received at
Closing (but also addressing such matters unique to the
Substitute Premises as may be reasonably required by FFCA).
(vii) no Event of Default shall have occurred and be
continuing under any of the Loan Documents.
(viii) Debtor shall have executed such documents, or
caused to be executed, as applicable, as are comparable to the
security documents executed and delivered at Closing, as
applicable (but with such revisions as may be reasonably
required by FFCA to address matters unique to the Substitute
Premises) or amendments to such documents, including, without
limitation, a Mortgage, UCC Financing Statements and a Guaranty
(the "Substitute Documents"), to provide FFCA with a first
priority lien on the proposed Substitute Premises, subject only
to the Substitute Premises Permitted Exceptions, and all other
rights, remedies and benefits with respect to the proposed
Substitute Premises which FFCA holds in the Premises to be
replaced, all of which documents shall be in form and substance
reasonably satisfactory to FFCA.
(ix) the representations and warranties set forth in the
Substitute Documents and Section 6 of this Agreement applicable
to the proposed Substitute Premises shall be true and correct
in all material respects as of the date of substitution, and
Debtor shall have delivered to FFCA an officer's certificate
certifying to that effect.
(x) Debtor shall have delivered to FFCA certificates of
insurance showing that insurance required by the Substitute
Documents is in full force and effect.
Upon satisfaction of the foregoing conditions with respect to the
release of a Premises:
(a) the proposed Substitute Premises shall be deemed
substituted for the Premises to be replaced;
(b) the Loan Amount for the Substitute Premises shall
be the same as for the replaced Premises;
(c) the Substitute Premises shall be referred to herein
as a "Premises" and included within the definition of
"Premises" and shall secure the same Obligations (as defined in
the Mortgages) as were secured by the Premises that were
replaced;
(d) the Substitute Documents shall be dated as of the
date of the substitution; and
(e) FFCA will release, or cause to be released, the
lien of the Mortgage, UCC Financing Statements and any other
Loan Documents encumbering the replaced Premises.
14. Miscellaneous Provisions.
A. Notices. All notices, consents, approvals or other
instruments required or permitted to be given by either party
pursuant to this Agreement shall be in writing and given by
(i) hand delivery, (ii) facsimile, (iii) express overnight
delivery service or (iv) certified or registered mail, return
receipt requested, and shall be deemed to have been delivered
upon (a) receipt, if hand delivered, (b) transmission, if
delivered by facsimile, (c) the next business day, if delivered
by express overnight delivery service, or (d) the third
business day following the day of deposit of such notice with
the United States Postal Service, if sent by certified or
registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as
applicable) specified below:
If to Debtor: E-Z Serve Convenience
Stores, Inc.
2550 North Loop West
Suite 600
Houston, TX 77092
Attention: Mr. Bob E. Bailey
Treasurer
Telephone: (713) 684-4318
Telecopy: (713) 684-4367
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and
General Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
B. Real Estate Commission. FFCA and Debtor represent
and warrant to each other that they have dealt with no real
estate or mortgage broker, agent, finder or other intermediary
in connection with the transaction contemplated by this
Agreement. FFCA and Debtor shall indemnify and hold each other
harmless from and against any costs, claims or expenses,
including attorneys' fees, arising out of the breach of their
respective representations and warranties contained within this
Section.
C. Waiver and Amendment. No provisions of this
Agreement shall be deemed waived or amended except by a written
instrument unambiguously setting forth the matter waived or
amended and signed by the party against which enforcement of
such waiver or amendment is sought. Waiver of any matter shall
not be deemed a waiver of the same or any other matter on any
future occasion.
D. Captions. Captions are used throughout this
Agreement for convenience of reference only and shall not be
considered in any manner in the construction or interpretation
hereof.
E. FFCA's Liability. Notwithstanding anything to the
contrary provided in this Agreement, it is specifically
understood and agreed, such agreement being a primary
consideration for the execution of this Agreement by FFCA, that
(i) there shall be absolutely no personal liability on the part
of any shareholder, director, officer or employee of FFCA, with
respect to any of the terms, covenants and conditions of this
Agreement or the other Loan Documents, (ii) Debtor waives all
claims, demands and causes of action against FFCA's officers,
directors, employees and agents in the event of any breach by
FFCA of any of the terms, covenants and conditions of this
Agreement or the other Loan Documents to be performed by FFCA
and (iii) Debtor shall look solely to the assets of FFCA for
the satisfaction of each and every remedy of Debtor in the
event of any breach by FFCA of any of the terms, covenants and
conditions of this Agreement or the other Loan Documents to be
performed by FFCA, such exculpation of liability to be absolute
and without any exception whatsoever.
F. Severability. The provisions of this Agreement
shall be deemed severable. If any part of this Agreement shall
be held unenforceable, the remainder shall remain in full force
and effect, and such unenforceable provision shall be reformed
by such court so as to give maximum legal effect to the
intention of the parties as expressed therein.
G. Construction Generally. This is an agreement
between parties who are experienced in sophisticated and
complex matters similar to the transaction contemplated by this
Agreement and is entered into by both parties in reliance upon
the economic and legal bargains contained herein and shall be
interpreted and construed in a fair and impartial manner
without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or
the domicile of any party. Debtor and FFCA were each
represented by legal counsel competent in advising them of
their obligations and liabilities hereunder.
H. Other Documents. Each of the parties agrees to
sign such other and further documents as may be appropriate to
carry out the intentions expressed in this Agreement.
I. Attorneys' Fees. In the event of any judicial or
other adversarial proceeding between the parties concerning
this Agreement, the prevailing party shall be entitled to
recover its attorneys' fees and other costs in addition to any
other relief to which it may be entitled. References in this
Agreement to the attorneys' fees and/or costs of FFCA shall
mean both the fees and costs of independent outside counsel
retained by FFCA with respect to this transaction and the fees
and costs of FFCA's in-house counsel incurred in connection
with this transaction.
J. Entire Agreement. This Agreement and the other Loan
Documents, together with any other certificates, instruments or
agreements to be delivered in connection therewith, constitute
the entire agreement between the parties with respect to the
subject matter hereof, and there are no other representations,
warranties or agreements, written or oral, between Debtor and
FFCA with respect to the subject matter of this Agreement.
Notwithstanding anything in this Agreement to the contrary,
upon the execution and delivery of this Agreement by Debtor and
FFCA, the Commitment shall be deemed null and void and of no
further force and effect and the terms and conditions of this
Agreement shall control notwithstanding that such terms may be
inconsistent with or vary from those set forth in the
Commitment.
K. Forum Selection; Jurisdiction; Venue; Choice of
Law. Debtor acknowledges that this Agreement was substantially
negotiated in the State of Arizona, this Agreement was signed
by FFCA and Debtor in the State of Arizona and delivered by
Debtor in the State of Arizona, all payments under the Notes
will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transaction
contemplated herein and the State of Arizona. For purposes of
any action or proceeding arising out of this Agreement, the
parties hereto hereby expressly submit to the jurisdiction of
all federal and state courts located in the State of Arizona
and Debtor consents that it may be served with any process or
paper by registered mail or by personal service within or
without the State of Arizona in accordance with applicable law.
Furthermore, Debtor waives and agrees not to assert in any
such action, suit or proceeding that it is not personally
subject to the jurisdiction of such courts, that the action,
suit or proceeding is brought in an inconvenient forum or that
venue of the action, suit or proceeding is improper. It is the
intent of the parties hereto that all provisions of this
Agreement shall be governed by and construed under the laws of
the State of Arizona. To the extent that a court of competent
jurisdiction finds Arizona law inapplicable with respect to any
provisions hereof, then, as to those provisions only, the laws
of the states where the Premises are located shall be deemed to
apply. Nothing in this Section shall limit or restrict the
right of FFCA to commence any proceeding in the federal or
state courts located in the states in which the Premises are
located to the extent FFCA deems such proceeding necessary or
advisable to exercise remedies available under this Agreement
or the other Loan Documents.
L. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original.
M. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of Debtor and FFCA and their
respective successors and permitted assigns, including, without
limitation, any United States trustee, any debtor in possession
or any trustee appointed from a private panel.
N. Survival. Except for the conditions of Closing set
forth in Section 9, which shall be satisfied or waived as of
the Closing Date, all representations, warranties, agreements,
obligations and indemnities of Debtor and FFCA set forth in
this Agreement shall survive the Closing.
O. Waiver of Jury Trial and Punitive, Consequential,
Special and Indirect Damages. DEBTOR AND FFCA HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR
ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED
HEREIN OR RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF
ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN
NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM FFCA WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY DEBTOR AGAINST
FFCA OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT
CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY DEBTOR OF
ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL
AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO
AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
P. Transfers, Participations and Securitization. (1)
A material inducement to FFCA's willingness to complete
the transaction contemplated by the Loan Documents is Debtor's
agreement that FFCA may, at any time, sell, transfer or assign
any Note, Mortgage and any of the other Loan Documents, and any
or all servicing rights with respect thereto (each, a
"Transfer"), or grant participations therein (each, a
"Participation"), or complete an asset securitization vehicle
selected by FFCA, in accordance with all requirements which may
be imposed by the investors or the rating agencies involved in
such securitized financing transaction, as selected by FFCA, or
which may be imposed by applicable securities, tax or other
laws or regulations, including, without limitation, laws
relating to FFCA's status as a real estate investment trust
(each, a "Securitization").
(2) Debtor agrees to cooperate in good faith with FFCA
in connection with any Transfer, Participation and/or
Securitization, including, without limitation, (i) providing
such documents, financial and other data, and other information
and materials (the "Disclosures") which would typically be
required with respect to Debtor or Guarantor by a purchaser,
transferee, assignee, servicer, participant, investor or rating
agency involved with respect to such Transfer, Participation
and/or the Securitization, as applicable; provided, however,
Debtor and Guarantor shall not be required to make Disclosures
of any confidential information or any information which has
not previously been made public unless required by applicable
federal or state securities laws; and (ii) amending the terms
of the transaction evidenced by the Loan Documents to the
extent necessary so as to satisfy the requirements of
purchasers, transferees, assignees, servicers, participants,
investors or selected rating agencies involved in any such
Transfers, Participations or Securitization, so long as such
amendments would not have a material adverse effect upon Debtor
or Guarantor or the transaction contemplated hereunder.
(3) Debtor consents to FFCA providing the Disclosures,
as well as any other information which FFCA may now have or
hereafter acquire with respect to the Premises or the financial
condition of Debtor or Guarantor, to each purchaser,
transferee, assignee, servicer, participant, investor or rating
agency involved with respect to each Transfer, Participation
and/or Securitization, as applicable. FFCA and Debtor (and
their respective Affiliates) shall each pay their own attorneys
fees and other out-of-pocket expenses incurred in connection
with the performance of their respective obligations under this
Section.
(4) Notwithstanding anything to the contrary contained
in this Agreement or the other Loan Documents, from and after
the closing of a Securitization with respect to some or all of
the Loans, the Equipment Loan or any loan evidenced by any
Other Agreement:
(a) a breach or default, after the passage of all
applicable notice and cure or grace periods, under any
Loan Document, any Equipment Loan Document or Other
Agreement which relates to a loan or sale/leaseback
transaction which has not been the subject of a
Securitization shall not constitute an Event of Default
under any Loan Document, any Equipment Loan Document or
Other Agreement which relates to a loan which has been
the subject of a Securitization;
(b) a breach or default, after the passage of all
applicable notice and cure or grace periods, under any
Loan Document, any Equipment Loan Document or Other
Agreement which relates to a loan which has been the
subject of a Securitization transaction shall not
constitute an Event of Default under any Loan Document,
any Equipment Loan Document or Other Agreement which
relates to a loan which has been the subject of a
different Securitization transaction;
(c) the Loan Documents corresponding to the Loans
and/or the Equipment Loan in any Securitized Loan Pool
shall not secure the obligations of Debtor and/or its
Affiliates contained in any Loan Document, Equipment Loan
Document or Other Agreement which does not correspond to
a loan in such Securitized Loan Pool; and
(d) the Loan Documents, Equipment Loan Document
and Other Agreements which do not correspond to a loan in
any Securitized Loan Pool shall not secure the
obligations of Debtor and/or its Affiliates contained in
any Loan Document, Equipment Loan Document or Other
Agreement which does correspond to a loan in such
Securitized Loan Pool.
Q. Change of Use. FFCA agrees that, notwithstanding
the terms of any Loan Document, it will not unreasonably
withhold or delay its consent to a request from Debtor to
change the use of any of the Premises from the concept of
convenience store and gasoline station operated by Debtor at
such Premises as of the Closing Date to another concept of
convenience store and gasoline station owned or operated by
Debtor; provided, however, such consent, if granted, shall be
granted on the condition that such change in use shall not
cause any of the rating agencies to withdraw or downgrade the
ratings initially granted to the certificates issued in
connection with any securitized financing transaction involving
the applicable Loan (it being understood and agreed that, if
FFCA's consent is granted and such a withdrawal or downgrading
shall occur, FFCA's consent shall be of no force and effect).
IN WITNESS WHEREOF, Debtor and FFCA have entered into this
Agreement as of the date first above written.
FFCA:
FFCA ACQUISITION CORPORATION,
a Delaware corporation
By
Stephen Y. Schwanz
Vice President
DEBTOR:
E-Z SERVE CONVENIENCE STORES,
INC.,
a Delaware corporation
By
John T. Miller
Senior Vice President
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December , 1997 by Stephen Y. Schwanz, Vice President, of FFCA
Acquisition Corporation, a Delaware corporation, on behalf of the
corporation.
Notary Public
My Commission Expires:
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on December
, 1997 by John T. Miller, Senior Vice President of E-Z Serve
Convenience Stores, Inc., a Delaware corporation, on behalf of the
corporation.
Notary Public
My Commission Expires:
EXHIBIT A
DESCRIPTION OF PREMISES; ALLOCATED LOAN AMOUNT
SCHEDULE I
ENVIRONMENTAL DISCLOSURES
"Environmental Disclosures" means the information set forth in
the Questionnaires.
SCHEDULE II
INSURANCE PROVISIONS
Debtor shall maintain business interruption insurance in the
amount of $3,000,000 per occurrence. The deductibles under the
policies of insurance Debtor is required to maintain under the Loan
Documents and the Equipment Loan Documents shall not exceed the amount
applicable to the particular coverage set forth in the attached
Schedule II-A.
05/58795.6
FFCA No. 8000-
Rev. 10/03/97
05/58795.6
FFCA No. 8000-
36
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FFCA No. 8000-
Rev. 10/03/97
[Execution Copy]
GUARANTEE
December 24, 1997
Congress Financial Corporation
(Southwest), individually and as Collateral Agent,
on behalf of the Lenders as referred to below
1201 Main Street
Dallas, Texas 75202
Madeleine L.L.C.,
individually and as Administrative Agent
on behalf of the Lenders referred to below
450 Park Avenue
New York, New York 10022
Re: E-Z Serve Convenience Stores, Inc. ("Borrower")
Gentlemen:
Borrower has entered into certain financing arrangements
with Congress Financial Corporation (Southwest), in its
capacity as collateral agent pursuant to the Loan Agreement (as
hereinafter defined) acting for and on behalf of the financial
institutions which are parties thereto as lenders (in such
capacity, "Collateral Agent"), Madeleine L.L.C., in its
capacity as administrative agent pursuant to the Loan Agreement
acting for and on behalf of the financial institutions which
are parties thereto as lenders (in such capacity,
"Administrative Agent" and together with Collateral Agent,
collectively, "Agents") and the financial institutions which
are parties to the Loan Agreement as lenders (collectively,
"Lenders") pursuant to which Collateral Agent and Lenders may
make loans and advances and provide financial accommodations to
Borrower as set forth in the Loan and Security Agreement, dated
of even date herewith, by and among Borrower, Guarantor (as
hereinafter defined), Agents and Lenders (as the same now
exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement"),
and other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection
therewith or related thereto, including, but not limited to,
this Guarantee (all of the foregoing, together with the Loan
Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the
"Financing Agreements").
Due to the close business and financial relationships
between Borrower and the undersigned ("Guarantor"), in
consideration of the benefits which will accrue to Guarantor
and as an inducement for and in consideration of Collateral
Agent and Lenders making loans and advances and providing other
financial accommodations to Borrower pursuant to the Loan
Agreement and the other Financing Agreements, Guarantor hereby
agrees in favor of Collateral Agent, Administrative Agent and
Lenders as follows:
1. Guarantee.
(a) Guarantor absolutely and unconditionally
guarantees and agrees to be liable for the full and
indefeasible payment and performance when due of the following
(all of which are collectively referred to herein as the
"Guaranteed Obligations"): (i) all obligations, liabilities and
indebtedness of every kind, nature and description of Borrower
to either or both Agents or any Lender and/or any of their
affiliates, including principal, interest, charges, fees, costs
and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise arising under the Loan
Agreement or any of the other Financing Agreements, whether now
existing or hereafter arising, whether arising before, during
or after the initial or any renewal term of the Loan Agreement
or after the commencement of any case with respect to Borrower
under the United States Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and
other amounts, which would accrue and become due but for the
commencement of such case, whether or not such amounts are
allowed or allowable in whole or in part in any such case and
including loans, interest, fees, charges and expenses related
thereto and all other obligations of Borrower or its successors
to either or both Agents or any Lender arising after the
commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by any Agent or any Lender and
(ii) all expenses (including, without limitation, attorneys'
fees and legal expenses) incurred by Lender in connection with
the preparation, execution, delivery, recording,
administration, collection, liquidation, enforcement and
defense of Borrower's obligations, liabilities and indebtedness
as aforesaid to either or both Agents or any Lender, the rights
of either or both Agents or any Lender in any collateral or
under this Guarantee and all other Financing Agreements or in
any way involving claims by or against Lender directly or
indirectly arising out of or related to the relationships
between Borrower, Guarantor or any other Obligor (as
hereinafter defined) and Agents or Lenders, whether such
expenses are incurred before, during or after the initial or
any renewal term of the Loan Agreement and the other Financing
Agreements or after the commencement of any case with respect
to Borrower or Guarantor under the United States Bankruptcy
Code or any similar statute; provided, that, such expenses
shall not include any expenses incurred as a result of the
gross negligence or wilful misconduct of Agents and Lenders as
determined pursuant to a final non-applicable order of a court
of competent jurisdiction.
(b) This Guarantee is a guaranty of payment and
not of collection. Guarantor agrees that Collateral Agent or
Lenders need not attempt to collect any Guaranteed Obligations
from Borrower, Guarantor or any other Obligor or to realize
upon any collateral, but may require Guarantor to make
immediate payment of all of the Guaranteed Obligations to
Collateral Agent when due, whether by maturity, acceleration or
otherwise, or at any time thereafter. Collateral Agent, for
itself and the ratable benefit of Lenders, may apply any
amounts received in respect of the Guaranteed Obligations to
any of the Guaranteed Obligations, in whole or in part
(including attorneys' fees and legal expenses incurred by any
Agent or any Lender with respect thereto or otherwise
chargeable to Borrower or Guarantor) and in such order as
Lender may elect.
(c) Payment by Guarantor shall be made to
Collateral Agent, for itself and the ratable benefit of
Lenders, at the office of Collateral Agent from time to time on
demand as Guaranteed Obligations become due. Guarantor shall
make all payments to Collateral Agent on the Guaranteed
Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. One or
more successive or concurrent actions may be brought hereon
against Guarantor either in the same action in which Borrower
or any other Obligor is sued or in separate actions. In the
event any claim or action, or action on any judgment, based on
this Guarantee is brought against Guarantor, Guarantor agrees
not to deduct, set-off, or seek any counterclaim for or recoup
any amounts which are or may be owed by any Agent or any Lender
to Guarantor.
2. Waivers and Consents.
(a) Notice of acceptance of this Guarantee, the
making of loans and advances and providing other financial
accommodations to Borrower and presentment, demand, protest,
notice of protest, notice of nonpayment or default and all
other notices to which Borrower or Guarantor is entitled are
hereby waived by Guarantor. Guarantor also waives notice of
and hereby consents to, (i) any amendment, modification,
supplement, extension, renewal, or restatement of the Loan
Agreement and any of the other Financing Agreements, including,
without limitation, extensions of time of payment of or
increase or decrease in the amount of any of the Guaranteed
Obligations, the interest rate, fees, other charges, or any
collateral, and the guarantee made herein shall apply to the
Loan Agreement and the other Financing Agreements and the
Guaranteed Obligations as so amended, modified, supplemented,
renewed, restated or extended, increased or decreased, (ii) the
taking, exchange, surrender and releasing of collateral or
guarantees now or at any time held by or available to
Collateral Agent, for itself and the ratable benefit of
Lenders, for the obligations of Borrower or any other party at
any time liable on or in respect of the Guaranteed Obligations
or who is the owner of any property which is security for the
Guaranteed Obligations (individually, an "Obligor" and
collectively, the "Obligors"), (iii) the exercise of, or
refraining from the exercise of any rights against Borrower or
any other Obligor or any collateral, (iv) the settlement,
compromise or release of, or the waiver of any default with
respect to, any of the Guaranteed Obligations and (v) any
financing by Agents or Lenders of Borrower under Section 364 of
the United States Bankruptcy Code or consent to the use of cash
collateral by Agents or Lenders under Section 363 of the United
States Bankruptcy Code. Guarantor agrees that the amount of
the Guaranteed Obligations shall not be diminished and the
liability of Guarantor hereunder shall not be otherwise
impaired or affected by any of the foregoing.
(b) No invalidity, irregularity or
unenforceability of all or any part of the Guaranteed
Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might
otherwise constitute a defense available to or legal or
equitable discharge of Borrower in respect of any of the
Guaranteed Obligations, or Guarantor in respect of this
Guarantee, affect, impair or be a defense to this Guarantee.
Without limitation of the foregoing, the liability of Guarantor
hereunder shall not be discharged or impaired in any respect by
reason of any failure by Collateral Agent for itself and the
ratable benefit of Lenders to perfect or continue perfection of
any lien or security interest in any collateral or any delay by
Collateral Agent in perfecting any such lien or security
interest. As to interest, fees and expenses, whether arising
before or after the commencement of any case with respect to
Borrower under the United States Bankruptcy Code or any similar
statute, Guarantor shall be liable therefor, even if Borrower's
liability for such amounts does not, or ceases to, exist by
operation of law. Guarantor acknowledges that Agents and
Lenders have not made any representations to Guarantor with
respect to Borrower, any other Obligor or otherwise in
connection with the execution and delivery by Guarantor of this
Guarantee and Guarantor is not in any respect relying upon any
Agent or any Lender or any statements by any Agent or any
Lender in connection with this Guarantee.
(c) Until the Loan Agreement and all of the other
Financing Agreements have been terminated and all Guaranteed
Obligations have been indefeasibly paid and satisfied in full
(i) Guarantor hereby irrevocably and unconditionally waives and
relinquishes all statutory, contractual, common law, equitable
and all other claims against Borrower, any collateral for the
Guaranteed Obligations or other assets of Borrower or any other
Obligor, for subrogation, reimbursement, exoneration,
contribution, indemnification, setoff or other recourse in
respect to sums paid or payable to any Agent or any Lender by
Guarantor hereunder and (ii) Guarantor hereby further
irrevocably and unconditionally waives and relinquishes any and
all other benefits which Guarantor might otherwise directly or
indirectly receive or be entitled to receive by reason of any
amounts paid by or collected or due from Guarantor, Borrower or
any other Obligor upon the Guaranteed Obligations or realized
from their property.
3. Subordination. Payment of all amounts now or
hereafter owed to Guarantor by Borrower or any other Obligor is
hereby subordinated in right of payment to the indefeasible
payment in full to Agents and Lenders of the Guaranteed
Obligations and all such amounts and any security and
guarantees therefor are hereby assigned to Collateral Agent as
security for the Guaranteed Obligations.
4. Acceleration. Notwithstanding anything to the
contrary contained herein or any of the terms of any of the
other Financing Agreements, the liability of Guarantor for the
entire Guaranteed Obligations shall mature and upon demand by
any Agent or Lender become immediately due and payable, even if
the liability of Borrower or any other Obligor therefor does
not, upon the occurrence of any act, condition or event which
constitutes an Event of Default as such term is defined in the
Loan Agreement (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h) of
the Loan Agreement, all Guaranteed Obligations shall
automatically become immediately due and payable).
5. Account Stated. The books and records of any Agent
or any Lender showing the account between any Agent or any
Lender and Borrower shall be admissible in evidence in any
action or proceeding against or involving Guarantor as prima
facie proof of the items therein set forth, and the monthly
statements of Collateral Agent rendered to Borrower, to the
extent to which no written objection is made within thirty (30)
days from the date of sending thereof to Borrower, shall be
deemed conclusively correct and constitute an account stated
between Agents, Lenders and Borrower and be binding on
Guarantor.
6. Termination. This Guarantee is continuing,
unlimited, absolute and unconditional. All Guaranteed
Obligations shall be conclusively presumed to have been created
in reliance on this Guarantee. Guarantor shall continue to be
liable hereunder until one of Collateral Agent's officers
actually receives a written termination notice from Guarantor
sent to Collateral Agent at its address set forth above by
certified mail, return receipt requested and thereafter as set
forth below. Revocation or termination hereof by Guarantor
shall not affect, in any manner, the rights of any Agent or any
Lender or any obligations or duties of Guarantor under this
Guarantee with respect to (a) Guaranteed Obligations which have
been created, contracted, assumed or incurred prior to the
receipt by Collateral Agent of such written notice of
revocation or termination as provided herein, including,
without limitation, (i) all amendments, extensions, renewals
and modifications of such Guaranteed Obligations (whether or
not evidenced by new or additional agreements, documents or
instruments executed on or after such notice of revocation or
termination), (ii) all interest, fees and similar charges
accruing or due on and after revocation or termination, and
(iii) all attorneys' fees and legal expenses, costs and other
expenses paid or incurred on or after such notice of revocation
or termination in attempting to collect or enforce any of the
Guaranteed Obligations against Borrower, Guarantor or any other
Obligor (whether or not suit be brought), or (b) Guaranteed
Obligations which have been created, contracted, assumed or
incurred after the receipt by Collateral Agent of such written
notice of revocation or termination as provided herein pursuant
to any contract entered into by any Agent or any Lender prior
to receipt of such notice. The sole effect of such revocation
or termination by Guarantor shall be to exclude from this
Guarantee the liability of Guarantor for those Guaranteed
Obligations arising after the date of receipt by Collateral
Agent of such written notice which are unrelated to Guaranteed
Obligations arising or transactions entered into prior to such
date. Without limiting the foregoing, this Guarantee may not
be terminated and shall continue so long as the Loan Agreement
shall be in effect (whether during its original term or any
renewal, substitution or extension thereof).
7. Reinstatement. If after receipt of any payment of,
or proceeds of collateral applied to the payment of, any of the
Guaranteed Obligations, any Agent or any Lender is required to
surrender or return such payment or proceeds to any Person for
any reason, then the Guaranteed Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and
continue and this Guarantee shall continue in full force and
effect as if such payment or proceeds had not been received by
Collateral Agent. Guarantor shall be liable to pay to
Collateral Agent, and does indemnify and hold Agents and
Lenders harmless for the amount of any payments or proceeds
surrendered or returned. This Section 7 shall remain effective
notwithstanding any contrary action which may be taken by
Lender in reliance upon such payment or proceeds. This Section
7 shall survive the termination or revocation of this
Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor
any provision hereof shall be amended, modified, waived,
discharged or terminated orally or by course of conduct, but
only by a written agreement signed by an authorized officer of
Collateral Agent, Administrative Agent, Lenders, or the
Majority Lenders (as such term is defined in the Loan
Agreement) in accordance with the Loan Agreement, and if such
written agreement constitutes an amendment or modification,
then also by an authorized officer of Guarantor. Agents or
Lenders shall not by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of their
rights, powers and/or remedies unless such waiver shall be in
writing and signed by an authorized officer of Agents and
Lenders in accordance with the Loan Agreement. Any such waiver
shall be enforceable only to the extent specifically set forth
therein. A waiver by Agents or Lenders of any right, power
and/or remedy on any one occasion shall not be construed as a
bar to or waiver of any such right, power and/or remedy which
Agents or Lenders would otherwise have on any future occasion,
whether similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Guarantor
is a corporation duly organized and in good standing under the
laws of its state or other jurisdiction of incorporation and is
duly qualified as a foreign corporation and in good standing in
all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have
a material adverse effect on the financial condition, results
of operation or businesses of Guarantor or the rights of Agents
and Lenders hereunder or under any of the other Financing
Agreements. The execution, delivery and performance of this
Guarantee is within the corporate powers of Guarantor, have
been duly authorized and are not in contravention of law or the
terms of the certificates of incorporation, by-laws, or other
organizational documentation of Guarantor, or any indenture,
agreement or undertaking to which Guarantor is a party or by
which Guarantor or its property are bound. This Guarantee
constitutes the legal, valid and binding obligation of
Guarantor enforceable in accordance with its terms.
10. Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.
(a) The validity, interpretation and enforcement
of this Guarantee and any dispute arising out of the
relationship between Guarantor and Lender, whether in contract,
tort, equity or otherwise, shall be governed by the internal
laws of the State of New York (without giving effect to
principles of conflicts of law).
(b) Guarantor hereby irrevocably consents and
submits to the non-exclusive jurisdiction of the Supreme Court
of the State of New York for New York County and the United
States District Court for the Southern District of New York and
waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under
this Guarantee or any of the other Financing Agreements or in
any way connected with or related or incidental to the dealings
of Guarantor and Agents and Lenders in respect of this
Guarantee or any of the other Financing Agreements or the
transactions related hereto or thereto, in each case whether
now existing or hereafter arising and whether in contract,
tort, equity or otherwise, and agrees that any dispute arising
out of the relationship between Guarantor or Borrower and
Agents or Lenders or the conduct of any such persons in
connection with this Guarantee, the other Financing Agreements
or otherwise shall be heard only in the courts described above
(except that Collateral Agent shall have the right to bring any
action or proceeding against Guarantor or its property in the
courts of any other jurisdiction which Collateral Agent deems
necessary or appropriate in order to realize on any collateral
at any time granted by Borrower or Guarantor to Collateral
Agent for itself and the ratable benefit of Lenders or to
otherwise enforce its rights against Guarantor or its
property).
(c) Guarantor hereby waives personal service of
any and all process upon it and consents that all such service
of process may be made by certified mail (return receipt
requested) directed to its address set forth on the signature
pages hereof and service so made shall be deemed to be
completed ten (10) days after the same shall have been so
deposited in the U.S. mails, or, at Collateral Agent's option,
by service upon Guarantor in any other manner provided under
the rules of any such courts. Within thirty (30) days after
such service, Guarantor shall appear in answer to such process,
failing which Guarantor shall be deemed in default and judgment
may be entered by Collateral Agent against Guarantor for the
amount of the claim and other relief requested.
(d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF GUARANTOR AND AGENTS OR LENDERS
IN RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. GUARANTOR
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT GUARANTOR OR AGENTS OR LENDERS MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR, AGENTS AND
LENDERS TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agents and Lenders shall not have any
liability to Guarantor (whether in tort, contract, equity or
otherwise) for losses suffered by Guarantor in connection with,
arising out of, or in any way related to the transactions or
relationships contemplated by this Guarantee, or any act,
omission or event occurring in connection herewith, unless it
is determined by a final and non-appealable judgment or court
order binding on such Agent or such Lender that the losses were
the result of acts or omissions constituting gross negligence
or willful misconduct. In any such litigation, each Agent and
each Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise
of ordinary care in the performance by it of the terms of the
Loan Agreement and the other Financing Agreements.
11. Notices. All notices, requests and demands
hereunder shall be in writing and (a) made to Collateral Agent
at its address set forth above and to Guarantor at its chief
executive office set forth below, or to such other address as
either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been
given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if
by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business
day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing.
12. Partial Invalidity. If any provision of this
Guarantee is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this
Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the
parties shall be construed and enforced only to such extent as
shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the
entire agreement and understanding of this parties concerning
the subject matter hereof, and supersedes all other prior
agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or
written.
14. Successors and Assigns. This Guarantee shall be
binding upon Guarantor and its successors and assigns and shall
inure to the benefit of Agents and Lenders and their
successors, endorsees, transferees and assigns. The
liquidation, dissolution or termination of Guarantor shall not
terminate this Guarantee as to such entity or as to Guarantor.
15. Construction. for purposes of this Guarantee, the
following terms shall have the respective meanings given to
them below:
(a) "Agents" shall mean each and all of Agents and
their respective successors and assigns.
(b) "Borrower" shall mean Borrower and its
successors and assigns (including, without limitation, any
receiver, trustee or custodial for Borrower or any of its
assets or in its capacity as debtor or debtor-in-possession
under the United States Bankruptcy Code.
(c) "Guarantor" shall mean Guarantor and its
successors and assigns (including, without limitation, any
receiver, trustee or custodian for Guarantor or any of its
assets or in its capacity as debtor or debtor-in-possession
under the United States Bankruptcy Code).
(d) "Lenders" shall mean each and all of Lenders
and their respective successors and assigns (and including any
financial institution which may after the date hereof become a
party to the Loan Agreement pursuant to an Assignment and
Acceptance or otherwise).
(e) "Person" or "person" shall mean any
individual, sole proprietorship, partnership, corporation
(including, without limitation, any corporation which elects
subchapter S status under the Internal Revenue Code of 1986, as
amended), limited liability company, limited liability
partnership, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any
government or any agency or instrumentality or political
subdivision thereof.
(f) All references to the plural shall also mean
the singular and to the singular shall also meant he plural,
unless the context requires otherwise.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Guarantor has executed and delivered
this Guarantee as of the day and year first above written.
ATTEST:
E-Z SERVE CORPORATION
________________________
By: ________________________________
Title:
______________________________
[CORPORATE SEAL]
Chief Executive Office
2550 North Loop West, Suite
600
Houston, Texas 77092
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of December 1997, before me personally
came _____________________, to me known, who stated that he is
the ____________________ of E-Z SERVE CORPORATION, the
corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the
Board of Directors of said corporation.
_____________________
______
Notary Public
- - 11 -
S18\CONGRESS\E-ZSERVE\GUAR-3.MJM
- - 12 -
fmw
[Execution] PRIVATE
LOAN AND SECURITY AGREEMENT
by and among
E-Z SERVE CONVENIENCE STORES, INC.,
as Borrower
E-Z SERVE CORPORATION,
as Guarantor
MADELEINE L.L.C.,
as Administrative Agent
and
CONGRESS FINANCIAL CORPORATION (SOUTHWEST),
as Collateral Agent
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders
Dated: December 24, 1997
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
SECTION 2. CREDIT FACILITIES 18
2.1 Loans 18
2.2 Letter of Credit Accommodations 18
2.3 Commitments 21
SECTION 3. INTEREST AND FEES 21
3.1 Interest 21
3.2 Closing Fee 22
3.3 Servicing Fee 22
SECTION 4. CONDITIONS PRECEDENT 23
4.1 Conditions Precedent to Initial Loans
and Letter of Credit Accommodations 23
4.2 Conditions Precedent to All Loans and
Letter of Credit Accommodations 25
SECTION 5. SECURITY INTEREST 26
SECTION 6. COLLECTION AND ADMINISTRATION 27
6.1 Borrower's Loan Account 27
6.2 Statements 27
6.3 Collection of Accounts 27
6.4 Mandatory Prepayments 29
6.5 Payments 30
6.6 Authorization to Make Loans 30
6.7 Use of Proceeds 31
6.8 Sharing of Payments, Etc. 31
6.9 Settlement Procedures 32
SECTION 7. COLLATERAL REPORTING AND COVENANTS 34
7.1 Collateral Reporting 34
7.2 Accounts Covenants 35
7.3 Inventory Covenants 37
7.4 Equipment Covenants 38
7.5 Power of Attorney 39
7.6 Right to Cure 39
7.7 Access to Premises 40
SECTION 8. REPRESENTATIONS AND WARRANTIES 40
8.1 Corporate Existence, Power and Authority;
Subsidiaries 40
8.2 Financial Statements; No Material Adverse
Change. 41
8.3 Chief Executive Office; Collateral Locations. 41
8.4 Priority of Liens; Title to Properties 41
8.5 Tax Returns 41
8.6 Litigation 42
8.7 Compliance with Other Agreements and Applicable
Laws 42
8.8 Environmental Compliance. 43
8.9 Credit Card Agreements 44
8.10 Employee Benefits 44
8.11 Bank Accounts 45
8.12 Intellectual Property 45
8.13 Financial Statements 46
8.14 Disclosure 46
8.15 Governmental Authority 46
8.16 Capitalization 47
8.17 Labor Disputes 47
8.18 Corporate Name; Prior Transactions 47
8.19 Accuracy and Completeness of Information 47
8.20 Survival of Warranties; Cumulative 48
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 48
9.1 Maintenance of Existence 48
9.2 New Collateral Locations 48
9.3 Compliance with Laws, Regulations, Etc 48
9.4 Payment of Taxes and Claims 50
9.5 Insurance 50
9.6 Financial Statements and Other Information 51
9.7 Sale of Assets, Consolidation, Merger,
Dissolution, Etc 53
9.8 Encumbrances 55
9.9 Indebtedness 56
9.10 Loans, Investments, Guarantees, Etc 60
9.11 Dividends and Redemptions 62
9.12 Transactions with Affiliates 62
9.13 Minimum Consolidated Net Worth 63
9.14 Fixed Charge Coverage Ratio 63
9.15 Current Ratio. 63
9.16 Changes in Business 63
9.17 Sale and Leasebacks 64
9.18 Credit Card Agreements 64
9.19 Compliance with ERISA 64
9.20 Additional Bank Accounts. 65
9.21 Costs and Expenses. 65
9.22 Further Assurances 66
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 66
10.1 Events of Default 66
10.2 Remedies 68
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW 71
11.1 Governing Law; Choice of Forum; Service of
Process;
Jury Trial Waiver 71
11.2 Waiver of Notices 73
11.3 Amendments and Waivers 73
11.4 Confidentiality 75
11.5 Waiver of Counterclaims 75
11.6 Indemnification 75
SECTION 12. THE AGENT 75
12.1 Appointment, Powers and Immunities 75
12.2 Reliance by Agent 76
12.3 Events of Default 76
12.4 Madeleine in its Individual Capacity 77
12.5 Congress in is Individual Capacity 77
12.6 Indemnification 78
12.7 NonReliance on Agents and Other Lenders 78
12.8 Failure to Act 78
12.9 Additional Loans 79
12.10 Concerning the Collateral and
the Related Financing Agreements 79
12.11 Field Audit, Examination Reports and
other Information; Disclaimer by Lenders 79
12.12 Collateral Matters 80
12.13 Agency for Perfection 82
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS 82
13.1 Term 82
13.2 Notices 83
13.3 Partial Invalidity 83
13.4 Successors 83
13.5 Assignments; Participations. 84
13.6 Participant's Security Interests 87
13.7 Entire Agreement 87
13.8 Nonapplicability of Article 506915.01 et seq. 87
13.9 DTPA WAIVER 87
13.10 ORAL AGREEMENTS INEFFECTIVE 88
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Schedule 1.34 Locations of Eligible Equipment
Schedule 1.42 Existing Letters of Credit
Schedule 1.68 Permitted Holders
Schedule 1.79 Term Loan Lender Collateral
Schedule 6.3 Bank Accounts
Schedule 8.1 Subsidiaries
Schedule 8.3 List of Locations
Schedule 8.4 Existing Liens
Schedule 8.6 Pending Litigation
Schedule 8.8 Environmental Matters
Schedule 8.9 Credit Card Agreements
Schedule 8.17 Labor Disputes
Schedule 8.18 Corporate Name; Prior Transactions
Schedule 9.7 List of Stores to be Sold
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Loans, Investments, Guarantees
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated December 24, 1997,
is entered into by and among E-Z Serve Convenience Stores, Inc.,
a Delaware corporation ("Borrower"), E-Z Serve Corporation, a
Delaware corporation ("Guarantor"), the financial institutions
from time to time parties hereto as lenders, whether by execution
of this Agreement or an Assignment and Acceptance (each
individually, a "Lender" and, collectively, "Lenders"), Madeleine
L.L.C., a New York limited liability company, in its capacity as
administrative agent for Lenders (in such capacity,
"Administrative Agent"), Congress Financial Corporation
(Southwest), a Texas corporation, in its capacity as collateral
agent for Lenders (in such capacity, "Collateral Agent", and
together with Administrative Agent, collectively, "Agents" and
sometimes referred to individually as an "Agent").
W I T N E S S E T H:
WHEREAS, Borrower and Guarantor have requested that Agents
and Lenders enter into certain financing arrangements with
Borrower pursuant to which Lenders may make loans and provide
other financial accommodations to Borrower; and
WHEREAS, each Lender is willing to agree (severally and not
jointly) to make such loans and provide such financial
accommodations to Borrower on a pro rata basis according to its
Commitment (as defined below) on the terms and conditions set
forth herein and Administrative Agent is willing to act as
administrative agent for Lenders on the terms and conditions set
forth herein and the other Financing Agreements and Collateral
Agent is willing to act as collateral agent for Lenders on the
terms and conditions set forth herein and the other Financing
Agreements;
NOW, THEREFORE, in consideration of the mutual conditions
and agreements set forth herein, and for other and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
PRIVATE SECTION 1. DEFINITIONS tc \l 1 "SECTION 1.
DEFINITIONS"
All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings
given therein unless otherwise defined in this Agreement. All
references to the plural herein shall also mean the singular and
to the singular shall also mean the plural unless the context
otherwise requires. All references to Borrower, Agents and
Lenders pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole
and not any particular provision of this Agreement and as this
Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. The word
"including" when used in this Agreement shall mean "including,
without limitation". The words "ratable" or ratably" or words of
similar import when used in this Agreement shall refer to a
sharing or allocation based on the respective Pro Rata Shares (as
defined below) of Lenders. An Event of Default shall exist or
continue or be continuing until such Event of Default is waived
in accordance with Section 11.3 hereof or cured in a manner
reasonably satisfactory to Administrative Agent. Any accounting
term used herein unless otherwise defined in this Agreement shall
have the meanings customarily given to such term in accordance
with GAAP. For purposes of this Agreement, the following terms
shall have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services
rendered, which are not evidenced by instruments or chattel
paper, and whether or not earned by performance, and including,
without limitation, Credit Card Receivables.
1.2 "Administrative Agent" shall mean Madeleine in its
capacity as administrative agent on behalf of Lenders pursuant to
the terms hereof and any replacement or successor administrative
agent hereunder.
1.3 "Affiliates" shall mean, with respect to a specified
Person, a partnership, corporation or any other person which
directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such
Person, and without limiting the generality of the foregoing,
includes (a) any Person which beneficially owns or holds five
(5%) percent or more of any class of voting securities of such
Person or other equity interests in such Person, (b) any Person
of which such Person beneficially owns or holds five (5%) percent
or more of any class of voting securities or in which such Person
beneficially owns or holds five (5%) percent or more of the
equity interests and (c) any director or officer of such Person.
For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
1.4 "Appraised Equipment Value" shall mean the orderly
liquidation value of the Eligible Equipment as determined
pursuant to the most recent appraisal of the Equipment delivered
to Agents in accordance with Section 1.34 hereof.
1.5 "Assignment and Acceptance" shall mean an Assignment
and Acceptance substantially in the form of Exhibit A attached
hereto (with blanks appropriately completed) delivered to
Administrative Agent in connection with an assignment of a
Lender's interest hereunder in accordance with the provisions of
Section 13.5 hereof.
1.6 "Blocked Accounts" shall have the meaning set forth in
Section 6.3 hereof.
1.7 "Borrowing Base" shall mean at any time: (a) the
lesser of: (i) $25,000,000, or (ii) the sum of: (A) eighty
(80%) percent of the Net Amount of Eligible Accounts, plus
(B) seventy-five (75%) percent of the Value of Eligible Inventory
consisting of merchandise and gasoline, plus (C) the lesser of:
(1) $2,000,000 or (2) one hundred (100%) percent of the Appraised
Equipment Value, minus (b) amounts drawn under the Letter of
Credit Accommodations to the extent not already included in the
Loans and one hundred (100%) percent of the undrawn amount of all
Letter of Credit Accommodations, minus (c) reserves for shrinkage
and spoilage of Inventory (which reserve is $500,000 as of the
date hereof and may be increased or decreased after the date
hereof based on increases or decreases of shrinkage and/or
spoilage of Inventory as a percentage of Inventory as determined
by either Agent), minus (d) all other reserves (including,
without limitation, reserves with respect to security interests
or liens of third parties permitted hereunder or in connection
with litigation) which either Agent in its reasonable discretion
deems necessary or desirable to maintain, including, without
limitation, reserves for any amounts which either Agent or any
Lender may need to pay in the future for the account of Borrower
or Guarantor.
1.8 "Business Day" shall mean any day other than a
Saturday, Sunday, or other day on which commercial banks are
authorized or required to close under the laws of the State of
New York or the Commonwealth of Pennsylvania, and a day on which
each Agent is open for the transaction of business.
1.9 "Capital Expenditures" shall mean all expenditures for
any fixed or capital assets or improvements, or for replacements,
substitutions or additions thereto, which have a useful life of
more than one (1) year, including, but not limited to, the direct
or indirect acquisition of such assets by way of increased
product service charges, offset items or otherwise and shall
include capitalized lease payments.
1.10 "Capitalized Lease Obligations" shall mean any
obligation to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) any property (whether
real, personal or mixed) that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for
the purposes of this Agreement, the amount of such obligation at
any date shall be capitalized amount thereof at such date,
determined in accordance with GAAP.
1.11 "Capital Stock" shall mean, with respect to any
Person, any and all shares, interests, participations or other
equivalents (however designated) of such Person's capital stock
at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock
(but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.12 "Cash Equivalents" shall mean any of the following:
(a) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof; (b) investments
in time deposit accounts, certificates of deposit and money
market deposits maturing within one hundred eighty (180) days of
the date of acquisition thereof issued by a bank or trust company
which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of
$50,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the
Securities Exchange Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor;
(c) repurchase obligations with a term of not more than thirty
(30) days for underlying securities of the types described in
clause (a) above entered into with a bank meeting the
qualifications described in clause (b) above; (d) investments in
commercial paper, maturing not more than ninety (90) days after
the date of acquisition, issued by a corporation (other than an
Affiliate of Borrower) organized and in existence under the laws
of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of
which any investment therein is made of "P-1" (or higher)
according to Moody's Investor Service, Inc. or "A-1" (or higher)
according to Standard & Poor's Ratings Group, a division of
McGraw Hill Companies, Inc.; and (e) investments in securities
with maturities of six (6) months or less from the date of
acquisition issued or fully guaranteed by any State, commonwealth
or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's Ratings Group, a division of McGraw Hill
Companies, Inc. or "A" by Moody's Investor Service, Inc.
1.13 "Change of Control" shall mean the occurrence of any
of the following: (a) the failure of the Permitted Holders at
any time (i) to own beneficially free and clear of all security
interests, liens, pledges or other encumbrances at all times, at
least fifty-one (51%) percent of the issued and outstanding
shares of common stock of Guarantor (both voting and non-voting),
on a fully diluted basis and (ii) to have and exercise voting
power for the election of at least a majority of the board of
directors of Guarantor; (b) the direct or indirect acquisition by
any Person or a group (as such term is defined in Section
13(d)(3) of the Securities Exchange Act), other than Permitted
Holders, of beneficial ownership (as such term is defined in Rule
13D-3 promulgated under the Securities Exchange Act) of twenty-
five (25%) percent or more of the outstanding shares of common
stock of Guarantor; (c) the failure of Guarantor at any time to
own beneficially one hundred (100%) percent of the issued and
outstanding shares of common stock of Borrower (both voting and
non-voting) free and clear of all security interests, liens,
pledges or other encumbrances (other than security interests and
pledges in favor of Collateral Agent) on a fully diluted basis;
or (d) a change in the majority of the board of directors of
Guarantor unless approved by the then majority of the board of
directors of Guarantor.
1.14 "Code" shall mean the Internal Revenue Code of 1986,
as the same now exists or may from time to time hereafter be
amended, modified, recodified or supplemented, together with all
rules, regulations and interpretations thereunder or related
thereto.
1.15 "Collateral" shall have the meaning set forth in
Section 5 hereof.
1.16 "Collateral Agent" shall mean Congress in its
capacity as collateral agent on behalf of Lenders pursuant to the
terms hereof and any replacement or successor collateral agent
hereunder.
1.17 "Commitment" shall have the meaning set forth in
Section 2.3 hereof.
1.18 "Commitment Percentage" shall mean, as to each
Lender, the percentage of the Maximum Credit provided for
hereunder represented by such Lender's Commitment. The
Commitment Percentage of each Lender signing this Agreement is
set forth on the signature pages hereto below each Lender's
respective signature.
1.19 "Congress" shall mean Congress Financial Corporation
(Southwest), a Texas corporation, in its individual capacity and
its successors and assigns.
1.20 "Consolidated Net Income" shall mean, with respect to
any Person for any period, the aggregate of the net income (loss)
of such Person and its Subsidiaries, on a consolidated basis, for
such period (excluding to the extent included therein any
extraordinary and/or unusual and non-recurring gains or losses in
excess of $100,000) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period
and, without duplication, after deducting the Provision for Taxes
for such period, all as determined in accordance with GAAP;
provided, that, (a) the net income of any Person that is not a
wholly-owned Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the
amount of dividends or distributions paid or payable to such
Person or a wholly-owned Subsidiary of such Person; (b) except to
the extent included pursuant to the foregoing clause, the net
income of any Person accrued prior to the date it becomes a
wholly-owned Subsidiary of such Person or is merged into or
consolidated with such Person or any of its wholly-owned
Subsidiaries or that Person's assets are acquired by such Person
or by its wholly-owned Subsidiaries shall be excluded; and (c)
the net income (if positive) of any wholly-owned Subsidiary to
the extent that the declaration or payment of dividends or
similar distributions by such wholly-owned Subsidiary to such
Person or to any other wholly-owned Subsidiary of such Person is
not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such
wholly-owned Subsidiary shall be excluded. For the purposes of
this definition, (i) net income excludes any gain (or loss)
together with any related Provision for Taxes for such gain (or
loss) realized upon the sale or other disposition of any assets
that are not sold in the ordinary course of business (including,
without limitation, dispositions pursuant to sale and leaseback
transactions) or of any Capital Stock of such Person or a
Subsidiary of such Person and any net income realized or loss
incurred as a result of changes in accounting principles or the
application thereof to such Person, and (ii) the term "Provision
for Taxes" shall mean an amount equal to all taxes imposed on or
measured by net income, whether Federal, State, Provincial,
county or local, and whether foreign or domestic, that are paid
or payable by any Person in respect of any period in accordance
with GAAP.
1.21 "Consolidated Net Worth" shall mean, as to any Person
at any time, in accordance with GAAP, consistently applied, on a
consolidated basis for such Person and its Subsidiaries, the
amount equal to (a) the difference between (i) the aggregate net
book value of all assets of such Person and its Subsidiaries,
calculating the book value of inventory for this purpose using
the average cost method of accounting in accordance with GAAP,
after deducting from such book value all appropriate reserves in
accordance with GAAP, consistently applied (including all
reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (ii) the total aggregate Indebtedness and other
liabilities of such Person and its Subsidiaries, including
accruals for taxes, workmen's compensation liability and other
accruals (other than contingent liabilities which would not be
included in the balance sheet under GAAP) of such Person and its
Subsidiaries; provided, that, as to Guarantor, no assets other
than the Capital Stock of Borrower (to the extent that Guarantor
is the direct and beneficial owner and holder thereof) and cash
or Cash Equivalents and deferred tax assets shall be considered
an asset of Guarantor for purposes of calculating the
Consolidated Net Worth of Guarantor.
1.22 "Consolidated Working Capital" shall mean as to any
Person, at any time, in accordance with GAAP, on a consolidated
basis for such Person and its Subsidiaries (if any), the amount
equal to the difference between: (a) the aggregate net book
value of all current assets of such Person and its Subsidiaries
(as determined in accordance with GAAP), calculating the book
value of inventory for this purpose on an average cost basis, and
(b) all current liabilities of such Person and its Subsidiaries
(as determined in accordance with GAAP), provided, that, as to
Guarantor, for purposes of Section 9.15, the liabilities of
Guarantor and its Subsidiaries to Agents and Lenders under this
Agreement shall not be considered current liabilities (whether or
not classified as current liabilities in accordance with GAAP).
1.23 "Credit Card Acknowledgments" shall mean,
individually and collectively, the agreements by Credit Card
Issuers or Credit Card Processors who are parties to Credit Card
Agreements in favor of Collateral Agent acknowledging the first
priority security interest of Collateral Agent, for itself and
the ratable benefit of Lenders, in the monies due and to become
due to Borrower (including, without limitation, credits and
reserves) under the Credit Card Agreements, and agreeing to
transfer all such amounts to the Blocked Accounts, as the same
now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.24 "Credit Card Agreements" shall mean all agreements
now or hereafter entered into by Borrower with any Credit Card
Issuer or any Credit Card Processor, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, including, but not limited to, the
agreements set forth on Schedule 8.9 hereto.
1.25 "Credit Card Issuer" shall mean any person (other
than Borrower) who issues or whose members issue credit cards,
including, without limitation, MasterCard or VISA bank credit or
debit cards or other bank credit or debit cards issued through
MasterCard International, Inc., Visa U.S.A., Inc. or Visa
International, Inc. and American Express, Discover, Diners Club,
Carte Blanche and other non-bank credit or debit cards,
including, without limitation, credit or debit cards issued by or
through American Express Travel Related Services Company, Inc.
and Novus Services, Inc.
1.26 "Credit Card Processor" shall mean any servicing or
processing agent or any factor or financial intermediary who
facilitates, services, processes or manages the credit
authorization, billing transfer and/or payment procedures with
respect to any of Borrower's sales transactions involving credit
card or debit card purchases by customers using credit cards or
debit cards issued by any Credit Card Issuer, (including, but not
limited to EFS National Bank).
1.27 "Credit Card Receivables" shall mean collectively,
(a) all present and future rights of Borrower to payment from any
Credit Card Issuer, Credit Card Processor or other third party
arising from sales of goods or rendition of services to customers
who have purchased such goods or services using a credit or debit
card and (b) all present and future rights of Borrower to payment
from any Credit Card Issuer, Credit Card Processor or other third
party in connection with the sale or transfer of Accounts arising
pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a
credit card or a debit card, including, but not limited to, all
amounts at any time due or to become due from any Credit Card
Issuer or Credit Card Processor under the Credit Card Agreements
or otherwise.
1.28 "Credit Facility" shall mean, collectively, the
secured Loans and Letter of Credit Accommodations provided for
hereunder and under the other Financing Agreements.
1.29 "Current Assets" shall mean, as to any Person, at any
time, the aggregate net book value of all assets of such Person
and its Subsidiaries, calculating the book value of inventory for
this purpose on an average cost basis, on a consolidated basis,
which would, in accordance with GAAP, be classified as current
assets.
1.30 "Current Liabilities" shall mean, as to any Person,
at any time, all Indebtedness of such Person and its
Subsidiaries, on a consolidated basis, which would, in accordance
with GAAP, be classified as current liabilities; provided, that,
as to Borrower for purposes of this definition, all Indebtedness
of Borrower to Lenders hereunder shall not be considered current
liabilities (whether or not classified as current liabilities in
accordance with GAAP).
1.31 "Defaulting Lender" shall have the meaning set forth
in Section 6.9 hereof.
1.32 "EBITDA" shall mean, as to any Person, with respect
to any period, an amount equal to: (a) the Consolidated Net
Income of such Person and its Subsidiaries for such period
determined in accordance with GAAP, plus (b) depreciation,
amortization and other non-cash charges (including, but not
limited to, imputed interest and deferred compensation) for such
period (to the extent deducted in the computation of Consolidated
Net Income of such Person), all in accordance with GAAP, plus (c)
Interest Expense for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person), plus (d)
charges for Federal, State, local and foreign income taxes for
such period (to the extent deducted in the computation of
Consolidated Net Income of such Person).
1.33 "Eligible Accounts" shall mean Accounts created by
Borrower which are and continue to be acceptable to Collateral
Agent based on the criteria set forth below. In general,
Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona
fide sale and delivery of goods by Borrower or rendition of
services by Borrower in the ordinary course of its business which
transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
(b) such Accounts do not remain unpaid after the
original due date for them in accordance with their terms;
(c) such Accounts comply with the terms and
conditions contained in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval,
or other terms under which payment by the account debtor may be
conditioned or contingent;
(e) the chief executive office or other principal
office of the account debtor with respect to such Accounts is
located in the United States of America;
(f) the account debtor with respect to such Accounts
has not asserted a counterclaim, defense or dispute and does not
have, and does not engage in transactions which may give rise to,
any right of setoff against such Accounts, except (i) to the
extent of Accounts due from vendors who sell merchandise to
Borrower which are subject to offset which may be approved by
Collateral Agent, provided, that, in no event shall the aggregate
amount of such Eligible Accounts exceed $1,000,000 and (ii) the
portion of the Accounts of such account debtor in excess of the
amount at any time and from time to time owed by Borrower to such
account debtor or claimed owed by such account debtor may be
deemed Eligible Accounts;
(g) there are no facts, events or occurrences which
would impair the validity, enforceability or collectability of
such Accounts or reduce the amount payable or delay payment
thereunder;
(h) such Accounts are subject to the first priority,
valid and perfected security interest of Collateral Agent (for
itself and the ratable benefit of Lenders) and any goods giving
rise thereto are not, and were not at the time of the sale
thereof, subject to any liens except those permitted in this
Agreement;
(i) neither the account debtor nor any officer or
employee of the account debtor with respect to such Accounts is
an Affiliate of Borrower;
(j) the account debtors with respect to such
Accounts are not any foreign government, the United States of
America, any State, political subdivision, department, agency or
instrumentality thereof;
(k) there are no proceedings or actions which are
threatened or pending against the account debtors with respect to
such Accounts which might result in any material adverse change
in any such account debtor's financial condition;
(l) such Accounts of a single account debtor or its
affiliates do not constitute more than ten (10%) percent of all
otherwise Eligible Accounts (but the portion of the Accounts not
in excess of such percentage may be deemed Eligible Accounts);
(m) such Accounts are owed by account debtors whose
total indebtedness to Borrower does not exceed the credit limit
with respect to such account debtors as determined by Borrower
from time to time in the ordinary course of business, to the
extent such credit limits are satisfactory to Collateral Agent
(but the portion of the Accounts not in excess of such credit
limit which is satisfactory to Collateral Agent may be deemed
Eligible Accounts); and
(n) such Accounts are owed by account debtors deemed
creditworthy at all times by Collateral Agent, as determined by
Collateral Agent in good faith.
General criteria for Eligible Accounts may be established and
revised from time to time by Collateral Agent in its reasonable,
good faith judgment, with the consent or at the direction of
Administrative Agent in its reasonable, good faith judgment,
based on an event, condition or other circumstance arising after
the date hereof, or existing on the date hereof to the extent
Collateral Agent has no written notice thereof from Borrower,
which adversely affects or could be expected to adversely affect
the Accounts in the reasonable, good faith determination of
either Agent. Any Accounts which are not Eligible Accounts shall
nevertheless be part of the Collateral.
1.34 "Eligible Equipment" shall mean Equipment owned by
Borrower which is in order, repair, running and marketable
condition and acceptable to Collateral Agent in all respects. In
general, Eligible Equipment shall not include: (a) Equipment at
premises other than those set forth on Schedule 1.34 hereto and
Equipment at the premises set forth on Schedule 1.34 to the
extent such premises are not owned or leased by Borrower;
(b) Equipment which is not subject to an appraisal thereof, in
form, scope and methodology acceptable to each Agent and by an
appraiser acceptable to Administrative Agent and addressed to
each Agent and upon which each Agent is permitted to rely;
(c) Equipment subject to a security interest or lien in favor of
any person other than the security interest of Collateral Agent,
for itself and the ratable benefit of Lenders, except those
permitted in this Agreement; (d) Equipment which is not subject
to the first priority, valid and perfected security interest of
Collateral Agent, for itself and the ratable benefit of Lenders,
or (e) worn-out, obsolete, damaged or defective Equipment or
Equipment not used or usable in the ordinary course of Borrower's
business as presently conducted. General criteria for Eligible
Equipment may be established and revised from time to time by
Collateral Agent in its reasonable, good faith judgment, with the
consent or at the direction of Administrative Agent in its
reasonable, good faith judgment, based on an event, condition or
circumstance arising after the date hereof, or existing on the
date hereof to the extent Collateral Agent has no notice thereof
from Borrower, which adversely affects or could reasonably be
expected to adversely affect the Equipment in the reasonable,
good faith determination of either Agent. Any Equipment which is
not Eligible Equipment shall nevertheless be part of the
Collateral, provided, that, the Collateral shall not include
Equipment described on Schedule 1.79 hereto constituting part of
the Term Loan Lender Collateral to the extent subject to the
perfected security interest of Term Loan Lender or otherwise
excluded from the Collateral pursuant to Section 5.2 hereof.
1.35 "Eligible Inventory" shall mean Inventory consisting
of merchandise and gasoline held by Borrower for resale in the
ordinary course of the business of Borrower that are acceptable
to Collateral Agent based on the criteria set forth below. In
general, Eligible Inventory shall not include (a) packaging and
shipping materials; (b) supplies used or consumed in Borrower's
business; (c) Inventory at premises other than those owned and
controlled by Borrower, except for Inventory at retail store
locations of Borrower; (d) Inventory subject to a security
interest or lien in favor of any person other than Collateral
Agent, for itself and the ratable benefit of Lenders, except
those permitted in this Agreement; (e) bill and hold goods;
(f) unserviceable, obsolete or slow moving Inventory; (g)
Inventory which is not subject to the first priority, valid and
perfected security interest of Collateral Agent, for itself and
the ratable benefit of Lenders; (h) damaged and/or defective
Inventory (i) returned Inventory that is not held for resale; (j)
Inventory to be returned to vendors; (k) Inventory held after the
applicable expiration date thereof; and (l) Inventory purchased
or sold on consignment. General criteria for Eligible Inventory
may be established and revised from time to time by Collateral
Agent in its reasonable, good faith judgment, with the consent or
at the direction of Administrative Agent, in its reasonable, good
faith judgment, based on an event, condition or other
circumstance arising after the date hereof, or existing on the
date hereof to the extent Collateral Agent has no written notice
thereof from Borrower, which adversely affects or could be
expected to adversely affect the Inventory in the reasonable,
good faith determination of either Agent. Any Inventory which is
not Eligible Inventory shall nevertheless be part of the
Collateral.
1.36 "Eligible Transferee" shall mean (a) any Lender; (b)
any Affiliate of a Lender; and (c) any other commercial bank,
financial institution or "accredited investor" (as defined in
Regulation D under the Securities Exchange Act) approved by
Administrative Agent and Collateral Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment
is effected hereunder, Borrower, such approval not to be
unreasonably withheld or delayed by Borrower, and such approval
to be deemed given by Borrower if no objection from Borrower is
received by the assigning Lender and Administrative Agent within
five (5) Business Days after notice of such proposed assignment
has been provided by the assigning Lender or Administrative Agent
to Borrower; provided, that, neither Borrower nor any Affiliate
of Borrower shall qualify as an Eligible Transferee.
1.37 "Environmental Laws" shall mean all foreign, Federal,
State and local laws (including common law), legislation, rules,
codes, licenses, permits (including any conditions imposed
therein), authorizations, judicial or administrative decisions,
injunctions or agreements between Borrower and any governmental
authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air,
water vapor, surface water, ground water, drinking water,
drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource), or to human health or
safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production,
release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to
recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term
"Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
the Federal Superfund Amendments and Reauthorization Act, the
Federal Water Pollution Control Act of 1972, the Federal Clean
Water Act, the Federal Clean Air Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, and the
Federal Safe Drinking Water Act of 1974, (ii) applicable state
counterparts to such laws, and (iii) any common law or equitable
doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.38 "Equipment" shall mean all of Borrower's now owned
and hereafter acquired equipment, machinery, computers and
computer hardware and software (whether owned or licensed),
vehicles, tools, furniture, fixtures, all attachments, accessions
and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof,
wherever located.
1.39 "ERISA" shall mean the United States Employee
Retirement Income Security Act of 1974, as the same now exists or
may hereafter from time to time be amended, modified, recodified
or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.40 "ERISA Affiliate" shall mean any person required to
be aggregated with Borrower or any of its Subsidiaries under
Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.41 "Excess Availability" shall mean the amount, as
determined by Collateral Agent, calculated at any time, equal to:
(a) the Borrowing Base, minus (b) the sum of: (i) the amount of
all then outstanding and unpaid Obligations, plus (ii) the
aggregate amount of all trade payables of Borrower which are more
than thirty (30) days past due as of such time.
1.42 "Existing Letters of Credit" shall mean the letters
of credit outstanding as of the date hereof issued by Societe
Generale for the account of Borrower listed on Schedule 1.42
hereto.
1.43 "Event of Default" shall mean the occurrence or
existence of any event or condition described in Section 10.1
hereof.
1.44 "Final Maturity Date" shall mean the date which is
the second anniversary of the date hereof; provided, that, to the
extent Borrower may exercise its option to extend the Final
Maturity Date in accordance with the terms of Section 13.1
hereof, the term "Final Maturity Date" shall mean the date which
is the third anniversary of the date hereof.
1.45 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Borrower or any Obligor in
connection with this Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.46 "Fixed Charge Coverage Ratio" for any period shall
mean the ratio of (a) EBITDA of Guarantor and its Subsidiaries
for such period to (b) Fixed Charges of Guarantor and its
Subsidiaries for such period.
1.47 "Fixed Charges" for any period shall mean the sum of,
without duplication, (a) all Interest Expense, (b) all scheduled
(as determined at the beginning of the respective period)
mandatory principal payments of Indebtedness (including principal
payments with respect to all Capitalized Lease Obligations) made
by Borrower, Guarantor or their Subsidiaries during such period,
and (c) all cash payments of income taxes made by Borrower,
Guarantor and their Subsidiaries during such period, including,
without duplication, any payments made pursuant to any tax
sharing arrangements by and among Borrower, Guarantor and their
Subsidiaries.
1.48 "GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from time
to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which
are applicable to the circumstances as of the date of
determination consistently applied, except that, if any change in
generally accepted accounting principles after the date hereof
affects the calculation of compliance with the financial
covenants in Sections 9.13, 9.14 and 9.15 hereof, Borrower may by
notice to each Agent, or Collateral Agent may, or at the request
of Majority Lenders shall, by notice to Borrower require that
such covenants thereafter be calculated in accordance with
generally accepted accounting principles as in effect, and
applied by Borrower immediately before such change in generally
accepted accounting principles occurred. If such notice is
given, the financial statements delivered pursuant to Section 9.6
hereof after such change occurs shall be accompanied by
reconciliations of the difference between the calculation set
forth therein and a calculation made in accordance with generally
accepted accounting principles as in effect from time to time
after such change occurs.
1.49 "Governmental Authority" shall mean any nation or
government, any state, province, or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
1.50 "Guarantor" shall mean E-Z Serve Corporation, a
Delaware corporation, and its successors and assigns.
1.51 "Hedging Obligations" shall mean, with respect to any
Person, the obligations of such Person under any of the following
agreements or arrangements to the extent that the primary purpose
thereof is the reduction of risk for fluctuations in interest
rates or currency or commodity values relating to its customary
business and not for speculative purposes: (a) interest rate
swap agreements, interest rate cap agreements and interest rate
collar agreements and (b) other agreements or arrangements
designed to protect such person against fluctuations in interest
rates or currency or commodity values.
1.52 "Indebtedness" shall mean, with respect to any
Person, any liability (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof) or evidenced by
bonds, notes, indentures or similar instruments; (b) representing
the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an
account payable to a trade supplier in the ordinary course of
business of such Person in connection with obtaining goods,
materials or services, to the extent such balance is not more
than ninety (90) days past due); (c) all Capitalized Lease
Obligations; (d) any contractual obligations, contingent or
otherwise, of such Person to pay or be liable for the payment of
any indebtedness described in this definition of another Person,
including, without limitation, any such indebtedness, directly or
indirectly guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business), co-made or
discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise)
arising through any agreement to purchase, repurchase, or
otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition,
or to make payment other than for value received; (e) all
obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity
securities issued by such Person; (f) all reimbursement
obligations and other liabilities, contingent or otherwise, of
such Person with respect to bonds, letters of credit, banker's
acceptances or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect
of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this
definition which is secured by any security interest in, or
mortgage or lien upon the interest in any asset of such Person,
whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of
such time; and (h) all obligations, liabilities and indebtedness
of such Person (marked to market) constituting Hedging
Obligations.
1.53 "Inventory" shall mean all of Borrower's now owned
and hereafter existing or acquired raw materials, work in
process, finished goods and all other inventory of whatsoever
kind or nature, wherever located.
1.54 "Interest Expense" shall mean, for any period, as to
any Person and its Subsidiaries, all of the following as
determined in accordance with GAAP: (a) total interest expense,
whether paid or accrued (including the interest component of
Capitalized Lease Obligations for such period), including,
without limitation, all bank fees, commissions, discounts and
other fees and charges owed with respect to letters of credit,
banker's acceptances or similar instruments, but excluding
(i) amortization of discount and amortization of deferred
financing fees and closing costs, (ii) interest paid in property
other than cash and (iii) any other interest expense not payable
in cash, minus (b) any net payments received during such period
as interest income received in respect of its investments in cash
and Cash Equivalents.
1.55 "Lenders" shall mean the financial institutions who
are signatories hereto as lenders and other persons made a party
to this Agreement as Lenders in accordance with Section 13.5
hereof, and their respective successors and assigns.
1.56 "Letter of Credit Accommodations" shall mean the
letters of credit, merchandise purchase or other guaranties which
are from time to time either (a) issued or opened by Collateral
Agent or any Lender for the account of Borrower or any Obligor or
(b) with respect to which Collateral Agent on behalf of Lenders
has agreed to indemnify the issuer or guaranteed to the issuer
the performance by Borrower of its obligations to such issuer
(including, without limitation, the Existing Letters of Credit).
1.57 "Loans" shall mean the loans made to or for the
benefit of Borrower by Lenders or by Collateral Agent for the
ratable account of Lenders, on a revolving basis pursuant to the
Credit Facility (involving advances, repayments and readvances)
as set forth in Section 2.1 hereof.
1.58 "Majority Lenders" shall mean as of any date of
determination thereof, Lenders holding more than fifty (50%)
percent of the aggregate outstanding principal amount of Loans
and outstanding Letter of Credit Accommodations, or, if there are
no Loans or Letter of Credit Accommodations outstanding, then
such term shall mean Lenders having aggregate Commitment
Percentage of more than fifty (50%) percent.
1.59 "Material Adverse Effect" shall mean a material
adverse effect on (a) the financial condition, business,
performance, operations or properties of Borrower and Guarantor,
taken as a whole; (b) the legality, validity or enforceability of
this Agreement or any of the other Financing Agreements; (c) the
legality, validity, enforceability, perfection or priority of the
security interests and liens of Collateral Agent or any Lender
upon the Collateral or any other property which is security for
the Obligations; (d) the Collateral (taken as a whole) or any
other property which is security for the Obligations (taken as a
whole), or the value of the Collateral or such other property;
(e) the ability of Borrower to repay the Obligations or of
Borrower or any Obligor to perform its obligations under this
Agreement or any of the other Financing Agreements; or (f) the
ability of any Agent or Lender to enforce the Obligations or
realize upon the Collateral or otherwise with respect to the
rights and remedies of any Agent or Lender under this Agreement
or any of the other Financing Agreements.
1.60 "Maximum Credit" shall mean $25,000,000.
1.61 "Maximum Interest Rate" shall mean the maximum non-
usurious rate of interest under applicable Federal or State law
as in effect from time to time that may be contracted for, taken,
reserved, charged or received in respect of the Obligations.
1.62 "Net Amount of Eligible Accounts" shall mean the
gross amount of Eligible Accounts less (a) sales, excise or
similar taxes included in the amount thereof and (b) returns,
discounts, claims, credit and allowances of any nature at any
time issued, owing, granted, outstanding or claimed with respect
thereto.
1.63 "Obligations" shall mean any and all Loans, Letter of
Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by
Borrower to either or both of Agents and any Lender and/or any of
their Affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, arising under this
Agreement or any of the other Financing Agreements, whether now
existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after
the commencement of any case with respect to Borrower under the
United States Bankruptcy Code or any similar statute (including,
without limitation, the payment of interest and other amounts
which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable
in whole or in part in such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, secured or unsecured,
and however acquired by any Agent or Lender.
1.64 "Obligor" shall mean any guarantor, endorser,
acceptor, surety or other person liable on or with respect to the
Obligations or who is the owner of any property which is security
for the Obligations (including, without limitation, Guarantor),
other than Borrower.
1.65 "Participant" shall mean any financial institution
that acquires and holds a participation in the interest of any
Lender in any of the Loans and Letter of Credit Obligations in
conformity with the provisions of Section 13.5 of this Agreement
governing participations.
1.66 "Payment Account" shall have the meaning set forth in
Section 6.3 hereof.
1.67 "Permits" shall have the meaning set forth in Section
8.7 hereof.
1.68 "Permitted Holders" shall mean the persons listed on
Schedule 1.68 hereof.
1.69 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without
limitation, any corporation which elects subchapter S status
under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any
government or any agency or instrumentality or political
subdivision thereof.
1.70 "Pro Rata Share" shall mean, with respect to any
Lender, a fraction (expressed as a percentage), the numerator of
which shall be the amount of such Lender's Commitment and the
denominator of which shall be the aggregate amount of all of the
Lenders' Commitments, as adjusted from time to time in accordance
with the provisions of Section 13.5 hereof; provided, that, if
the Commitments have been terminated, the numerator shall be the
unpaid amount of such Lender's Loans and its interest in the
Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit
Accommodations.
1.71 "Real Property" shall mean all now owned and
hereafter acquired real property of Borrower, including leasehold
interests, together with all buildings, structures, and other
improvements located thereon and all licenses, easements and
appurtenances relating thereto, wherever located.
1.72 "Records" shall mean all of Borrower's present and
future books of account of every kind or nature, purchase and
sale agreements, invoices, ledger cards, bills of lading and
other shipping evidence, statements, correspondence, memoranda,
credit files and other data relating to the Collateral or any
account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets
or containers in or on which the foregoing are stored (including
any rights of Borrower with respect to the foregoing maintained
with or by any other person).
1.73 "Reference Rate" shall mean the greater of: (a) the
rate from time to time publicly announced by CoreStates Bank,
N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced
rate is the best rate available at such bank and (b) eight and
one-half (8 1/2%) percent.
1.74 "Register" shall have the meaning set forth in
Section 13.5 hereof.
1.75 "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as the same now exists or may hereafter
from time to time be amended, modified, recodified or
supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.76 "Special Agent Advances" shall have the meaning set
forth in Section 12.12 hereof.
1.77 "Subsidiary" shall mean, with respect to any Person,
any corporation, limited or general partnership, trust,
association or other business entity of which an aggregate of at
least a majority of the outstanding Capital Stock or other
interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the
time, Capital Stock of any other class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other
controlling persons, or an equivalent controlling interest
therein, of such Person is, at the time, directly or indirectly,
owned by such Person and/or one ore more Subsidiaries of such
Person.
1.78 "Term Loan Lender" shall mean FFCA Acquisition
Corporation, a Delaware corporation, and its successors and
assigns.
1.79 "Term Loan Lender Collateral" shall mean the assets
and properties of Borrower described on Schedule 1.79 hereto,
provided, that, in no event shall the Term Loan Lender Collateral
include any of the Collateral.
1.80 "Value" shall mean, with respect to Inventory, the
lower of (a) cost computed on a average cost basis in accordance
with the historical practices of Borrower previously disclosed to
Collateral Agent and in accordance with GAAP or (b) market value
in accordance with GAAP, as determined by Borrower in its
reasonable, good faith judgment so long as the final
determination is acceptable to each Agent.
PRIVATE SECTION 2. CREDIT FACILITIES tc \l 1 "SECTION 2.
CREDIT FACILITIES"
PRIVATE 2.1 Loans tc \l 2 "2.1 Loans" .
(a) Subject to and upon the terms and conditions
contained herein, each of the Lenders severally (and not jointly)
agrees to fund its Pro Rata Share of Loans to Borrower from time
to time under the Credit Facility in amounts requested by
Borrower, up to the amount at any one time outstanding equal to
the Borrowing Base.
(b) Collateral Agent may, in its reasonable, good
faith discretion, with the consent of Administrative Agent, or
shall upon the direction of Administrative Agent, in its
reasonable, good faith determination, from time to time, upon not
less than ten (10) days prior notice to Borrower, (i) reduce the
lending formula with respect to Eligible Accounts to the extent
that such Agent determines in its reasonable good faith, judgment
that the likelihood of collection of such Accounts has decreased
or there has been a deterioration in the performance of such
Accounts from historical levels or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that
such Agent determines in its reasonable, good faith judgment
that: (A) the number of days of the turnover of the Inventory
for any reasonable period as determined in the reasonable, good
faith judgment of Collateral Agent has changed in any material
respect or (B) the quality or mix of the Inventory has
deteriorated in any material respect. In determining whether to
reduce the lending formula(s), Agents may consider events,
conditions, contingencies or risks which are also considered in
determining Eligible Accounts, Eligible Inventory or in
establishing reserves. The amount of any reduction in any
lending formula by Collateral Agent pursuant to this Section
2.1(b) shall have a proportional relationship to the matter
described herein which is the basis for such reduction in the
good faith determination of Collateral Agent. To the extent
reserve shall have been established which is sufficient to
address any event, condition or matter in a manner satisfactory
to each Agent, in its reasonable, good faith determination,
Agents shall not exercise their rights under this Section 2.1(b)
to reduce the lending formulas, to address such event, condition
or matter.
(c) Except in Administrative Agent's discretion,
with the consent of all of the Lenders, the aggregate amount of
the Loans and the Letter of Credit Accommodations outstanding at
any time shall not exceed the Maximum Credit.
PRIVATE 2.2 Letter of Credit Accommodations tc \l 2
"2.2 Letter of Credit Accommodations" .
(a) Subject to, and upon the terms and conditions
contained herein, at the request of Borrower, Collateral Agent
agrees, for the ratable risk of each Lender according to its Pro
Rata Share, to provide or arrange for Letter of Credit
Accommodations for the account of Borrower containing terms and
conditions acceptable to each Agent and the issuer thereof. Any
payments made by Collateral Agent or any Lender to any issuer
thereof and/or related parties in connection with the Letter of
Credit Accommodations shall constitute additional Loans to
Borrower pursuant to this Section 2.
(b) In addition to any customary charges, fees or
expenses charged by any bank or issuer in connection with the
Letter of Credit Accommodations, Borrower shall pay to Collateral
Agent, for the benefit of Lenders, a letter of credit fee at a
rate equal to two and one-half (2 1/2%) percent per annum on the
daily outstanding balance of the Letter of Credit Accommodations
for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month, except that
Collateral Agent may, and upon the written direction of
Administrative Agent or Majority Lenders shall, require Borrower
to pay to Collateral Agent such letter of credit fee at a rate
equal to five and one-half (5 1/2%) percent per annum for (i) the
period from and after the date of the termination of this
Agreement until Collateral Agent, for the ratable benefit of
Lenders, has received full and final payment of all Obligations
(notwithstanding entry of a judgment against Borrower) and (ii)
the period from and after the date of the occurrence of an Event
of Default and for so long as such Event of Default is
continuing. Such letter of credit fee shall be calculated on the
basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrower to pay such fee shall
survive the termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be
available unless on the date of the proposed issuance of any
Letter of Credit Accommodations, the Loans then available to
Borrower (subject to the Maximum Credit) are equal to or greater
than an amount equal to one hundred (100%) percent of the face
amount thereof and all other commitments and obligations made or
incurred by any Agent or Lender with respect thereto.
(d) Except in Administrative Agent's discretion,
with the consent of all of the Lenders, the amount of all
outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by any Agent or
Lender in connection therewith, shall not at any time exceed
$15,000,000. At any time an Event of Default exists or has
occurred and is continuing, upon the request of either Agent,
Borrower will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to
Collateral Agent, for the ratable benefit of Lenders, for the
Letter of Credit Accommodations.
(e) Borrower shall indemnify and hold Agents and
Lenders harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses which any Agent or
Lender may suffer or incur in connection with any Letter of
Credit Accommodations and any documents, drafts or acceptances
relating thereto, including, but not limited to, any losses,
claims, damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent with respect to any
Letter of Credit Accommodation. Borrower assumes all risks with
respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such
purposes the drawer or beneficiary shall be deemed Borrower's
agent. Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Agents and
Lenders harmless from and against any acts, waivers, errors,
delays or omissions, whether caused by Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation, except for any losses, claims,
damages, liabilities, costs and expenses suffered by Borrower as
a result of the gross negligence or willful misconduct of Agents
and Lenders as determined pursuant to final non-appealable order
of a court of competent jurisdiction. The provisions of this
Section 2.2(e) shall survive the payment of Obligations and the
termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or
construed to grant Borrower any right or authority to pledge the
credit of Agents or Lenders in any manner. Agents and Lenders
shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Agents or
Lenders unless Collateral Agent has duly executed and delivered
to such issuer the application or a guarantee or indemnification
in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any interpretation made in good faith
by Collateral Agent, or any other issuer or correspondent under
or in connection with any Letter of Credit Accommodation or any
documents, drafts or acceptances thereunder, notwithstanding that
such interpretation may be inconsistent with any instructions of
Borrower.
(i) Collateral Agent shall have the sole and
exclusive right and authority to, and Borrower shall not at any
time an Event of Default exists or has occurred and is
continuing, (A) approve or resolve any questions of non-
compliance of documents, (B) give any instructions as to
acceptance or rejection of any documents or goods, or (C) execute
any and all applications for steamship or airway guaranties,
indemnities or delivery orders, or (D) grant any extensions of
the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents, or (E) agree to any
amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents,
drafts or acceptances thereunder or any letters of credit
included in the Collateral.
(ii) Borrower may, with the consent of
Collateral Agent, so long as no Event of Default exists or has
occurred and is continuing, (A) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any
drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents,
drafts or acceptances thereunder or any letters of credit
included in the Collateral. Collateral Agent may take such
actions under clause (i) or clause (ii) above either in its own
name, Lenders' name, or in Borrower's name.
(g) Any rights, remedies, duties or obligations
granted or undertaken by Borrower to any issuer or correspondent
in any application for any Letter of Credit Accommodation, or any
other agreement in favor of any issuer or correspondent relating
to any Letter of Credit Accommodation, shall be deemed to have
been granted or undertaken by Borrower to Collateral Agent, for
the ratable benefit of Lenders. Any duties or obligations
undertaken by Collateral Agent to any issuer or correspondent in
any application for any Letter of Credit Accommodation, or any
other agreement by Collateral Agent in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrower to Collateral
Agent, for the ratable benefit of Lenders, and to apply in all
respects to Borrower.
PRIVATE 2.3 Commitments tc \l 2 "2.3 Commitments" .
The aggregate amount of each Lender's share of the Loans and
Letter of Credit Accommodations shall not exceed the amount set
forth below such Lender's signature on the signature pages
hereto, as the same may from time to time be amended with the
written acknowledgment of Administrative Agent. Such amount set
forth below each Lender's signature on the signature pages hereto
is referred to herein as such Lender's "Commitment".
PRIVATE SECTION 3. INTEREST AND FEES tc \l 1 "SECTION 3.
INTEREST AND FEES"
PRIVATE 3.1 Interest tc \l 2 "3.1 Interest" .
(a) Borrower shall pay to Collateral Agent, for the
benefit of Lenders, interest on the outstanding principal amount
of the non-contingent Obligations at the rate equal to two and
one-half (2 1/2%) percent per annum in excess of the Reference
Rate, except that, upon the request of the Majority Lenders,
without notice, Borrower shall pay to Collateral Agent, for the
benefit of Lenders, interest at the rate three (3%) percent per
annum greater than the rate otherwise payable as provided above:
(i) on the non-contingent Obligations for (A) the period from
and after the date of termination hereof until such time as
Collateral Agent has received full and final payment of all such
Obligations on behalf of Lenders (notwithstanding entry of any
judgment against Borrower), and (B) the period from and after the
date of the occurrence of an Event of Default for so long as such
Event of Default is continuing as determined by Administrative
Agent and (ii) on the Loans at any time outstanding in excess of
the Borrowing Base (whether or not such excess(es), arise or are
made with or without either Agent's knowledge or consent and
whether made before or after an Event of Default). All interest
accruing hereunder on and after the date of any Event of Default
or termination or non-renewal hereof shall be payable on demand.
(b) Interest shall be payable by Borrower to
Collateral Agent, for the benefit of Lenders, monthly in arrears
not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed. The interest rate shall increase or
decrease by an amount equal to each increase or decrease in the
Reference Rate effective on the first day of the month after any
change in such Reference Rate is announced based on the Reference
Rate in effect on the last day of the month in which any such
change occurs. No agreements, conditions, provisions or
stipulations contained in this Agreement or any of the other
Financing Agreements or any Event of Default, or the exercise by
any Agent or Lender of the right to accelerate the payment or the
maturity of all or any portion of the Obligations, or the
exercise by any Agent or Lender of any option whatsoever
contained in this Agreement or any of the other Financing
Agreements, or the prepayment by Borrower of any of the
Obligations, or the occurrence of any event or contingency
whatsoever, shall entitle Agents and Lenders to contract for,
charge or receive, in any event, interest exceeding the Maximum
Interest Rate. In no event shall Borrower be obligated to pay
interest exceeding such Maximum Interest Rate. All agreements,
conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel
Borrower to pay a rate of interest exceeding the Maximum Interest
Rate shall be without binding force or effect, at law or in
equity, to the extent of the excess of interest over such Maximum
Interest Rate. In the event any interest is contracted for,
charged or received in excess of the Maximum Interest Rate
("Excess"), Borrower acknowledges and
stipulates that any such contract, charge or receipt shall be the
result of an accident and bona fide error, and that any Excess
received by any Agent or Lender shall be applied, first, to the
payment of the then outstanding and unpaid principal hereunder;
second, to the payment of the other Obligations then outstanding
and unpaid; and third, returned to Borrower, it being the intent
of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Borrower recognizes that, with
fluctuations in the rate of interest set forth in Section 3.1 of
this Agreement and the Maximum Interest Rate, such an
unintentional result could inadvertently occur. By the execution
of this Agreement, Borrower agrees that (i) the credit or return
of any Excess shall constitute the acceptance by Borrower of such
Excess, and (ii) Borrower shall not seek or pursue any other
remedy, legal or equitable, against any Agent or Lender, based in
whole or in part upon contracting for, charging or receiving of
any interest in excess of the Maximum Interest Rate. For the
purpose of determining whether or not any Excess has been
contracted for, charged or received by any Agent or Lender, all
interest at any time contracted for, charged or received by any
Agent or Lender in connection with this Agreement or any of the
other Financing Agreements shall be amortized, prorated,
allocated and spread during the entire term of this Agreement in
accordance with the amounts outstanding from time to time
hereunder and the Maximum Interest Rate from time to time in
effect in order to lawfully charge the maximum amount of interest
permitted under applicable law.
PRIVATE 3.2 Closing Fee tc \l 2 "3.2 Closing Fee" .
Borrower shall pay to Collateral Agent, for the benefit of
Lenders, as a closing fee the amount of one and one-quarter (1
1/4%) percent of the Maximum Credit which shall be fully earned
as of and payable on the date hereof (less any amounts paid by
Borrower to either Agent as a commitment fee upon the issuance by
Agents of a commitment letter to Borrower in connection with the
financing arrangements provided for herein).
PRIVATE 3.3 Servicing Fee tc \l 2 "3.3 Servicing
Fee" . Borrower shall pay to Collateral Agent, for the benefit
of Lenders, monthly a servicing fee in an amount equal to $5,000
for each month (or part thereof) while this Agreement is in
effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be fully earned as of and payable in
advance on the date hereof and on the first day of each month
hereafter.
PRIVATE SECTION 4. CONDITIONS PRECEDENT tc \l 1 "SECTION 4.
CONDITIONS PRECEDENT"
PRIVATE 4.1 Conditions Precedent to Initial Loans and
Letter of Credit Accommodations tc \l 2 "4.1 Conditions
Precedent to Initial Loans and Letter of Credit Accommodations" .
Each of the following is a condition precedent to Lenders (or
Collateral Agent on behalf of Lenders) making the initial Loans
and providing the initial Letter of Credit Accommodations
hereunder:
(a) Agents shall have received, in form and
substance satisfactory to each Agent, all releases, terminations
and such other documents as such Agent may request to evidence
and effectuate the termination by Societe Generale and the other
lenders under the existing credit facility provided by Societe
Generale and such other lenders to Borrower and Guarantor and the
termination and release by them of any interest in and to any
assets and properties of Borrower and each Obligor, duly
authorized, executed and delivered by it, including, but not
limited to, UCC termination statements for all UCC financing
statements previously filed by it or its predecessors, as secured
party and Borrower or any Obligor, as debtor;
(b) Agents shall have received evidence, in form and
substance satisfactory to each Agent, that Collateral Agent, for
itself and the ratable benefit of Lenders, has valid perfected
and first priority security interests in and liens upon the
Collateral and any other property which is intended to be
security for the Obligations or the liability of any Obligor in
respect thereof, subject only to the security interests and liens
permitted herein or in the other Financing Agreements;
(c) all requisite corporate action and proceedings
in connection with this Agreement and the other Financing
Agreements shall be satisfactory in form and substance to each
Agent, and each Agent shall have received all information and
copies of all documents, including, without limitation, records
of requisite corporate action and proceedings which such Agent
may have requested in connection therewith, such documents where
requested by such Agent or its counsel to be certified by
appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred
in the assets, business or prospects of Borrower since the date
of Collateral Agent's latest field examination and no change or
event shall have occurred which would impair the ability of
Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a
party or of Agents to enforce the Obligations or realize upon the
Collateral;
(e) Collateral Agent shall have completed a field
review of the Records and such other information with respect to
the Collateral as Collateral Agent and Administrative Agent may
require to determine the amount of Loans available to Borrower
including, without limitation, current agings of receivables,
current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing, together with
such supporting documentation as may be necessary or appropriate,
and other documents and information that will enable Collateral
Agent to accurately identify and verify the Collateral, the
results of which shall be satisfactory to each Agent, not more
than three (3) Business Days prior to the date hereof;
(f) Borrower shall have established the Blocked
Accounts and Agents shall have received, in form and substance
satisfactory to each Agent, all agreements with the depository
banks and Borrower with respect to such Blocked Accounts as such
Agent may require pursuant to Section 6.3 hereof, duly
authorized, executed and delivered by such depository banks and
Borrower;
(g) Agents shall have received evidence, in form and
substance satisfactory to each Agent, that Borrower has
(i) directed the banks at which Borrower maintains deposit
accounts for the initial receipt of cash, checks and other items
from Borrower's retail store locations to transfer all
immediately available funds deposited in such bank only to the
Blocked Accounts as required pursuant to Section 6.3 hereof or as
otherwise directed by Administrative Agent and (ii) notified such
banks of the security interests of Collateral Agent in such funds
and the other Collateral;
(h) Agents shall have received Credit Card
Acknowledgements in each case, duly authorized, executed and
delivered by American Express Travel Related Services Company,
Inc., Novus Services, Inc. and EFS National Bank;
(i) the Excess Availability as determined by
Collateral Agent, as of the date hereof, shall not be less than
$3,000,000 after giving effect to the initial Loans made or to be
made and Letter of Credit Accommodations issued or to be issued
in connection with the initial transactions hereunder;
(j) Agents shall received, in form and substance to
each Agent, an agreement by and among Term Loan Lender, Agents
and Lenders, as acknowledged and agreed to by Borrower and
Guarantor, duly authorized, executed and delivered by Term Loan
Lender, Borrower and Guarantor;
(k) Agents shall have received, in form and
substance satisfactory to each Agent, the Term Loan Agreement,
duly authorized, and delivered by Term Loan Lender, Borrower and
Guarantor;
(l) Agents shall have received evidence, in form and
substance satisfactory to each Agent, that Borrower has received
not less than $60,000,000 of gross proceeds from the initial term
loans by Term Loan Lender to Borrower pursuant to the Term Loan
Agreement;
(m) Agents shall have received evidence, in form and
substance satisfactory to each Agent, that all of the Series H
Preferred Stock of Guarantor (together with all warrants issued
in connection therewith) have been redeemed and cancelled with a
portion of the proceeds of the initial term loans by Term Loan
Lender to Borrower pursuant to the Term Loan Agreement of not
more than $15,800,000, and that Borrower and Guarantor have no
further obligations or liabilities in respect of such Capital
Stock or any agreement related thereto;
(n) Agents shall have received evidence of insurance
and loss payee endorsements required hereunder and under the
other Financing Agreements, in form and substance satisfactory to
each Agent, and certificates of insurance policies and/or
endorsements naming Collateral Agent as loss payee;
(o) Agents shall have received, in form and
substance satisfactory to each Agent, the opinion letter of
counsel(s) to Borrower with respect to the Financing Agreements
and the security interests and liens of Collateral Agent with
respect to the Collateral and such other matters as either Agent
may request; and
(p) the other Financing Agreements and all
instruments and documents hereunder and thereunder shall have
been duly executed and delivered to Agents, in form and substance
satisfactory to each Agent.
PRIVATE 4.2 Conditions Precedent to All Loans and Letter
of Credit Accommodations tc \l 2 "4.2 Conditions Precedent to
All Loans and Letter of Credit Accommodations" . Each of the
following is an additional condition precedent to Loans and
Letters of Credit Accommodation to Borrower, including the
initial Loans and Letter of Credit Accommodations and any future
Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained
herein and in the other Financing Agreements shall be true and
correct in all respects with the same effect as through such
representations and warranties had been made on and as of the
date of the making of each such Loan or providing each such
Letter of Credit Accommodations and after giving effect thereto,
except to the extent that such representations and warranties
expressly related solely to an earlier date (in which case such
representations and warranties shall have been true and accurate
on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of
any Governmental Authority shall, and neither of Agents nor any
Lender shall have received any notice that any action, suit,
investigation, litigation or proceeding is pending or threatened
in any court or before any arbitrator or Governmental Authority
which (i) purports to enjoin, prohibit, restrain or otherwise
affect (A) the making of the Loans or (B) the consummation of the
transactions contemplated pursuant to the terms hereof of the
Financing Agreements or (ii) has or could reasonably be expected
to have a Material Adverse Effect; and
(c) no Event of Default and no act, condition or
event which, with notice or passage of time or both, would
constitute an Event of Default, shall exist or have occurred and
be continuing on and as of the date of the making of such Loan or
providing each such Letter of Credit Accommodations and after
giving effect thereto.
PRIVATE SECTION 5. SECURITY INTEREST tc \l 1 "SECTION 5.
SECURITY INTEREST"
5.1 To secure payment and performance of all Obligations,
Borrower hereby grants to Collateral Agent, for itself and the
ratable benefit of Lenders, a continuing security interest in, a
lien upon, and a right of set off against, and hereby assigns to
Collateral Agent, for itself and the ratable benefit of Lenders,
as security, the following property and interests in property of
Borrower, whether now owned or hereafter acquired or existing,
and wherever located (collectively, the "Collateral"):
(a) Accounts;
(b) all present and future contract rights, general
intangibles (including, but not limited to, tax and duty refunds,
registered and unregistered patents, trademarks, service marks,
copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer
lists, prescription files, licenses, whether as licensor or
licensee, choses in action and other claims and existing and
future leasehold interests in equipment, real estate and
fixtures), chattel paper, documents, instruments, securities and
other investment property, credit card sales drafts, credit card
sales slips or charge slips or receipts and other forms of store
receipts, letters of credit, bankers' acceptances and guaranties;
(c) all present and future monies, credit balances,
deposits, deposit accounts and other property of Borrower now or
hereafter held or received by or in transit to any Agent, Lender
or its Affiliates or at any other depository or other institution
from or for the account of Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies,
title and interest in, to and in respect of Accounts and other
Collateral, including, without limitation, (i) rights and
remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance
related to the Collateral, (ii) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies
of an unpaid vendor, lienor or secured party, (iii) goods
described in invoices, documents, credit card sales drafts,
credit card sales slips or charge slips or receipts and other
forms of store receipts, contracts or instruments with respect
to, or otherwise representing or evidencing, Accounts or other
Collateral, including, without limitation, returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account
debtors or other persons securing the obligations of account
debtors;
(d) Inventory;
(e) Equipment at any time and from time to time at
the locations set forth on Schedule 1.34 hereto;
(f) Records; and
(g) all products and proceeds of the foregoing, in
any form, including, without limitation, insurance proceeds and
all claims against third parties for loss or damage to or
destruction of any or all of the foregoing.
5.2 Notwithstanding anything to the contrary set forth in
Section 5.1 above, the types or items of Collateral described in
such Section shall not include any lease of a new retail store
location of Borrower entered into after the date hereof (but not
including for this purpose any new lease or extension or renewal
of an existing lease of any existing retail store location).
PRIVATE SECTION 6. COLLECTION AND ADMINISTRATION tc \l 1
"SECTION 6. COLLECTION AND ADMINISTRATION"
PRIVATE 6.1 Borrower's Loan Account tc \l 2 "6.1
Borrower's Loan Account" . Collateral Agent shall maintain one
or more loan account(s) on its books in which shall be recorded
(a) all Loans, Letter of Credit Accommodations and other
Obligations and the Collateral, (b) all payments made by or on
behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All
entries in the loan account(s) shall be made in accordance with
Collateral Agent's customary practices as in effect from time to
time.
PRIVATE 6.2 Statements tc \l 2 "6.2 Statements" .
Collateral Agent shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s)
maintained by such Agent for Borrower pursuant to the provisions
of this Agreement, including principal, interest, fees, costs and
expenses. Each such statement shall be subject to subsequent
adjustment by Collateral Agent but shall, absent manifest errors
or omissions, be considered correct and deemed accepted by
Borrower and conclusively binding upon Borrower as an account
stated except to the extent that Collateral Agent receives a
written notice from Borrower of any specific exceptions of
Borrower thereto within thirty (30) days after the date such
statement has been mailed by Collateral Agent. Until such time
as Collateral Agent shall have rendered to Borrower a written
statement as provided above, the balance in Borrower's loan
account(s) shall be presumptive evidence of the amounts due and
owing to Agents and Lenders by Borrower.
PRIVATE 6.3 Collection of Accounts tc \l 2 "6.3
Collection of Accounts" .
(a) Borrower shall establish and maintain, at its
expense, deposit account arrangements and merchant payment
arrangements with the banks set forth on Schedule 6.3 hereto and
after prior written notice to Agents, subject to Section 9.20,
such other banks as Borrower may hereafter select as are
acceptable to each Agent. The banks set forth on Schedule 6.3
constitute all of the banks with whom Borrower has deposit
account arrangements and merchant payment arrangements as of the
date hereof and identifies each of the deposit accounts at such
banks to a retail store location of Borrower or otherwise
describes the nature of the use of such deposit account by
Borrower.
(i) Borrower shall deposit all proceeds from
sales of Inventory in every form, including, without limitation,
cash, checks, credit card sales drafts, credit card sales or
charge slips or receipts and other forms of daily store receipts,
from each retail store location of Borrower on each Business Day
into the deposit accounts of Borrower used solely for such
purpose and identified to each retail store location as set forth
on Schedule 6.3. All such funds deposited into the separate
deposit accounts shall be sent through the automated clearing
house network (ACH) or by wire transfer on a daily basis, or in
any event not later than the next Business Day after the deposit
thereof in such deposit accounts of Borrower, and all other
proceeds of Collateral shall be sent by wire transfer, to the
Blocked Accounts as provided in Section 6.3(a)(ii) below.
Borrower shall irrevocably authorize and direct in writing, in
form and substance satisfactory to each Agent, each of the banks
into which proceeds from sales of Inventory from each retail
store location of Borrower are at any time deposited as provided
above to send all funds deposited in such account by wire
transfer or through the automated clearing house network (ACH) on
a daily basis to the Blocked Accounts. Such authorization and
direction shall not be rescinded, revoked or modified without the
prior written consent of Agents.
(ii) Borrower shall establish and maintain, at
its expense, deposit accounts with such banks as are acceptable
to each Agent (the "Blocked Accounts") into which Borrower shall
promptly either cause all amounts on deposit in its deposit
accounts used by each retail store location to be sent as
provided in Section 6.3(a)(i) above or shall itself deposit or
cause to be deposited all proceeds from sales of Inventory, all
amounts payable to Borrower from Credit Card Issuers and Credit
Card Processors and all other proceeds of Collateral. The banks
at which the Blocked Accounts are established shall enter into an
agreement, in form and substance satisfactory to each Agent,
providing that all items received or deposited in the Blocked
Accounts are the property of Collateral Agent, for itself and the
ratable benefit of Lenders, that the depository bank has no lien
upon, or right of setoff against the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on
deposit therein (other than for customary bank charges that may
be permitted to be setoff under such agreement among Collateral
Agent, Borrower and such bank with respect to such Blocked
Account) and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all
funds received or deposited into the Blocked Accounts to such
bank account of Collateral Agent, as Collateral Agent may from
time to time designate for such purpose ("Payment Account").
Borrower agrees that all amounts deposited in such Blocked
Accounts or other funds received and collected by Collateral
Agent, whether as proceeds of Inventory or other Collateral or
otherwise shall be the property of Collateral Agent, for the
ratable benefit of itself and Lenders to the extent of the
security interests of Collateral Agent therein.
(b) For purposes of calculating interest on the
Obligations, such payments or other funds received will be
applied (conditional upon final collection) to the Obligations
one (1) Business Day following the date of receipt of immediately
available funds by Collateral Agent in the Payment Account (the
"Collection Period"). For purposes of calculating the amount of
the Loans available to Borrower such payments will be applied
(conditional upon final collection) to the Obligations on the
Business Day of receipt by Collateral Agent in the Payment
Account, if such payments are received within sufficient time (in
accordance with Collateral Agent's usual and customary practices
as in effect from time to time) to credit Borrower's loan account
on such day, and if not, then on the next Business Day.
(c) Borrower and all of its employees, agents and
Subsidiaries shall, acting as trustee for Collateral Agent,
receive, as the property of Collateral Agent, any cash, checks,
credit card sales drafts, credit card sales or charge slips or
receipts, notes, drafts, all forms of store receipts or any other
payment relating to and/or proceeds of Accounts or other
Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or
cause the same to be deposited in the Blocked Accounts, or remit
the same or cause the same to be remitted, in kind, to Collateral
Agent, provided, that, if at any time Excess Availability during
the period from and including the first (1st) day of any month to
and including the tenth (10th) day of such month shall be less
than $4,800,000, or Excess Availability during the period from
and including the eleventh (11th) day of any month to and
including the twentieth (20th) day of such month shall be less
than $6,200,000, or Excess Availability during the period from
and including the twenty-first (21st) day of any month to and
including the last day of such month shall be less than
$3,400,000, Borrower shall promptly upon the request of either
Agent (i) cause the portion thereof representing excise taxes,
sales taxes and/or use taxes payable in connection with such
sales or otherwise, and any amounts then and thereafter held by
Borrower in connection with the sale of lottery tickets or the
sale of money orders to be deposited into a separate bank account
or accounts established for such purpose (unless and until
Administrative Agent shall request otherwise) and (ii) provide
Collateral Agent each week with a report of the amount of
estimated excise taxes, sales taxes and/or use taxes payable in
connection with all sales during the immediately preceding week
(which estimate shall be within five (5%) percent of the actual
amount payable). In the event Borrower shall fail to so
establish such separate bank account or accounts upon either
Agent's request, without limiting any other rights or remedies of
Agents and Lenders, Collateral Agent may establish reserves with
respect to the liabilities of Borrower in connection with such
taxes and sales of lottery tickets and money orders. In no event
shall and such cash, checks, credit card sales drafts, credit
card sales or charge slips or receipts, notes, drafts or other
payments be commingled with Borrower's own funds. Borrower
agrees to reimburse Collateral Agent on demand for any amounts
owed or paid to any bank at which a Blocked Account is
established or any other bank or person involved in the transfer
of funds to or from the Blocked Accounts arising out of
Collateral Agent's payments to or indemnification of such bank or
person. The obligation of Borrower to reimburse Collateral Agent
for such amounts pursuant to this Section 6.3 shall survive the
termination or non-renewal of this Agreement.
PRIVATE 6.4 Mandatory Prepayments tc \l 2 "6.4
Mandatory Prepayments" . In the event that the aggregate amount
of the Loans and the Letter of Credit Accommodations outstanding
at any time shall exceed the Borrowing Base, or the aggregate
amount of the outstanding Letter of Credit Accommodations exceed
the sublimit for Letter of Credit Accommodations set forth in
Section 2.3(d), or the aggregate amount of the Loans and the
Letter of Credit Accommodations outstanding at any time shall
exceed the Maximum Credit, such event shall not limit, waive or
otherwise affect any rights of Agents and Lenders in that
circumstance or on any future occasions and Borrower shall, upon
demand by either Agent, which may be made at any time or from
time to time, immediately pay to Collateral Agent, for the
ratable benefit of Lenders, the entire amount of any such
excess(es) for which payment is demanded or provide cash
collateral up to such amount as may be required by Collateral
Agent.
PRIVATE 6.5 Payments tc \l 2 "6.5 Payments" . All
Obligations shall be payable to the Payment Account as provided
in Section 6.3 or such other place as Collateral Agent may
designate from time to time. Collateral Agent may apply payments
received or collected from Borrower or for the account of
Borrower (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the
Obligations, whether or not then due, in such order and manner as
Collateral Agent determines. Collateral Agent may, at its
option, and shall upon the direction of Administrative Agent,
charge all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing
Agreements directly to the loan account(s) of Borrower. Borrower
shall make all payments to Agents and Lenders, on the Obligations
free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes,
levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the
Obligations, any Agent or Lender is required to surrender or
return such payment or proceeds to any Person for any reason,
then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or
proceeds had not been received by such Agent or Lender. Borrower
shall be liable to pay to Collateral Agent, for the ratable
benefit of Lenders, and does hereby indemnify and hold Agents and
Lenders harmless for the amount of any payments or proceeds
surrendered or returned. This Section 6.5 shall remain effective
notwithstanding any contrary action which may be taken by any
Agent or Lender in reliance upon such payment or proceeds. This
Section 6.5 shall survive the payment of the Obligations and the
termination of this Agreement.
PRIVATE 6.6 Authorization to Make Loans tc \l 2 "6.6
Authorization to Make Loans" . Collateral Agent is authorized to
make the Loans and provide the Letter of Credit Accommodations,
for the account and risk of Lenders, based upon telephonic or
other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the
discretion of Collateral Agent, if such Loans are necessary to
satisfy any Obligations. All requests for Loans or Letter of
Credit Accommodations hereunder shall specify the date on which
the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day)
and the amount of the requested Loan. Requests received after
11:00 a.m. Dallas time on any day shall be deemed to have been
made as of the opening of business on the immediately following
Business Day. All Loans and Letter of Credit Accommodations
under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, Borrower
when deposited to the credit of Borrower or otherwise disbursed
or established in accordance with the instructions of Borrower or
in accordance with the terms and conditions of this Agreement.
PRIVATE 6.7 Use of Proceeds tc \l 2 "6.7 Use of
Proceeds" . Borrower shall use the initial proceeds of the Loans
provided by Collateral Agent or any Lender to Borrower hereunder
only for: (a) payments to each of the Persons listed in the
disbursement direction letter furnished by Borrower to Agents on
or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements.
All other Loans made or Letter of Credit Accommodations provided
by Collateral Agent or any Lender to Borrower pursuant to the
provisions hereof shall be used by Borrower only for general
operating, working capital and other proper corporate purposes of
Borrower not otherwise prohibited by the terms hereof. None of
the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the
purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or
for any other purpose which might cause any of the Loans to be
considered a "purpose credit" within the meaning of Regulation G
of the Board of Governors of the Federal Reserve System, as
amended.
PRIVATE 6.8 Sharing of Payments, Etc. tc \l 2 "6.8
Sharing of Payments, Etc."
(a) Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or
counterclaim any Agent or Lender may otherwise have, each Lender
shall be entitled, at its option (but subject, as among Agents
and Lenders, to the provisions of Section 12.3(b) hereof), to
offset balances held by it for the account of Borrower at any of
its offices, in dollars or in any other currency, against any
principal of or interest on any Loans owed to such Lender or any
other amount payable to such Lender hereunder, that is not paid
when due (regardless of whether such balances are then due to
Borrower), in which case it shall promptly notify Borrower and
Agents thereof; provided, that, such Lender's failure to give
such notice shall not affect the validity thereof.
(b) If any Lender (including either Agent) shall
obtain from Borrower payment of any principal of or interest on
any Loan owing to it or payment of any other amount under this
Agreement or any other Financing Agreement through the exercise
of any right of setoff, banker's lien or counterclaim or similar
right or otherwise (other than from Collateral Agent as provided
herein), and, as a result of such payment, such Lender shall have
received more than its Pro Rata Share of the principal of the
Loans or more than its share of such other amounts then due
hereunder or thereunder by Borrower to such Lender than the
percentage thereof received by any other Lender, it shall
promptly pay to Collateral Agent, for the benefit of Lenders, the
amount of such excess and simultaneously purchase from such other
Lenders a participation in the Loans or such other amounts,
respectively, owing to such other Lenders (or such interest due
thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end
that all Lenders shall share the benefit of such excess payment
(net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) in accordance with
their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate
adjustments among themselves (by the resale of participation sold
or otherwise) if such payment is rescinded or must otherwise be
restored.
(c) Borrower agrees that any Lender so purchasing
such a participation (or direct interest) may exercise, in a
manner consistent with this Section 6.8, all rights of setoff,
banker's lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender were a direct
holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.
(d) Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of
any Lender to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness or
obligation of Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured
claim in lieu of a setoff to which this Section 6.8 applies, such
Lender shall, to the extent practicable, assign such rights to
Collateral Agent for the benefit of Lenders and, in any event,
exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section
6.8 to share in the benefits of any recovery on such secured
claim.
PRIVATE 6.9 Settlement Procedures tc \l 2 "6.9
Settlement Procedures" .
(a) In order to administer the Credit Facility in an
efficient manner and to minimize the transfer of funds between
Agents and Lenders, Collateral Agent may, subject to the terms of
this Section 6.9, make available, on behalf of Lenders, the full
amount of the Loans requested or charged to Borrower's loan
account(s) or otherwise to be advanced by Lenders pursuant to the
terms hereof, without any requirement of prior notice to Lenders
of the proposed Loans.
(b) With respect to all Loans made by Collateral
Agent on behalf of Lenders as provided in this Section 6.9, the
amount of each Lender's Pro Rata Share of the outstanding Loans
shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as
of 5:00 p.m. New York City time on the Business Day immediately
preceding the date of each settlement computation; provided,
that, Collateral Agent retains the absolute right at any time or
from time to time to make the above described adjustments at
intervals more frequent than weekly, but in no event more than
twice in any week. Collateral Agent shall deliver to each of the
Lenders after the end of each week, or at such lesser period or
periods as Collateral Agent shall determine (subject to the
consent of Administrative Agent), a summary statement of the
amount of outstanding Loans for such period (such week or lesser
period or periods being hereinafter referred to as a "Settlement
Period"). If the summary statement is sent by Collateral Agent
and received by a Lender prior to 2:00 p.m. York City time, then
such Lender shall make the settlement transfer described in this
Section by no later than 2:00 p.m. New York City time on the next
Business Day following the date of receipt. If, as of the end of
any Settlement Period, the amount of a Lender's Pro Rata Share of
the outstanding Loans is more than such Lender's Pro Rata Share
of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later
than the time set forth in the preceding sentence) transfer to
Collateral Agent by wire transfer in immediately available funds
the amount of the increase. Alternatively, if the amount of a
Lender's Pro Rata Share of the outstanding Loans in any
Settlement Period is less than the amount of such Lender's Pro
Rata Share of the outstanding Loans for the previous Settlement
Period, Collateral Agent shall forthwith transfer to such Lender
by wire transfer in immediately available funds the amount of the
decrease. The obligation of each of the Lenders to transfer such
funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Collateral
Agent. Each of Agents and Lenders agrees to mark its books and
records at the end of each Settlement Period to show at all times
the dollar amount of its Pro Rate Share of the outstanding Loans
and Letter of Credit Accommodations. Each Lender shall only be
entitled to receive interest on its Pro Rata Share of the Loans
to the extent such Loans have been funded by such Lender.
Because the Collateral Agent on behalf of Lenders may be
advancing and/or may be repaid Loans prior to the time when
Lenders will actually advance and/or be repaid such Loans,
interest with respect to Loans shall be allocated by Collateral
Agent in accordance with the amount of Loans actually advanced by
and repaid to each Lender and the Collateral Agent and shall
accrue from and including the date such Loans are so advanced to
but excluding the date such Loans are either repaid by Borrower
or actually settled with the applicable Lender as described in
this Section 6.9.
(c) To the extent that Collateral Agent has made any
such amounts available and the settlement described above shall
not yet have occurred, upon repayment of any Loans by Borrower,
Collateral Agent may apply such amounts repaid directly to any
amounts made available by Collateral Agent pursuant to this
Section 6.9. In lieu of weekly or more frequent settlements,
Collateral Agent may at any time require each Lender to provide
Collateral Agent with immediately available funds representing
its Pro Rata Share of each Loan, prior to Collateral Agent's
disbursement of such Loan to Borrower. In such event, all Loans
under this Agreement shall be made by the Lenders simultaneously
and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other
Lender's obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender be increased or decreased as a
result of the default by any other Lender in the other Lender's
obligation to make a Loan hereunder.
(d) If Collateral Agent is not funding a particular
Loan pursuant to Section 6.9(a) above on any day, Collateral
Agent may assume that each Lender will make available to
Collateral Agent such Lender's Pro Rata Share of the Loan
requested or otherwise made on such day and Collateral Agent may,
in its discretion, but shall not obligated to, cause a
corresponding amount to be made available to Borrower on such
day. If Collateral Agent makes such corresponding amount
available to Borrower and such corresponding amount is not in
fact made available to Collateral Agent by such Lender,
Collateral Agent shall be entitled to recover such corresponding
amount on demand from such Lender together with interest thereon
for each day from the date such payment was due until the date
such amount is paid to Collateral Agent at the interest rate
provided for in Section 3.1 hereof. During the period in which
such Lender has not paid such corresponding amount to Collateral
Agent, notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, the amount so
advanced by Collateral Agent to a Borrower shall, for all
purposes hereof, be a Loan made by Collateral Agent for its own
account. Upon any such failure by a Lender to pay Collateral
Agent, Collateral Agent shall promptly thereafter notify Borrower
of such failure and the Borrower shall immediately pay such
corresponding amount to Collateral Agent for its own account. A
Lender who fails to pay Collateral Agent its Pro Rata Share of
any Loans made available by the Collateral Agent on such Lender's
behalf, or any Lender who fails to pay any other amount owing by
its Collateral Agent, is a "Defaulting Lender". Collateral Agent
shall not be obligated to transfer to a Defaulting Lender any
payments made by or on behalf of Borrower or any Obligor to
Collateral Agent for the Defaulting Lender's benefit, nor shall a
Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead
be paid to or retained by Collateral Agent. Collateral Agent may
hold and, in its discretion, relend to Borrower the amount of all
such payments received or retained by it for the account of such
Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting
Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0). This Section shall
remain effective with respect to a Defaulting Lender until such
default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any
Lender, or relieve or excuse the performance by Borrower or any
Obligor of their duties and obligations hereunder.
(e) Nothing in this Section 6.9 or elsewhere in this
Agreement or the other Financing Agreements shall be deemed to
require Collateral Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by any Lender
hereunder in fulfilling its Commitment.
PRIVATE SECTION 7. COLLATERAL REPORTING AND COVENANTS tc \l
1 "SECTION 7. COLLATERAL REPORTING AND COVENANTS"
PRIVATE 7.1 Collateral Reporting tc \l 2 "7.1
Collateral Reporting" .
(a) Borrower shall provide Collateral Agent with the
following documents in a form satisfactory to Collateral Agent:
(i) on a monthly basis, or at any time an Event
of Default exists or has occurred and is continuing more
frequently as Collateral Agent may request, (A) monthly
rollforward inventory reports, reports as to shrinkage, purchase
product mix reports, reports of gasoline sales and merchandise
sales and margins for sales of merchandise and gasoline,
(B) reports of accounts payable, (C) reports on excise and sales
and use tax collections, deposits and payments, including monthly
sales and use tax accruals, (D) reports of amounts of consigned
Inventory held by Borrower by category and consignor, and (E) a
schedule of Accounts by category, credits issued and cash
received,
(ii) on a weekly basis, or at any time an Event
of Default exists or has occurred and is continuing more
frequently as Collateral Agent may request, (A) weekly
rollforward inventory reports (including a report of merchandise
sales and gasoline sales), (B) reports of sales of Inventory,
indicating gross sales and net sales, (C) reports of aggregate
Inventory purchases (including all costs related thereto), and
(D) reports of amounts received and held by Borrower in
connection with sales of lottery tickets and money orders and
payables related to the handling of lottery tickets and money
orders by Borrower,
(iii) upon Collateral Agent's reasonable
request, (A) copies of customer statements and credit memos,
remittance advices and reports, and copies of deposit slips and
bank statements, (B) copies of shipping and delivery documents,
(C) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower and (D) reports
by retail store location of sales and operating profits for each
such retail store location,
(iv) upon Collateral Agent's request, the
monthly statements received by Borrower from any Credit Card
Issuers or Credit Card Processors, together with such additional
information with respect thereto as shall be sufficient to enable
Agents to monitor the transactions pursuant to the Credit Card
Agreements, and
(v) such other reports as to the Collateral as
either Agent may reasonably request from time to time.
(b) If any of Borrower's records or reports of the
Collateral are prepared or maintained by an accounting service,
contractor, shipper or other agent, Borrower hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Collateral Agent
and to follow Collateral Agent's instructions with respect to
further services at any time that an Event of Default exists or
has occurred and is continuing.
PRIVATE 7.2 Accounts Covenants tc \l 2 "7.2 Accounts
Covenants" .
(a) Borrower shall notify Collateral Agent promptly
of (i) the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, Credit Card Issuer or Credit
Card Processor or any disputes with any of such persons or any
settlement, adjustment or compromise thereof and (ii) all
material adverse information relating to the financial condition
of any account debtor, Credit Card Issuer or Credit Card
Processor. No credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any
account debtor, Credit Card Issuer or Credit Card Processor
except in the ordinary course of Borrower's business in
accordance with the current practices of Borrower as in effect on
the date hereof. So long as no Event of Default exists or has
occurred and is continuing, Borrower shall settle, adjust or
compromise any claim, offset, counterclaim or dispute with any
account debtor, Credit Card Issuer, Credit Card Processor. At
any time that an Event of Default exists or has occurred and is
continuing, Collateral Agent shall, at its option (but only with
the consent of Administrative Agent), have the exclusive right to
settle, adjust or compromise any claim, offset, counterclaim or
dispute with account debtors, Credit Card Issuers or Credit Card
Processors or grant any credits, discounts or allowances.
(b) Borrower shall notify Collateral Agent promptly
of: (i) any notice of a material default by Borrower under any
of the Credit Card Agreements or of any default which might
result in the Credit Card Issuer or Credit Card Processor ceasing
to make payments or suspending payments to Borrower, (ii) any
notice from any Credit Card Issuer or Credit Card Processor that
such person is ceasing or suspending, or will cease or suspend,
any present or future payments due or to become due to Borrower
from such person, or that such person is terminating or will
terminate any of the Credit Card Agreements, and (iii) the
failure of Borrower to comply with any material terms of the
Credit Card Agreements or any terms thereof which might result in
the Credit Card Issuer or Credit Card Processor ceasing or
suspending payments to Borrower.
(c) With respect to each Account: (i) the amounts
shown on any invoice delivered to Collateral Agent or schedule
thereof delivered to Collateral Agent shall be true and complete,
(ii) no payments shall be made thereon except payments delivered
to Collateral Agent, for the ratable benefit of Lenders, pursuant
to the terms of this Agreement, (iii) no credit, discount,
allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor, Credit Card Issuer or
Credit Card Processor, except as reported to Collateral Agent in
accordance with this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of
Borrower's business in accordance with practices and policies
previously disclosed to Collateral Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to
Collateral Agent in accordance with the terms of this Agreement,
and (v) none of the transactions giving rise thereto will violate
any applicable State or Federal Laws or regulations, all
documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be
legally enforceable in accordance with its terms.
(d) Collateral Agent shall, upon the direction of
Administrative Agent, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any
or all account debtors, Credit Card Issuers and Credit Card
Processors that the Accounts have been assigned to Collateral
Agent and that Collateral Agent has a security interest therein
for itself and the ratable benefit of Lenders and Collateral
Agent shall, upon the direction of Administrative Agent, direct
any or all account debtors, Credit Card Issuers and Credit Card
Processors to make payments of Accounts directly to Collateral
Agent, (ii) extend the time of payment of, compromise, settle or
adjust for cash, credit, return of merchandise or otherwise, and
upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or
release the account debtor or any other party or parties in any
way liable for payment thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any
Accounts or such other obligations, but without any duty to do
so, and neither Agent nor any Lender shall be liable for its
failure to collect or enforce the payment thereof not for the
negligence of its agents or attorneys with respect thereto and
(iv) take whatever other action, or cause to be taken whatever
other action, Administrative Agent may deem necessary or
desirable for the protection of its interests. At any time that
an Event of Default exists or has occurred and is continuing, at
Administrative Agent's request, all invoices and statements sent
to any account debtor, Credit Card Issuer or Credit Card
Processor shall state that the Accounts due from such account
debtor, Credit Card Issuer or Credit Card Processor and such
other obligations have been assigned to Collateral Agent and are
payable directly and only to Collateral Agent and Borrower shall
deliver to Collateral Agent or its designee such originals of
documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as either
Agent may require.
(e) Agents shall have the right at any time or
times, in such Agent's name or in the name of a nominee of such
Agent, to verify the validity, amount or any other matter
relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(f) Borrower shall deliver or cause to be delivered
to Collateral Agent, with appropriate endorsement and assignment,
with full recourse to Borrower, all chattel paper and instruments
which Borrower now owns or may at any time acquire immediately
upon Borrower's receipt thereof, except as Collateral Agent may
otherwise agree.
PRIVATE 7.3 Inventory Covenants tc \l 2 "7.3 Inventory
Covenants" . With respect to the Inventory: (a) Borrower shall
at all times maintain inventory records in accordance with
Borrower's current practices as of the date hereof (which
practices as of the date hereof are satisfactory to Agents),
keeping correct and accurate records itemizing and describing the
kind, type and quantity of Inventory, Borrower's cost therefor
and daily withdrawals therefrom and additions thereto;
(b) Borrower shall conduct a physical count of the Inventory at
least once each year, but at any time or times an Event of
Default exists or has occurred and is continuing as either Agent
may request and, in each case promptly following such physical
inventory shall supply each Agent with a report in the form and
with such specificity as may be reasonably satisfactory to each
Agent concerning such physical count; (c) Borrower shall not
remove any Inventory from the locations set forth or permitted
herein, without the prior written consent of Collateral Agent,
except (i) for sales of Inventory in the ordinary course of
Borrower's business and except to move Inventory directly from
one location set forth or permitted herein to another such
location and (ii) so long as no Event of Default exists or has
occurred and is continuing, returns of Inventory to vendors in
the ordinary course of business; (d) upon the request of either
Agent, Borrower shall, at any time or times as such Agent may
request at such Agent's expense, or at any time or times an Event
of Default exists or has occurred and is continuing as such Agent
may request at Borrower's expense, deliver or cause to be
delivered to each Agent written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to each Agent
and by an appraiser acceptable to each Agent, addressed to each
Agent or upon which each Agent is expressly permitted to rely;
(e) Borrower shall, at its expense, conduct through an inventory
counting service acceptable to each Agent, a physical count of
the Inventory in form, scope and methodology acceptable to each
Agent to the extent and in a manner and with a frequency
consistent with the current practices of Borrower as of the date
hereof (provided, that, the retail store locations subject to
such counts shall be acceptable to Collateral Agent) and at any
time or times an Event of Default exists or has occurred and is
continuing as either Agent may request, and in either case, the
results of which shall be reported directly by such inventory
counting service to Agents and Borrower shall promptly deliver
confirmation in a form satisfactory to each Agent that
appropriate adjustments have been made to the inventory records
of Borrower to reconcile the inventory count to Borrower's
inventory records; (f) Borrower shall produce, use, store and
maintain the Inventory, with all reasonable care and caution and
in accordance with applicable standards of any insurance and in
conformity with applicable laws (including, but not limited to,
the requirements of the Federal Fair Labor Standards Act of 1938,
as amended and all rules, regulations and orders related
thereto); (g) Borrower assumes all responsibility and liability
arising from or relating to the production, use, sale or other
disposition of the Inventory; (h) Borrower shall not sell
Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate Borrower to
repurchase such Inventory except for the right of return given to
retail customers of Borrower in the ordinary course of the
business of Borrower in accordance with the then current return
policy of Borrower; (i) Borrower shall keep the Inventory in and
marketable condition; and (j) Borrower shall not acquire or
accept any Inventory on consignment or approval, except to the
extent such Inventory is reported to Collateral Agent in
accordance with the terms hereof.
PRIVATE 7.4 Equipment Covenants tc \l 2 "7.4 Equipment
Covenants" . With respect to the Equipment: (a) upon either
Agent's request, Borrower shall, at its expense, at any time or
times an Event of Default exists or has occurred and is
continuing, as such Agent may request, deliver or cause to be
delivered to each Agent written reports or appraisals as to the
Equipment in form, scope and methodology acceptable to
Administrative Agent and by an appraiser acceptable to
Administrative Agent addressed to each Agent and upon which each
Agent is expressly permitted to rely; (b) Borrower shall keep the
Equipment in order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) Borrower shall use the
Equipment with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with
all applicable laws; (d) the Equipment is and shall be used in
Borrower's business and not for personal, family, household or
farming use; (e) Borrower shall not remove any Equipment from the
locations set forth or permitted herein, except to the extent
necessary to have any Equipment repaired or maintained in the
ordinary course of the business of Borrower or to move Equipment
directly from one location set forth or permitted herein to
another such location and except for the movement of motor
vehicles used by or for the benefit of Borrower in the ordinary
course of business; provided, that, in no event shall Borrower
move any Equipment at any time now or hereafter at any of the
locations set forth on Schedule 1.34 hereto having an Appraised
Equipment Value of greater than $25,000 in the aggregate to any
location of Borrower which is part of the Term Loan Lender
Collateral or any other location which is not set forth on
Schedule 1.34 hereto; (f) the Equipment is now and shall remain
personal property and Borrower shall not permit any of the
Equipment to be or become a part of the Real Property or a
fixture; and (g) Borrower assumes all responsibility and
liability arising from the use of the Equipment.
PRIVATE 7.5 Power of Attorney tc \l 2 "7.5 Power of
Attorney" . Borrower hereby irrevocably designates and appoints
each Agent (and all persons designated by such Agent) as
Borrower's true and lawful attorney-in-fact, and authorizes each
Agent, in Borrower's or such Agent's name, to: (a) at any time an
Event of Default exists or has occurred and is continuing (i)
demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal
proceedings or otherwise, (iii) exercise all of Borrower's rights
and remedies to collect any Account or other Collateral,
(iv) sell or assign any Account upon such terms, for such amount
and at such time or times as Collateral Agent (with the consent,
or upon the direction, of Administrative Agent deems advisable,
(v) settle, adjust, compromise, extend or renew an Account,
(vi) discharge and release any Account, (vii) prepare, file and
sign Borrower's name on any proof of claim in bankruptcy or other
similar document against an account debtor, and (viii) do all
acts and things which are necessary, in either Agent's
determination, to fulfill Borrower's obligations under this
Agreement and the other Financing Agreements and (b) at any time
to (i) take control in any manner of any item of payment or
proceeds thereof deposited or received for credit to the Blocked
Accounts or constituting part of the Collateral or otherwise
received by any Agent or Lender, (ii) have access to any lockbox
or postal box to which remittances from account debtors or other
obligors in any respect of any Collateral are sent, (iii) endorse
Borrower's name upon any items of payment or proceeds thereof
deposited or received for credit to the Blocked Accounts or
constituting part of the Collateral or otherwise received by any
Agent or Lender and transfer the same to the Collateral Agent's
account for application to the Obligations, (iv) endorse
Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account
or any goods pertaining thereto or any other Collateral, (v) sign
Borrower's name on any verification of Accounts and notices
thereof to account debtors and (vi) execute in Borrower's name
and file any UCC financing statements covering any of the
Collateral or amendments thereto (provided, that, Collateral
Agent shall provide copies of any such UCC financing statements
or amendments executed by Collateral Agent pursuant to its rights
under this Section 7.5 to Borrower). Borrower hereby releases
Agents, Lenders and their officers, employees and designees from
any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or
commission, including, without limitation, as a result of any
Agent's or Lender's own negligence, except as a result of such
Agent's or Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of
competent jurisdiction.
PRIVATE 7.6 Right to Cure tc \l 2 "7.6 Right to
Cure" .
(a) Collateral Agent shall upon the direction of
Administrative Agent and at the option of Administrative Agent,
(i) cure any default by Borrower under any agreement with a third
party or pay or bond on appeal any judgment entered against
Borrower, and (ii) discharge taxes, liens, security interests or
other encumbrances at any time levied on or existing with respect
to the Collateral.
(b) Collateral Agent may, at its option, and shall
upon the direction of Administrative Agent, pay any amount, incur
any expense or perform any act which, in such Agent's judgment,
is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agents and Lenders with
respect thereto.
(c) Collateral Agent shall add any amounts so
expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand.
Agents shall be under no obligation to effect such cure, payment
or bonding and shall not, by doing so, be deemed to have assumed
any obligation or liability of Borrower. Any payment made or
other action taken by Collateral Agent under this Section shall
be without prejudice to any right to assert an Event of Default
hereunder and to proceed accordingly.
PRIVATE 7.7 Access to Premises tc \l 2 "7.7 Access to
Premises" . From time to time as requested by either Agent, at
the cost and expense of Borrower, (a) such Agent or its designee
shall have complete access to all of Borrower's premises during
normal business hours and after notice to Borrower, or at any
time and without notice to Borrower if an Event of Default exists
or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of
Borrower's books and records, including, without limitation, the
Records, and (b) Borrower shall promptly furnish to such Agent
such copies of such books and records or extracts therefrom as
such Agent may request, and (c) use during normal business hours
such of Borrower's personnel, equipment, supplies and premises as
may be reasonably necessary for the foregoing and if an Event of
Default exists or has occurred and is continuing for the
collection of Accounts and realization of other Collateral.
PRIVATE SECTION 8. REPRESENTATIONS AND WARRANTIES tc \l 1
"SECTION 8. REPRESENTATIONS AND WARRANTIES"
Borrower and Guarantor hereby jointly and severally
represent and warrant to Agents and Lenders the following (which
shall survive the execution and delivery of this Agreement), the
truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations to
Borrower:
PRIVATE 8.1 Corporate Existence, Power and Authority;
Subsidiaries tc \l 2 "8.1 Corporate Existence, Power and
Authority; Subsidiaries" . Each of Borrower, Guarantor and their
Subsidiaries is a corporation duly organized and in standing
under the laws of its state of incorporation and is duly
qualified as a foreign corporation and in standing in all states
or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such
qualification necessary, where the failure to so qualify would
have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and
the transactions contemplated hereunder and thereunder are all
within the corporate powers or Borrower and Guarantor, have been
duly authorized and are not in contravention of law or the terms
of the certificate of incorporation, by-laws, or other
organizational documentation of Borrower or Guarantor, or any
indenture, agreement or undertaking to which Borrower or
Guarantor is a party or by which Borrower or Guarantor or its
property are bound. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of
Borrower and Guarantor enforceable in accordance with their
respective terms, except as such enforceability may be limited by
any applicable bankruptcy, insolvency, reorganization,
moratorium, or similar law affecting creditors' rights generally
and by general principles of equity. Borrower and Guarantor do
not have any Subsidiaries except as set forth on Schedule 8.1
hereof.
PRIVATE 8.2 Financial Statements; No Material Adverse
Change. tc \l 2 "8.2 Financial Statements; No Material Adverse
Change." All financial statements relating to Borrower and
Guarantor which have been or may hereafter be delivered by
Borrower or Guarantor to Agents or Lenders have been prepared in
accordance with GAAP and fairly present the financial condition
and the results of operation of Borrower and Guarantor as at the
dates and for the periods set forth therein. Except as disclosed
in any interim financial statements furnished by Borrower or
Guarantor to Agents or Lenders prior to the date of this
Agreement, there has been no material adverse change in the
assets, liabilities, properties and condition, financial or
otherwise, of Borrower or Guarantor, since the December 31, 1996
audited financial statements of Borrower and Guarantor, furnished
by Borrower or Guarantor to Agents prior to the date of this
Agreement.
PRIVATE 8.3 Chief Executive Office; Collateral
Locations. tc \l 2 "8.3 Chief Executive Office; Collateral
Locations." The chief executive office of Borrower and
Borrower's Records concerning Accounts and Inventory are located
only at the address set forth below and its only other places of
business and the only other locations of Collateral, if any, are
the addresses set forth in Schedule 8.3 hereto, subject to the
right of Borrower to establish new locations in accordance with
Section 9.2 hereof. Schedule 8.3 hereto correctly identifies any
of such locations which are not owned by Borrower and sets forth
the owners and/or operators thereof.
PRIVATE 8.4 Priority of Liens; Title to Properties tc
\l 2 "8.4 Priority of Liens; Title to Properties" . The
security interests and liens granted to Administrative Agent, for
itself and the ratable benefit of Lenders, under this Agreement
and the other Financing Agreements constitute valid and perfected
first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on Schedule 8.4
hereto and the other liens permitted under Section 9.8 hereof.
Borrower has and marketable title to all of its properties and
assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those
granted to Collateral Agent, for itself and the ratable benefit
of Lenders, and such others as are specifically listed on
Schedule 8.4 hereto or permitted under Section 9.8 hereof.
PRIVATE 8.5 Tax Returns tc \l 2 "8.5 Tax Returns" .
Each of Borrower and Guarantor has filed, or caused to be filed,
in a timely manner all tax returns, reports and declarations
which are required to be filed by it (without requests for
extension except as previously disclosed in writing to Agents).
All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Each of Borrower
or Guarantor, as the case may be, has paid or caused to be paid
all taxes due and payable or claimed due and payable in any
assessment received by it, and has collected, deposited and
remitted in accordance with all applicable laws, all excise taxes
and all sales and/or use taxes applicable to the conduct of its
business, except taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and
available to Borrower or Guarantor, as the case may be, and with
respect to which adequate reserves have been set aside on its
books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not
disputed. Each of Borrower and Guarantor has collected and
remitted to the appropriate tax authority all excise taxes and
sales and/or use taxes applicable to its business required to be
collected and remitted under the laws of the United States and
each possession or territory thereof, and each State or political
subdivision thereof, including any State in which Borrower or
Guarantor owns any Inventory or owns or leases any other
property.
PRIVATE 8.6 Litigation tc \l 2 "8.6 Litigation" .
Except as set forth on Schedule 8.6 hereto, there is no present
investigation by any Governmental Authority pending, or to the
best of the knowledge of Borrower or Guarantor threatened,
against or affecting Borrower or Guarantor or its assets or
business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of the knowledge of Borrower or
Guarantor threatened, against Borrower or Guarantor or its assets
or will, or against or affecting any transactions contemplated by
this Agreement, which if adversely determined against Borrower or
Guarantor would have a Material Adverse Effect.
PRIVATE 8.7 Compliance with Other Agreements and
Applicable Laws tc \l 2 "8.7 Compliance with Other Agreements
and Applicable Laws" .
(a) Each of Borrower, Guarantor and their
Subsidiaries is not in default in any respect under, or in
violation in any respect of any of the terms of, any agreement,
contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound with respect
to which the default or violation of which would have a Material
Adverse Effect. Each of Borrower, Guarantor and their
Subsidiaries is in compliance with the requirements of all
applicable laws, rules, regulations and orders of any
Governmental Authority relating to its business, including,
without limitation, those set forth in or promulgated pursuant to
the Occupational Safety and Health Act of 1970, as amended, the
Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as
amended, and the rules and regulations thereunder, all Federal,
State and local statutes, regulations, rules and orders relating
to consumer credit (including, without limitation, as each has
been amended, the Truth-in-Lending Act, the Fair Credit Billing
Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act, and regulations, rules and orders promulgated
thereunder), all Federal, State and local statutes, regulations,
rules and orders pertaining to sales of consumer goods
(including, without limitation, the Consumer Products Safety Act
of 1972, as amended, and the Federal Trade Commission Act of
1914, as amended, and all regulations, rules and orders
promulgated thereunder) and all Environmental Laws with respect
to which the failure to comply would have a Material Adverse
Effect.
(b) Each of Borrower, Guarantor and their
Subsidiaries has obtained all permits, licenses, approvals,
consents, certificates, orders or authorizations of any
Governmental Authority (the "Permits") required for the lawful
conduct of its business which the failure to obtain would have a
Material Adverse Effect. The Permits constitute all permits,
licenses, approvals, consents, certificates, orders or
authorizations necessary for Borrower, Guarantor and their
Subsidiaries to own and operate its business as presently
conducted or proposed to be conducted with respect to which the
failure to have such Permits would have a Material Adverse
Effect. All of the Permits are valid and subsisting and in full
force and effect. There are no actions, claims or proceedings
pending or threatened that seek the revocation, cancellation,
suspension or modification of any of the Permits which would have
a Material Adverse Effect.
PRIVATE 8.8 Environmental Compliance. tc \l 2 "8.8
Environmental Compliance."
(a) Except as set forth on Schedule 8.8 hereto,
neither Borrower, Guarantor nor their Subsidiaries has generated,
used, stored, treated, transported, manufactured, handled,
produced or disposed of any Hazardous Materials, on or off its
premises (whether or not owned by it) in any manner which at any
time violates any applicable Environmental Law the violation of
which would have a Material Adverse Effect or violates any
license, permit, certificate, approval or similar authorization
issued to Borrower, Guarantor or such Subsidiary thereunder with
respect to which the violation thereof would have a Material
Adverse Effect. The operations of Borrower, Guarantor and their
Subsidiaries comply in all respects with all applicable
Environmental Laws and all licenses, permits, certificates,
approvals and similar authorizations thereunder with respect to
which the failure to comply therewith or the violation thereof
would have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 hereto,
(i) there is no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any Governmental
Authority or any other person pending or, to the best of the
knowledge of Borrower and Guarantor threatened, with respect to
any non-compliance with or violation of the requirements of any
applicable Environmental Law by Borrower, Guarantor and their
Subsidiaries which would have a Material Adverse Effect,
(ii) there has not been any release, spill or discharge of any
Hazardous Material on any properties of Borrower, Guarantor or
such Subsidiary, or to the best of the knowledge of Borrower and
Guarantor, releases, spills or discharges from any properties at
which Borrower, Guarantor or such Subsidiary have transported,
stored or disposed of any Hazardous Materials which would have a
Material Adverse Effect, and (iii) there has not been any
generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials or
any other environmental matter which affects Borrower or
Guarantor or its business, operations or assets in any manner
which would have a Material Adverse Effect.
(c) Except as set forth on Schedule 8.8 hereto,
neither Borrower, nor Guarantor nor any of their Subsidiaries has
any liability (contingent or otherwise) in connection with a
release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of
any Hazardous Materials which would have a Material Adverse
Effect.
(d) Each of Borrower, Guarantor and their
Subsidiaries has all licenses, certificates, approvals, similar
authorizations and other Permits required to be obtained or filed
in connection with the operations of Borrower, Guarantor and
their Subsidiaries under any Environmental Law and all of such
licenses, permits, certificates, approvals or similar
authorizations and other Permits are valid and in full force and
effect in each case where the failure to obtain or maintain such
licenses, permits, certificates, approvals or similar
authorizations would have a Material Adverse Effect.
PRIVATE 8.9 Credit Card Agreements tc \l 2 "8.9 Credit
Card Agreements" . Set forth on Schedule 8.9 hereto is a correct
and complete list of (a) all of the Credit Card Agreements and
all other agreements, documents and instruments existing as of
the date hereof between or among Borrower, any of its Affiliates,
the Credit Card Issuers, the Credit Card Processors and any of
their Affiliates, (b) the percentage of each sale payable to the
Credit Card Issuer or Credit Card Processor under the terms of
the Credit Card Agreements, (c) all other fees and charges
payable by Borrower under or in connection with the Credit Card
Agreements and (d) the term of such Credit Card Agreements. The
Credit Card Agreements constitute all of such agreements
necessary for Borrower to operate its business as presently
conducted with respect to credit cards and debit cards and no
Accounts of Borrower arise from purchases by customers of
Inventory with credit cards or debit cards, other than those
which are issued by Credit Card Issuers with whom Borrower has
entered into one of the Credit Card Agreements set forth on
Schedule 8.9 hereto or with whom Borrower has entered into a
Credit Card Agreement in accordance with Section 9.18 hereof.
Each of the Credit Card Agreements constitutes the legal, valid
and binding obligations of Borrower and to the best of Borrower's
knowledge, the other parties thereto, enforceable in accordance
with their respective terms and are in full force and effect,
except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
law affecting creditors' rights generally and by general
principles of equity. No default or event of default, or act,
condition or event which after notice or passage of time or both,
would constitute a default or an event of default under any of
the Credit Card Agreements exists or has occurred. Borrower and
the other parties thereto have complied with all of the terms and
conditions of the Credit Card Agreements to the extent necessary
for Borrower to be entitled to receive all payments thereunder.
Borrower has delivered, or caused to be delivered to Agents,
true, correct and complete copies of all of the Credit Card
Agreements.
PRIVATE 8.10 Employee Benefits tc \l 2 "8.10 Employee
Benefits" .
(a) No Borrower or Guarantor has engaged in any
transaction in connection with which either Borrower or Guarantor
or any of its ERISA Affiliates could be subject to either a civil
penalty assessed pursuant to ERISA or a tax imposed by the Code,
including any accumulated funding deficiency described in Section
8.10(c) hereof and any deficiency with respect to vested accrued
benefits described in Section 8.10(d) hereof.
(b) No liability to the Pension Benefit Guaranty
Corporation has been or is expected by Borrower or Guarantor to
be incurred with respect to any employee benefit plan of either
Borrower or Guarantor or any of its ERISA Affiliates which has or
would have a Material Adverse Effect. There has been no
reportable event (within the meaning of ERISA) or any other event
or condition with respect to any employee benefit plan of
Borrower or Guarantor or any of its ERISA Affiliates which
presents a risk of termination of any such plan by the Pension
Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which
either Borrower or Guarantor or any of its ERISA Affiliates is
required under ERISA and the Code to have paid under the terms of
each employee benefit plan as contributions to such plan as of
the last day of the most recent fiscal year of such plan ended
prior to the date hereof, and no accumulated funding deficiency
(as defined in ERISA and the Code), whether or not waived, exists
with respect to any employee pension benefit plan, including any
penalty or tax described in Section 8.10(a) hereof and any
deficiency with respect to vested accrued benefits described in
Section 8.10(d) hereof.
(d) The current value of all vested accrued benefits
under all employee pension benefit plans maintained by Borrower
or Guarantor that are subject to Title IV of ERISA does not
exceed the current value of the assets of such plans allocable to
such vested accrued benefits, including any penalty or tax
described in Section 8.10(a) hereof and any accumulated funding
deficiency described in Section 8.10(d) hereof. The terms
"current value" and "accrued benefit" have the meanings specified
in ERISA.
(e) Neither Borrower or Guarantor, nor any of its
ERISA Affiliates is or has ever been obligated to contribute to
any "multiemployer plan" (as such term is defined in ERISA) that
is subject to Title IV of ERISA.
PRIVATE 8.11 Bank Accounts tc \l 2 " 8.11 Bank
Accounts" . All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrower or Guarantor
maintained at any bank or other financial institution are set
forth on Schedule 6.3 hereto, subject to the right of Borrower
and Guarantor to establish new accounts in accordance with
Section 9.20 below.
PRIVATE 8.12 Intellectual Property tc \l 2 "8.12
Intellectual Property" . Each of Borrower and Guarantor owns or
licenses all material patents, trademarks, service-marks, logos,
trade names, trade secrets, know-how, copyrights, or licenses and
other rights with respect to any of the foregoing, which are
necessary for the operation of its business as presently
conducted or proposed to be conducted. To the best of the
knowledge of Borrowers and Guarantors, no product, process,
method, substance, part or other material presently contemplated
to be sold by or employed by any Borrower or Guarantor infringes
any patent, trademark, service-mark, trade name, copyright,
license or other right owned by any other Person in any manner
which would have a Material Adverse Effect and no claim or
litigation is pending or to the best of the knowledge of
Borrowers and Guarantors, threatened against or affecting any
Borrower or Guarantor contesting its right to sell or use any
such product, process, method, substance, part or other material
which would have a Material Adverse Effect.
PRIVATE 8.13 Financial Statements tc \l 2 "8.13
Financial Statements" .
(a) None of the financial statements, reports and
other information furnished or to be furnished by Borrower or
Guarantor to Agents or any Lender with respect to Guarantor and
its Subsidiaries contain, as of their respective dates, any
untrue statement of material fact or (taken as a whole) omit to
state any material fact necessary to make the information therein
not misleading. Such financial statements and reports were and
will be prepared in accordance with GAAP consistently applied
(other than those unaudited financial statements and reports
provided to Agents prior to the date hereof), and shall fairly
present the consolidated and consolidating financial condition
and results of operations of the applicable Persons, as of the
dates and for the periods indicated thereon.
(b) The pro forma balance sheets and future cash
flow projections for Guarantor and its Subsidiaries (together
with the summaries of assumptions and projected assumptions,
based on historical performance with respect thereto) furnished
by Guarantor and Borrower to Agents or any Lender prior to before
the date of this Agreement taken as a whole represent the
reasonable, good faith opinion of Guarantor, Borrower and their
management as to the subject matter thereof and the pro forma
balance sheets furnished by Guarantor and Borrower to any Agent
or Lender were prepared in accordance with applicable guidelines
of the American Institute of Certified Public Accountants.
PRIVATE 8.14 Disclosure tc \l 2 "8.14 Disclosure" .
(a) The information contained in the representations
and warranties of Borrower and Guarantor set forth in this
Agreement, the other Financing Agreements, or in any other
instrument, document, list, certificate, statement, schedule or
exhibit heretofore delivered or to be delivered to any Agent or
Lender, as contemplated in this Agreement or in the other
Financing Agreements, does not contain and will not contain any
untrue statement of a material fact and (taken as a whole) does
not omit and will not omit to state a material fact necessary in
order to make the information contained herein or therein not
misleading.
(b) After giving effect to the transactions
contemplated by this Agreement, the other Financing Agreements,
and the other instruments or documents delivered in connection
herewith and therewith, there does not exist and there has not
occurred any act, condition or event which constitutes an Event
of Default or which, with notice or passage of time or both would
constitute an Event of Default.
PRIVATE 8.15 Governmental Authority tc \l 2 "8.15
Governmental Authority" . No consent, approval or other action
of, or filing with, or notice to any Governmental Authority is
required in connection with the execution, delivery and
performance of this Agreement, the other Financing Agreements or
any of the instruments or documents to be delivered pursuant
hereto or thereto, except for those consents or approvals already
obtained by Borrower and Guarantor and the filing of UCC
financing statements.
PRIVATE 8.16 Capitalization tc \l 2 "8.16
Capitalization" .
(a) All of the issued and outstanding shares of
Capital Stock of Borrower are directly and beneficially owned and
held by Guarantor and all of such shares have been duly
authorized and are fully paid and non-assessable, free and clear
of all claims, liens, pledges and encumbrances of any kind,
except in favor of Collateral Agent, for itself and the ratable
benefit of Lenders, and as permitted hereunder.
(b) Borrower is solvent and will continue to be
solvent after the creation of the Obligations, the security
interests of Collateral Agent, for itself and the ratable benefit
of Lenders, and the other transactions contemplated hereunder, is
able to pay its debts as they mature and has (and has reason to
believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business and all
businesses in which it is about to engage. The assets and
properties of Borrower at a fair valuation and at their present
fair salable value are, and will be, greater than the
Indebtedness and other liabilities of Borrower, and including
subordinated and contingent liabilities computed at the amount
which, to the best of the knowledge of Borrower, represents an
amount which can reasonably be expected to become an actual or
matured liability.
PRIVATE 8.17 Labor Disputes tc \l 2 "8.17 Labor
Disputes" . There is no collective bargaining agreement or other
labor contract covering employees of Borrower, Guarantor or their
Subsidiaries as of the date hereof, except as set forth on
Schedule 8.17 hereto. There is no pending or threatened strike,
work stoppage, material unfair labor practice claims, or other
labor dispute against or affecting Borrower or its Subsidiaries
or their respective employees which would have a Material Adverse
Effect.
PRIVATE 8.18 Corporate Name; Prior Transactions tc \l 2
"8.18 Corporate Name; Prior Transactions" . Borrower has not,
during the past five (5) years, been known by or used any other
corporate or fictitious name or been a party to any merger or
consolidation, or acquired all or substantially all of the assets
of any Person, or acquired any of its property or assets out of
the ordinary course of business, except as set forth on Schedule
8.18 hereto.
PRIVATE 8.19 Accuracy and Completeness of Information tc
\l 2 "8.19 Accuracy and Completeness of Information" . All
information furnished by or on behalf of Borrower or Guarantor in
writing to Agents or Lenders in connection with this Agreement or
any of the other Financing Agreements or any transaction
contemplated hereby or thereby, is true and correct in all
material respects on the date as of which such information is
dated or certified and does not omit any material fact necessary
in order to make such information not misleading. No event or
circumstance has occurred which has had or could reasonably be
expected to have a Material Adverse Effect, which has not been
fully and accurately disclosed to Agents or Lenders in writing.
PRIVATE 8.20 Survival of Warranties; Cumulative tc \l 2
"8.20 Survival of Warranties; Cumulative" . All representations
and warranties contained in this Agreement or any of the other
Financing Agreements shall survive the execution and delivery of
this Agreement and shall be deemed to have been made again to
Agents and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agents and Lenders regardless
of any investigation made or information possessed by Agents and
Lenders. The representations and warranties set forth herein
shall be cumulative and in addition to any other representations
or warranties which Borrower shall now or hereafter give, or
cause to be given, to Agents and Lenders.
PRIVATE SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS tc \l
1 "SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS"
PRIVATE 9.1 Maintenance of Existence tc \l 2 "9.1
Maintenance of Existence" . Each of Borrower and Guarantor
shall, and shall cause its Subsidiaries to, at all times
preserve, renew and keep in full force and effect its corporate
existence and rights and franchises with respect thereto and
maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and
Permits necessary to carry on the business as presently or
proposed to be conducted, except for those cases in which the
failure to preserve, renew, or keep in full force and effect any
of the foregoing would not have a Material Adverse Effect. Each
of Borrower and Guarantor shall, and shall cause its Subsidiaries
to, give Collateral Agent thirty (30) days prior written notice
of any proposed change in its corporate name, which notice shall
set forth the new name and Borrower and Guarantor shall deliver
to Collateral Agent a copy of the amendment to the Certificate of
Incorporation of Borrower, Guarantor or such Subsidiary providing
for the name change certified by the Secretary of State of the
jurisdiction of incorporation of Borrower, Guarantor or such
Subsidiary as soon as it is available.
PRIVATE 9.2 New Collateral Locations tc \l 2 "9.2 New
Collateral Locations" . Each of Borrower and Guarantor may open
any new location within the continental United States provided
Borrower or Guarantor (a) gives Collateral Agent twenty (20) days
prior written notice of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed
and delivered, to Collateral Agent such agreements, documents,
and instruments as Collateral Agent may deem reasonably necessary
or desirable to protect the interest of Collateral Agent, for
itself and the ratable benefit of Lenders, in the Collateral at
such location, including UCC financing statements with respect to
the Collateral.
PRIVATE 9.3 Compliance with Laws, Regulations, Etc tc
\l 2 "9.3 Compliance with Laws, Regulations, Etc" .
(a) Each of Borrower and Guarantor shall, and shall
cause its Subsidiaries, at all times, to comply in all respects
with all laws, rules, regulations, licenses, approvals, orders
and Permits applicable to it and duly observe all requirements of
any Federal, State or local Governmental Authority, including the
Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, ERISA, the Code and all
statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and
safety, including all of the Environmental Laws in each case in
which the failure to so comply has or would have a Material
Adverse Effect.
(b) Borrower and Guarantor shall establish and
maintain, and shall cause its Subsidiaries to establish and
maintain, at its expense, a system to assure and monitor its
continued compliance with all applicable Environmental Laws in
all of its operations. Upon the request of either Agent, copies
of any environmental surveys, audits, assessments, feasibility
studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by Borrower to such Agent.
Borrower shall take prompt and appropriate action to respond to
any material non-compliance with any of the Environmental Laws
and shall regularly report to each Agent on such response.
(c) Borrower and Guarantor shall give both oral and
written notice to each Agent promptly after the receipt by
Borrower or Guarantor of any notice of, or Borrower's or
Guarantor's otherwise obtaining knowledge of, (i) the occurrence
of any event involving the release, spill or discharge,
threatened or actual, of any Hazardous Material in violation of
any Environmental Law which would have a Material Adverse Effect
or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by
Borrower or Guarantor which would have a Material Adverse Effect
or (B) the release, spill or discharge, threatened or actual, of
any Hazardous Material which would have a Material Adverse Effect
or (C) the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous
Materials which would have a Material Adverse Effect or (D) any
other environmental, health or safety matter, which materially
adversely effects Borrower, Guarantor or its business, operations
or assets or any properties at which Borrower or Guarantor
transported, stored or disposed of any Hazardous Materials.
(d) Without limiting the generality of the
foregoing, whenever either Agent reasonably determines that there
is any non-compliance, or any condition which requires any action
by or on behalf of Borrower or Guarantor in order to avoid any
non-compliance with any Environmental Law in each case in which
non-compliance would have a Material Adverse Effect, Borrower and
Guarantor shall, at such Agent's reasonable request and
Borrower's expense: (i) cause an independent environmental
engineer acceptable to such Agent to conduct such tests of the
site where Borrower's or Guarantor's non-compliance or alleged
non-compliance with such Environmental Laws has occurred as to
such non-compliance and prepare and deliver to Lender a report as
to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii)
provide to each Agent a supplemental report of such engineer
whenever the scope of such non-compliance, or Borrower's or
Guarantor's response thereto or the estimated costs thereof,
shall change in any material respect.
(e) Borrower and Guarantor shall indemnify and hold
harmless Agents, Lenders, their directors, officers, employees,
agents, invitees, representatives, successors and assigns, from
and against any and all losses, claims, damages, liabilities,
costs, and expenses (including reasonable attorneys' fees and
legal expenses) arising out of or attributable to the use,
generation, manufacture, reproduction, storage, release,
threatened release, spill, discharge, disposal or presence of a
Hazardous Material on any of the Real Property, including the
costs of any repair, cleanup or other remedial work required
under any Environmental Law or by any governmental authority with
respect to such property of Borrower or Guarantor and the
preparation and implementation of any closure, remedial or other
required plans except for such losses, claims, damages,
liabilities, costs or expenses as a result of the gross
negligence or wilful misconduct of such Agent or Lender as
determined pursuant to a final non-appealable order of a court of
competent jurisdiction. All representations, warranties,
covenants and indemnifications in this Section 9.3 shall survive
the payment of the Obligations and the termination of this
Agreement.
PRIVATE 9.4 Payment of Taxes and Claims tc \l 2 "9.4
Payment of Taxes and Claims" . Each of Borrower and Guarantor
shall, and shall cause its Subsidiaries to, duly pay and
discharge all taxes, assessments, contributions and governmental
charges upon or against it or its properties or assets, except
for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to
Borrower, Guarantor or such Subsidiary, as the case may be, and
with respect to which adequate reserves have been set aside on
its books. Borrower shall be liable for any tax or penalties
imposed on any Agent or Lender as a result of the financing
arrangements provided for herein and Borrower agrees to indemnify
and hold Agents and Lenders harmless with respect to the
foregoing, and to repay to Agents and Lenders on demand the
amount thereof, and until paid by Borrower such amount shall be
added and deemed part of the Loans; provided, that, nothing
contained herein shall be construed to require Borrower to pay
any income or franchise taxes attributable to the income of
Agents or Lenders from any amounts charged or paid hereunder to
any Agent or Lender. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
PRIVATE 9.5 Insurance tc \l 2 "9.5 Insurance" . Each
of Borrower and Guarantor shall, and shall cause its Subsidiaries
to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses
and similarly situated. Such policies of insurance shall be
satisfactory to each Agent as to form, amount and insurer. Each
Agent acknowledges that such policies of insurance maintained by
Borrower and Guarantor delivered to Agents before the date hereof
are satisfactory as to form, amount and insurer. If such
policies are cancelled or expire, Borrower and Guarantor may
obtain new policies from different insurance companies so long as
such policies and insurance company are comparable to the
insurance policies and insurance company existing on the date
hereof regarding form, amount and insurer. Borrower shall
furnish certificates, policies or endorsements to each Agent as
such Agent shall require as proof of such insurance, and, if
Borrower fails to do so, Collateral Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower.
All policies shall provide for at least thirty (30) days prior
written notice to Collateral Agent of any cancellation or
reduction of coverage and that Collateral Agent may act as
attorney for Borrower, Guarantor or such Subsidiary in obtaining,
and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such
insurance. Borrower and Guarantor shall cause Collateral Agent
to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance
policies and Borrower and Guarantor shall obtain non-contributory
lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to each Agent. Such lender's
loss payable endorsements shall specify that the proceeds of such
insurance shall be payable to Collateral Agent, for the benefit
of Lenders, as its interests may appear and further specify that
Collateral Agent shall be paid regardless of any act or omission
by Borrower or any of its Affiliates. At its option,
Administrative Agent may direct Collateral Agent and Collateral
Agent shall upon such direction apply any insurance proceeds
received by Collateral Agent at any time to the cost of repairs
or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such
manner as Administrative Agent may determine or hold such
proceeds as cash collateral for the Obligations.
PRIVATE 9.6 Financial Statements and Other
Information tc \l 2 "9.6 Financial Statements and Other
Information" .
(a) Each of Borrower and Guarantor shall, and shall
cause its Subsidiaries to, keep proper books and records in which
true and complete entries shall be made of all dealings or
transactions of or in relation to the Collateral and the
businesses of Borrower, Guarantor and their Subsidiaries (if any)
in accordance with GAAP and Borrower and shall furnish or cause
to be furnished to each Agent: (i) within thirty-five (35) days
after the end of each fiscal month, monthly unaudited
consolidated financial statements of Guarantor and its
Subsidiaries, (including in each case balance sheets, statements
of income and loss, statements of cash flow and statements of
shareholders' equity) all in reasonable detail, fairly presenting
the financial position and the results of the operations of
Guarantor and its Subsidiaries as of the end of and through such
fiscal month, (ii) within forty-five (45) days after the end of
each fiscal quarter, quarterly unaudited consolidated financial
statements of Guarantor and its Subsidiaries (including in each
case, balance sheets, statements of income and loss, statements
of cash flow and statements of shareholders' equity) all in
reasonable detail, fairly presenting the financial position and
the results of operations of Guarantor and its Subsidiaries as of
the end of and through such fiscal quarter and (iii) within one
hundred twenty (120) days after the end of each fiscal year,
audited consolidated financial statements of Guarantor and its
Subsidiaries (including in each case balance sheets, statements
of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and
the results of the operations of Guarantor and its Subsidiaries
as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public accountants,
which accountants shall be an independent accounting firm
selected by Borrower and reasonably acceptable to each Agent,
that such financial statements have been prepared in accordance
with GAAP, and present fairly the results of operations and
financial condition of Guarantor and its Subsidiaries as of the
end of and for the fiscal year then ended.
(b) Borrower and Guarantor shall promptly notify
each Agent in writing of the details of (i) any loss, damage,
investigation, action, suit, proceeding or claim relating to the
Collateral or any other property which is security for the
Obligations having a value of $50,000 in any one case or $150,000
in the aggregate or which would have a Material Adverse Effect
and (ii) the occurrence of any Event of Default or act, condition
or event which, with the passage of time or giving of notice or
both, would constitute an Event of Default.
(c) Borrower and Guarantor shall promptly after the
sending or filing thereof furnish or cause to be furnished to
each Agent copies of all reports which Borrower or Guarantor
sends to its stockholders generally and copies of all reports and
registration statements which Borrower or Guarantor files with
the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.
(d) Without limiting the rights of Agents or Lenders
under any other provision of this Agreement, as soon as
available, but in any event not later than thirty-five (35) days
after the end of each calendar month, Borrower and Guarantor
shall deliver to each Agent, in form and substance satisfactory
to each Agent, in each case certified by the chief financial
officer of Borrower as true and correct: (i) a statement
confirming the payment of rent and other amounts due to owners
and lessors of real property used by Borrower in the immediately
preceding month, subject to year-end or periodic adjustments,
(ii) the addresses of all new retail store locations of Borrower
opened and existing retail store locations closed or sold, in
each case since the date of the most recent certificate delivered
to Agents containing the information required under this clause
(ii), or if no such certificate has been delivered, then since
the date hereof, and (iii) a report of any new deposit account,
investment accounts, security accounts or other accounts
established or used by Borrower and Guarantor with any bank or
other financial institution, including the Borrower or Guarantor
in whose name the account is maintained, the account number, the
name and address of the financial institution at which such
account is maintained, the purpose of such account and, if any,
the amount held in such account on or about the date of such
report.
(e) Borrower and Guarantor shall furnish or cause to
be furnished to each Agent such budgets, forecasts, projections
and other information respecting the Collateral and the business
of Borrower, as such Agent may, from time to time, reasonably
request. Agents and Lenders are hereby authorized to deliver a
copy of any financial statement or any other information relating
to the business of Borrower or Guarantor to any court or other
Governmental Authority requiring a copy or to any Participant or
assignee or prospective Participant or assignee. Borrower and
Guarantor hereby irrevocably authorize and direct all accountants
or auditors to deliver to each Agent, at Borrower's expense,
copies of the financial statements of Borrower and any reports or
management letters prepared by such accountants or auditors on
behalf of Borrower and to disclose to Agent such information as
they may have regarding the business of Borrower. Any documents,
schedules, invoices or other papers delivered to either Agent may
be destroyed or otherwise disposed of by such Agent one (1) year
after the same are delivered to such Agent, except as otherwise
designated by Borrower to such Agent in writing.
PRIVATE 9.7 Sale of Assets, Consolidation, Merger,
Dissolution, Etc tc \l 2 "9.7 Sale of Assets, Consolidation,
Merger, Dissolution, Etc" . Each of Borrower and Guarantor shall
not, and shall not permit its Subsidiaries to, directly or
indirectly:
(a) merge into or with or consolidate with any other
Person or permit any other Person to merge into or with or
consolidate with it, or
(b) sell, assign, lease, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any
other Person or any of its assets to any other Person, except
for:
(i) sales of Inventory in the ordinary course
of business;
(ii) the disposition of worn-out or obsolete
Equipment so long as (A) such sales do not involve Equipment
having an aggregate fair market value in excess of $250,000 for
all such Equipment disposed of during the term of this Agreement
and (B) on and after the time that the aggregate amount of the
Appraised Equipment Value of any or all of such Equipment
constituting Collateral so sold or otherwise disposed of exceeds
$100,000, Borrower shall (1) receive, and cause to be paid to
Collateral Agent, net cash proceeds from any such sale or other
disposition and (2) promptly notify Collateral Agent of each such
sale or other disposition;
(iii) sales by Borrower of assets in connection
with the sales of the retail store locations of Borrower listed
on Schedule 9.7 hereto consisting of the leasehold interests in
the premises of such store, the Equipment, fixtures and Inventory
located at such premises, in each case pursuant to the agreement
with respect to such sales listed on Schedule 9.7 (as in effect
on the date hereof), provided, that, (A) all proceeds of such
sales shall be paid to Collateral Agent for application to the
Obligations in such order and manner as Collateral Agent shall
determine and (B) all such sales shall have occurred by no later
than January 31, 1998;
(iv) sales or other dispositions after the date
hereof by Borrower of assets in connection with the closing or
sale of a retail store location of Borrower in the ordinary
course of Borrower's business which consist of leasehold
interests in the premises of such store, the Equipment, fixtures
and Inventory located at such premises (other than the sale of
retail store locations permitted under Section 9.7(b)(iii)
above); provided, that, as to each and all such sales, (A) on the
date of, and after giving effect to, any such sale, in any
calendar year, Borrower shall not have closed or sold retail
store locations accounting for more than ten (10%) percent of all
sales of Borrower in the immediately preceding twelve (12) month
period (provided, that, for purposes of this clause (iv)(A), the
sales of retail store locations by Borrower permitted under
Section 9.7(b)(iii) above shall not be included in the
calculation of (1) stores closed or sold or (2) the amount of the
sales of Borrower in the immediately preceding twelve (12) month
period), (B) each Agent shall have received not less than ten
(10) Business Days prior written notice of such sale, which
notice shall set forth in reasonable detail satisfactory to each
Agent, the parties to such sale or other disposition, the assets
to be sold or otherwise disposed of, the purchase price and the
manner of payment thereof and such other information with respect
thereto as such Agent may request, (C) as of the date of such
sale or other disposition and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or
passage of time would constitute an Event of Default, shall exist
or have occurred, (D) as of the date of such sale or other
disposition and after giving effect thereto, Excess Availability
shall be not less than the amount of Excess Availability as of
the close of business on the Business Day immediately prior to
such sale or other disposition (without regard for any
collections or other payments received, Loans made or other
transactions otherwise occurring as of the date of such sale or
other disposition, other than such sale or other disposition and
the proceeds thereof received by Collateral Agent as of such
date) and in any event, after giving effect to such sale or other
disposition, there shall be Excess Availability, (E) such sale
shall be on commercially reasonable prices and terms in a bona
fide arm's length transaction, and (F) any and all net proceeds
payable or delivered to Borrower in respect of such sale or other
disposition (other than as to Real Property or Equipment
constituting Term Loan Lender Collateral) shall be paid or
delivered, or caused to be paid or delivered, to Collateral
Agent, for the ratable benefit of Lenders, in accordance with the
terms of this Agreement either for application to the Obligations
in accordance with the terms hereof (except to the extent such
proceeds are required to be used to make a mandatory prepayment
of Indebtedness secured by a properly perfected first priority
security interest in the assets sold under the terms of the
agreements with respect to such Indebtedness, in which case, such
proceeds shall be applied to such Indebtedness secured thereby to
the extent permitted under Section 9.9(g) hereof) or to be held
by Collateral Agent as cash collateral for the Obligations on
terms and conditions acceptable to Collateral Agent, as
Administrative Agent shall direct;
(v) the issuance and sale by Guarantor of
Capital Stock of Guarantor after the date hereof; provided, that,
(A) each Agent shall have received not less than ten (10)
Business Days prior written notice of such issuance and sale by
Guarantor, which notice shall specify the parties to whom such
shares are to be sold, the terms of such sale, the total amount
which it is anticipated will be realized from the issuance and
sale of such stock and the net cash proceeds which it is
anticipated will be received by Guarantor from such sale,
(B) Guarantor shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other
payments in respect thereof, except that Guarantor may pay cash
dividends in respect of such Capital Stock on terms and
conditions and in amounts acceptable to each Agent so long as
each Agent shall have received, in form and substance
satisfactory to each Agent, an agreement in writing from the
holders of such shares of Capital Stock with respect to the
rights to payment and other rights of the holder of such shares,
(C) the terms of such Capital Stock, and the terms and conditions
of the purchase and sale thereof, shall not include any terms
that include any limitation on the right of Borrower to request
or receive Loans or Letter of Credit Accommodations or the right
of Borrower or Guarantor to amend or modify any of the terms and
conditions of this Agreement or any of the other Financing
Agreements or otherwise in any way relate to or affect the
arrangements of Borrower or Guarantor with Agents and Lenders or
are more restrictive or burdensome to Borrower or Guarantor than
the terms of any Capital Stock in effect on the date hereof
(after giving effect to the cancellation of the Series H
Preferred Stock of Guarantor), and (D) as of the date of such
issuance and sale and after giving effect thereto, no Event of
Default or act, condition or event which with notice or passage
of time or both would constitute an Event of Default shall exist
or have occurred;
(c) form or acquire any Subsidiaries; or
(d) wind up, liquidate or dissolve; or
(e) agree to do any of the foregoing.
PRIVATE 9.8 Encumbrances tc \l 2 "9.8 Encumbrances" .
Each of Borrower and Guarantor shall not, and shall not permit
its Subsidiaries to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or
properties, including, without limitation, the Collateral,
except:
(a) liens and security interests of Collateral Agent
for itself and the ratable benefit of Lenders;
(b) liens and security interests of Term Loan Lender
on the Term Loan Lender Collateral to secure the Indebtedness of
Borrower to Term Loan Lender permitted under Section 9.9 hereof;
(c) liens securing the payment of taxes, either not
yet overdue or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available
to Borrower, Guarantor or such Subsidiary, as the case may be,
and with respect to which adequate reserves have been set aside
on its books;
(d) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of
the business of Borrower, Guarantor or such Subsidiary, as the
case may be, to the extent: (i) such liens secure Indebtedness
which is not overdue or (ii) such liens secure Indebtedness
relating to claims or liabilities which are fully insured and
being defended at the sole cost and expense and at the sole risk
of the insurer or being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower,
Guarantor or such Subsidiary, as the case may be, in each case
prior to the commencement of foreclosure or other similar
proceedings and with respect to which adequate reserves have been
set aside on its books;
(e) zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of Real
Property which do not interfere in any material respect with the
use of such Real Property or ordinary conduct of the business of
Borrower, Guarantor or such Subsidiary, as the case may be, as
presently conducted thereon or materially impair the value of the
Real Property which may be subject thereto;
(f) pledges of cash or marketable securities of
Borrower to secure Hedging Obligations of Borrower made in the
ordinary course of the business of Borrower;
(g) purchase money security interests in Equipment
(including capital leases) and purchase money mortgages on real
estate arising after the date hereof to secure Indebtedness of
Borrower permitted under Section 9.9(g) hereof so long as such
security interests and mortgages do not apply to any property of
Borrower other than the Equipment or real estate so acquired, and
the Indebtedness secured thereby does not exceed the cost of the
Equipment or real estate so acquired, as the case may be;
(h) liens and security interests granted by Borrower
to CoreStates Bank, N.A. in any agreement with respect to Letter
of Credit Accommodations issued by CoreStates Bank, N.A. to
secure the obligations of Borrower to CoreStates Bank, N.A.
arising pursuant to such Letter of Credit Accommodation;
(i) liens or rights of setoff or credit balances of
Borrower with Credit Card Issuers, but not liens on or rights of
setoff against any other property or assets of Borrower pursuant
to the Credit Card Agreements (as in effect on the date hereof)
to secure the obligations of Borrower to the Credit Card Issuers
as a result of fees and chargebacks;
(j) deposits of cash with the owner or lessor of
premises leased and operated by Borrower in the ordinary course
of the business of Borrower to secure the performance by Borrower
of its obligations under the terms of the lease for such
premises; and
(k) the liens and security interests set forth on
Schedule 8.4 hereto.
PRIVATE 9.9 Indebtedness tc \l 2 "9.9 Indebtedness" .
Each of Borrower and Guarantor shall not, and shall not permit
any Subsidiary to, incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any Indebtedness,
except:
(a) the Obligations;
(b) Indebtedness arising in the ordinary course of
the business of Borrower in connection with worker's
compensation, unemployment insurance or other types of social
security benefits in each case consistent with the current
practices of Borrower as of the date hereof;
(c) Indebtedness of Borrower to the Term Loan Lender
evidenced by or arising under the Term Loan Agreement; provided,
that: (i) the aggregate principal amount of such Indebtedness
shall not exceed $60,000,000 (less the aggregate amount of all
repayments or repurchases of principal in respect thereof) plus
interest thereon at the rate set forth in the Term Loan Agreement
(as in effect on the date hereof), plus the principal amount of
any loans by Term Loan Lender to Borrower after the date hereof
to the extent the Indebtedness of Borrower to Term Loan Lender
arising pursuant to such Loans would otherwise be permitted under
Section 9.9(g) hereof, plus interest thereon, (ii) Collateral
Agent shall have received true, correct and complete copies of
the Term Loan Agreement and all other material agreements,
documents or instruments executed by Borrower and any Obligor
with, to or in favor of Term Loan Lender in connection therewith,
(iii) Borrower shall only make regularly scheduled payments of
principal and interest in respect of such Indebtedness, except
for prepayments by Borrower of any such Indebtedness, provided,
that, as to any such prepayment, each of the following conditions
is satisfied: (A) no Event of Default, or act, condition or
event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred,
(B) Borrower shall be in compliance with Section 9.14 hereof
after giving effect to such prepayment on a pro forma basis, and
(C) after giving effect to such prepayment, Excess Availability
shall be not less than $7,000,000, (iv) Borrower shall not,
directly or indirectly, amend, modify, alter or change the terms
of the Term Loan Agreement or any of the other agreements,
documents and instruments entered into in connection therewith,
except, that, Borrower may, after prior written notice to each
Agent, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to
reduce the interest rate or any fees in connection therewith, or
to make any covenants contained therein less restrictive or
burdensome as to Borrower or Guarantor, (v) Borrower shall
furnish to each Agent all notices or demands in connection with
such Indebtedness either received by Guarantor or Borrower or on
its or their behalf from the Term Loan Lender or on its behalf,
promptly after receipt thereof, or sent by Guarantor or Borrower
or on its or their behalf, the Term Loan Lender or any
representative or agent or other person acting on its behalf,
concurrently with sending thereof, as the case may be;
(d) Hedging Obligations of Borrower consisting of
interest rate protection obligations entered into by Borrower in
the ordinary course of the business of Borrower consistent with
the current practices of Borrower as of the date hereof;
(e) Indebtedness of Borrower existing as of the date
hereof consisting of contingent reimbursement obligations to
Societe Generale in the event of a draw on any of the Existing
Letters of Credit;
(f) unsecured Indebtedness of Borrower to any of its
Subsidiaries after the date hereof pursuant to loans by such
Subsidiaries to Borrower, provided, that, (i) such Indebtedness
is subject to, and subordinate in right of payment to, the right
of Agents and Lenders to receive the prior indefeasible payment
and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Administrative Agent,
(ii) Administrative Agent shall have received, in form and
substance satisfactory to Administrative Agent, a subordination
agreement providing for the terms of the subordination in right
of payment of such Indebtedness of Borrower to the prior
indefeasible payment and satisfaction in full of all of the
Obligations, duly authorized, executed and delivered by such
Subsidiaries and Borrower, (iii) Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect
of such Indebtedness so long as any of the Obligations are
outstanding and unpaid, (iv) Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change any terms of such
Indebtedness or any agreement, document or instrument related
thereto, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and (v) Borrower shall furnish
to each Agent all notices, demands or other materials in
connection with such Indebtedness either received by Borrower or
on its behalf, promptly after receipt thereof, or sent by
Borrower or on its behalf, concurrently with the sending thereof,
as the case may be;
(g) Indebtedness of Borrower arising after the date
hereof in connection with loans by, or capital leases from, a
financial institution to Borrower based on the value of, and
secured only by, a purchase money security interest in Equipment
or fixtures of Borrower or a purchase money mortgage on Real
Property, in each case acquired after the date hereof; provided,
that, as to any such Indebtedness, (i) each Agent shall have
received not less than ten (10) Business Days prior written
notice of the intention to incur such Indebtedness, which notice
shall set forth in reasonable detail satisfactory to each Agent,
the amount of such Indebtedness, the person to whom such
Indebtedness will be owed, the interest rate, the schedule of
repayments and maturity date with respect thereto and such other
information with respect thereto as either Agent may request,
(ii) Collateral Agent shall have received true, correct and
complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly
authorized, executed and delivered by the parties thereto,
(iii) such Indebtedness shall be incurred by Borrower at
commercially reasonable rates and terms in a bona fide arm's
length transaction, (iv) such Indebtedness shall not at any time
include terms and conditions which in any manner adversely affect
Agents or Lenders or any rights of Agents or Lenders as
determined in good faith by Agents or which are more restrictive
or burdensome than the terms or conditions of any other
Indebtedness of Borrower (taken as a whole) as in effect on the
date hereof; (v) such Indebtedness shall only be secured by the
Equipment or fixtures or Real Property, as the case may be,
purchased with the proceeds of the loans giving rise to such
Indebtedness to the extent the security interests in such
Equipment or fixtures, or Real Property, as the case may be, is
permitted under Section 9.8(g) hereof, (vi) as of the date of
incurring such Indebtedness and after giving effect thereto, no
Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default
shall exist or have occurred, (vii) the aggregate amount of such
Indebtedness incurred after the date hereof for the purpose of
purchasing Equipment, fixtures or Real Property to be used at new
retail locations of Borrower established after the date hereof
shall not exceed $10,000,000 and the aggregate amount of such
Indebtedness incurred after the date hereof for any other purpose
shall not exceed $5,000,000, (viii) Borrower shall be in
compliance with Section 9.14 hereof after giving effect to such
Indebtedness on a pro forma basis by adding the Interest Expense
and scheduled mandatory payments of principal in respect of such
Indebtedness payable during the first full fiscal quarter of
Borrower after such Indebtedness has been incurred by Borrower to
the Fixed Charges of Borrower in the immediately preceding full
fiscal quarter of Borrower, (ix) Borrower may only make regularly
scheduled payments of principal and interest in respect of such
Indebtedness, except that in the event Borrower may sell or
otherwise dispose of such Equipment, fixtures or Real Property,
as the case may be, to the extent permitted under Section 9.7(b)
hereof, Borrower may use the proceeds from such sale or other
disposition to make a mandatory prepayment of the Indebtedness
secured by a properly perfected security interest or mortgage in
the assets sold, provided, that, to the extent that the proceeds
of such sale or other disposition are less than the amount of the
mandatory prepayment required to be made by Borrower under the
terms of the agreements with respect to such Indebtedness by more
than $500,000, Borrower may make payment of such additional
amounts so required to be prepaid so long as after giving effect
to such prepayment Excess Availability shall be not less than
$7,000,000 (x) Borrower shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of the agreements
with respect to such Indebtedness or (B) redeem, retire, defease,
purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and
(xi) Borrower shall furnish to each Agent all notices or demands
in connection with such Indebtedness either received by Borrower
or on its behalf, promptly after the receipt thereof, or sent by
Borrower or on its behalf, concurrently with the sending thereof,
as the case may be; and
(h) unsecured Indebtedness of Borrower or Guarantor
arising after the date hereof owing to any Person (other than
Borrower or Guarantor); provided, that, as to any such
Indebtedness, each of the following conditions is satisfied as
determined by Collateral Agent: (i) each Agent shall have
received not less than ten (10) Business Days prior written
notice of the intention to incur such Indebtedness, which notice
shall set forth in reasonable detail satisfactory to each Agent,
the amount of such Indebtedness, the person to whom such
Indebtedness will be owed, the interest rate and fees, the
schedule of repayments and maturity date with respect thereto and
such other information with respect thereto as either Agent may
request, (ii) Collateral Agent shall have received true, correct
and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly
authorized, executed and delivered by the parties thereof,
(iii) such Indebtedness shall be incurred by Borrower or
Guarantor at commercially reasonable rates and terms in a bona
fide arm's length transaction, (iv) such Indebtedness shall not
be owed to any shareholder, officer, director, agent, employee or
other Affiliate of Borrower or Guarantor, unless such
Indebtedness is subordinated in right of payment to the
indefeasible payment and satisfaction in full of the Obligations
and Administrative Agent shall have received a subordination
agreement, in form and substance satisfactory to Administrative
Agent, providing for such subordination and related matters, duly
authorized, executed and delivered by the person to whom such
Indebtedness is owed, Borrower and Guarantor, (v) as of the date
of incurring such Indebtedness, and after giving effect thereto,
no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default,
shall exist or have occurred, (vi) the aggregate principal amount
of all such Indebtedness outstanding at any time shall not exceed
$3,000,000, (vii) such Indebtedness shall not at any time include
terms and conditions which in any manner adversely affect Agents
or Lenders or any rights of Agents or Lenders as determined in
good faith by Agents or which are more restrictive or burdensome
than the terms or conditions of any other Indebtedness of
Borrower (taken as a whole) as in effect on the date hereof,
(viii) Borrower shall be in compliance with Section 9.14 hereof
after giving effect to such Indebtedness on a pro forma basis by
adding the Interest Expense and scheduled mandatory payments of
principal in respect of such Indebtedness payable during the
first full fiscal quarter of Borrower after such Indebtedness has
been incurred by Borrower to the Fixed Charges of Borrower in the
immediately preceding full fiscal quarter of Borrower, (ix)
Borrower or Guarantor may only make regularly scheduled payments
of principal and interest in respect of such Indebtedness,
(x) Borrower or Guarantor shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of the agreements
with respect to such Indebtedness, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose,
and (xi) Borrower and Guarantor shall furnish to each Agent all
notices or demands in connection with such Indebtedness either
received by Borrower or Guarantor or on its behalf promptly after
the receipt thereof, or sent by Borrower and Guarantor or on its
behalf, concurrently with the sending thereof, as the case may
be;
(i) contingent Indebtedness of Borrower to
CoreStates Bank, N.A. arising pursuant to any Letter of Credit
Accommodations issued by CoreStates Bank, N.A.;
(j) Indebtedness existing as of the date hereof set
forth on Schedule 9.9 hereto, provided, that, (i) Borrower or
Guarantor (as the case may be) may only make regularly scheduled
payments or mandatory prepayments of principal and interest in
respect of such Indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof (except that
Borrower may prepay the Indebtedness of up to $350,000 listed as
item IA in Schedule 9.9), (ii) Borrower or Guarantor shall not,
directly or indirectly, amend, modify, alter or change the terms
of the agreements, documents and instruments entered into in
connection therewith, except, that, Borrower or Guarantor may,
after prior written notice to each Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or
defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or
any fees in connection therewith, or to make any covenants
contained therein less restrictive or burdensome as to Borrower
or Guarantor, or (iii) Borrower or Guarantor shall not, directly
or indirectly redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose (except that Borrower may prepay
the Indebtedness of up to $350,000 listed as item IA in Schedule
9.9) and (iii) Borrower and Guarantor shall furnish to each Agent
all notices or demands in connection with such indebtedness
either received by Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by Borrower or
Guarantor or on its behalf, concurrently with the sending
thereof, as the case may be.
PRIVATE 9.10 Loans, Investments, Guarantees, Etc tc \l
2 "9.10 Loans, Investments, Guarantees, Etc" . Each of Borrower
and Guarantor shall not, and shall not permit its Subsidiaries
to, directly or indirectly, make any loans or advance money or
property to any Person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the Capital
Stock or Indebtedness or all or a substantial part of the assets
or property of any Person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the
Indebtedness, performance, obligations or dividends of any Person
or hold any cash or Cash Equivalents or agree to do any of the
foregoing, except:
(a) guarantees by any Subsidiaries of Borrower or
Guarantor of the Obligations in favor of Agents and Lenders or
any guarantees by Guarantor of Indebtedness of Borrower permitted
under Section 9.9 hereof;
(b) guarantees by Guarantor issued after the date
hereof in favor of trade suppliers of goods and services to
Borrower in the ordinary course of the business of Borrower of
the indebtedness of Borrower to such trade suppliers for
purchases of such goods or services in the ordinary course of
business consistent with the current practices of Borrower as of
the date hereof;
(c) the endorsement of instruments for collection or
deposit in the ordinary course of business;
(d) investments in cash or Cash Equivalents so long
as there are no Loans outstanding and such investments are
pledged and delivered to Collateral Agent upon Collateral Agent's
request;
(e) the existing equity investment of each of
Borrower and Guarantor as of the date hereof in its respective
Subsidiaries as of the date hereof;
(f) loans by any Subsidiary of Borrower to Borrower
to the extent the Indebtedness arising from such loans is
permitted under Section 9.9 above;
(g) stock or obligations issued to Borrower by any
Person (or the representative of such Person) in respect of
Indebtedness of such Person owing to Borrower in connection with
the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such
Person; provided, that, the original of any such stock or
instrument evidencing such obligations shall be promptly
delivered to Collateral Agent, upon Collateral Agent's request,
together with such stock power, assignment or endorsement by
Borrower as Collateral Agent may request;
(h) obligations or account debtors to Borrower
arising from Accounts which are past due evidenced by a
promissory note made by such account debtor payable to Borrower;
provided, that, promptly upon the receipt of the original of any
such promissory note by Borrower, such promissory note shall be
endorsed to the order of Collateral Agent, for itself and the
ratable benefit of Lenders, by Borrower and promptly delivered to
Collateral Agent as so endorsed;
(i) loans and advances by Borrower or its
Subsidiaries to employees of Borrower or its Subsidiaries not to
exceed the principal amount of $100,000 in the aggregate at any
time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such
employee in connection with their work for Borrower and
(ii) reasonable and necessary relocation expenses of such
employees (including home mortgage financing for relocated
employees);
(j) the existing loans, advances and guarantees by
Borrower and Guarantor outstanding as of the date hereof as set
forth on Schedule 9.10 hereto; provided, that, as to such loans,
advances and guarantees, (i) Borrower and Guarantor shall not,
directly or indirectly, (A) amend, modify, alter or change the
terms of such loans, advances or guarantees or any agreement,
document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise
acquire such guarantee or set aside or otherwise deposit or
invest any sums for such purpose and (ii) Borrower and Guarantor
shall furnish to each Agent all notices, demands or other
materials in connection with such loans, advances or guarantees
either received by Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by Borrower or
Guarantor or on its behalf, concurrently with the sending
thereof, as the case may be; and
(k) the existing investments by Borrower and
Guarantor outstanding as of the date hereof set forth on Schedule
9.10 hereto.
PRIVATE 9.11 Dividends and Redemptions tc \l 2 "9.11
Dividends and Redemptions" . Each of Borrower and Guarantor
shall not, directly or indirectly, declare or pay any dividends
on account of any shares of class of Capital Stock of Borrower or
Guarantor now or hereafter outstanding, or set aside or otherwise
deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of
Capital Stock (or set aside or otherwise deposit or invest any
sums for such purpose) for any consideration other than common
stock or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of
any such shares or agree to do any of the foregoing except for
consideration consisting of common stock and except for the
payment of dividends by any Subsidiaries of Borrower to Borrower.
PRIVATE 9.12 Transactions with Affiliates tc \l 2 "9.12
Transactions with Affiliates" . Each of Borrower and Guarantor
shall not, and shall not permit its Subsidiaries to, directly or
indirectly, (a) purchase, acquire or lease any property from, or
sell, transfer or lease any property to, any officer, employee,
shareholder, director, agent or any other Affiliate, except in
the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable
terms no less favorable to the Borrower than Borrower would
obtain in a comparable arm's length transaction with an
unaffiliated person or (b) make any payments of management,
consulting or other fees for management or similar services, or
of any Indebtedness owing to any officer, employee, shareholder,
director or any other Affiliate of except (i) reasonable
compensation to officers, employees and directors for services
rendered to Borrower in the ordinary course of business, and (ii)
Borrower may make payments to Guarantor for actual and necessary
reasonable out-of-pocket administrative and operating expenses of
Guarantor for the business of Guarantor as presently conducted in
the ordinary course of business, and for actual and necessary
reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll and similar types of services paid for by
Guarantor on behalf of Borrower or Guarantor in the ordinary
course of their respective businesses or as the same may be
directly attributable to Borrower or Guarantor; provided, that,
(A) Guarantor shall not conduct any business except as permitted
under Section 9.16 hereof and (B) Guarantor shall not own or hold
any assets or properties, except as permitted under Section 9.16
hereof.
PRIVATE 9.13 Minimum Consolidated Net Worth tc \l 2
"9.13 Minimum Consolidated Net Worth" . Borrower and Guarantor
shall not permit the Consolidated Net Worth of Guarantor and its
Subsidiaries as of the last day of any fiscal quarter to be less
than $35,000,000.
PRIVATE 9.14 Fixed Charge Coverage Ratio tc \l 2 "9.14
Fixed Charge Coverage Ratio" . Borrower and Guarantor shall not
permit the Fixed Charge Coverage Ratio for any fiscal quarter to
be less than the ratio set forth opposite the month in which such
fiscal quarter ends listed below:
Fiscal Quarter Ending Ratio
March 1.10:1
June 1.30:1
September 1.40:1
December 1.25:1
PRIVATE 9.15 Current Ratio. tc \l 2 "9.15 Current
Ratio. " Borrower and Guarantor shall not permit the ratio of
Current Assets to Current Liabilities of Guarantor and its
Subsidiaries as of the last day of any fiscal quarter shall not
be less than .9:1.
PRIVATE 9.16 Changes in Business tc \l 2 "9.16 Changes
in Business" .
(a) Borrower and its Subsidiaries shall not engage
in any business other than the businesses of Borrower and its
Subsidiaries on the date hereof and any businesses reasonably
related, ancillary or complimentary to the businesses in which
Borrower and its Subsidiaries are engaged on the date hereof.
(b) Guarantor shall not engage in any business other
than its ownership of the Capital Stock of Borrower and any
Subsidiaries established or acquired by it after the date hereof
to the extent permitted hereunder, provided, that, any
Subsidiaries of Guarantor shall be engaged solely in the
businesses of Borrower and its Subsidiaries on the date hereof
and any businesses reasonably related, ancillary or complimentary
to the businesses in which Borrower and its Subsidiaries are
engaged on the date hereof. Guarantor shall have no significant
assets other than its ownership interests as described in the
immediately preceding sentence and shall act as a holding company
which shall not directly engage in any business.
PRIVATE 9.17 Sale and Leasebacks tc \l 2 "9.17 Sale
and Leasebacks" . Each of Borrower and Guarantor shall not, and
shall not permit its Subsidiaries to, enter into any arrangement,
directly or indirectly, with any Person whereby Borrower or
Guarantor, as the case may be, shall sell or transfer any
property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or
lease such property which it intends to use for substantially the
same purpose or purposes as the property being sold or
transferred (except to the extent of capital leases permitted
under Section 9.9(g) hereof).
PRIVATE 9.18 Credit Card Agreements tc \l 2 "9.18
Credit Card Agreements" . Borrower shall (a) observe and perform
all material terms, covenants, conditions and provisions of the
Credit Card Agreements to be observed and performed by it at the
times set forth therein; (b) not do, permit, suffer or refrain
from doing anything, as a result of which there could be a
default under or breach of any of the terms of any of the Credit
Card Agreements by Borrower and (c) at all times maintain in full
force and effect the Credit Card Agreements and not terminate,
cancel, surrender, modify, amend, waive or release any of the
Credit Card Agreements, or consent to or permit to occur any of
the foregoing; except, that, (i) Borrower may terminate or cancel
any of the Credit Card Agreements in the ordinary course of the
business of Borrower; provided, that, Borrower shall give
Collateral Agent not less than fifteen (15) days prior written
notice of its intention to so terminate or cancel any of the
Credit Card Agreements; (d) not enter into any new Credit Card
Agreements with any new Credit Card Issuer unless (i) Collateral
Agent shall have received not less than thirty (30) days prior
written notice of the intention of Borrower to enter into such
agreement (together with such other information with respect
thereto as Collateral Agent may request) and (ii) to the extent
it is a new Credit Card Processor, Borrower delivers, or causes
to be delivered to Collateral Agent, a Credit Card Acknowledgment
in favor of Collateral Agent, for the ratable benefit of Lenders
duly authorized and executed by such Credit Card Processor; (e)
give Collateral Agent immediate written notice of any Credit Card
Agreement entered into by Borrower after the date hereof,
together with a true, correct and complete copy thereof and such
other information with respect thereto as Collateral Agent may
request; and (f) furnish to Collateral Agent, promptly upon the
request of Collateral Agent, such information and evidence as
Collateral Agent may require from time to time concerning the
observance, performance and compliance by Borrower or the other
party or parties thereto with the terms, covenants or provisions
of the Credit Card Agreements.
PRIVATE 9.19 Compliance with ERISA tc \l 2 "9.19
Compliance with ERISA" .
(a) Each of Borrower and Guarantor shall not, and
shall not permit its Subsidiaries to, with respect to any
"employee benefit plans" maintained by Borrower or any of its
ERISA Affiliates: (i) terminate any of such employee pension
plans so as to incur any liability to the Pension Benefit
Guaranty Corporation established pursuant to ERISA, (ii) allow or
suffer to exist any prohibited transaction involving any of such
employee benefit plans or any trust created thereunder which
would subject Borrower or such ERISA Affiliate to a tax or
penalty or other liability on prohibited transactions imposed
under the Code or ERISA, (iii) fail to pay to any such employee
benefit plan any contribution which it is obligated to pay under
ERISA, the Code or the terms of such plan, (iv) allow or suffer
to exist any accumulated funding deficiency, whether or not
waived, with respect to any such employee benefit plan, (v) allow
or suffer to exist any occurrence of a reportable event or any
other event or condition which presents a material risk of
termination by the Pension Benefit Guaranty Corporation of any
such employee benefit plan that is a single employer plan, which
termination could result in any liability to the Pension Benefit
Guaranty Corporation or (vi) incur any withdrawal liability with
respect to any multiemployer pension plan.
(b) As used in this Section 9.19, the term
"employee pension benefit plans," "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall
have the respective meanings assigned to them in ERISA, and the
term "prohibited transaction" shall have the meaning assigned to
it in the Code and ERISA.
PRIVATE 9.20 Additional Bank Accounts. tc \l 2 "9.20
Additional Bank Accounts." Each of Borrower and Guarantor shall
not, directly or indirectly, open, establish or maintain any
deposit account, investment account or any other account with any
bank or other financial institution, other than the Blocked
Accounts and the accounts set forth in Schedule 6.3 hereto,
except: (a) as to any new or additional Blocked Accounts and
other such new or additional accounts which contain any
Collateral or proceeds thereof, with the prior written consent of
each Agent and subject to such conditions thereto as such Agent
may establish and (b) as to any accounts used by Borrower to make
payments of payroll, taxes or other obligations to third parties,
after prior written notice to each Agent.
PRIVATE 9.21 Costs and Expenses. tc \l 2 "9.21 Costs
and Expenses." Borrower and Guarantor shall pay to each Agent,
for itself and the benefit of Lenders, within five (5) Business
Days after demand, all costs (other than any costs which are
payable by either Agent by the express terms of this Agreement),
expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement
and defense of the Obligations, the rights of Agents and Lenders,
in the Collateral, this Agreement, the other Financing Agreements
and all other documents related hereto or thereto, including any
amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect
hereof and thereof, including: (a) all costs and expenses of
filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles
taxes and mortgage recording taxes and fees, if applicable); (b)
all insurance premiums, appraisal fees and search fees; (c) costs
and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the
Blocked Accounts, together with Collateral Agent's customary
charges and fees with respect thereto; (d) charges, fees or
expenses charged by any bank or issuer in connection with the
Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses
paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of
Collateral Agent, for the ratable benefit of Lenders, selling or
otherwise realizing upon the Collateral, and otherwise enforcing
the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against
Agents and/or Lenders arising out of the transactions
contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (g) all out-of-pocket
expenses and costs heretofore and from time to time hereafter
incurred by Agents during the course of periodic field
examinations of the Collateral and Borrower's operations, plus at
any time on and after an Event of Default, a per diem charge at
the rate of $600 per person per day for each Agent's examiners in
the field and office; and (h) the fees and disbursements of
counsel (including legal assistants) to Agents in connection with
any of the foregoing.
PRIVATE 9.22 Further Assurances tc \l 2 "9.22 Further
Assurances" . At the request of any Agent or Lender at any time
and from time to time, Borrower and Guarantor shall, at its
expense, duly execute and deliver, or cause to be duly executed
and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral
and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Each Agent
may at any time and from time to time request a certificate from
an officer of Borrower representing that all conditions precedent
to the making of Loans and providing Letter of Credit
Accommodations contained herein are satisfied. In the event of
such a request, Collateral Agent and Lenders may, at the option
of Collateral Agent or Administrative Agent, cease to make any
further Loans or provide any further Letter of Credit
Accommodations until such Agent has received such certificate.
Where permitted by law, Borrower hereby authorizes Agents and
Lenders to execute and file one or more UCC financing statements
signed only by any Agent or Lender.
PRIVATE SECTION 10. EVENTS OF DEFAULT AND REMEDIES tc \l 1
"SECTION 10. EVENTS OF DEFAULT AND REMEDIES"
PRIVATE 10.1 Events of Default tc \l 2 "10.1 Events of
Default" . The occurrence or existence of any one or more of the
following events are referred to herein individually as an "Event
of Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay any of the Obligations
within three (3) days after the due date thereof or (ii) Borrower
or any Obligor fails to perform any of the covenants contained in
Sections 9.3, 9.4, 9.6, 9.13, 9.14, 9.15, 9.18, 9.19 or 9.21 of
this Agreement and such failure shall continue for fifteen (15)
days; provided, that, such fifteen (15) day period shall not
apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within
such fifteen (15) day period or which has been the subject of a
prior failure within a six (6) month period or (B) an intentional
breach of Borrower or any Obligor of any such covenant or (iii)
Borrower or any Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement
or any of the other Financing Agreements other than those
described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) Borrower fails to pay when due any of the
Obligations or fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of
the other Financing Agreements;
(c) any representation, warranty or statement of
fact made by Borrower or any Obligor to any Agent or Lender in
this Agreement, the other Financing Agreements or any other
agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material
respect;
(d) any Obligor revokes, terminates or fails to
perform any of the terms, covenants, conditions or provisions of
any guarantee, endorsement or other agreement of such party in
favor of Agents or Lenders;
(e) any judgment for the payment of money is
rendered against Borrower or any Obligor in excess of $1,000,000
in any one case or in excess of $2,000,000 in the aggregate and
shall remain undischarged or unvacated for a period in excess of
thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of
money, or injunction, attachment, garnishment or execution is
rendered against Borrower or any Obligor or any of their assets;
(f) Borrower or any Obligor dissolves or suspends or
discontinues doing business;
(g) Borrower or any Obligor becomes insolvent
(however defined or evidenced), makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or
calls a meeting of its creditors or principal creditors in
connection with a moratorium or adjustment of the Indebtedness
due to them;
(h) a case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in
equity) is filed against Borrower or any Obligor or all or any
part of its properties and such petition or application is not
dismissed within forty-five (45) days after the date of its
filing or Borrower or any Obligor shall file any answer admitting
or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(i) a case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or
under any insolvency, reorganization, receivership, readjustment
of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at a law or
equity) is filed by Borrower or any Obligor or for all or any
part of its property; or
(j) (i) any default by Borrower or any Obligor under
any agreement, document or instrument relating to any
Indebtedness for borrowed money owing to any person other than
Agents or any Lender, or any Capitalized Lease Obligations,
contingent indebtedness in connection with any guarantee, letter
of credit, indemnity or similar type of instrument in favor of
any person other than any Agent or Lender, in any case in an
amount in excess of $2,000,000, which default continues for more
than the applicable cure period, if any, with respect thereto, or
(ii) any default by Borrower or any Obligor under any contract,
lease, license or other obligation to any person other than any
Agent or Lender, which default continues for more than the
applicable cure period, if any, with respect thereto and would
have a Material Adverse Effect;
(k) any Change of Control;
(l) the indictment by any Governmental Authority, or
as either Agent may reasonably and in good faith determine, the
threatened indictment by any Governmental Authority of which
Borrower, any Obligor or any Agent or Lender receives notice, of
Borrower or any Obligor under any criminal statute, or
commencement or threatened commencement of criminal or civil
proceedings against Borrower or any Obligor, pursuant to which
statute or proceedings the penalties or remedies sought or
available include forfeiture of (i) any of the Collateral or
(ii) any other property of Borrower which is necessary or
material to the conduct of its business;
(m) there shall be an act, condition or event which
has a Material Adverse Effect with respect to the Collateral
after the date hereof; or
(n) there shall be an event of default under any of
the other Financing Agreements.
PRIVATE 10.2 Remedies tc \l 2 "10.2 Remedies" .
(a) At any time an Event of Default exists or has
occurred and is continuing, Agents and Lenders shall have all
rights and remedies provided in this Agreement, the other
Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised
without notice to or consent by Borrower or any Obligor, except
as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers
granted to Agents and Lenders hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other
applicable law, are cumulative, not exclusive and enforceable, in
each Agent's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by
Borrower of this Agreement or any of the other Financing
Agreements. Subject to Section 12 hereof, Collateral Agent
shall, upon the direction of Administrative Agent or the Majority
Lenders, at any time or times an Event of Default exists or has
occurred and is continuing, proceed directly against Borrower or
any Obligor to collect the Obligations without prior recourse to
the Collateral.
(b) Without limiting the foregoing, at any time an
Event of Default exists or has occurred and is continuing,
Administrative Agent may, and Collateral Agent shall, upon the
direction of the Majority Lenders, (i) upon notice to Borrower,
accelerate the payment of all Obligations and demand immediate
payment thereof to Collateral Agent, for the ratable benefit of
Lenders, (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all
Obligations shall automatically become immediately due and
payable), (ii) with or without judicial process or the aid or
assistance of others, enter upon any premises on or in which any
of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (iii) require Borrower, at
Borrower's expense, to assemble and make available to Collateral
Agent any part or all of the Collateral at any place and time
designated by Collateral Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v)
remove any or all of the Collateral from any premises on or in
which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other
purpose, (vi) sell, lease, transfer, assign, deliver or otherwise
dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private
sales at any exchange, broker's board, at any office of
Administrative Agent or elsewhere) at such prices or terms as
Administrative Agent may deem reasonable, for cash, upon credit
or for future delivery, with any Agent or Lender having the right
to purchase the whole or any part of the Collateral at any such
public sale, all of the foregoing being free from any right or
equity of redemption of Borrower, which right or equity of
redemption is hereby expressly waived and released by Borrower
and/or (vii) upon notice to Borrower, terminate this Agreement.
If any of the Collateral is sold or leased by Collateral Agent
upon credit terms or for future delivery, the Obligations shall
not be reduced as a result thereof until payment therefor is
finally collected by Collateral Agent, for the ratable benefit of
Lenders. If notice of disposition of Collateral is required by
law, ten (10) days prior notice by either Agent to Borrower
designating the time and place of any public sale or the time
after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrower waives any other notice. In the event
Collateral Agent institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be
required.
(c) In the event that Borrower is for any reason
deemed domiciled in, or any of the Collateral is located in, the
State of Louisiana or any security interest created by this
Agreement or any of the other Financing Agreements is required to
be governed by, and interpreted in accordance with, the laws of
the State of Louisiana, if an Event of Default occurs:
(i) Lender shall have all remedies available
to a secured party under the Louisiana Commercial Laws Secured
Transaction, La. R.S. 10:9-101 et seq. in addition to the
remedies provided in this Agreement and any of the other
Financing Agreements or any other applicable law.
(ii) For purposes of executory process under
the laws of the State of Louisiana, Borrower hereby acknowledges
the Obligations and confesses judgment in favor of Agents and
Lenders for the full amount of the Obligations, including,
without limitation, principal, interest, expenses, reasonable
attorneys' fees, and all other fees, and consents that judgment
be rendered and signed whether during term of court or in
vacation for the full amount of the Obligations.
(iii) Borrower hereby expressly waives, to the
extent permitted by Louisiana law: (A) the benefit of
appraisement provided for in Articles 2332, 2336, 2723 and 2724
of the Louisiana Code of Civil Procedure conferring such
benefits, (B) the demand and three (3) days delay accorded by
Articles 2639 and 2721 of the Louisiana Code of Civil Procedure,
(C) the notice of seizure required by Articles 2293 and 2721 of
the Louisiana Code of Civil Procedure, (D) the three (3) days
delay provided in Articles 2331 and 2722 of the Louisiana Code of
Civil Procedure, (E) the benefit of the other provisions of
Articles 2331, 2722 and 2723 of the Louisiana Code of Civil
Procedure, (F) the benefit of the provisions of any other
articles of the Louisiana Code of Civil Procedure not
specifically mentioned above, and (G) all rights of division and
discussion with respect to the Obligations.
(iv) In the event Collateral Agent elects, at
its option, to enter suit via ordinaria on the Obligations, in
addition to the foregoing confession of judgment, Borrower hereby
waives citation, other legal process, and legal delays and hereby
consents that judgment for all amounts due on the Obligations,
including, without limitation, principal, interest, expenses,
attorneys' fees and all other fees, be rendered and signed
immediately, whether during the court's term or during vacation.
(v) Pursuant to La. R.S. 9:5136 et seq.,
Borrower hereby designates Collateral Agent or any employee,
agent, or other person named by Collateral Agent at the time of
seizure to serve as keeper, pending judicial sale, of any
Collateral of which seizure is effected by Collateral Agent under
the laws of the State of Louisiana. The keeper's fees shall be
determined by the court before which the proceedings are pending
and shall be secured by this Agreement and the other Financing
Agreements.
(vi) At any time on or after the occurrence of
an Event of Default, Collateral Agent may proceed by summary
process against Borrower to obtain possession of any instruments
and documents included in the Collateral to exercise Collateral
Agent's right to sell the instruments and documents pursuant to
La.R.S. 10:9-503(1)(b), to enforce the instruments and documents
as provided by La. R.S. 10:9-207 and 9-502, or to obtain the
endorsement of Borrower on the instruments and documents.
Collateral Agent may sell, in the manner and with the effect as
provided by La. R.S. 10:9-504, the following Collateral: (A)
goods included in the Collateral or that are in the possession of
any Agent or Lender or that have been voluntarily delivered or
surrendered to any Agent or Lender by Borrower, either before or
after an Event of Default and (B) instruments, documents and
Accounts included in the Collateral. To the maximum extent
permitted by applicable law, Borrower waives all claims, damages
and demands against Agents and Lenders arising out of the
repossession, retention, or sale of the Collateral, except those
resulting from actions taken or not taken by Agents and Lenders
that are found pursuant to a final non-appealable order of a
court of competent jurisdiction to constitute gross negligence or
wilful misconduct.
(vi) Borrower agrees that the Collateral may
be sold at one or more sales, whether judicial, public or
private. Borrower agrees that in the event of a judicial sale of
Collateral, notice of the judicial sale given pursuant to the
Louisiana Revised Statutes and the Louisiana Code of Civil
Procedure is reasonable notification of the sale. In the event
of a public sale of the Collateral, Collateral Agent shall have
the right to conduct the sale on Borrower's premises or elsewhere
and shall have the right to use Borrower's premises without
charge for such sale for such time or times as Lender may see
fit.
(vii) Collateral Agent shall have the right to
cause all and singular the Collateral to be seized and sold under
executory process without appraisement, appraisement being hereby
expressly waived, as an entirety or in parcels, as Collateral
Agent may determine, to the highest bidder for cash.
(d) Administrative Agent and Collateral Agent may
apply the cash proceeds of Collateral actually received by it
from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and
in such order as it may elect, whether or not then due. Borrower
shall remain liable to Agents and Lenders for the payment of any
deficiency with interest at the highest rate provided for herein
and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(e) Without limiting the foregoing, upon the
occurrence of an Event of Default or an event which with notice
or passage of time or both would constitute an Event of Default,
Collateral Agent shall, upon the direction of Administrative
Agent or the Majority Lenders, without notice, (i) cease making
Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrower and/or (ii) terminate any
provision of this Agreement providing for any future Loans or
Letter of Credit Accommodations to be made by Agents or Lenders
to Borrower.
PRIVATE SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS tc \l 1
"SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS"
AND CONSENTS; GOVERNING LAW
PRIVATE 11.1 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver tc \l 2 "11.1 Governing Law; Choice
of Forum; Service of Process; Jury Trial Waiver" .
(a) The validity, interpretation and enforcement of
this Agreement and the other Financing Agreements and any dispute
arising out of the relationship between the parties hereto,
whether in contract, tort, equity or otherwise, shall be governed
by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
(b) Borrower, Agents and Lenders irrevocably consent
and submit to the non-exclusive jurisdiction of the Supreme Court
of the State of New York in New York County and the United States
District Court for the Southern District of New York and waive
any objection based on venue or forum non conveniens with respect
to any action instituted therein arising under this Agreement or
any of the other Financing Agreements or in any way connected
with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each
case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute
with respect to any such matters shall be heard only in the
courts described above (except that any Agent or Lender shall
have the right to bring any action or proceeding against Borrower
or its property in the courts of any other jurisdiction which
such Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against
Borrower or its property).
(c) Each of Borrower and Guarantor hereby waives
personal service of any and all process upon it and consents that
all such service of process may be made by certified mail (return
receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be
completed ten (10) days after the same shall have been so
deposited in the U.S. mails, or, at any Agent or Lender's option,
by service upon Borrower in any other manner provided under the
rules of any such courts. Within thirty (30) days after such
service, Borrower or Guarantor, as the case may be, shall appear
in answer to such process, failing which Borrower or Guarantor,
as the case may be, shall be deemed in default and judgment may
be entered by any Agent or Lender against Borrower or Guarantor
for the amount of the claim and other relief requested.
(d) BORROWER, GUARANTOR, AGENTS AND LENDERS EACH
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY
OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER, GUARANTOR, AGENTS
AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT BORROWER, AGENTS OR LENDERS MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither of Agent nor any of Lenders shall have
any liability to Borrower (whether in tort, contract, equity or
otherwise) for losses suffered by Borrower in connection with,
arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order
binding on such Agent and Lender, that the losses were the result
of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Agents and Lenders shall be
entitled to the benefit of the rebuttable presumption that it
acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement.
PRIVATE 11.2 Waiver of Notices tc \l 2 "11.2 Waiver of
Notices" . Borrower hereby expressly waives demand, presentment,
notice of intent to accelerate, notice of acceleration, protest
and notice of protest and notice of dishonor with respect to any
and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and
all other demands and notices of any kind or nature whatsoever
with respect to the Obligations, the Collateral and this
Agreement, except such as are expressly provided for herein. No
notice to or demand on Borrower which Lender may elect to give
shall entitle Borrower to any other or further notice or demand
in the same, similar or other circumstances.
PRIVATE 11.3 Amendments and Waivers tc \l 2 "11.3
Amendments and Waivers" .
(a) Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by
course of conduct, but only by a written agreement signed as
provided in Section 11.3(b) hereof. Agents and Lenders shall
not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its or their rights, powers
and/or remedies unless such waiver shall be in writing and signed
as provided in Section 11.3(b) hereof. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A
waiver by any Agent or Lender of any right, power and/or remedy
on any one occasion shall not be construed as a bar to or waiver
of any such right, power/and or remedy which any Agent or Lender
would otherwise have on any future occasion, whether similar in
kind or otherwise.
(b) Neither this Agreement nor any other Financing
Agreement nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by Agents and the Majority
Lenders, and as to amendments to any of the Financing Agreements,
by Borrower; except, that, any change, waiver, discharge or
termination with respect to the following shall require the
consent of each Agent and all Lenders:
(i) the extension of the Final Maturity Date,
(ii) reduction in the interest rate or any fees
or the extension of the time of payment of interest or any fees
or reduction in the principal amount of any Loan or Letter of
Credit Accommodations,
(iii) increase in the Commitment of any Lender
over the amount thereof then in effect or provided hereunder (it
being understood that a waiver of any Event of Default shall not
constitute a change in the terms of any Commitment of any
Lender),
(iv) the release of any Collateral (except as
expressly required by the Financing Agreements and except as
permitted under Section 12.12(b) hereof),
(v) the amendment, modification or waiver of:
(A) the terms of the following definitions or any provisions
relating thereto: Eligible Accounts, Eligible Inventory, Excess
Availability, Final Maturity Date, Maximum Credit, or (B) the
terms of Sections 2.2(c), 2.2(d) or 9.7 hereof, or (C) any
provision of this Section 11.3,
(vi) the reduction of any percentage specified
in the definition of Majority Lenders,
(vii) the consent to the assignment or transfer
by Borrower of any of its rights and obligations under this
Agreement, or
(viii) the increase in the advance rates
constituting part of the Borrowing Base.
(c) Notwithstanding anything to the contrary
contained in Section 11.3(b) above, in the event that Borrower
requests that this Agreement or any other Financing Agreements be
amended or otherwise modified in a manner which would require the
unanimous consent of all of the Lenders and such amendment or
other modification is agreed to by the Majority Lenders, then,
with the consent of Borrower and the Majority Lenders, Borrower
and the Majority Lenders may amend this Agreement without the
consent of the Lender or Lenders which did not agree to such
amendment or other modification (collectively, the "Minority
Lenders") to provide for (i) the termination of the Commitment of
each of the Minority Lenders, (ii) the addition to this Agreement
of one or more other Lenders, or an increase in the Commitment of
one or more of the Majority Lenders, so that the Commitments,
after giving effect to such amendment, shall be in the same
aggregate amount as the Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at
the time of such amendment, the making of such additional Loans
by such new Lenders or Majority Lenders, as the case may be, as
may be necessary to repay in full the outstanding Loans of the
Minority Lenders immediately before giving effect to such
amendment and (iv) the payment of all interest, fees and other
Obligations payable or accrued in favor of the Minority Lenders
and such other modifications to this Agreement as Borrowers and
the Majority Lenders may determine to be appropriate.
(d) The consent of either Agent shall be required
for any amendment, waiver or consent affecting the rights or
duties of such Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section.
PRIVATE 11.4 Confidentiality tc \l 2 "11.4
Confidentiality" . Each Lender agrees that it will use its
reasonable best efforts not to disclose without the prior consent
of Borrower confidential information with respect to Borrower,
Guarantor or any of its Subsidiaries which is furnished pursuant
to this Agreement and which is specifically designated in writing
by Borrower; provided, that, any Lender may disclose any such
information (a) to its employees, auditors or counsel, or to
another Lender if the disclosing Lender or such disclosing
Lender's holding or parent company in its sole discretion
determines that any such party should have access to such
information, (b) as has become generally available to the public,
(c) as may be required or appropriate in any report, statement or
testimony submitted to any Governmental Authority having or
claiming to have jurisdiction over such Lender, (d) as may be
required or appropriate in response to any summons or subpoena or
in connection with any litigation, (e) in order to comply with
any statute or regulation, and (f) to any prospective or actual
assignee or Participant in connection with any contemplated
transfer or participation of any of the Commitments or any
interest therein by such Lender, provided, that, such assignee or
Participant has been generally advised as to the confidentiality
of any such confidential information.
PRIVATE 11.5 Waiver of Counterclaims tc \l 2 "11.5
Waiver of Counterclaims" . Borrower and Guarantor waive all
rights to interpose any claims, deductions, setoffs or
counterclaims of any nature (other then compulsory counterclaims)
in any action or proceeding with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
PRIVATE 11.6 Indemnification tc \l 2 "11.6
Indemnification" . Borrower shall indemnify and hold each Agent
and Lender, and its directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses imposed on, incurred by or
asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any
of the other Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant
thereto, including, without limitation, any and all losses,
claims, damages, liabilities, costs or expenses caused by the
negligence (but not the gross negligence) of such Agent or Lender
and such Agent or Lender's directors, agents, employees and
counsel, and further including, without limitation, amounts paid
in settlement, court costs, and the fees and expenses of counsel.
To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because
it violates any law or public policy, Borrower shall pay the
maximum portion which it is permitted to pay under applicable law
to Agents and Lenders in satisfaction of indemnified matters
under this Section. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
PRIVATE SECTION 12. THE AGENT tc \l 1 "SECTION 12. THE
AGENT" S
PRIVATE 12.1 Appointment, Powers and Immunities tc \l 2
"12.1 Appointment, Powers and Immunities" . Each Lender hereby
irrevocably designates, appoints and authorizes Congress to act
as Collateral Agent and Madeleine to act as Administrative Agent
hereunder and under the other Financing Agreements with such
powers as are specifically delegated to such Agent by the terms
of this Agreement and of the other Financing Agreements, together
with such other powers as are reasonably incidental thereto.
Each Agent (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and in the other
Financing Agreements, and shall not by reason of this Agreement
or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any
recitals, statements, representations or warranties contained in
this Agreement or in any other Financing Agreement, or in any
certificate or other document referred to or provided for in, or
received by any of them under, this Agreement or any other
Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
any other Financing Agreement or any other document referred to
or provided for herein or therein or for any failure by Borrower
or any Obligor or any other Person to perform any of its
obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be
taken by it hereunder or under any other Financing Agreement or
under any other document or instrument referred to or provided
for herein or therein or in connection herewith or therewith,
except for its own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of
competent jurisdiction. Each Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any such agents or attorneys-in-fact selected by
it in good faith. Each Agent may deem and treat the payee of any
note as the holder thereof for all purposes hereof unless and
until the assignment thereof pursuant to an agreement (if and to
the extent permitted herein) in form and substance satisfactory
to such Agent shall have been delivered to and acknowledged by
such Agent.
PRIVATE 12.2 Reliance by Agent tc \l 2 "12.2 Reliance
by Agent" . Each Agent shall be entitled to rely upon any
certification, notice or other communication (including any
thereof by telephone, telecopy, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed
or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants
and other experts selected by such Agent. As to any matters not
expressly provided for by this Agreement or any other Financing
Agreement, each Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Majority Lenders or all
of Lenders as is required in such circumstance, and such
instructions of such Lenders and any action taken or failure to
act pursuant thereto shall be binding on all Lenders.
PRIVATE 12.3 Events of Default tc \l 2 "12.3 Events of
Default" .
(a) Neither Agent shall be deemed to have knowledge
or notice of the occurrence of an Event of Default or other
failure of a condition precedent to the Loans and Letter of
Credit Accommodations hereunder, unless and until such Agent has
received written notice from a Lender, the other Agent or
Borrower specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a "Notice of
Default or Failure of Condition". In the event that such Agent
receives such a Notice of Default or Failure of Condition, such
Agent shall give prompt notice thereof to the other Agent and
Lenders. Each Agent shall (subject to Section 12.8) take such
action with respect to any such Event of Default or failure of
condition precedent as shall be directed by the Majority Lenders;
provided, that, unless and until such Agent shall have received
such directions, such Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with
respect to or by reason of such Event of Default or failure of
condition precedent, as it shall deem advisable in the best
interest of Lenders. Without limiting the foregoing, and
notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to
the contrary, Collateral Agent may (with the consent of
Administrative Agent), but shall have no obligation to, continue
to make Loans and issue or cause to be issued Letter of Credit
Accommodations for the ratable account and risk of Lenders from
time to time if Collateral Agent believes making such Loans or
issuing or causing to be issued such Letter of Credit
Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of
Collateral Agent and Administrative Agent, no Lender or Agent may
assert or exercise any enforcement right or remedy in respect of
the Loans, Letter of Credit Accommodations or other Obligations,
as against Borrower or any Obligor or any of the Collateral or
other property of Borrower or any Obligor.
PRIVATE 12.4 Madeleine in its Individual Capacity tc \l
2 "12.4 Madeleine in its Individual Capacity" . With respect to
its Commitment and the Loans made and Letter of Credit
Accommodations issued or caused to be issued by it (and any
successor acting as Administrative Agent), so long as Madeleine
shall be a Lender hereunder, it shall have the same rights and
powers hereunder as any other Lender and may exercise the same as
though it were not acting as Administrative Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise
indicates, include Madeleine in its individual capacity as Lender
hereunder. Madeleine (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender)
lend money to, make investments in and generally engage in any
kind of business with Borrower and Guarantor (and any of their
Subsidiaries or Affiliates) as if it were not acting as
Administrative Agent, and Madeleine and its Affiliates may accept
fees and other consideration from Borrower and Guarantor for
services in connection with this Agreement or otherwise without
having to account for the same to Lenders.
PRIVATE 12.5 Congress in is Individual Capacity tc \l 2
"12.5 Congress in is Individual Capacity" . With respect to its
Commitment and the Loans made and Letter of Credit Accommodations
issued or caused to be issued by it (and any successor acting as
Collateral Agent), so long as Congress shall be a Lender
hereunder, it shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not
acting as Collateral Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include Congress
in its individual capacity as Lender hereunder. Congress (and
any successor acting as Collateral Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to,
make investments in and generally engage in any kind of business
with Borrower and Guarantor (and any of their Subsidiaries or
Affiliates) as if it were not acting as Collateral Agent, and
Congress and its Affiliates may accept fees and other
consideration from Borrower and Guarantor for services in
connection with this Agreement or otherwise without having to
account for the same to Lenders.
PRIVATE 12.6 Indemnification tc \l 2 "12.6
Indemnification" . Lenders agree to indemnify each Agent (to the
extent not reimbursed by Borrower hereunder and without limiting
the Obligations of Borrower hereunder) ratably, in accordance
with their Pro Rata Shares, for any and all claims of any kind
and nature whatsoever that may be imposed on, incurred by or
asserted against such Agent (including by any Lender) arising out
of or by reason of any investigation in or in any way relating to
or arising out of this Agreement or any other Financing Agreement
or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby
(including the costs and expenses that such Agent is obligated to
pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender
shall be liable for any of the foregoing to the extent it arises
from the gross negligence or willful misconduct of the party to
be indemnified as determined by a final non-appealable judgment
of a court of competent jurisdiction.
PRIVATE 12.7 Non-Reliance on Agents and Other Lenders tc
\l 2 "12.7 Non-Reliance on Agents and Other Lenders" . Each
Lender agrees that it has, independently and without reliance on
any Agent or other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of Borrower and Guarantor and has made its own decision
to enter into this Agreement and that it will, independently and
without reliance upon either 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 analysis and decisions in
taking or not taking action under this Agreement or any of the
other Financing Agreements. Neither Agent shall be required to
keep itself informed as to the performance or observance by
Borrower or Guarantor of any term or provision of this Agreement
or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the
properties or books of Borrower or Guarantor. Each Agent will
use reasonable efforts to provide Lenders with any information
received by such Agent from Borrower which is required to be
provided to Lenders hereunder and with a copy of any Notice of
Default or Failure of Condition received by such Agent from
Borrower or any Lender; provided, that, such Agent shall not be
liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to such Agent's own
gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction.
Except for notices, reports and other documents expressly
required to be furnished to Lenders by each Agent hereunder, such
Agent shall not have any duty or responsibility to provide any
Lender with any other credit or other information concerning the
affairs, financial condition or business of Borrower that may
come into the possession of such Agent or any of its Affiliates.
PRIVATE 12.8 Failure to Act tc \l 2 "12.8 Failure to
Act" . Except for action expressly required of each Agent
hereunder and under the other Financing Agreements, such Agent
shall in all cases be fully justified in failing or refusing to
act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.6 hereof against any
and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action.
PRIVATE 12.9 Additional Loans tc \l 2 "12.9 Additional
Loans" . Collateral Agent shall not make any Loans or provide
any Letter of Credit Accommodations on behalf of Lenders
intentionally and with actual knowledge that such Loans or Letter
of Credit Accommodations would cause the aggregate amount of the
total outstanding Loans and Letter of Credit Accommodations to
exceed the Borrowing Base, without the prior consent of all
Lenders, except, that, Collateral Agent may, with the consent of
Administrative Agent, or shall upon the direction of
Administrative Agent, make such additional Loans or provide such
additional Letter of Credit Accommodations on behalf of Lenders,
intentionally and with actual knowledge that such Loans or Letter
of Credit Accommodations will cause the total outstanding Loans
and Letter of Credit Accommodations to exceed the Borrowing Base
as such Agent may deem necessary or advisable in its discretion,
provided, that: (a) the total principal amount of the additional
Loans or additional Letter of Credit Accommodations which
Collateral Agent may make or provide after obtaining such actual
knowledge that the aggregate principal amount of the Loans equal
or exceed the Borrowing Base shall not exceed the amount equal to
ten (10%) percent (10%) of the Borrowing Base at the time and
shall not cause the total principal amount of the Loans and
Letter of Credit Accommodations to exceed the Maximum Credit and
(b) without the consent of all Lenders, Collateral Agent shall
not make any such additional Loans or Letter of Credit
Accommodations more than ninety (90) days from the date of the
first such additional Loans or Letter of Credit Accommodations.
Each Lender shall be obligated to pay Collateral Agent the amount
of its Pro Rata Share of any such additional Loans or Letter of
Credit Accommodations provided that Collateral Agent is acting in
accordance with the terms of this Section 12.9.
PRIVATE 12.10 Concerning the Collateral and the Related
Financing Agreements tc \l 2 "12.10 Concerning the Collateral
and the Related Financing Agreements" . Each Lender authorizes
and directs each Agent to enter into this Agreement and the other
Financing Agreements relating to the Collateral, for the ratable
benefit of Lenders and Agents. Each Lender agrees that any
action taken by either Agent or Majority Lenders in accordance
with the terms of this Agreement or the other Financing
Agreements relating to the Collateral, and the exercise by each
Agent or Majority Lenders of their respective powers set forth
therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the
Lenders.
PRIVATE 12.11 Field Audit, Examination Reports and other
Information; Disclaimer by Lenders tc \l 2 "12.11 Field Audit,
Examination Reports and other Information; Disclaimer by
Lenders" .
(a) By signing this Agreement, each Lender:
(i) is deemed to have requested that
Collateral Agent furnish Lender, promptly after it becomes
available, a copy of each field audit or examination report and a
weekly report with respect to the Borrowing Base prepared by
Collateral Agent (each field audit or examination report and
weekly report with respect to the Borrowing Base being referred
to herein as a "Report" and collectively, "Reports");
(ii) expressly agrees and acknowledges that
Collateral Agent (A) does not make any representation or warranty
as to the accuracy of any Report, or (B) shall not be liable for
any information contained in any Report; provided, that, nothing
contained in this Section 12.11(a)(ii) shall be construed to
limit the liability of Collateral Agent under Section 12.1(c)
hereof in the event of the gross negligence or wilful misconduct
of Collateral Agent as determined pursuant to a final non-
appealable order of a court of competent jurisdiction;
(iii) expressly agrees and acknowledges that
the Reports are not comprehensive audits or examinations, that
Collateral Agent or other party performing any audit or
examination will inspect only specific information regarding
Borrower and Guarantor and will rely significantly upon
Borrower's books and records, as well as on representations of
Borrowers' personnel; and
(iv) agrees to keep all Reports confidential
and strictly for its internal use in accordance with the terms of
Section 11.4 hereof, and not to distribute or use any Report in
any other manner.
(b) Collateral Agent shall, at the expense of
Borrower, deliver to Administrative Agent such information
provided by Borrower to Collateral Agent pursuant to Section 7.1
hereof as Administrative Agent may reasonably request.
PRIVATE 12.12 Collateral Matters tc \l 2 "12.12
Collateral Matters" .
(a) Collateral Agent may, at its option and shall,
at the direction of Administrative Agent, from time to time, at
any time on or after an Event of Default and for so long as the
same is continuing or upon any other failure of a condition
precedent to the Loans and Letter of Credit Accommodations
hereunder, make such disbursements and advances ("Special Agent
Advances") which such Agent, in its sole discretion, deems
necessary or desirable either (i) to preserve or protect the
Collateral or any portion thereof (provided that in no event
shall Special Agent Advances for such purpose exceed $500,000 in
the aggregate outstanding at any time) or (ii) to pay any other
amount chargeable to Borrower pursuant to the terms of this
Agreement consisting of costs, fees and expenses as described in
Section 9.22 and payments to any issuer of Letter of Credit
Accommodations. Special Agent Advances shall be repayable on
demand and be secured by the Collateral. Special Agent Advances
shall not constitute Loans but shall otherwise constitute
Obligations hereunder. In the event of Special Agent Advances
made at the direction of Administrative Agent, Administrative
Agent shall, and in the event of Special Agent Advances, made at
the option of Collateral Agent, Collateral Agent shall notify the
other Agent, each Lender and Borrower in writing of each such
Special Agent Advance, which notice shall include a description
of the purpose of such Special Agent Advance. Without limitation
of its obligations pursuant to Section 6.9, each Lender agrees
that it shall make available to Collateral Agent, upon Collateral
Agent's demand, in immediately available funds, the amount equal
to such Lender's Pro Rata Share of each such Special Agent
Advance. If such funds are not made available to Collateral
Agent by such Lender, Collateral Agent shall be entitled to
recover such funds, on demand from such Lender together with
interest thereon, for each day from the date such payment was due
until the date such amount is paid to Collateral Agent at the
interest rate then payable by Borrower in respect of the Loans as
set forth in Section 3.1(a) hereof.
(b) Lenders hereby irrevocably authorize Collateral
Agent, at its option and in its discretion to release any
security interest in, mortgage or lien upon, any of the
Collateral (i) upon termination of the Commitments and payment
and satisfaction of all of the Obligations and delivery of cash
collateral to the extent required under Section 13.1 below, or
(ii) constituting property being sold or disposed of if Borrower
or Guarantor certifies to each Agent that the sale or disposition
is made in compliance with Section 9.7 hereof (and each Agent may
rely conclusively on any such certificate, without further
inquiry), or (iii) constituting property in which Borrower or
Guarantor did not own an interest at the time the security
interest, mortgage or lien was granted or at any time thereafter,
or (iv) having a value of less than $5,000,000 (but as to any
release pursuant to this clause (iv), only with the consent of
Administrative Agent in each case) or (v) if approved, authorized
or ratified in writing by all of Lenders. Except as provided
above, Collateral Agent will not release any security interest
in, mortgage or lien upon, any of the Collateral without the
prior written authorization of all of Lenders (and any Lender may
require that the proceeds from any sale or other disposition of
the Collateral to be so released be applied to the Obligations in
a manner satisfactory to such Lender). Upon request by
Collateral Agent at any time, Lenders will promptly confirm in
writing Collateral Agent's authority to release particular types
or items of Collateral pursuant to this Section 12.12.
(c) Without any manner limiting Collateral Agent's
authority to act without any specific or further authorization or
consent by the Majority Lenders, each Lender agrees to confirm in
writing, upon request by Collateral Agent, the authority to
release Collateral conferred upon Collateral Agent under this
Section 12.12. Collateral Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest,
mortgage or liens granted to Collateral Agent for itself and the
benefit of the Lenders upon any Collateral to the extent set
forth above; provided, that, (i) Collateral Agent shall not be
required to execute any such document on terms which, in
Collateral Agent's opinion, would expose Collateral Agent to
liability or create any obligations or entail any consequence
other than the release of such security interest, mortgage or
liens without recourse or warranty and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or
any security interest, mortgage or lien upon (or obligations of
Borrower in respect of) the Collateral retained by Borrower.
(d) Agents shall have no obligation whatsoever to
any Lender or any other Person to investigate, confirm or assure
that the Collateral exists or is owned by any Borrower or
Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans or Letter
of Credit Accommodations hereunder, or whether any particular
reserves are appropriate, or that the liens and security
interests granted to Collateral Agent herein or pursuant hereto
or otherwise have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers
granted or available to Agents in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that
in respect of the Collateral, or any act, omission or event
related thereto, Collateral Agent may act in any manner it may
deem appropriate, in its discretion, given Collateral Agent's own
interest in the Collateral as a Lender and that Collateral Agent
shall have no duty or liability whatsoever to any other Lender.
PRIVATE 12.13 Agency for Perfection tc \l 2 "12.13
Agency for Perfection" . Each Agent and Lender hereby appoints
each other Agent and Lender as agent for the purpose of
perfecting the security interests in and liens upon the
Collateral of Collateral Agent for itself and the ratable benefit
of Lenders in assets which, in accordance with Article 9 of the
UCC can be perfected only by possession. Should Administrative
Agent or any Lender obtain possession of any such Collateral,
Administrative Agent or such Lender shall notify Collateral Agent
thereof, and, promptly upon Collateral Agent's request therefor
shall deliver such Collateral to Collateral Agent or in
accordance with Collateral Agent's instructions.
PRIVATE SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS tc \l 1
"SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS"
PRIVATE 13.1 Term tc \l 2 "13.1 Term" .
(a) This Agreement and the other Financing
Agreements shall become effective as of the date set forth on the
first page hereof and shall continue in full force and effect for
a term ending on the Final Maturity Date, unless sooner
terminated pursuant to the terms hereof; except, that, the Final
Maturity Date may be extended to the date which is the third
anniversary of the date hereof at the option of Borrower,
provided, that, (i) no Event of Default or act, condition or
event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred, (ii)
Borrower shall have paid to Collateral Agent, for the benefit of
Lenders, an extension fee in an amount equal to one (1%) percent
of the Maximum Credit (as in effect after giving effect to such
extension), and (iii) each Agent shall have received written
notice from Borrower of its election to exercise this option
(which notice shall be irrevocable). Upon the effective date of
termination of the Financing Agreements, Borrower shall pay to
Collateral Agent, for the ratable benefit of Lenders, in full,
all outstanding and unpaid Obligations and shall furnish cash
collateral to Administrative Agent, for the ratable benefit of
Lenders, in such amounts as Administrative Agent determines are
reasonably necessary to secure Agents and Lenders from loss,
cost, damage or expense, including attorneys' fees and legal
expenses, in connection with any contingent Obligations,
including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the
Obligations and/or as to which Agents and Lenders have not yet
received final and indefeasible payment. Such payments in
respect of the Obligations and cash collateral shall be remitted
by wire transfer in Federal funds to such bank account of
Collateral Agent, as Collateral Agent may, in its discretion,
designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the
amounts so paid by Borrower to the bank account designated by
Collateral Agent are received in such bank account later than
12:00 noon, New York City time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge Borrower of its
respective duties, obligations and covenants under this Agreement
or the other Financing Agreements until all Obligations have been
fully and finally discharged and paid, and the continuing
security interest of Collateral Agent, for itself and the ratable
benefit of Lenders, in the Collateral and the rights and remedies
of Agents and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all
such Obligations have been fully and finally discharged and paid.
PRIVATE 13.2 Notices tc \l 2 "13.2 Notices" . All
notices, requests and demands hereunder shall be in writing and
(a) made to Agents and Lenders at their addresses set forth below
and to Borrower and Guarantor at their chief executive office set
forth below, or to such other address as either party may
designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and
upon confirmation of receipt; if by nationally recognized
overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by
certified mail, return receipt requested, ten (10) days after
mailing.
PRIVATE 13.3 Partial Invalidity tc \l 2 "13.3 Partial
Invalidity" . If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability
shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable
law.
PRIVATE 13.4 Successors tc \l 2 "13.4 Successors" .
This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Lenders, Agents,
Borrower and Guarantor and their respective successors and
assigns, except that Borrower and Guarantor may not assign its
rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the
prior written consent of Agents and Lenders. No Lender may
assign its rights and obligations under this Agreement (or any
part thereof) without the prior written consent of all Lenders
and Agents, except as permitted under Section 13.5 hereof. Any
purported assignment by a Lender without such prior express
consent or compliance with Section 13.5 where applicable, shall
be void. The terms and provisions of this Agreement and the
other Financing Agreements are for the purpose of defining the
relative rights and obligations of Borrower, Guarantor, Agents
and Lenders with respect to the transactions contemplated hereby
and there shall be no third party beneficiaries of any of the
terms and provisions of this Agreement or any of the other
Financing Agreements.
PRIVATE 13.5 Assignments; Participations. tc \l 2
"13.5 Assignments; Participations."
(a) Each Lender may (i) assign all or a portion of
its rights and obligations under this Agreement (including,
without limitation, a portion of its Commitment, the Loans owing
to it and its rights and obligations as a Lender with respect to
Letters of Credit Accommodations) and the other Financing
Agreements; to its parent company and/or any Affiliate of such
Lender which is at least fifty (50%) percent owned by such Lender
or its parent company or to one or more Lenders or (ii) assign
all, or if less than all a portion equal to at least $5,000,000
in the aggregate for the assigning Lender or assigning Lenders,
of such rights and obligations under this Agreement to one or
more Eligible Transferees, each of which assignees shall become a
party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, (A) the consent of each Agent
shall be required in connection with any assignment to an
Eligible Transferee pursuant to clause (ii) above, (B) if such
Eligible Transferee is not a bank, Administrative Agent shall
receive a representation in writing by such Eligible Transferee
that either (1) no part of its acquisition of its Loans is made
out of assets of any employee benefit plan, or (2) after
consultation, in good faith, with Borrower and provision by
Borrower of such information as may be reasonably requested by
such Eligible Transferee, the acquisition and holding of such
Commitments and Loans does not constitute a non-exempt prohibited
transaction under Section 406 of ERISA and Section 4975 of the
Code, or (3) such assignment is an "insurance company general
account," as such term is defined in the Department of Labor
Prohibited Transaction Class Exemption 95.60 (issued July 12,
1995) ("PTCE 95-60), and, as of the date of the assignment, there
is no "employee benefit plan" with respect to which the aggregate
amount of such general account's reserves and liabilities for the
contracts held by or on behalf of such "employee benefit plan"
and all other "employee benefit plans" maintained by the same
employer (and affiliates thereof as defined in Section V(a)(1) of
PTCE 95-60) or by the same employee organization (in each case
determined in accordance with the provisions of PTCE 95-60)
exceeds ten (10%) percent of the total reserves and liabilities
of such general account (as determined under PTCE 95-60)
(exclusive of separate account liabilities) plus surplus as set
forth in the National Association of Insurance Commissioners
Annual Statement filed with the state of domicile of such
Eligible Transferee and (C) such transfer or assignment will not
be effective until recorded by the Administrative Agent on the
Register. As used in this Section, the term "employee benefit
plan" shall have the meaning assigned to it in Title I of ERISA
and shall also include a "plan" as defined in Section 4975(e)(1)
of the Code.
(b) Administrative Agent shall maintain a register
of the names and addresses of Lenders, their Commitments and the
principal amount of their Loans (the "Register"). Administrative
Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the
Register to give effect to each Assignment and Acceptance. Upon
its receipt of each Assignment and Acceptance, Administrative
Agent will give prompt notice thereof to Collateral Agent and
Lenders and deliver to each of them a copy of the executed
Assignment and Acceptance. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and Borrower, Guarantor, Agents and Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available
for inspection by Borrower, Guarantor and any Lender at any
reasonable time and from time to time upon reasonable prior
notice.
(c) Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each
Assignment and Acceptance, (i) the assignee thereunder shall be a
party hereto and to the other Financing Agreements and, to the
extent that rights and obligations hereunder have been assigned
to it pursuant to such Assignment and Acceptance, have the rights
and obligations (including, without limitation, the obligation to
participate in Letter of Credit Accommodations) of a Lender
hereunder and thereunder and (ii) the assigning Lender shall, to
the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under
this Agreement.
(d) By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and
agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, the
assigning Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Financing Agreements furnished
pursuant hereto, (ii) the assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, Guarantor or any
of their Subsidiaries or the performance or observance by
Borrower or Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement
and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment
and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agents or any other
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and
the other Financing Agreements, (v) such assignee appoints and
authorizes Administrative Agent and Collateral Agent to take such
action as agent on its behalf and to exercise such powers under
this Agreement and the other Financing Agreements as are
delegated to Administrative Agent and Collateral Agent by the
terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such assignee agrees that
it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a
Lender. Agents and Lenders may furnish any information
concerning Borrower, Guarantor or their Subsidiaries in the
possession of any Agent or Lender from time to time to assignees
and Participants.
(e) Each Lender may sell participations to one or
more banks or other entities in or to all or a portion of its
rights and obligations under this Agreement and the other
Financing Agreements (including, without limitation, all or a
portion of its Commitments and the Loans owing to it and its
participation in the Letter of Credit Accommodations, without the
consent of Agents of the other Lenders); provided, that, (i) such
Lender's obligations under this Agreement (including, without
limitation, its Commitment hereunder) and the other Financing
Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the
performance of such obligations, and Borrower, Guarantor, Agent
and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Financing
Agreements, (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (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 Borrower hereunder shall be determined as if
such Lender had not sold such participation, and (iv) if such
Participant is not a bank, represent that either (A) no part of
its acquisition of its participation is made out of assets of any
employee benefit plan, or (B) after consultation, in good faith,
with Borrower and provision by Borrower of such information as
may be reasonably requested by the Participant, the acquisition
and holding of such participation does not constitute a non-
exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code, or (C) such participation is an
"insurance company general account, " as such term is defined in
the "PTCE 95-60", and, as of the date of the transfer there is no
"employee benefit plan" with respect to which the aggregate
amount of such general account's reserves and liabilities for the
contracts held by or on behalf of such "employee benefit plan"
and all other "employee benefit plans" maintained by the same
employer (and affiliates thereof as defined in Section V(a)(1) of
PTCE 95-60) or by the same employee organization (in each case
determined in accordance with the provisions of PTCE 95-60)
exceeds ten (10%) percent of the total reserves and liabilities
of such general account (as determined under PTCE 95-60)
(exclusive of separate account liabilities) plus surplus as set
forth in the National Association of Insurance Commissioners
Annual Statement filed with the state of domicile of the
participant. As used in this Section, the term "employee benefit
plan" shall have the meaning assigned to it in Title I of ERISA
and shall also include a "plan" as defined in Section 4975(e)(1)
of the Code.
(f) Nothing in this Agreement shall prevent or
prohibit any Lender from pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by such
Lenders from such Federal Reserve Bank.
(g) Borrower shall assist any Agent or Lender
permitted to sell assignments or participations under this
Section 13.5 in whatever manner reasonably necessary in order to
enable or effect any such assignment or participation, including
(but not limited to) the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals
or other documents for, and the participation of relevant
management in meetings and conference calls with, potential
assignees or Participants. Borrower shall certify the
correctness, completeness and accuracy of all descriptions of
Borrower and its affairs provided, prepared or reviewed by
Borrower that are contained in any selling materials and all
other information provided by it and included in such materials.
PRIVATE 13.6 Participant's Security Interests tc \l 2
"13.6 Participant's Security Interests" . If a Participant
shall at any time participate with any Lender in the Loans and
Letter of Credit Accommodations, Borrower hereby grants to such
Participant and such Participant shall have and is hereby given,
a continuing lien on and security interest in any money,
securities and other property of Borrower in the custody or
possession of the Participant, including the right of setoff, to
the extent of the Participant's participation in the Obligations,
and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as
it would have if it were a direct Lender.
PRIVATE 13.7 Entire Agreement tc \l 2 "13.7 Entire
Agreement" . This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the
subject matter hereof and thereof between the parties hereto, and
supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the
subject matter hereof, whether oral or written.
PRIVATE 13.8 Nonapplicability of Article 5069-15.01 et
seq. tc \l 2 "13.8 Nonapplicability of Article 5069-15.01 et
seq." Agents, Lenders, Borrower and Guarantor hereby agree
that, except for Section 15.10(b) thereof, the provisions of Tex.
Rev. Civ. Stat. Ann. art. 5069-15.01 et seq. (Vernon 1987)
(regulating certain revolving credit loans and revolving
tri-party accounts) shall not apply to this Agreement or any of
the other Financing Agreements.
PRIVATE 13.9 DTPA WAIVER tc \l 2 "13.9 DTPA
WAIVER" . EACH OF BORROWER AND GUARANTOR HEREBY WAIVES ALL
PROVISIONS OF THE DECEPTIVE TRADE PRACTICES -- CONSUMER
PROTECTION ACT (TEX. BUS. & COM. CODE ANN. ? 17.01 ET SEQ.
(VERNON SUPP. 1987)), OTHER THAN SECTION 17.555 THEREOF
PERTAINING TO CONTRIBUTION AND INDEMNITY, AND EXPRESSLY WARRANTS
AND REPRESENTS THAT BORROWER (a) HAS ASSETS OF $5,000,000 OR
MORE, (b) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS
MATTERS THAT ENABLE BORROWER TO EVALUATE THE MERITS AND RISKS OF
THIS TRANSACTION, (c) IS NOT IN A SIGNIFICANTLY DISPARATE
BARGAINING POSITION RELATIVE TO AGENTS AND LENDERS, AND (d) HAS
BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
PRIVATE 13.10 ORAL AGREEMENTS INEFFECTIVE tc \l 2
"13.10 ORAL AGREEMENTS INEFFECTIVE" . THIS AGREEMENT AND THE
OTHER FINANCING AGREEMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, Agents, Lenders, Borrower and Guarantor
have caused these presents to be duly executed as of the day and
year first above written.
GUARANTOR BORROWER
E-Z SERVE CORPORATION E-Z SERVE CONVENIENCE
STORES,
INC.
By:________________________________
By:____________________
____________
Title:______________________________
Title:_________________
_____________
Chief Executive Office: Chief Executive Office:
2250 North Loop West 2250 North Loop West
Houston, Texas, 77092 Houston, Texas, 77092
AGENTS
CONGRESS FINANCIAL CORPORATION, MADELEINE L.L.C., as
Administrative
(SOUTHWEST), as Collateral Agent Agent
By:________________________________
By:____________________
____________
Title:_______________________________
Title:_________________
______________
Address: Address:
1201 Main Street, Suite 1625 450 Park Avenue
Dallas, Texas 75202 New York, New York
10022
[SIGNATURES CONTINUED ON THE NEXT PAGE]
[SIGNATURES CONTINUED FROM THE PREVIOUS PAGE]
LENDERS
CONGRESS FINANCIAL CORPORATION MADELEINE L.L.C.
(SOUTHWEST)
By:_____________________________
By:____________________
_________
Title:___________________________
Title:_________________
__________
Address: Address:
1201 Main Street, Suite 1625 450 Park Avenue
Dallas, Texas 75202 New York, New York
10022
Commitment: Commitment:
$7,500,000 $17,500,000
Commitment Percentage: Commitment Percentage:
30% 70%