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CREDIT AGREEMENT
DATED AS OF APRIL 22, 1997
AMONG
THE KRYSTAL COMPANY,
AS BORROWER,
TRANSAMERICA BUSINESS CREDIT CORPORATION
AND THE OTHER PARTIES HERETO IDENTIFIED
AS "LENDERS" HEREINBELOW,
AS LENDERS,
AND
TRANSAMERICA BUSINESS CREDIT CORPORATION,
AS AGENT FOR LENDERS
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
1.1. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . - 2 -
1.2. Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement . . . . . . . . . . .- 22 -
1.3. Other Definitional Provisions. . . . . . . . . . . . . . . . .- 22 -
SECTION 2. AMOUNTS AND TERMS OF LOANS . . . . . . . . . . . . . . . . . .- 23 -
2.1. Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 23 -
2.2. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .- 26 -
2.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 29 -
2.4. Payments and Prepayments . . . . . . . . . . . . . . . . . . .- 31 -
2.5. Term of This Agreement . . . . . . . . . . . . . . . . . . . .- 33 -
2.6. Borrower's Loan Account and Statements . . . . . . . . . . . .- 34 -
2.7. Other Letter of Credit Provisions. . . . . . . . . . . . . . .- 35 -
2.8. Requirements of Law. . . . . . . . . . . . . . . . . . . . . .- 36 -
2.9. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 38 -
2.10. Optional Prepayment/Replacement of Lender
in Respect of Increased Costs. . . . . . . . . . . . . . . . .- 40 -
2.11. One General Obligation . . . . . . . . . . . . . . . . . . . .- 40 -
SECTION 3. CONDITIONS TO LOANS. . . . . . . . . . . . . . . . . . . . . .- 41 -
3.1. Conditions to Initial Loans. . . . . . . . . . . . . . . . . .- 41 -
3.2. Conditions to All Loans. . . . . . . . . . . . . . . . . . . .- 44 -
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . .- 45 -
4.1. Organization, Powers, Capitalization, Good
Standing, Business and Subsidiaries. . . . . . . . . . . . . .- 45 -
4.2. Authorization of Borrowing etc.. . . . . . . . . . . . . . . .- 46 -
4.3. Financial Condition. . . . . . . . . . . . . . . . . . . . . .- 47 -
4.4. Indebtedness and Contingent Obligations. . . . . . . . . . . .- 47 -
4.5. No Material Adverse Change; No Stock Payments. . . . . . . . .- 47 -
4.6. Title to Properties; Liens . . . . . . . . . . . . . . . . . .- 48 -
4.7. Litigation; Adverse Facts. . . . . . . . . . . . . . . . . . .- 48 -
4.8. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . .- 48 -
4.9. Adverse and Affiliate Contracts. . . . . . . . . . . . . . . .- 49 -
4.10. Performance of Agreements. . . . . . . . . . . . . . . . . . .- 49 -
4.11. Governmental Regulation. . . . . . . . . . . . . . . . . . . .- 49 -
4.12. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . .- 49 -
4.13. Intellectual Property. . . . . . . . . . . . . . . . . . . . .- 50 -
4.14. Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . .- 51 -
4.15. Environmental Compliance . . . . . . . . . . . . . . . . . . .- 51 -
4.16. Employee Matters . . . . . . . . . . . . . . . . . . . . . . .- 52 -
4.17. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . .- 52 -
4.18. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . .- 52 -
4.19. Use of Proceeds and Margin Security. . . . . . . . . . . . . .- 53 -
4.20. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .- 53 -
4.21. Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . .- 54 -
- i -
4.22. Compliance with Laws . . . . . . . . . . . . . . . . . . . . .- 54 -
4.23. Investments. . . . . . . . . . . . . . . . . . . . . . . . . .- 54 -
4.24. Trade Relations. . . . . . . . . . . . . . . . . . . . . . . .- 54 -
SECTION 5. BORROWER'S AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . .- 55 -
5.1. Financial Statements and Other Reports . . . . . . . . . . . .- 55 -
5.2. Access to Accountants. . . . . . . . . . . . . . . . . . . . .- 59 -
5.3. Corporate Existence etc. . . . . . . . . . . . . . . . . . . .- 59 -
5.4. Payment of Taxes and Claims; Tax
Consolidation. . . . . . . . . . . . . . . . . . . . . . . . .- 60 -
5.5. Maintenance of Properties; Insurance;
Condemnation . . . . . . . . . . . . . . . . . . . . . . . . .- 60 -
5.6. Inspection; Lender Meetings; Periodic Audits.. . . . . . . . .- 61 -
5.7. Environmental Compliance . . . . . . . . . . . . . . . . . . .- 61 -
5.8. Environmental Disclosure . . . . . . . . . . . . . . . . . . .- 62 -
5.9. Compliance with Laws . . . . . . . . . . . . . . . . . . . . .- 63 -
5.10. Additional Mortgaged Property. . . . . . . . . . . . . . . . .- 63 -
5.11. Concentration Account. . . . . . . . . . . . . . . . . . . . .- 63 -
5.12. Further Assurances . . . . . . . . . . . . . . . . . . . . . .- 63 -
SECTION 6. FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . .- 64 -
6.1. Capital Expenditure Limits.. . . . . . . . . . . . . . . . . .- 64 -
6.2. Capital Lease Limits.. . . . . . . . . . . . . . . . . . . . .- 65 -
6.3. Operating Lease Limits.. . . . . . . . . . . . . . . . . . . .- 65 -
6.4. Fixed Charge Coverage. . . . . . . . . . . . . . . . . . . . .- 65 -
6.5. EBITDA.. . . . . . . . . . . . . . . . . . . . . . . . . . . .- 65 -
6.6. Tangible Net Worth.. . . . . . . . . . . . . . . . . . . . . .- 66 -
6.7. Total Liabilities to Tangible Net Worth Ratio. . . . . . . . .- 66 -
SECTION 7. BORROWER'S NEGATIVE COVENANTS. . . . . . . . . . . . . . . . .- 67 -
7.1. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . .- 67 -
7.2. Liens and Related Matters. . . . . . . . . . . . . . . . . . .- 68 -
7.3. Investments; Joint Ventures. . . . . . . . . . . . . . . . . .- 68 -
7.4. Contingent Obligations . . . . . . . . . . . . . . . . . . . .- 69 -
7.5. Restricted Junior Payments . . . . . . . . . . . . . . . . . .- 69 -
7.6. Restriction on Fundamental Changes.. . . . . . . . . . . . . .- 70 -
7.7. Disposal of Assets or Subsidiary Stock.. . . . . . . . . . . .- 70 -
7.8. Transactions with Affiliates.. . . . . . . . . . . . . . . . .- 71 -
7.9. Environmental Liabilities. . . . . . . . . . . . . . . . . . .- 71 -
7.10. Conduct of Business. . . . . . . . . . . . . . . . . . . . . .- 71 -
7.11. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . .- 72 -
7.12. Compliance with ERISA. . . . . . . . . . . . . . . . . . . . .- 72 -
7.13. Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . .- 73 -
7.14. Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . .- 73 -
7.15. Forgiveness of Debts.. . . . . . . . . . . . . . . . . . . . .- 73 -
SECTION 8. DEFAULT, RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . .- 73 -
8.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . .- 73 -
8.2. Suspension or Termination of Commitments . . . . . . . . . . .- 76 -
8.3. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . .- 77 -
8.4. Performance by Agent.. . . . . . . . . . . . . . . . . . . . .- 77 -
- ii -
SECTION 9. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . .- 78 -
9.1. Assignments and Participations in
Loans and Notes. . . . . . . . . . . . . . . . . . . . . . . .- 78 -
9.2. Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . .- 79 -
9.3. Amendments, Consents and Waivers for
Certain Actions. . . . . . . . . . . . . . . . . . . . . . . .- 83 -
9.4. Set-Off and Sharing of Payments. . . . . . . . . . . . . . . .- 84 -
9.5. Disbursement of Funds. . . . . . . . . . . . . . . . . . . . .- 84 -
9.6. Disbursements of Advances, Payments and
Information. . . . . . . . . . . . . . . . . . . . . . . . . .- 85 -
9.7. Defaulting Lender's Status.. . . . . . . . . . . . . . . . . .- 86 -
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . .- 87 -
10.1. Expenses and Attorneys' Fees. . . . . . . . . . . . . . . . .- 87 -
10.2. Indemnity.. . . . . . . . . . . . . . . . . . . . . . . . . .- 88 -
10.3. Amendments and Waivers. . . . . . . . . . . . . . . . . . . .- 89 -
10.4. Retention of Borrower's Documents.. . . . . . . . . . . . . .- 90 -
10.5. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . .- 90 -
10.6. Survival of Warranties and Certain
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . .- 91 -
10.7. Failure or Indulgence Not Waiver; Remedies
Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . .- 91 -
10.8. Marshaling; Payments Set Aside. . . . . . . . . . . . . . . .- 91 -
10.9. Independence of Covenants.. . . . . . . . . . . . . . . . . .- 91 -
10.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . .- 92 -
10.11. Lenders' Obligations Several; Independent Nature of Lenders'
Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . - 92 -
10.12. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . .- 92 -
10.13. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . .- 92 -
10.14. Successors and Assigns; Subsequent
Holders of Notes. . . . . . . . . . . . . . . . . . . . . . .- 92 -
10.15. No Fiduciary Relationship.. . . . . . . . . . . . . . . . . .- 93 -
10.16. Limitation of Liability.. . . . . . . . . . . . . . . . . . .- 93 -
10.17. No Duty.. . . . . . . . . . . . . . . . . . . . . . . . . . .- 93 -
10.18. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .- 93 -
10.19. Construction. . . . . . . . . . . . . . . . . . . . . . . . .- 93 -
10.20. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . .- 93 -
10.21. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . .- 94 -
10.22. Confidentiality.. . . . . . . . . . . . . . . . . . . . . . .- 95 -
10.23. Publicity.. . . . . . . . . . . . . . . . . . . . . . . . . .- 95 -
10.24. Counterparts; Effectiveness.. . . . . . . . . . . . . . . . .- 95 -
- iii -
Exhibits and Schedules
Exhibits
Exhibit 1.1(B) -- Compliance Certificate
Exhibit 1.1(C) -- Notice of Borrowing
Exhibit 1.1(D) -- Revolving Note
Exhibit 1.1(E) -- Security Agreement
Exhibit 1.1(F)A - Term Note A
Exhibit 1.1(F)B - Term Note B
Exhibit 1.1(G) -- Lien Waiver
Schedules
Schedule 1.1(B) -- Other Liens
Schedule 1.1(C) -- Prior Indebtedness
Schedule 3.1(I)(5) -- Mortgaged Property
Schedule 4.1(A) -- Jurisdiction Incorporated
Schedule 4.1(B) -- Capital Stock
Schedule 4.1(C) -- Jurisdictions Qualified
Schedule 4.1(D) -- Conduct of Business
Schedule 4.1(E) -- Subsidiaries
Schedule 4.4 -- Other Indebtedness/Contingent Obligations
Schedule 4.7 -- Litigation
Schedule 4.8 -- Payment of Taxes
Schedule 4.9(B) -- Affiliate Contracts
Schedule 4.9(C) -- Co-op Contracts
Schedule 4.12 -- Employee Benefit Plans
Schedule 4.13 -- Intellectual Property
Schedule 4.15(A) - Environmental Claims
Schedule 4.15(B) - Hazardous Materials
Schedule 4.15(C) - Compliance with Environmental Laws
Schedule 4.16 -- Employee Matters
Schedule 4.20 -- Insurance
Schedule 4.21 -- Bank Accounts
Schedule 4.23 -- Investments
Schedule 7.7 -- Capital Stock Transactions
Schedule 7.8 -- Affiliate Transactions
- iv -
CREDIT AGREEMENT
PREAMBLE: THIS CREDIT AGREEMENT, dated as of April 22, 1997 (the
"Closing Date"), is entered into by and among THE KRYSTAL COMPANY, a
Tennessee corporation ("Borrower"), with its principal place of business at
The Krystal Building, One Union Square, Chattanooga, Tennessee 37402;
TRANSAMERICA BUSINESS CREDIT CORPORATION, a Delaware corporation (in its
individual capacity, called "Transamerica" or "TBCC"), with offices at Two
Ravinia Drive, Suite 700, Atlanta, Georgia 30346, for itself, as a Lender,
and as agent for each other Lender (the term "Lender" and other capitalized
terms used in the Recitals are defined in Section 1 of this Agreement); and
each such Lender.
RECITALS:
WHEREAS, Borrower desires that Lenders extend a certain term credit
facility, a certain revolving credit facility and a certain letter of credit
facility to Borrower, to fund the repayment of certain indebtedness of
Borrower, to provide working capital financing for Borrower and to provide
funds for other general corporate purposes of Borrower consistent with the
terms of this Agreement; and
WHEREAS, Borrower is willing to secure all of its debts, liabilities and
obligations to Lenders arising hereunder and under the other Loan Documents
by granting to Agent, on behalf of Lenders, a security interest in and lien
upon all, or substantially all, of its personal property and its real
property;
NOW, THEREFORE, in consideration of the foregoing premises, the
agreements, provisions and covenants herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged by all parties hereto, Borrower, Lenders, and Agent,
intending to be legally bound, do hereby covenant and agree as follows:
SECTION 1.
DEFINITIONS
1.1. CERTAIN DEFINED TERMS.
The terms defined below are used in this Agreement as so defined. Terms
defined in the Preamble and Recitals to this Agreement are used in this
Agreement as so defined.
"ACCOUNTS" means, on any date of determination, the unpaid portion of
the obligations as stated on the respective invoices issued to a customer of
Borrower with respect to Inventory sold or services performed in the ordinary
course of business, net of any credits, rebates or offsets owed by Borrower
to the respective customer and net of any commissions payable by Borrower to
third parties.
"ADDITIONAL MORTGAGED PROPERTY" shall have the meaning specified in
subsection 5.10.
"ADVANCE" means an advance of borrowed funds under the Revolving Loan.
"AFFILIATE," in respect of any Person, means any other Person: (a)
directly or indirectly controlling, controlled by, or under common control
with, such Person; (b) directly or indirectly owning or holding ten percent
(10%) or more of any equity interest in such Person; or (c) ten percent (10%)
or more of whose voting stock or other equity interest is directly or
indirectly owned or held by such Person. For purposes of this definition,
"control" (including with correlative meanings the terms "controlling,"
"controlled by" and "under common control with") means the possession
directly or indirectly of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities or by contract or otherwise. Without limitation of the foregoing
provisions, each Subsidiary of Borrower, whether existing on the Closing Date
or thereafter, shall constitute an Affiliate of Borrower.
"AGENT" means TBCC acting in its capacity as agent for the Lenders under
this Agreement and any successor agent acting in such capacity appointed
pursuant to subsection 9.2.
"AGREEMENT" means this Credit Agreement (including all schedules,
exhibits, annexes and appendices hereto) as it may be modified or amended
from time to time in accordance with subsection 10.3; and shall refer to this
Agreement as the same may be in effect at the time such reference becomes
operative.
-2-
"ALTERNATE BASE RATE," for any day, means a rate per annum (rounded
upwards, if necessary, to the next 1/16th of 1%) equal to the sum of (a) the
Base Rate (as defined below) in effect on such day PLUS (b) the Applicable
Margin. For purposes hereof, "Base Rate" shall mean the higher of (i) the
highest among the rates of interest per annum publicly announced from time to
time by each of The First National Bank of Chicago, Northern Trust Company or
Citibank, N.A. as its prime rate, base rate or other equivalent rate with
each change in the Base Rate to be deemed effective on the date that such
change is publicly announced); and (ii) the latest published annualized rate
for 90-day-commercial paper which normally appears in the "Money Rates"
section of THE WALL STREET JOURNAL; provided that clause (i) hereof shall
govern in all cases in which clause (ii) hereof cannot be ascertained. Any
change in the Alternate Base Rate due to a change in the Base Rate shall be
effective on the effective day of such change in the Base Rate.
"ALTERNATE BASE RATE LOANS" means the collective reference to Loans the
rate of interest applicable to which is based upon the Alternate Base Rate.
"APPLICABLE MARGIN" means a percentage equal to one-half of one percent
(0.5%) with respect to Revolving Loans and Term Loan A priced as Alternate
Base Rate Loans, one and one-half percent (1.5%) with respect to Term Loan B
priced as an Alternative Base Rate Loan, two and one-half percent (2.5%) with
respect to Revolver Loans and Term Loan A priced as Eurodollar Rate Loans,
and three and one-half percent (3.5%) for Term Loan B priced as a Eurodollar
Rate Loan; PROVIDED THAT, if there exists no Default or Event of Default,
then the Applicable Margin shall be decreased, based upon the ratio of
Borrower's Indebtedness to Free Cash Flow, as follows:
Applicable Applicable Applicable Applicable
Margin for Margin for Margin for Margin for
Revolving Term Loan B Revolving Term Loan B
Indebtedness/ Loans and Priced as an Loans and Priced as a
Free Cash Flow Term Loan A Alternate Term Loan A Eurodollar
Ratio Priced as Base Rate Priced as Rate Loan
- -------------- Alternate Loan Eurodollar -----------
Base Rate ------------ Rate Loans
Loans -----------
-----------
If, on the last
day of any
fiscal quarter .25% 1.25% 2.25% 3.25%
of Borrower
ending after
January 1,
1998, the
Indebtedness/
Free Cash Flow
Ratio is less
than 3.75 to 1
-3-
Applicable Applicable Applicable Applicable
Margin for Margin for Margin for Margin for
Revolving Term Loan B Revolving Term Loan B
Indebtedness/ Loans and Priced as an Loans and Priced as a
Free Cash Flow Term Loan A Alternate Term Loan A Eurodollar
Ratio Priced as Base Rate Priced as Rate Loan
- -------------- Alternate Loan Eurodollar -----------
Base Rate ------------ Rate Loans
Loans -----------
-----------
If, on the last
day of any
fiscal quarter .0% 1.0% 2.0% 3.0%
of Borrower
ending after
January 1,
1999, the
Indebtedness/
Free Cash Flow
Ratio is less
than 2.75 to 1
The Applicable Margin shall be subject to reduction as set forth, and in the
order shown, in the table above not more than one (1) time during any Fiscal
Year of Borrower and not more than two (2) times during the term of this
Agreement according to the performance of Borrower as measured by the ratio
of Borrower's Indebtedness to Free Cash Flow for the immediately preceding
four (4) fiscal quarters of Borrower, commencing with the four (4) fiscal
quarters ending December, 1997. Any such reduction in the Applicable Margin
provided for herein shall be effective on the first day of the second month
after receipt by Agent of the applicable Form 10K or 10Q of Borrower as filed
with the U.S. Securities and Exchange Commission and corresponding Compliance
Certificate as required under Section 5.1.
"APPLICATION" shall have the meaning given to such term in subsection
2.1(C)(4).
"ASSET DISPOSITION," as to any Person, means the disposition, whether by
sale, lease, transfer, loss, damage, destruction, condemnation or otherwise
of any of the following: (a) any of the Capital Stock of any Subsidiary of
such Person or (b) any or all of the equipment or real property assets of
such Person.
"BALLOON PAYMENT" shall have the meaning given to such term in
subsection 2.1(A).
"BANK AGENCY AGREEMENT" means an agreement, satisfactory to Agent, among
Agent, for the benefit of the Lenders, Borrower and each bank at which
Borrower maintains depository accounts respecting the manner of receipt,
collection and disposition of funds of Borrower constituting proceeds from
the sale of Inventory, the collection of Accounts and the disposition of
other Collateral. Without limitation, the foregoing shall include "blocked
account" agreements, agency agreements and "lockbox" agreements.
-4-
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time and all rules and regulations
promulgated thereunder.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
Eastern District of Tennessee, Chattanooga Division.
"BIG SIX ACCOUNTING FIRM" means any of Arthur Andersen L.L.P., KPMG Peat
Marwick, Coopers & Lybrand, Ernst & Young, Deloitte & Touche and Price
Waterhouse or any of their respective successors.
"BORROWER" shall have the meaning given to such term in the Preamble.
"BORROWING AVAILABILITY" means, as of the date of determination, the
amount (if any) by which the sum of(a)the Maximum Revolving Loan Amount on
such date plus (b) Borrower's unrestricted cash on hand on such date plus (c)
the unpaid Term Loans on such date exceeds the Plan Costs on such date.
"BUSINESS DAY" means any day, excluding (i) a Saturday, Sunday or any
day which is a legal holiday under the laws of the States of Illinois or New
York, (ii) a day on which banking institutions located in the States of
Illinois or New York are authorized to close; or (iii) any date on which the
Agent is closed for business in Chicago, Illinois, New York, New York or
Atlanta, Georgia.
"CAPITAL EXPENDITURES" means, without duplication, for any period, the
aggregate of all expenditures on a consolidated basis including deposits
(whether paid in cash or property or accrued as liabilities) made by Borrower
and its Subsidiaries that, in conformity with GAAP, are required to be
included in the property, plant and equipment, or similar, fixed asset
account.
"CAPITAL LEASES" means any lease of any property (whether real, personal
or mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"CAPITAL STOCK," of any Person which is a corporation, means all issued
and outstanding equity securities of such Person, including both common and
preferred stock, and any warrants or similar rights to acquire any such stock.
"CASH EQUIVALENTS," as to any Person, means: (a) marketable direct
obligations issued or unconditionally guarantied by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one (1) year from
the date of acquisition thereof; (b) commercial paper maturing no more than
one (1) year from the date issued and, at the time of acquisition, having a
rating of at Least A-1 from Standard & Poor's Corporation or at least P-1
from Moody's Investors Service, Inc.; (c) certificates of deposit or bankers'
acceptances maturing within one (1) year from the date of issuance thereof
issued by, or overnight reverse repurchase agreements from, First Tennessee
Bank, National Association or NationsBank of Tennessee, N.A. or any
commercial bank organized under the laws of the United States of America or
any state thereof
-5-
or the District of Columbia having combined capital and surplus of not less
than $1,000,000,000 and not subject to setoff rights in favor of such bank;
(d) time deposits maturing no more than thirty (30) days from the date of
creation thereof with commercial banks having membership in the Federal
Deposit Insurance Corporation in amounts not exceeding the lesser of One
Hundred Thousand Dollars ($100,000) or the maximum amount of insurance
applicable to the aggregate amount of such Person's deposits at such
institution; and (e) deposits or investments in mutual or similar funds
offered or sponsored by brokerage or other companies as having membership in
the Securities Investor Protection Corporation in amounts not exceeding the
lesser of One Hundred Thousand Dollars ($100,000) or the maximum amount of
insurance applicable to the aggregate amount of such Person's deposits at
such institution.
"CHAPTER 11 CASE" means the Chapter 11 case commenced by Borrower in the
Bankruptcy Court, being Case No. 95-15306.
"CLOSING DATE" means the date specified as such in the Preamble to this
Agreement.
"COLLATERAL" means, collectively: (a) all "Collateral," as that term is
defined in the Security Agreement; (b) all Mortgaged Property and, as and
when appropriate, Additional Mortgaged Property; and (c) any property or
interest in property at any time provided in addition to or in substitution
for any of the foregoing as security for the payment of the Obligations.
"COLLATERAL LOCATION" means each restaurant, distribution center,
warehouse or other location, whether owned or leased by Borrower, at which
any Collateral is situated at any time or from time to time.
"COMMITMENT" or "COMMITMENTS" means the commitment or commitments of a
Lender or Lenders to make the Loans described in subsection 2.1 and of the
Issuer to issue Lender Letters of Credit as set forth in subsection 2.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT 1.1(B) (containing sufficient data, segregated by reporting
period, to verify the accuracy of the calculations confirmed thereby).
"CONCENTRATION ACCOUNT" means the demand deposit account of Borrower at
First Tennessee Bank, National Association, or such other financial
institution approved by Agent in writing.
"CONFIRMATION ORDER" means an order of the Court that is acceptable to
Lenders and that confirms the Plan.
"CONTINGENT OBLIGATION," as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (a) with respect
to any indebtedness, lease, dividend or other obligation of another Person if
the primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any
-6-
agreements relating thereto will be complied with, or that the holders of
such liability will be protected (in whole or in part) against loss with
respect thereto; (b) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (c) under Interest Rate Agreements; or (d) under
any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect that Person against fluctuations
in currency values. Contingent Obligations shall include, without
limitation: (i) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the
obligation of another, (ii) the obligation to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or
parties to an agreement, and (iii) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or
to maintain the solvency, financial condition or any balance sheet item or
level of income of another. The amount of any Contingent Obligation shall be
equal to the amount of the monetary obligation so guaranteed or otherwise
supported or, if not a fixed and determined amount, the maximum amount of the
monetary obligation so guaranteed.
"CONTRACTUAL OBLIGATION," as applied to any Person, means any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"DEFAULT" means a condition or event that, after notice or lapse of time
or both, would constitute an Event of Default if that condition or event were
not cured or removed within any applicable grace or cure period.
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"EBITDA" means, without duplication, for any period, the following, each
calculated for Borrower and its Subsidiaries on a consolidated basis, in each
instance determined in accordance with GAAP, for such period: (a) Net Income;
PLUS (b) any provision for income or franchise taxes included in the
determination of Net Income; PLUS (c) Interest Expense, net of Interest
Income, deducted in the determination of Net Income; PLUS (d) amortization
and depreciation expenses deducted in the determination of Net Income; plus
(e) Plan-related professional expenses and payment of all amounts to or on
behalf of Wage Claimants for FLSA Claims under (and as defined in) the Plan
to the extent such expenses and payments were expensed by Borrower during
such period, PLUS (f) any cost attributable to changes in the value of
Borrower's Inventory caused by changes in Borrower's LIFO (to the extent such
changes exceed One Hundred Thousand Dollars ($100,000) and cost
capitalization gross-ups or reserves (including purchase accounting inventory
writeups); PLUS (g) without duplication, in Fiscal Year
-7-
1997 an extraordinary item not in excess of $360,000 before taxes resulting
from early extinguishment of debt of Borrower; LESS (h) any income
attributable to changes in the value of Borrower's Inventory caused by
changes in Borrower's LIFO (to the extent such changes exceed One Hundred
Thousand Dollars ($100,000) and cost capitalization gross-ups or reserves
(including purchase accounting inventory writeups).
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA.
"ENVIRONMENTAL CLAIMS" shall have the meaning given to such term in
subsection 4.15(A).
"ENVIRONMENTAL LAWS" means all present and future federal, state or
local laws, statutes, ordinances, codes, rules, regulations, orders, decrees
or directives imposing liability or standards of conduct for relating to the
environment, industrial hygiene, land use or the protection of human health
and safety, natural resources, pollution or waste management.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations promulgated thereunder.
"ERISA AFFILIATE," as applied to any Loan Party, means any Person who is
a member of a group which controls, is controlled by or is under common
control with any Loan Party (as those correlative terms are defined in the
definition of "Affiliate" above), who together with any Loan Party is treated
as a single employer within the meaning of Section 414, subsections (b) and
(c) of the IRC.
"ERISA TERMINATION EVENT" means: (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder; or (b) the
withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) or 4068(f) of ERISA; or (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (d) the institution of proceedings to terminate, or the appointment
of a trustee with respect to, any Pension Plan by the PBGC; or (e) any other
event or condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; or (f) the partial or complete withdrawal of any Loan Party
or any ERISA Affiliate from a Multiemployer Plan; or (g) the imposition of a
Lien pursuant to Section 412 of the IRC or Section 302 of ERISA; or (h) any
event or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (i) any event or
condition which results in the termination of a Multiemployer Plan under
Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
-8-
"EUROCURRENCY RESERVE REQUIREMENTS," for any day, as applied to a
Eurodollar Rate Loan, means the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or
other Governmental Authority having jurisdiction with respect thereto),
dealing with reserve requirements prescribed for Eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Federal Reserve Board) maintained by a member bank of the Federal Reserve
System.
"EURODOLLAR BASE RATE," with respect to each day during each Interest
Period pertaining to a Eurodollar Rate Loan, means the rate per annum equal
to the latest published rate for London Interbank Offered Rates (LIBOR) for
Dollar deposits which appears in the "Money Rates" section of THE WALL STREET
JOURNAL, or in such other publication as Agent may, from time to time
hereafter, designate in writing, two (2) Working Days prior to the beginning
of such Interest Period for the number of months comprised in such Interest
Period and in an amount comparable to the amount of the Eurodollar Rate Loan
requested by Borrower to be outstanding during such Interest Period.
"EURODOLLAR RATE LOANS" means Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"EURODOLLAR RATE," with respect to each day during each Interest Period
pertaining to a Eurodollar Rate Loan, means a rate per annum determined for
such day by the Agent or its designee and notified to the Agent in accordance
with the following formula (rounded upwards to the nearest whole multiple of
1/100th of one percent):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
PLUS the Applicable Margin.
"EVENT OF DEFAULT" means each of the events set forth in subsection 8.1.
"EXCESS CASH FLOW" means, for any period, without duplication, the total
of the following for Borrower and its Subsidiaries on a consolidated basis,
in each instance determined in accordance with GAAP, each calculated for such
period: (a) EBITDA; LESS (b) any income or franchise taxes paid in cash and
included in the determination of Net Income less any tax refunds received;
LESS (c) Unfinanced Capital Expenditures; LESS (d) scheduled payments of
principal of any Indebtedness (whether or not actually made); LESS (e) the
aggregate amount of all voluntary prepayments of principal of the Term Loans
made in accordance with subsection 2.4(E) and any related prepayment fees
paid in connection under subsection 2.3(E) LESS (f) Interest Expense.
-9-
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and any rule or regulation promulgated thereunder from time to time.
"EXPIRY DATE" means the earlier of (a) the termination of the Revolving
Loan Commitment pursuant to subsection 8.3 or (b) the Termination Date.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) federal funds brokers of recognized standing selected by it.
"FINANCIAL CONDITION CERTIFICATE" means a certificate delivered to Agent
by Borrower pursuant to subsection 3.1(B).
"FINANCIAL STATEMENTS" means the balance sheets, income statements and
statements of cash flows of any Person, and all footnotes and other
supplementary or explanatory materials delivered in connection therewith.
"FISCAL YEAR" means the 52 or 53 week accounting period of Borrower and
its Subsidiaries ending on the Sunday closest to December 31 in each year.
"FIXED CHARGE COVERAGE" means, for any period, the quotient of (a)
EBITDA, LESS Unfinanced Capital Expenditures, and LESS any income or
franchise taxes DIVIDED BY (b) Fixed Charges.
"FIXED CHARGES" means, without duplication, for any period, the total of
the following for Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP, each calculated for such period: (a) Interest Expense;
PLUS (b) scheduled payments of principal with respect to all Indebtedness of
Borrower and its Subsidiaries on a consolidated basis (whether or not
actually made), including, but not limited to, the principal component of any
scheduled payments on Capital Leases and Subordinated Debt (whether or not
actually made), but excluding any repayments of the Revolving Loan.
"FREE CASH FLOW" means for any period, EBITDA for such period MINUS
Capital Expenditures for such period.
"FUNDING DATE" means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.
"GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally
accepted accounting principles as set forth in statements from Auditing
Standards No. 69 entitled "The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles
-10-
in the Independent Auditors Report" issued by the Auditing Standards Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government or federal,
state, county, province, canton, city, town, municipality, local or other
political subdivision thereof, and any department, commission, agency or
instrumentality exercising executive, legislative, judicial, regulatory or
administrative function of or pertaining to government.
"HAZARDOUS MATERIAL" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity or "TLCP" toxicity, "EP toxicity"; (b) oil, petroleum
or petroleum derived substances, natural gas, natural gas liquids or
synthetic gas and drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil,
natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
"INCHOATE INDEMNITY OBLIGATIONS" means that portion, if any, of
Borrower's or any other Loan Party's Obligations consisting of indemnities of
Borrower or another Loan Party arising in favor of Agent or Lenders pursuant
to the terms hereof or of any Loan Document which are contingent, uncertain
or unknown. The foregoing shall include, but not be limited to, the
indemnities set forth in subsections 2.2(H), 2.8, 2.9, 10.1 and 10.2 of this
Agreement.
"INDEBTEDNESS," as applied to any Person, means: (a) the Obligations and
all other indebtedness for borrowed money; (b) that portion of obligations
with respect to Capital Leases that is properly classified as a liability on
a balance sheet in conformity with GAAP; (c) all notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part
of the deferred purchase price of property or services if the purchase price
is due more than one year from the date the obligation is incurred or is
evidenced by a note, title retention agreement, conditional sale contract or
similar written instrument; (e) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; and (f) all Subordinated Debt.
Obligations under Interest Rate Agreements constitute Contingent Obligations
and not Indebtedness.
-11-
"INTEREST EXPENSE" means, without duplication, for any period, (a)
interest expense deducted in the determination of Net Income, MINUS (b) that
portion of interest expense representing amortization of deferred debt cost
of Borrower and its Subsidiaries on a consolidated basis determined in
accordance with GAAP.
"INTEREST PAYMENT DATE" shall mean: (i) as to all Loans, the first day
of each calendar month, commencing on the first such date occurring after the
Closing Date; (ii) in addition to and not in limitation of the foregoing, as
to any Eurodollar Rate Loan, the last day of the Interest Period for such
Eurodollar Rate Loan; and (iii) in addition to and without limitation of the
foregoing, for each Loan, the maturity date of such Loan, whether by its
terms or upon acceleration of its maturity pursuant hereto.
"INTEREST PERIOD" with respect to any Eurodollar Rate Loan:
(a) initially, the period commencing on the Funding Date or conversion
date, as the case may be, with respect to such Eurodollar Rate Loan and
ending one (1) month, two (2) months, three (3) months or six (6) months
thereafter, as selected by Borrower in its Notice of Borrowing not less than
two (2) Working Days prior to the intended Funding Date for such Eurodollar
Rate Loan; and
(b) thereafter, for any continuation of a Eurodollar Rate Loan, each
period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Rate Loan and ending two (2) months, three (3)
months or six (6) months thereafter, as selected by Borrower in its Notice of
Borrowing not less than two (2) Working Days prior to the last day of the
then current Interest Period with respect to such Eurodollar Rate Loan;
PROVIDED that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(1) if any Interest Period would otherwise end on a day which is
not a Working Day, that Interest Period shall be extended to the next
succeeding Working Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Working Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date;
(3) if Borrower shall fail to give notice as provided above, such
Borrower shall be deemed to have selected an Alternate Base Rate Loan to
replace the affected Eurodollar Rate Loan;
(4) any Interest Period that begins on the last Working Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Working Day of a calendar month; and
-12-
(5) Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Rate Loan during an Interest Period
for such Loan.
"INTEREST RATE AGREEMENT" means any interest rate protection agreement,
hedge contract, swap agreement or similar agreement or arrangement designed
to protect a Person against fluctuations in interest rates.
"INVENTORY" means inventory (as defined in Article 9 of the UCC) to the
extent comprised of materials, products or goods of a type manufactured, sold
or consumed by a Person in the ordinary course of its business.
"INVESTMENT," as applied to any Person, means (a) any direct or indirect
purchase or other acquisition by such Person of any beneficial interest in,
including stock, partnership interest or other Securities of, or all, or
substantially all, assets of, any other Person or (b) any direct or indirect
loan, advance or capital contribution by a Person to any other Person,
including, without limitation, all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from, sales to
that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment PLUS the cost of all
additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such
investment.
"IRC" means the Internal Revenue Code of 1986, as amended, and any rule
or regulation promulgated thereunder from time to time.
"ISSUER" means any Lender (which is a bank) as may be selected by Agent,
which agrees to be the issuer of a Lender Letter of Credit.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, regardless of the legal form of such arrangement.
"LENDER" or "LENDERS" means TBCC and each other Person identified as a
"Lender" on the signature pages to this Agreement, together with each
successor and permitted assign of such Person pursuant to subsection 9.1.
"LENDER ADDITION AGREEMENT" means an agreement among Agent, a Lender and
such Lender's assignee regarding their respective rights and obligations with
respect to assignments of any of the Loans, the Commitments and other
interests under this Agreement and the other Loan Documents.
"LENDER LETTER OF CREDIT" shall have the meaning given to such term in
subsection 2.1(C).
"LENDER REIMBURSEMENT LIABILITY" means, as to each Lender Letter of
Credit, all reimbursement obligations of Borrower to the Issuer thereof,
whether contingent or otherwise, including with respect to any Lender Letter
of Credit: (a) the amount available to
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be drawn or which may become available to be drawn; (b) all amounts which
have been paid or made available by the issuing bank to the extent not
reimbursed; and (c) all unpaid interest, fees and expenses.
"LENDER REIMBURSEMENT RESERVE" means, at any time, an amount equal to
(a) the aggregate amount of Lender Reimbursement Liability with respect to
all Lender Letters of Credit outstanding at such time PLUS (b) to the extent
not included in clause (a), the aggregate amount theretofore paid by any
Issuer under Lender Letters of Credit for which such Issuer has not been
reimbursed or which has not been debited to the Loan Account pursuant to
subsection 2.1(C)(2).
"LENDING OFFICE" shall mean the office of each Lender specified as such
on the signature pages to this Agreement opposite its name, or such other
office of such Lender as such Lender may from time to time specify in writing
to the Agent.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"LIEN WAIVER" means a written agreement, in substantially the form of
EXHIBIT 1.1(G) or as otherwise is reasonably acceptable to Agent, pursuant to
which a Person shall waive or subordinate its rights and claims as landlord
in any Collateral of Borrower for unpaid rents, grant access to Agent for the
repossession and sale of such Collateral and make other agreements relative
thereto.
"LOAN" or "LOANS" means an extension of credit made under or pursuant to
either the Term Loan Commitment or the Revolving Loan Commitment.
"LOAN ACCOUNT" shall have the meaning given to such term in subsection
2.6.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security Documents
and all other instruments, documents and agreements executed by or on behalf
of any Loan Party and delivered concurrently herewith or at any time
hereafter to or for the benefit of Agent or any Lender in connection with the
Loans and other transactions contemplated by this Agreement, all as amended,
supplemented or modified from time to time.
"LOAN PARTY" means, collectively, Borrower and any Subsidiary of
Borrower which, pursuant to Section 5.12(B) hereof, is or becomes a party to
any Loan Document.
"LOAN YEAR" means each period of twelve (12) consecutive months
commencing on the Closing Date and each anniversary thereof.
"MATERIAL ADVERSE CHANGE" means any material, adverse change occurring
in (a) the business, operations, properties, assets or financial condition of
Borrower or of Borrower and its Subsidiaries
-14-
taken as a whole or (b) the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party or of Agent or any
Lender to enforce or collect any of the Obligations.
"MATERIAL ADVERSE EFFECT" means any effect which has resulted in, will
result in, or which would reasonably be expected to result in, a Material
Adverse Change.
"MATERIAL SUBSIDIARY" means any Subsidiary of Borrower, other than
Krystal Aviation Co. and Krystal Aviation Management Co. (i) which has an
individual net worth that equals or exceeds, at the relevant time period, ten
percent (10%) of the Net Worth of Borrower and all of its Subsidiaries on a
consolidated basis (including such Subsidiary), (ii) which has a Net Income
that equals or exceeds, as of the relevant time period, ten percent (10%) of
the Net Income of Borrower and all of its Subsidiaries on a consolidated
basis (including such Subsidiary) or (iii) the divestiture of which by
Borrower otherwise could reasonably be expected to have a Material Adverse
Effect (regardless of its relative net worth).
"MAXIMUM REVOLVING LOAN AMOUNT" shall have the meaning given to such
term in subsection 2.1(B).
"MORTGAGE" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or
other real estate security documents delivered by any Loan Party to Agent,
with respect to Mortgaged Property or Additional Mortgaged Property, all in
form and substance satisfactory to Agent.
"MORTGAGED PROPERTY" shall have the meaning given to such term in
subsection 3.1(I)(5).
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA.
"NET INCOME" means, for any period, the net income (or loss) of Borrower
and its Subsidiaries on a consolidated basis after provision for or benefit
from income and franchise taxes determined in accordance with GAAP.
"NET PROCEEDS" means cash proceeds received by Borrower from any Asset
Disposition, including payments under notes or other debt securities received
in connection with any Asset Disposition and insurance proceeds and awards of
condemnation), net of (a) the costs of such sale, lease, transfer or other
disposition (including commissions and taxes attributable to such sale, lease
or transfer) and (b) amounts applied to repayment of Indebtedness (other than
the Obligations) secured by a lien, security interest, claim or encumbrance
on the asset or property disposed that is a Permitted Encumbrance.
"NET WORTH" means, on any date of determination, the total assets of
Borrower and its Subsidiaries on a consolidated basis less the total
liabilities of Borrower and its Subsidiaries on a
-15-
consolidated basis, in each instance determined in accordance with GAAP.
"NOTE" or "NOTES" means one or more of the Term Notes or Revolving
Notes, or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of
EXHIBIT 1.1(C).
"OBLIGATIONS" means the Term Loans, all Advances, all Loans, all
reimbursement obligations of Borrower with respect to Lender Letters of
Credit and any and all other obligations, liabilities and Indebtedness of
every nature of each Loan Party from time to time owed to Agent or any Lender
hereunder and under the Loan Documents, including the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all fees,
costs and expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing, due or
payable whether before or after the filing of a proceeding under the
Bankruptcy Code by or against the Loan Party obligated thereon. With respect
to any specified Loan Party, "Obligations" of such specified Loan Party means
all obligations, liabilities and Indebtedness of such Loan Party to any
Lender or Agent under any Loan Document to which such Loan Party is a party.
Without limitation, "Inchoate Indemnity Obligations" shall constitute a part
of "Obligations."
"OTHER LENDER RESERVES" means (i) reserves for costs, expenses and
liabilities of any Loan Party arising hereunder or under any Loan Document
which have become due and payable pursuant to the terms hereof or thereof and
as to which Agent is authorized to charge the amount thereof to the Loan
Account pursuant hereto; (ii) reserves for any taxes payable by Borrower at
any time or from time to time to any Governmental Authority; (iii) reserves
for sales, excise or similar taxes not otherwise being timely paid or fully
reserved against by Borrower in a manner reasonably satisfactory to Agent;
(iv) any other reserves which Agent may reasonably impose in order to perfect
or continue the perfection or first priority status of Agent's Liens
hereunder or under any of the Loan Documents; and (v) for so long as any
Event of Default exists, such additional reserves as Agent in its sole and
absolute discretion may elect to impose from time to time, without waiving
any Event of Default or Agent's entitlement to accelerate the maturity of the
Obligations as a consequence thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Part 3 of Title I
of ERISA, Title IV of ERISA or Section 412 of the IRC.
"PERMITTED ENCUMBRANCES" means the following:
(a) Liens (other than Liens relating to Environmental Claims or ERISA)
for taxes, assessments or other governmental charges not
-16-
yet due and payable or if being contested in accordance with subsection 5.4;
(b) Statutory Liens of carriers, mechanics, materialmen, landlords,
warehousemen, and other similar liens imposed by law, which are incurred in
the ordinary course of business for sums not yet due or not more than thirty
(30) days delinquent or which are being contested in good faith; PROVIDED
that a reserve, bond or other appropriate provision reasonably satisfactory
to Agent shall have been made therefor;
(c) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety, stay,
customs and appeal bonds, bids, leases, government contracts, trade
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(d) Liens for Purchase Money Indebtedness; PROVIDED that: (i) the
Indebtedness secured by any such Lien is permitted under subsection 7.1; and
(ii) any such Lien encumbers only the asset so purchased, constructed or
improved; and (iii) such Lien is released upon the Indebtedness secured
thereby being fully paid;
(e) Any attachment or judgment Lien not constituting an Event of
Default under subsection 8.1(J);
(f) Leases or subleases granted to others not interfering in any
material respect with the business of any Loan Party or any, of its
Subsidiaries;
(g) Easements, rights-of-way, restrictions, and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of any Loan Party or any of its Subsidiaries;
(h) Any interest or title of a lessor or sublessor under any Capital
Lease not restricted by Section 6.2;
(i) Any interest or title of a lessor or sublessor under any operating
lease;
(j) Liens arising from filing precautionary UCC financing statements
regarding leases and consignments permitted by this Agreement;
(k) Liens in favor of Agent, on behalf of Lenders;
(l) Liens existing on real estate when purchased by Borrower, which is
purchased by Borrower subject thereto or as to which Borrower has assumed any
Indebtedness to the extent permitted in subsection 7.1(E);
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(m) Other Liens existing on the date hereof and renewals, extensions
and refinancings thereof, which Liens (if any) are set forth on SCHEDULE
1.1(B); and
(n) Liens in the nature of zoning restrictions, easements, licenses,
restrictive covenants, riparian and other rights, mining and mineral rights
and similar encumbrances on title to real property of a customary nature or
other, minor irregularities of title thereto; PROVIDED that the same do not,
individually or in the aggregate, materially impair the use, value or
marketability of such real property.
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, limited liability limited partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof and their respective permitted successors and assigns (or in the case
of a governmental Person, the successor functional equivalent of such
Person).
"PLAN" means the Second Amended and Restated Plan of Reorganization
filed by Borrower in the Chapter 11 Case, as the same may be modified or
amended in any material respect with Agent's consent.
"PLAN COSTS" means the sum of (a) the amount determined by Agent as a
good faith estimate of the amount of accrued but unpaid professional fees and
expenses and other closing costs incurred by Borrower (or in respect of which
Borrower is obligated to reimburse Agent or any other party) in connection
with the closing of the transactions contemplated under this Agreement and
the consummation of the transactions contemplated by the Plan, and (b) all
amounts required to be paid under the Plan.
"PRIOR INDEBTEDNESS" means the indebtedness of Borrower to the various
Persons identified on SCHEDULE 1.1(C), which is to be paid in full on the
Closing Date.
"PRO RATA SHARE" means the percentage obtained by dividing (i) the Total
Loan Commitment of a Lender by (ii) the Total Loan Commitments of all
Lenders, in either case as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.1.
"PROJECTIONS" means a Person's forecasted Financial Statements, each
prepared on a division-by-division, Subsidiary-by-Subsidiary and consolidated
and consolidating basis, in each case as applicable, and otherwise consistent
with Borrower's historical financial statements, together with, if requested
by Agent, in the reasonable exercise of its discretion, appropriate
supporting details and statements of underlying assumptions and a budget for
Capital Expenditures.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness of Borrower or any
Subsidiary incurred in connection with its
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purchase, construction or improvement of any machinery, equipment, or real
property solely for the purpose of financing such purchase, construction or
improvement constituting either the deferred purchase price of the property
so purchased, constructed or improved or money borrowed in respect thereof;
but, expressly excluding therefrom any Capital Leases.
"REQUIREMENT OF LAW," as to any Person, shall mean any law treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"REQUISITE LENDERS" means any number of Lenders having either (a) sixty-six
and two-thirds percent (66-2/3%) or more of the Total Loan Commitments if the
Total Loan Commitments have not been terminated, or (b) if all Total Loan
Commitments have been terminated, sixty-six and two-thirds percent (66-2/3%) or
more of the aggregate outstanding principal amount of the Lender Reimbursement
Liability, the Revolving Loan and the Term Loans.
"RESTRICTED JUNIOR PAYMENT" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any of its Subsidiaries now or hereafter outstanding, except a dividend
payable solely in shares of a class of stock to the holders of that class; (b)
any redemption, conversion, exchange, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; (c) any payment or prepayment of principal of, premium,
if any, or interest on, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Subordinated
Debt; and (d) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding.
"REVOLVING LOAN" means all Advances made by Lenders pursuant to subsection
2.1(B) and any amounts added to the principal balance of the Revolving Loan
pursuant to this Agreement.
"REVOLVING LOAN COMMITMENT" means (a) as to any Lender, the commitment of
such Lender to make available its Pro Rata Share of the Advances under the
Revolving Loan and to purchase its Pro Rata Share of participations in Lender
Letters of Credit and (b) as to all Lenders, the aggregate commitment of all
Lenders to make available their Pro Rata Shares of the Advances under the
Revolving Loan and to purchase their Pro Rata Shares of participations in Lender
Letters of Credit. The Revolving Loan Commitments shall be limited as
prescribed in subsection 2.1(B).
"REVOLVING NOTE" means each promissory note of Borrower substantially in
the form of EXHIBIT 1.1(D).
"SALE ASSETS" means fixed assets held for sale from time to time by
Borrower in the ordinary course of its business, EXCLUDING,
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HOWEVER, therefrom any Mortgaged Property or any Additional Mortgaged
Property, and including, particularly, but without limitation, the fixed
assets described on SCHEDULE 1.1(D).
"SCHEDULED INSTALLMENT" shall have the meaning given to such term in
subsection 2.1(A).
"SECURITIES" means any stock, shares, voting trust certificates, bonds,
debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"SECURITY AGREEMENT" means the security agreement to be executed and
delivered by Borrower in favor of Agent for the benefit of Lenders,
substantially in the form of EXHIBIT 1.1(E).
"SECURITY DOCUMENTS" means all instruments, documents and agreements
executed by or on behalf of any Loan Party to guaranty or provide collateral
security with respect to the Obligations and other transactions contemplated by
this Agreement including, without limitation, the Mortgages, the Security
Agreement and all instruments, documents and agreements executed pursuant to the
terms of the foregoing, including, without limitation, those executed pursuant
to the Security Agreement.
"SERP" means Borrower's Supplemental Executive Retirement Plan, as amended
through 1992.
"SERP SURVIVOR BENEFITS PAYMENTS" means the post-retirement survivor
benefits payable by Borrower upon the death of a Participant (under and as
defined in the SERP) to such Participant's designated beneficiary in accordance
with the terms of the SERP as in effect on the date hereof.
"SOLVENT" means that any Person (a) has capital sufficient to carry on its
business as in existence on the Closing Date and all other or additional
business and transactions in which it is about to engage, (b) is able to pay its
Indebtedness as it matures and (c) owns property having a value, both at fair
valuation and at then present fair saleable value, greater than the sum of its
total liabilities PLUS all known contingent liabilities, computed at the amount
that, in light of all facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability in accordance with Generally Accepted Accounting Principles.
"SUBORDINATED DEBT" means unsecured Indebtedness of Borrower which has been
subordinated in right of payment and claim to the rights and claims of the
Lenders in respect of the Obligations pursuant to a Subordination Agreement.
"SUBORDINATION AGREEMENT means a written agreement containing subordination
terms reasonably satisfactory to the Requisite
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Lenders which are consistent, in any event, with the terms of subsection 7.5.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association or other business entity of which fifty percent
(50%) or more of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the occurrence
of any contingency which has not yet occurred) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or by one or more of the other
Subsidiaries of that Person or a combination thereof.
"TANGIBLE NET WORTH" means Net Worth, LESS all intangible assets, as
determined for Borrower and its Subsidiaries on a consolidated basis under GAAP,
to include in any event, goodwill, cost capitalization gross ups or reserves and
LIFO gross ups or reserves.
"TERM LOAN A" means the advance made pursuant to subsection 2.1(A) and
evidenced by Term Note A.
"TERM LOAN B" means the advance made pursuant to subsection 2.1(A) and
evidenced by Term Note B.
"TERM LOAN A COMMITMENT" means (a) as to any Lender, the commitment of such
Lender to make available its Pro Rata Share of Term Loan A and (b) as to all
Lenders, the aggregate commitment of all Lenders to make available their Pro
Rata Shares of Term Loan A.
"TERM LOAN B COMMITMENT" means (a) as to any Lender, the commitment of such
Lender to make available its Pro Rata Share of Term Loan B and (b) as to all
Lenders, the aggregate commitment of all Lenders to make available their Pro
Rata Shares of Term Loan B.
"TERM LOAN COMMITMENTS" means, collectively, the Term Loan A Commitment and
the Term Loan B Commitment.
"TERM LOANS" means collectively, Term Loan A and Term Loan B.
"TERM NOTE A" means the promissory note of Borrower substantially in the
form of EXHIBIT 1.1(F)A.
"TERM NOTE B" means the promissory note of Borrower substantially in the
form of EXHIBIT 1.1(F)B.
"TERM NOTES" means collectively, Term Note A and Term Note B.
"TERMINATION DATE" has the meaning assigned to that term in
subsection 2.5.
"TOTAL LIABILITIES" means, at any date, the amount at which all liabilities
of a Person on such date would be properly classified as liabilities on a
balance sheet at such date in accordance with GAAP.
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"TOTAL LOAN COMMITMENT" means (a) as to any Lender, the aggregate
commitments of any Lender with respect to the Revolving Loan Commitment and the
Term Loan Commitments as set forth on the signature page of this Agreement
opposite such Lender's signature or in the most recent Lender Addition
Agreement, if any, executed by such Lender; and (b) as to all Lenders, the
aggregate commitments of all Lenders with respect to all Revolving Loan
Commitments and all Term Loan Commitments.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Illinois; or as the Uniform Commercial Code is in effect in any
other jurisdiction in which Collateral is located, to the extent such code is
applicable to the exercise of any rights or remedies in respect of such
Collateral.
"UNFINANCED CAPITAL EXPENDITURES" shall mean Capital Expenditures which do
not constitute Capital Leases and which were not financed with Purchase Money
Indebtedness.
"WORKING DAY" means any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London, England.
1.2. ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT
For purposes of this Agreement, all accounting terms not otherwise defined
herein shall have the meanings assigned to such terms in conformity with GAAP.
Financial statements and other information furnished to Agent or any Lender
pursuant to subsection 5.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation. Unless otherwise approved by the
Requisite Lenders, no "Accounting Changes" (as defined below) shall affect the
calculation of financial covenants, standards or terms in this Agreement (which
shall be calculated using GAAP as in effect on the Closing Date); PROVIDED,
HOWEVER, that Borrower shall prepare footnotes to each Compliance Certificate
and the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "ACCOUNTING CHANGES" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles determined to be necessary by Borrower's
certified public accountants; and (c) changes in carrying value of Borrower's
(or any of its Subsidiaries') assets, liabilities or equity accounts.
1.3. OTHER DEFINITIONAL PROVISIONS
References herein to "SECTIONS", "SUBSECTIONS", "EXHIBITS" and "SCHEDULES"
shall be to Sections, subsections, Exhibits and Schedules, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. In this Agreement, "HEREOF,"
"HEREIN," "HERETO," "HEREUNDER" and the like mean and
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refer to this Agreement as a whole and not merely to the specific section,
paragraph or clause in which the respective word appears; words importing any
gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a tangible
visible form; the words "INCLUDING," "INCLUDES" and "INCLUDE" shall be deemed
to be followed by the words "without limitation"; references to agreements
and other contractual instruments shall be deemed to include subsequent
amendments, assignments, and other modifications thereto, but only to the
extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document;
references to Persons include their respective permitted successors and
assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons; and all references to statutes and
related regulations shall include, as to any statute, its related
regulations, any amendments of same and any successor statutes and
regulations.
SECTION 2.
AMOUNTS AND TERMS OF LOANS
2.1. LOANS
(A) TERM LOANS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Borrower contained
herein, each Lender agrees, severally and not jointly, to lend to Borrower on
the Closing Date its Pro Rata Share of the Term Loans. The aggregate amount of
Term Loan A shall be Ten Million Dollars ($10,000,000), and the aggregate amount
of Term Loan B shall be Twenty Million Dollars ($20,000,000). Each Term Loan
shall be funded in one (1) drawing on the Closing Date. Amounts borrowed under
this subsection 2.1(A) and repaid may not be reborrowed. Borrower shall make
principal payments in the amounts of the applicable Scheduled Installments (or
such lesser principal amount of the Term Loans as shall then be outstanding) on
the dates and in the amounts set forth below. For purposes hereof, "SCHEDULED
INSTALLMENTS" means, (1) as to Term Note A, consecutive, equal, quarterly
principal installments of Five Hundred Thousand Dollars ($500,000) each due and
payable on the first day of the fourth month following the Closing Date,
commencing on August 1, 1997, and continuing on the first day of each quarter
thereafter occurring prior to the Termination Date, and (2) as to Term Loan B,
consecutive, equal quarterly installments during the third, fourth and fifth
Loan Years, with the aggregate of such quarterly installments in the third Loan
Year being Two Million Dollars ($2,000,000), in the fourth Loan Year being Three
Million Dollars ($3,000,000) and in the fifth Loan Year being Four Million
Dollars ($4,000,000), with each such quarterly installment being due and payable
on the first day of May, August, November and February during such Loan Year,
and (3) as to each Term Loan, a final principal installment, equal in amount to
the then entire unpaid principal balance of the respective Term Loan (the
"BALLOON PAYMENT"), which shall be due and payable on the Termination Date.
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(B) REVOLVING LOAN. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrower contained
herein, each Lender agrees, severally and not jointly, to lend to Borrower from
time to time during the period from the Closing Date to and excluding the Expiry
Date, its Pro Rata Share of the Revolving Loan. The aggregate amount of all
Revolving Loan Commitments shall be equal at any one time to Twenty-Three
Million Dollars ($23,000,000) from the Closing Date through and including June
29, 1998, and Twenty Million Dollars ($20,000,000) thereafter; and the amount of
each Lender's Revolving Loan Commitment shall be equal at any one time to its
Pro Rata Share of all Revolving Loan Commitments. Amounts borrowed under this
subsection 2.1(B) may be repaid and reborrowed at any time prior to the Expiry
Date. No Lender shall have any obligation to make Advances under this
subsection 2.1(B) to the extent any requested Advance would cause (i) the
principal balance of the Revolving Loan outstanding to exceed the Maximum
Revolving Loan Amount, or (ii) such Lender's Pro Rata Share of the principal
balance of the Revolving Loan outstanding to exceed such Lender's Revolving Loan
Commitment. "MAXIMUM REVOLVING LOAN AMOUNT" means, as of any date of
determination, the sum of the Revolving Loan Commitments less any Lender
Reimbursement Reserve, any Collateral Disposition Reserve and any Other Lender
Reserves.
(C) LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, the Revolving Loan Commitment may, in addition to Advances
under the Revolving Loan, be utilized, upon the request of Borrower, for the
issuance of letters of credit by the Issuer (each such letter of credit, a
"LENDER LETTER OF CREDIT"). Each Lender agrees to purchase, and shall be deemed
to have purchased, a participation in each such Lender Letter of Credit upon its
issuance in an amount equal to its Pro Rata Share of the unpaid amount thereof
from time to time together with accrued interest thereon.
(1) MAXIMUM AMOUNT. The aggregate amount of Lender Reimbursement
Liability with respect to all Lender Letters of Credit outstanding at any time
shall not exceed Ten Million Dollars ($10,000,000).
(2) REIMBURSEMENT. Borrower shall be irrevocably and unconditionally
obligated forthwith, without presentment, demand, protest or other formalities
of any kind, to reimburse the Issuer for any amounts paid by the Issuer with
respect to a Lender Letter of Credit, including, but not limited to, all fees,
costs and expenses actually paid by the Issuer to any bank that issues letters
of credit. Borrower hereby authorizes and directs Agent, at Agent's option, to
debit the Loan Account (by increasing the principal balance of the Revolving
Loan) in the amount of any payment made by the Issuer with respect to any Lender
Letter of Credit. All amounts paid by the Issuer with respect to any Lender
Letter of Credit that are not immediately repaid by Borrower with the proceeds
of the Revolving Loan or otherwise shall bear interest at the interest rate
applicable to Revolving Loans from the date paid by the Issuer. In the event
that Borrower shall fail to reimburse the Issuer on the date of any payment by
the Issuer under
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a Lender Letter of Credit in an amount equal to the amount of such payment,
Agent shall promptly notify each Lender of the unreimbursed amount of such
payment together with accrued interest thereon. On the Business Day of its
receipt of notice from Agent to such effect, each Lender shall deliver to
Agent an amount equal to its respective participation therein in same day
funds, at the place and on the date and by the time notified by Agent. The
obligation of each Lender to deliver to Agent an amount equal to its
respective participation pursuant to the foregoing sentence shall be absolute
and unconditional and such remittance shall be made notwithstanding the
occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in Section 3. In the event any Lender
fails to make available to Agent the amount of such Lender's participation in
such Lender Letter of Credit as provided in this subsection 2.1(C)(2), Agent
shall be entitled to recover such amount on demand from such Lender together
with interest at the Federal Funds Rate.
(3) CONDITIONS OF ISSUANCE OF LENDER LETTERS OF CREDIT. In
addition to all other terms and conditions set forth in this Agreement, the
issuance by the Issuer of any Lender Letter of Credit shall be subject to the
conditions precedent that the Lender Letter of Credit shall support a
transaction entered into by Borrower in the ordinary course of its business
and each Lender Letter of Credit shall be in such form, be for such amount,
and contain such terms as may be reasonably satisfactory to the Issuer and
Agent. The expiration date of each Lender Letter of Credit shall be on a
date which is the earlier of (a) one (l) year from its date of issuance, or
(b) the Termination Date.
(4) REQUEST FOR LETTERS OF CREDIT. Borrower shall give Agent at
least five (5) Business Days prior notice specifying the date a Lender Letter
of Credit is to be issued, identifying the Issuer and beneficiary and
describing the nature of the transactions proposed to be supported thereby.
The notice shall be accompanied by the form of the Lender Letter of Credit,
together with Borrower's signed application and agreement for the issuance
thereof, in a form acceptable to the Issuer (herein, an "APPLICATION").
(D) BORROWING MECHANICS. Borrower may obtain Loans on any Business Day
if the Loan is an Alternate Base Rate Loan or on any Working Day if the Loan
is a Eurodollar Rate Loan. When Borrower desires to borrow under the
Revolving Credit Commitments, it shall deliver to Agent a fully and properly
completed irrevocable Notice of Borrowing no later than 11:00 a.m. (Atlanta
time) on the proposed Funding Date, in the case of an Alternate Base Rate
Loan, and at least two (2) Working Days prior to the proposed Funding Date,
in the case of an Eurodollar Rate Loan, specifying (i) the amount to be
borrowed, (ii) whether the borrowing is to be a Eurodollar Rate Loan, an
Alternate Base Rate Loan, or a combination thereof, (iii) the requested
Funding Date, and (iv) if the borrowing is to be entirely or partly a
Eurodollar Rate Loan, the length of the Interest Period for such Loan.
Neither Agent nor any Lender shall incur any liability to Borrower for acting
upon any Notice of Borrowing that Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to
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borrow on behalf of Borrower or for otherwise acting in good faith under this
subsection 2.1(D). Each such Advance to Borrower under the Revolving Loan
shall, on the Funding Date, be deposited, in immediately available funds, in
such account as Borrower may from time to time designate to Agent in writing.
(E) NOTES. Borrower shall execute and deliver to each Lender (1) a
Revolving Note to evidence the Revolving Loan, such Revolving Note to be in
the principal amount of the Revolving Loan Commitment of such Lender and with
other appropriate insertions, (2) a Term Note A to evidence Term Loan A, such
Term Note A to be in the principal amount of the Term Loan A Commitment of
such Lender and with other appropriate insertions and (3) a Term Note B to
evidence Term Loan B, such Term Note B to be in the principal amount of the
Term Loan B Commitment of such Lender and with other appropriate insertions.
In the event of an assignment under subsection 9.1, Borrower shall, upon
surrender of the assigning Lender's Notes, issue new Notes to reflect the new
Commitments of the assigning Lender and its assignee.
2.2. INTEREST
(A) RATE OF INTEREST. The unpaid principal amount of the Revolving
Loan and the Term Loans from time to time outstanding shall bear interest at
either the Alternate Base Rate or, subject to all terms and conditions hereof
relevant thereto, the Eurodollar Rate. Any other Obligations shall bear
interest at the interest rate specified herein or in the applicable Loan
Document evidencing such Obligations or, if no such interest rate is
specified, at the Alternate Base Rate. Notwithstanding the foregoing, at the
election of the Requisite Lenders, after the occurrence of an Event of
Default and for so long as such Event of Default continues, the Loans and all
other Obligations shall bear interest until paid in full at a rate per annum
that is two percent (2%) in excess of the interest rate(s) then or thereafter
otherwise applicable to all such Obligations. The rate of interest in effect
hereunder on the date hereof, expressed in simple interest terms, is nine
percent (9.0%) per annum with respect to Revolving Loans and Term Loan A and
ten percent (10%) per annum with respect to Term Loan B, based upon an
Alternate Base Rate in effect on the date hereof of eight and one-half
percent (8.5%).
(B) COMPUTATION AND PAYMENT OF INTEREST. Interest on the Loans and all
other Obligations shall be computed on the daily principal balance on the
basis of a 360-day year for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of
funding of the Loan shall be included and the date of payment of such Loan
shall be excluded; PROVIDED that if a Loan is repaid on the same day on which
it is made, one (1) day's interest shall be paid on that Loan (with the
oldest outstanding Advances being considered as first paid at all times).
Interest on the Loans and all other Obligations shall be payable to Agent,
for the ratable benefit of Lenders, on the applicable Interest Payment Dates,
on the date of any prepayment (in full) of Loans and at maturity, whether by
acceleration or otherwise.
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(C) INTEREST LAWS. Notwithstanding any provision to the contrary
contained in this Agreement or the other Loan Documents, Borrower shall not
be required to pay, and neither Agent nor any Lender shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by law ("EXCESS INTEREST"). If any Excess Interest is provided for
or determined by a court of competent jurisdiction to have been provided for
in this Agreement or in any of the other Loan Documents, then in such event:
(1) the provisions of this subsection shall govern and control; (2) neither
Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have received
hereunder shall be, at Agent's option, (a) applied as a credit against the
outstanding principal balance of the Obligations or accrued and unpaid
interest (not to exceed the maximum amount permitted by law), (b) refunded to
the payor thereof, or (c) any combination of the foregoing; (4) the interest
rate(s) provided for herein shall be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the "MAXIMUM
RATE"), and this Agreement and the other Loan Documents shall be deemed to
have been and shall be, reformed and modified to reflect such reduction; and
(5) neither Borrower nor any other Loan Party shall have any action against
Agent or any Lender for any damages arising out of the payment or collection
of any Excess Interest. Notwithstanding the foregoing, if for any period of
time interest on any Obligation is calculated at the Maximum Rate rather than
the applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until each Lender shall have
received the amount of interest which such Lender would have received during
such period on such Obligations had the rate of interest not been limited to
the Maximum Rate during such period.
(D) CONVERSION OPTIONS; MINIMUM AMOUNT OF LOANS.
(i) Each Eurodollar Rate Loan shall be converted automatically to
an Alternate Base Rate Loan effective on the last day of the Interest Period
corresponding thereto, unless it (or a portion thereof) is continued as a new
Eurodollar Rate Loan continued in accordance with the succeeding sentence
hereof. Borrower may elect to continue any existing Eurodollar Rate Loan (or
portion thereof) as an Eurodollar Rate Loan as of the end of the Interest
Period corresponding thereto by giving the Agent at least two (2) Working
Days, prior irrevocable notice of such election pursuant to a prior
irrevocable Notice of Borrowing, appropriately completed. Upon receipt of
such Notice of Borrowing, the Agent shall promptly notify each Lender
thereof. Borrower may also elect from time to time to convert Alternate Base
Rate Loans to Eurodollar Rate Loans by giving the Agent at least two (2)
Working Days' prior irrevocable Notice of Borrowing, appropriately completed.
Upon receipt of such Notice of Borrowing, the Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Rate Loans
and Alternate Base Rate Loans may be converted as provided herein; PROVIDED
that (A) no Loan may be converted into a Eurodollar Rate Loan when any
Default or an Event of Default has occurred and is continuing, (B) partial
conversions of Eurodollar Rate Loans shall be in an aggregate principal
amount
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of at least One Million Dollars ($1,000,000) or a whole multiple of Five
Hundred Thousand Dollars ($500,000) in excess thereof and (C) any such
conversion may only be made if, after giving effect thereto, subsection (E)
hereof shall not have been contravened.
(ii) Any Eurodollar Rate Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by a
Borrower with the notice provisions contained in clause (i) hereof; PROVIDED
that no Eurodollar Rate Loan may be continued as such when any Default or an
Event of Default has occurred and is continuing, but shall be automatically
converted to an Alternate Base Rate Loan on the last day of the then current
Interest Period with respect thereto. The Agent shall notify the Lenders
promptly that such automatic conversion contemplated by this subsection will
occur.
(E) MINIMUM AMOUNTS OF EURODOLLAR RATE LOANS: MAXIMUM NUMBER OF EURODOLLAR
RATE LOANS; INTEREST PREMIUM.
(i) All borrowings, conversions, payments, prepayments and
selection of Interest Periods hereunder by Borrower shall be in such amounts
and be made pursuant to such elections so that, after giving effect thereto,
the aggregate principal amount of each Eurodollar Rate Loan made to Borrower
shall not be less than One Million Dollars ($1,000,000) or an integral
multiple of Five Hundred Thousand Dollars ($500,000) in excess thereof.
(ii) There shall be no more than eight (8) Eurodollar Rate Loans
outstanding at any time.
(iii) On the Closing Date, and for at least two (2) Working Days
thereafter, all Loans shall be Alternate Base Rate Loans.
(F) INABILITY TO DETERMINE INTEREST RATE. In the event that: (a) Agent
has determined, or has been notified by its designee that it has determined
(which determination, in either case, shall be conclusive and binding upon
Borrower) that, by reason of circumstances affecting the interbank Eurodollar
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for any requested Interest Period; or (b) the Agent shall
have received notice prior to the first day of such Interest Period from
Lenders constituting the Requisite Lenders that the interest rate determined
for such Interest Period does not accurately reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period; then, the Agent shall forthwith
give notice of such determination to Borrower and the other Lenders as soon
as practicable thereafter. If such notice is given, (x) any then requested
Eurodollar Rate Loans shall be made as Alternate Base Rate Loans, (y) any
Alternate Base Rate Loans that were to have been converted to Eurodollar Rate
Loans shall be continued as Alternate Base Rate Loans and (z) any outstanding
Eurodollar Rate Loans shall be converted, on the last day of the then current
Interest Period with respect thereto, to Alternate Base Rate Loans; and no
further Eurodollar Rate Loans shall be made or continued as such, nor shall
Borrower have the right to convert Alternate Base
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Rate Loans to Eurodollar Rate Loans unless and until the circumstances
causing such suspension of Eurodollar Rate Loans no longer exist.
(G) ILLEGALITY. Notwithstanding any other provisions herein, if any
Requirement of Law or any change therein or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (a) the commitment
of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar
Rate Loans as such or convert Alternate Base Rate Loans to Eurodollar Rate
Loans shall forthwith be cancelled and (b) such Lender's Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Alternate Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any Lender's commitment to make
Eurodollar Rate Loans is cancelled under this Section, such Lender shall
promptly notify Borrower, through the Agent, of such cancellation and the
conversion of such Lender's Eurodollar Rate Loans to Alternate Base Rate
Loans. If any such conversion of a Eurodollar Rate Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, Borrower shall be obliged to pay to such Lender, upon its demand,
such amounts, if any, as may be required pursuant to subsection (H) below.
(H) INDEMNITY. Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by Borrower in payment when due of
the principal amount of or interest on any Eurodollar Rate Loans of such
Lender, (b) default by Borrower in making, continuing or converting a
borrowing after Borrower has given a Notice of Borrowing in respect thereto,
(c) default by Borrower in making any prepayment after Borrower has given a
voluntary prepayment notice in accordance with Section 2.4(F) hereof, or (d)
the making of a prepayment of a Eurodollar Rate Loan on a day which is not
the last day of the Interest Period with respect thereto, including, without
limitation, in each case, any such loss or expense arising from the
reemployment of funds obtained by each Lender to maintain its Eurodollar Rate
Loans hereunder or from fees payable to terminate the deposits from which
such funds were obtained. In addition to the foregoing, and separate and
apart from any indemnity otherwise payable to Lenders under this subsection
(H), Borrower shall pay to Agent, for its own account, an administrative fee
of Two Thousand Five Hundred Dollars ($2,500) for each occurrence described
in clause (d) above, after the first two (2) such occurrences, effective with
its occurrence.
2.3. FEES
(A) ORIGINATION FEE. Borrower shall pay to Agent, for the ratable
benefit of Lenders, on the Closing Date, a loan origination fee equal in
amount to Three Hundred Eighty Thousand Dollars ($380,000), which shall be
fully earned and (except to the extent otherwise required by applicable law
or as provided in Section 10.1) nonrefundable on the Closing Date.
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(B) UNUSED LINE FEE. From and after the Closing Date, Borrower shall
pay to Agent, for the ratable benefit of Lenders, a fee in an amount equal to
the maximum amount of the Revolving Loan Commitment LESS the sum of the
average daily balance of the Revolving Loan and the average daily face amount
of the Lender Reimbursement Reserve, in each case, computed for the preceding
calendar month (or portion thereof, in connection with the calendar month
ended April 30, 1997), multiplied by three-eighths of one percent (.375%) per
annum, such fee to be payable monthly in arrears on the first day of each
month following the Closing Date, commencing on May 1, 1997.
(C) LETTER OF CREDIT FEES. Borrower shall pay to Agent, for the
ratable benefit of Lenders, fees for each Lender Letter of Credit for the
period from and including the date of issuance of same to and excluding the
date of expiration or termination, equal to the daily average undrawn face
amount of the Lender Reimbursement Liability multiplied by two and one-half
percent (2.5%) per annum, such fees to be payable monthly in arrears on the
first day of each month following the issuance date of any Lender Letter of
Credit. Borrower shall also reimburse the Issuer for any and all customary
fees and expenses, if any, actually charged or incurred by such Issuer in
connection with such Lender Letter of Credit.
(D) AGENT'S FEES. Borrower shall pay to Agent an annual agency fee of
$50,000, payable in substantially equal monthly installments, the first of
which shall be due and payable on the first day of the month following the
month in which the Closing Date occurs, and each subsequent installment of
which shall be due and payable on the first day of each calendar month
thereafter.
(E) PREPAYMENT FEES. If Borrower voluntarily prepays Term Loan A in
whole or in part prior to the first anniversary of the Closing Date, Borrower
shall pay to Agent, for the ratable benefit of Lenders, as liquidated damages
and compensation for the costs of being prepared to make funds available to
Borrower under this Agreement, and not as a penalty, an amount determined by
multiplying (x) the principal amount of Term Loan A prepaid times (y) three
percent (3%), upon prepayment. If Borrower voluntarily prepays the
Revolving Loan in connection with any early termination of this Agreement in
accordance with Section 2.5, Borrower shall pay to Agent, for the ratable
benefit of Lenders, as liquidated damages and compensation for the costs of
being prepared to make funds available to Borrower under this Agreement, an
amount determined by multiplying (x) the principal amount of the Maximum
Revolving Loan Amount times (y) three percent (3%) (if termination occurs in
the first Loan Year) or two percent (2%) (if termination occurs in the second
Loan Year), upon termination.
(F) COMPUTATION AND PAYMENT OF FEES. All fees payable on a per annum
basis shall be computed on the basis of a 360-day year for the actual number
of days elapsed in the period during which such fees accrue.
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2.4. PAYMENTS AND PREPAYMENTS
(A) MANNER AND TIME OF PAYMENT. All payments by Borrower of the
Obligations shall be made without deduction, defense, setoff or counterclaim and
in same day funds and delivered to Agent by wire transfer to Agent's account,
ABA No. 071000013, Account No. 5297176 at The First National Bank of Chicago,
One First National Plaza, Chicago, IL 60670, Reference: "Transamerica Business
Credit Corporation for the benefit of The Krystal Company" or at such other
place as Agent may direct from time to time by notice to Borrower. Borrower
shall receive credit for such funds on the date received if Borrower has given
Agent telephonic notice by 2:00 p.m. (Atlanta time) of the transfer of such
funds and such funds are received by Agent by 2:00 p.m. (Chicago time) on such
day. In the absence of timely notice and receipt, such funds shall be deemed to
have been paid by Borrower on the next succeeding Business Day. In order to
cause timely payment to be made to Agent of all Obligations as and when due,
Borrower hereby authorizes and directs Agent, at Agent's option, to debit the
Loan Account (by increasing the principal balance of the Revolving Loan) for any
amounts of principal (including any prepayment of principal), accrued interest,
fees, charges or expenses at any time owing hereunder or under any Loan
Documents as and when such Obligations become due.
(B) CREDIT FOR COLLECTIONS. All payments and other collections received
by Agent, or any depository bank, for application to outstanding Obligations,
whether received pursuant to subsection 2.4(A) or otherwise, will be applied to
outstanding Obligations on the date of receipt by Agent of same in immediately
available funds at its designated account during regular banking hours, with
such application to be made, FIRST, to all expenses of Agent or the depository
bank, to the extent reasonably incurred, NEXT, to any Obligations then past due
and unpaid; NEXT, to any accrued interest or fees otherwise then due and
payable; NEXT, to any other Obligations then due and payable; NEXT, to the
Advances then outstanding (with any Advances then constituting Alternate Base
Rate Loans deemed paid first); and LASTLY, provided that no Event of Default has
occurred and is continuing, any remainder shall be remitted to Borrower. If an
Event of Default has occurred and is continuing, without limiting any other
rights and remedies of Lenders hereunder, Agent may, at its option, and Agent
will, at the direction of the Requisite Lenders, apply any remainder to any
other Obligations then outstanding, regardless of whether then past due, or hold
the same as additional cash Collateral pending the due dates for payment of such
Obligations. Payments applied pursuant to this subsection 2.4(B) to outstanding
Advances shall not reduce the Revolving Loan Commitments.
(C) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, the payment may
be made on the next succeeding Business Day and such extension of time shall be
included in the computation of the amount of interest or fees due hereunder.
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(D) MANDATORY PREPAYMENTS
(1) REVOLVING LOAN OVERADVANCE. On any day that the principal
balance of the Revolving Loan exceeds the Maximum Revolving Loan Amount,
Borrower shall, on such date, repay the Revolving Loan to the extent necessary
to reduce the principal balance to an amount that is equal to or less than the
Maximum Revolving Loan Amount.
(2) PREPAYMENTS FROM ASSET DISPOSITIONS. If Borrower receives Net
Proceeds of (a) any Asset Disposition, (b) any condemnation of any equipment or
real property of Borrower, or (c) any insurance payment, and the assets disposed
of, condemned or damaged (in the case of insurance Net Proceeds) are not
replaced with equipment or real property of comparable quality, value and
function, as determined by Agent in the exercise of its reasonable discretion,
within eighteen (18) months after the date of an Asset Disposition, receipt of
insurance proceeds or condemnation, Borrower shall prepay the Term Loans in an
amount equal to the Net Proceeds of such Asset Disposition, condemnation or
insurance payment within 30 Business Days after the expiration of such
replacement period, with the amount of such prepayment to be applied in
accordance with subsection 2.4(D)(6). Pending such prepayment or replacement,
the amount of such Net Proceeds shall be reserved against the Revolving Loans
otherwise available (the "COLLATERAL DISPOSITION RESERVE").
(3) PREPAYMENT FROM EXCESS CASH FLOW. Borrower shall prepay Term Loan
B in amounts equal to fifty percent (50%) of Excess Cash Flow (a) for each
Fiscal Year ending after December 31, 1997 and (b) for the period commencing May
1, 1997, and ending on December 31, 1997, such prepayments to be made within 30
Business Days after the date on which the financial statements under Section
5.1(B) are required to be delivered to Agent in accordance with the terms of
such Section. Concurrently with the making of any such payment, Borrower shall
deliver to Agent a certificate of Borrower's chief executive officer or chief
financial officer or controller demonstrating its calculation of the amount
required to be paid.
(4) PREPAYMENT FROM PENSION PLAN REVERSION. Upon the return to
Borrower or any of its Subsidiaries of any surplus assets of any Pension Plan,
Borrower shall prepay the Loans in an amount equal to such returned surplus
assets net of transaction costs (including income, excise or other taxes)
incurred in obtaining such return with the amount of such prepayment to be
applied in accordance with subsection 2.4(D)(6). Concurrently with the making
of any such payment, Borrower shall deliver to Agent a certificate of Borrower's
chief executive officer or chief financial officer or controller demonstrating
its calculation of the amount required to be paid.
(5) NO PREPAYMENT FEES. Borrower shall not be required to pay any
prepayment fees under subsection 2.3(E) in connection with any prepayments
required to be made by Borrower under this subsection 2.4(D).
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(6) APPLICATION OF PROCEEDS. With respect to the mandatory
prepayments described in subsections 2.4(D)(2) through 2.4(D)(4), such
prepayments shall first be applied in payment of the Term Loans in the manner
prescribed in subsection 2.4(F) and, at any time after the Term Loans shall have
been prepaid in full, such payments shall be applied to the Obligations in
accordance with subsection 2.4(B).
(E) VOLUNTARY PREPAYMENTS AND REPAYMENTS. Borrower may, upon at least five
(5) Business Days prior notice to Agent, prepay the Term Loans in whole at any
time or from time to time in part without premium or penalty other than as
described in Section 2.3(E). Borrower may repay the Revolving Loan in whole at
any time or from time to time in part without premium or penalty; PROVIDED that
concurrently with such payment Borrower pays any fees due under subsections
2.2(H) and 2.3(E) if such prepayment is made in conjunction with any early
termination of this Agreement by Borrower. Upon any prepayment in full of the
Term Loans and termination of the Revolving Loan Commitment made in conjunction
with any early termination of this Agreement by Borrower, Borrower shall cause
Agent and each Lender to be released from all liability under all Lender Letters
of Credit or, at Agent's option, Borrower will deposit cash collateral with
Agent in an amount equal to the 105% of the Lender Reimbursement Liability with
respect to each Lender Letter of Credit that will remain outstanding after
prepayment in full. After notice of prepayment is given, the amount specified
to be prepaid in such notice shall become due and payable on the prepayment
date. Any voluntary partial prepayment of the Term Loans pursuant to this
subsection 2.4(E) shall be applied in payment of the Scheduled Installments in
the manner specified in subsection 2.4(F).
(F) APPLICATION OF PREPAYMENTS AND REPAYMENTS. All prepayments (in full)
and repayments under Section 2.4 shall include payment of accrued interest on
the principal amount so prepaid and repaid and shall be applied to the payment
of interest before application to principal. All prepayments (whether mandatory
or voluntary) of either of the Term Loans, which do not result in its full
payment shall be applied as follows: (i) to the Balloon Payment for Term Loan B,
until it is fully paid; (ii) to the Balloon Payment for Term Loan A, until it is
fully paid; (iii) to the remainder of the Scheduled Installments of Term Loan B
in the inverse order of maturity; and (iv) to the remainder of the Scheduled
Installments of Term Loan A, in the inverse order of maturity.
2.5. TERM OF THIS AGREEMENT
This Agreement shall be effective until the EARLIER of: (a) the date on
which all Loans are paid in full and all other Obligations have been satisfied
and the Revolving Loan Commitment has been terminated, or (b) the fifth
anniversary of the Closing Date(the EARLIER of the dates described in clauses
(a) and (b) above called herein the "TERMINATION DATE"), and the Commitments
shall (unless earlier terminated) terminate concurrently on the Termination
Date. Borrower shall have the right to terminate this Agreement at any time
hereafter, PROVIDED that: (i) Borrower gives
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Agent written notice of its intent to terminate at least sixty (60) days in
advance of the date of early termination; and (ii) on the date of early
termination, Borrower fully pays and satisfies the applicable prepayment fees
specified in Section 2.3(E), complies in all respects with subsection 2.4(E)
and otherwise pays and performs all other Obligations (other than any
Inchoate Indemnity Obligations). In addition, this Agreement may be
terminated as set forth in Section 8.3 hereof. Upon termination in
accordance with this Section 2.5, Section 8.3 or on the Termination Date,
whichever is the earliest, all Obligations shall become immediately due and
payable without notice or demand. Notwithstanding any termination, until all
Lender Letters of Credit have been terminated (or cash collateral has been
provided in regard thereto, if required pursuant to subsection 2.4(E)), and
all Obligations (other than any Inchoate Indemnity Obligations) have been
fully paid and satisfied, Agent, on behalf of Lenders, shall be entitled to
retain security interests in and Liens upon all Collateral, and Agent shall
release such security interests and Liens, on behalf of all Lenders, only on
that date on which all such conditions have been fulfilled. Notwithstanding
full payment and satisfaction of all Obligations (other than Inchoate
Indemnity Obligations), Borrower's Inchoate Indemnity Obligations shall
continue in accordance with, and subject to, the terms and conditions of this
Agreement or any Loan Document giving rise thereto.
2.6. BORROWER'S LOAN ACCOUNT AND STATEMENTS
Agent shall maintain a loan account (the "LOAN ACCOUNT") on its books to
record: (a) all Loans and payments made under Lender Letters of Credit; (b) all
payments made by Borrower; and (c) all other appropriate debits and credits as
provided in this Agreement with respect to the Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. Borrower promises to pay all of its
Obligations as such amounts become due or are declared due pursuant to the terms
of this Agreement. After the occurrence and during the continuance of an Event
of Default, Borrower irrevocably waives the right to direct the application of
any and all payments at any time or times thereafter received by Agent or any
Lender from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply any and all
payments received at any time or times after the occurrence and during the
continuance of an Event of Default against the Obligations in such manner as
Agent may deem advisable notwithstanding any previous entry by Agent, upon the
Loan Account or any other books and records. The balance in the Loan Account,
as recorded on Agent's most recent printout or other written statement, shall be
presumptive evidence of the amounts due and owing to Lenders by Borrower;
PROVIDED, HOWEVER, that any failure so to record or any error in so recording
shall not limit or otherwise affect Borrower's obligation to pay the
Obligations. Not more than thirty (30) days after the last day of each calendar
month, Agent shall render to Borrower a statement setting forth the principal
balance of the Loan Account and the calculation of interest paid thereon as of
the last day of such calendar month. Each statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be presumptive
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evidence of the amounts due and owing to Lenders by Borrower, and shall
constitute an account stated unless, within thirty (30) days after receipt of
such statement, Borrower shall deliver to Agent its written objection thereto
specifying the error or errors, if any, contained in such statement.
2.7. OTHER LETTER OF CREDIT PROVISIONS
(A) OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse the
Issuer, Agent and Lenders for payments made under any Lender Letter of Credit
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement including the following circumstances:
(1) any lack of validity or enforceability of any Lender Letter of
Credit or any other agreement;
(2) the existence of any claim, set-off, defense or other right which
Borrower or any of its Affiliates, the Issuer, Agent or any Lender may at any
time have against a beneficiary or any transferee of any Lender Letter of Credit
(or any persons for whom any such transferee may be acting), the Issuer, Agent,
any Lender, or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between Borrower or any of its Affiliates and the
beneficiary for which the Lender Letter of Credit was procured);
(3) any draft, demand, certificate or any other document presented
under any Lender Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect unless the Issuer acts with gross negligence or
willful misconduct(as determined by a court of competent jurisdiction) in
determining that the document is not forged or fraudulent, or any statement
therein being untrue or inaccurate in any respect;
(4) payment by the Issuer, Agent or any Lender under any Lender
Letter of Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Lender Letter of Credit;
PROVIDED, HOWEVER, that, in the case of any payment by the Issuer, Agent or any
Lender under any Lender Letter of Credit, Agent or such Lender has not acted
with gross negligence or willful misconduct (as determined by a court of
competent jurisdiction) in determining that the demand for payment under such
Lender Letter of Credit complies on its face with any applicable requirements
for a demand for payment under such Lender Letter of Credit;
(5) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(6) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(B) NATURE OF LENDERS' DUTIES. As between the Issuer and Borrower and
Agent, each Lender and Borrower, Borrower assumes all risks of the acts and
omissions of, or misuse of any Lender Letter
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of Credit by beneficiaries of any Lender Letter of Credit. In furtherance
and not in limitation of the foregoing, neither the Issuer, Agent nor any
Lender shall be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document by any party in
connection with the application for and issuance of any Lender Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; PROVIDED that the Issuer has
not acted with gross negligence or willful misconduct (as determined by a
court of competent jurisdiction) in determining (if and to the extent
required by the Lender Letter of Credit and the application therefor) that
such document is not fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary
of any Lender Letter of Credit to comply fully with conditions required in
order to demand payment under such Lender Letter of Credit; PROVIDED that, in
the case of any payment by the Issuer under any Lender Letter of Credit, the
Issuer has not acted with gross negligence or willful misconduct (as
determined by a court of competent jurisdiction) in determining that the
demand for payment under such Lender Letter of Credit complies on its face
with any applicable requirements for a demand for payment under such Lender
Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in interpretation
of technical terms; (vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a payment under any
Lender Letter of Credit or of the proceeds thereof; (vii) for the credit of
the proceeds of any drawing under any Lender Letter of Credit; and (viii) for
any consequences arising from causes beyond the control of the Issuer, Agent
or any Lender. None of the above shall affect, impair, or prevent the
vesting of any of Agent's or any Lender's rights or powers hereunder. In
furtherance and extension of and not in limitation of, the specific
provisions hereinabove set forth, any action taken or omitted by Agent or any
Lender under or in connection with any Lender Letter of Credit, if taken or
omitted in good faith, shall not put the Issuer, Agent or any Lender under
any resulting liability to Borrower.
(C) APPLICATIONS FOR LENDER LETTERS OF CREDIT. Borrower shall comply with
the terms of the Application pertaining to any Lender Letter of Credit;
PROVIDED, HOWEVER, that in the event of any conflict between the terms of any
Application and the terms of this Agreement, the terms of this Agreement shall
govern and control. Upon Lenders' purchase of participations in any Lender
Letter of Credit, Lenders shall be fully subrogated to the rights and remedies
of the Issuer under the Application pertaining thereto, and the Agent, on behalf
of Lenders, shall have the right to exercise all such rights and remedies.
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2.8. REQUIREMENTS OF LAW.
(A) In the event that any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the Closing Date:
(1) does or shall subject any Lender to any tax of any kind
whatsoever (other than any Tax Liability or any taxes on net income which are
excluded from such definition which shall be exclusively governed by Section 2.9
hereof), with respect to this Agreement, any Note, any Letter of Credit, any
Application or any Eurodollar Rate Loans made by it, or change the basis of
taxation of payments to such Lender of principal, fees, interest or any other
amount payable hereunder; or
(2) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other extensions of credit by it, or any other acquisition of funds by, any
office of such Lender which are not otherwise included in the determination of
the Eurodollar Rate;
and the result of either of the foregoing is to increase the cost to such
Lender, by any amount which such Lender deems to be material of making,
converting into, continuing or maintaining advances or extensions of credit or
to reduce any amount receivable hereunder, in each case, in respect of its
Eurodollar Rate Loans, issuing or participating in Lender Letters of Credit or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, the Borrower shall be obliged to pay such Lender, upon its demand (with a
copy of such demand to the Agent), any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable in
respect of its Eurodollar Rate Loans or Lender Letters of Credit. If a Lender
becomes entitled to claim any additional amounts pursuant to this Section, it
shall promptly notify Borrower, through the Agent, of the event by reason of
which it has become so entitled. A certificate as to any additional amounts
payable pursuant to this Section submitted by such Lender, through the Agent, to
Borrower shall be presumptive evidence of the amount due and owing thereunder in
the absence of manifest error. This covenant shall survive the termination of
this Agreement and payment of the outstanding Notes and all other amounts
payable hereunder.
(B) In the event that any Lender shall have determined that the adoption
of any change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority, made
subsequent to the Closing Date does or shall have the effect of reducing the
rate of return on such Lender's or such corporation's capital as a consequence
of its obligations hereunder or under any Letter of Credit to a level below that
which such Lender or such
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corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, after submission by such Lender to Borrower
(with a copy to the Agent) of a written request therefor, Borrower shall be
obliged to pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction. A certificate as to any
additional amounts payable pursuant to this Section submitted by such Lender,
through the Agent, to Borrower, shall be presumptive evidence of the amount
due and owing thereunder in the absence of manifest error.
(C) For the purpose of subclauses (A) and (B) above, without limiting the
generality of the provisions therein set forth, any final adoption or
implementation by any Governmental Authority of any risk-based capital standards
in accordance with the International Convergence of Capital Measurement and
Capital Standards agreed upon by the Basle Committee on Banking Regulations and
Supervisory Practices made after the Closing Date shall be deemed to be an
introduction, change, guideline or request made prior to the Closing Date.
(D) Before making any demand for payment under this Section, each Lender
agrees to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, in its reasonable discretion, in any legal, economic or
regulatory manner) to designate a different Lending Office or take such other
action if the making of such a designation or the taking of such other action
would reduce or obviate the need for Borrower to make payments under this
Section.
2.9. TAXES
(A) NO DEDUCTIONS. Any and all payments or reimbursements made hereunder
or under the Notes shall be made free and clear of and without deduction for any
and all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto; excluding, however, the following: taxes
imposed on the net income of a Lender or Agent by the jurisdiction under the
laws of which such Lender or Agent is organized or doing business or any
political subdivision thereof and taxes imposed on its net income by the
jurisdiction of such Lender's or Agent's applicable lending office or any
political subdivision thereof (all such taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect thereto, excluding such
taxes imposed on net income, herein called "TAX LIABILITIES"). If Borrower
shall be required by law to deduct any such amounts from or in respect of any
sum payable hereunder to any Lender or Agent, then the sum payable hereunder
shall be increased as may be necessary so that, after making all required
deductions, such Lender or Agent receives an amount equal to the sum it would
have received had no such deductions been made.
(B) CHANGES IN TAX LAW. In the event that, subsequent to the Closing
Date, (1) any changes in any existing law, regulation,
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treaty or directive or in the interpretation or application thereof, (2) any
new law, regulation, treaty or directive enacted or any interpretation or
application thereof, or (3) compliance by Agent or any Lender with any
request or directive (whether or not having the force of law) from any
Governmental Authority, agency or instrumentality: (i) does or shall subject
Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement, the other Loan Documents or any Loans made or Lender Letters of
Credit issued hereunder, or change the basis of taxation of payments to Agent
or such Lender of principal, fees, interest or any other amount payable
hereunder (except for net income taxes, or franchise taxes imposed in lieu of
net income taxes, imposed generally by federal, state or local taxing
authorities with respect to interest or commitment or other fees payable
hereunder or changes in the rate of tax on the overall net income of Agent or
such Lender); or (ii) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein; and the result of any of the foregoing is to
increase the cost to Agent or any such Lender of issuing any Lender Letter of
Credit or making or continuing any Loan hereunder, as the case may be, or to
reduce any amount receivable hereunder, then, in any such case, Borrower
shall pay to Agent or such Lender, within fifteen (15) days after notice and
demand, any additional amounts necessary to compensate Agent or such Lender,
on an after-tax basis, for such additional cost or reduced amount receivable,
as determined by Agent or such Lender with respect to this Agreement or the
other Loan Documents; PROVIDED, HOWEVER, that Borrower shall not be bound to
compensate any Lender hereunder in respect of any claims arising more than
six (6) months prior to the date any such demand is made. If Agent or such
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrower of the event by reason of which
Agent or such Lender has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by
Agent or such Lender to Borrower and Agent shall, absent manifest error, be
presumptive evidence of the amount due and owing thereunder.
(C) FOREIGN LENDERS. Each Lender (if any) organized under the laws of a
jurisdiction outside the United States (a "FOREIGN LENDER") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (1) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement and
under the Notes (a "CERTIFICATE OF EXEMPTION") or (2) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "LETTER OF NON-EXEMPTION"). Prior to becoming a Lender
under this Agreement and within thirty (30) days after a reasonable written
request of Borrower or Agent from time to time thereafter, each Foreign Lender
that becomes a Lender under this Agreement shall
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provide a Certificate of Exemption or a Letter of Non-Exemption to Borrower
and Agent. If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a
reduced rate of withholding) and does not provide a Certificate of Exemption
to Borrower and Agent within the time periods set forth in the preceding
paragraph, Borrower shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrower shall not be required to pay
any additional amounts as a result of such withholding; PROVIDED, HOWEVER,
that all such withholding shall cease upon delivery by such Foreign Lender of
a Certificate of Exemption to Borrower and Agent.
2.10. OPTIONAL PREPAYMENT/REPLACEMENT OF LENDER IN RESPECT OF
INCREASED COSTS
Within fifteen (15) days after receipt by Borrower of written notice from
any Lender (an "AFFECTED LENDER") constituting a demand for payment of
additional costs as provided in subsections 2.8 or 2.9, or of the cancellation
of such Lender's commitment to make Eurodollar Rate Loans as provided in Section
2.2(G), Borrower may, at its option, notify Agent and such Affected Lender of
its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("REPLACEMENT LENDER") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and Commitments to
such Replacement Lender provided that Borrower has reimbursed such Affected
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment. Such payment
shall be made without payment of the prepayment fee otherwise required by
Section 2.3(E).
(B) With the approval of the Requisite Lenders, Borrower may prepay in full
all outstanding Obligations owed to such Affected Lender and terminate such
Affected Lender's Commitments. Borrower shall, within ninety (90) days
following notice of its intention to do so, prepay in full all outstanding
Obligations owed to such Affected Lender (including such Affected Lender's
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such prepayment), and terminate such Affected Lender's
Commitments. Such payment shall be made without payment of the prepayment fee
otherwise required by Section 2.3(E).
2.11. ONE GENERAL OBLIGATION
The Term Loans, all Advances under the Revolving Loan and each Lender
Letter of Credit, together with any and all other extensions of credit and
financial accommodations which may be made by Lenders to Borrower pursuant to
this Agreement or any other Loan Document shall be one general obligation of
Borrower, secured by Agent's security interests (for the benefit of all Lenders)
in all Collateral, including, without limitation, each parcel of Mortgaged
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Property to the extent provided in the Mortgage with respect to such parcel.
SECTION 3.
CONDITIONS TO LOANS
The obligations of each Lender to make Loans and the obligations of each
Issuer to issue Lender Letters of Credit are subject to satisfaction of all of
the applicable conditions set forth below.
3.1. CONDITIONS TO INITIAL LOANS
The obligations of Lenders to make the initial Loans and of each Issuer to
issue any Lender Letters of Credit on the Closing Date are, in addition to the
conditions precedent specified in subsection 3.2, subject to the prior or
concurrent satisfaction of the conditions set forth below.
(A) CLOSING DATE AVAILABILITY. After giving effect to the consummation of
all transactions contemplated herein on the Closing Date, including, without
limitation, the disbursement of all Loans and the payment of all fees and
expenses, Borrowing Availability on the Closing Date shall be at least Six
Million Dollars ($6,000,000).
(B) FEES. Borrower shall have paid all fees payable on the Closing Date
referred to in subsection 2.3.
(C) PERFORMANCE OF AGREEMENTS. Each of the Loan Parties shall have
performed in all material respects all agreements which this Agreement provides
shall be performed on or before the Closing Date except as otherwise agreed to
in writing by Lenders.
(D) SECURITY INTERESTS, UCC FILINGS AND STOCK CERTIFICATES. Agent shall
have received satisfactory evidence that Agent (for the benefit of Lenders) has
a valid and perfected first priority security interest in the Collateral,
subject only to Permitted Encumbrances. Borrower and the other Loan Parties
shall have delivered to or caused to be delivered to Agent executed documents
(including financing statements under the UCC and other applicable documents
under the laws of any jurisdiction with respect to the perfection of Liens) as
Agent may deem necessary to perfect its security interests in the Collateral.
Agent shall have received certified copies of UCC search reports listing all
effective financing statements that name Borrower or any Subsidiary of Borrower
as debtor together with copies of such financing statements (none of which shall
cover the Collateral except to the extent evidencing Permitted Encumbrances).
(E) OPINIONS OF COUNSEL. The Lenders shall have received written opinions
of legal counsel for Borrower, in form and substance satisfactory to the Lenders
and their counsel, dated as of the Closing Date.
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(F) TERMINATION OF PRIOR INDEBTEDNESS LIENS AND OTHER LIENS. Agent shall
have received a payoff letter satisfactory to Agent from (or, in the case of the
Wage Claimants, on behalf of) each of the Persons listed on SCHEDULE 1.1(C)
setting forth the amount of the Prior Indebtedness owed to such Person as of the
date of the funding of the initial Loans, together with duly executed UCC-3
termination statements, mortgage releases and such other instruments, in form
and substance satisfactory to Agent, as shall be necessary to terminate and
satisfy all Liens created pursuant to the Prior Indebtedness and all other Liens
except Permitted Encumbrances. Particularly, but without limitation of the
foregoing, Agent shall be satisfied that any and all Liens (excluding any
constituting Permitted Encumbrances) held by any trade creditors of Borrower
have been released or terminated.
(G) PLAN. Borrower shall have delivered to Lenders and each Lender and
its counsel shall have found acceptable the terms of the Plan; the Plan shall
have been confirmed, after proper notice and hearing, by the Confirmation Order;
not less than ten (10) days shall have elapsed following the entry of the
Confirmation Order; during the period from the date of entry of the Confirmation
Order to the Closing Date, there shall not have been filed any notice of appeal
from the Confirmation Order nor any motion to review, modify, vacate, set aside
or reconsider the Confirmation Order; and the "Effective Date" (as defined in
the Plan) shall have occurred.
(H) LOAN DOCUMENTS. On or before the Closing Date, Borrower shall deliver
or cause to be delivered to Agent the documents listed below, each, unless
otherwise noted, dated the Closing Date, duly executed, in form and substance
satisfactory to Agent and in quantities designated by Agent (except for the
Notes, of which only the originals shall be signed):
(1) AGREEMENT; NOTES. This Agreement, the Term Notes and the
Revolving Notes.
(2) SECURITY AGREEMENT. The Security Agreement and all instruments,
documents and agreements executed pursuant to the Security Agreement.
(3) OFFICER'S CERTIFICATE. A certificate executed by the chief
executive officer or chief financial officer of Borrower, stating that: (a) on
such date, and after giving effect to the transactions contemplated herein, no
Default or Event of Default has occurred and is continuing; (b) no Material
Adverse Change has occurred since December 29, 1996; (c) the representations and
warranties set forth in Section 4 are true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date; and (d) Borrower on such date is in compliance with all the terms and
provisions set forth in this Agreement on its part to be observed and performed.
(4) LIEN WAIVER. A Lien Waiver with respect to Borrower's leased
premises located at One Union Square, Chattanooga, Tennessee.
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(5) MORTGAGES. Mortgages covering the real property owned or
leased by Borrower designated on SCHEDULE 3.1(I)(5) ("MORTGAGED PROPERTY")
together with: (a) evidence that counterparts of the Mortgages have been
recorded in all places to the extent necessary or desirable, in the judgment
of Agent, to create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on each Mortgaged Property in favor of Agent for the
benefit of Lenders (or in favor of such other trustee as may be required or
desired under local law); provided that, Agent will record the Mortgage on
any Mortgaged Property on which Agent has been informed by Borrower that a
holder of Prior Indebtedness holds a mortgage Lien on the Closing Date only
after the Prior Indebtedness secured by such mortgage Lien has been paid or
the consent to the recording of the Mortgage by such holder of Prior
Indebtedness has been obtained; and (b) in the case of each leasehold
constituting Mortgaged Property, such estoppel letters, lease assignments,
consents and waivers from the landlords and non-disturbance agreements from
any holders of mortgages or deeds of trust on such real estate as may have
been requested by Agent and as may have been obtained by Borrower in the
exercise of reasonable efforts to obtain such documents (but without any
obligation of Borrower to amend any existing lease as a condition to
obtaining any such document); and (c) an opinion of counsel in each state in
which any Mortgaged Property is located in form and substance and from
counsel satisfactory to Agent.
(6) INSURANCE POLICIES; ENDORSEMENTS AND BUSINESS INTERRUPTION
INSURANCE. Certified copies of policies of insurance required to be
maintained under this Agreement and the other Loan Documents together with
endorsements satisfactory to Agent naming Agent as lender loss payee for
property insurance for the benefit of Lenders and as additional insured under
liability insurance.
(7) LIFE INSURANCE ASSIGNMENT. Life insurance assignments in form
and substance acceptable to Agent for each life insurance policy owned by
Borrower that is described on Schedule 4.20 ("LIFE INSURANCE ASSIGNMENTS"),
which policies shall have cash value (net of any loans thereon) equal in
aggregate amount to not less than $4,500,000.
(8) ACCOUNTANTS' LETTER. A letter in accordance with subsection
5.2 authorizing the independent certified public accountants of Borrower and
each of its Subsidiaries to communicate with Agent and Lenders and
acknowledging the reliance by Agent and Lenders on past, present and future
financial statements.
(9) BANK AGENCY AGREEMENTS. A Bank Agency Agreement with each
bank at which Borrower maintains depository accounts.
(10) CHARTER AND GOOD STANDING. Copies of the charter of each Loan
Party together with good standing certificates (including verification of tax
status) from the state of its incorporation, from the state in which its
principal place of business is located and from all states in which the laws
thereof require each Loan Party to be qualified and/or licensed to do
business, each to be dated a recent date prior to the Closing Date and
certified by the
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applicable Secretary of State or other authorized governmental entity and in
the case of the charter, also certified as of the Closing Date by its
corporate secretary or assistant secretary.
(11) BYLAWS. Copies of the bylaws of each Loan Party certified as
of the Closing Date by its corporate secretary or an assistant secretary.
(12) RESOLUTIONS. Resolutions of the Board of Directors of each
Loan Party approving and authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents to which each Loan Party is a
party, certified as of the Closing Date by its corporate secretary or an
assistant secretary as being in full force and effect without modification or
amendment.
(13) INCUMBENCY CERTIFICATES. Signature and incumbency
certificates of the officers of each Loan Party executing the Loan Documents.
(14) SUBSIDIARY STOCK PLEDGE AGREEMENT. A stock pledge agreement
from Borrower pledging all of the Capital Stock of each Subsidiary to Agent
as further security for the payment of the Obligations, together with all
stock certificates evidencing same and blank stock powers therefor.
(15) LETTER OF DIRECTION. A letter of direction from Borrower
addressed to Agent, on behalf of the Lenders, with respect to the
disbursement of the proceeds of the Term Loan, the initial Advance under the
Revolving Loan and any initial Lender Letter of Credit.
(16) FINANCIAL STATEMENTS. Interim financial statements of
Borrower as of, and for the fiscal month ending closest to, February 28, 1997.
(17) OTHER LOAN DOCUMENTS. Such other documents respecting
Borrower or any Loan Party as Agent may reasonably request.
3.2. CONDITIONS TO ALL LOANS
The obligations of Agent and each Lender to make Loans or the obligation
of the Issuer to issue Lender Letters of Credit on each Funding Date are
subject to the further conditions precedent set forth below.
(A) NOTICE OF BORROWING. Agent shall have received, in accordance with
the provisions of subsection 2.1, a Notice of Borrowing or notice requesting
issuance of a Lender Letter of Credit.
(B) REPRESENTATIONS STILL TRUE. The representations and warranties
contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of
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the Funding Date to the same extent as though made on and as of the Closing
Date, except for any representation or warranty limited by its terms to a
specific date and taking into account any updates to the Schedules or
Exhibits and any events which would cause any such representations and
warranties no longer to be true, correct or complete, in each case as
disclosed in writing by Borrower to Agent after the Closing Date, and, if not
consistent with the covenants corresponding thereto, approved by Agent, or,
as required by Section 10.3, the Requisite Lenders.
(C) NO SUSPENSION OR TERMINATION OF COMMITMENTS. The Commitments of
Lenders shall not have been suspended or terminated pursuant to the operation
of Section 8.2.
(D) NO RESTRAINING ORDER. Agent shall not have received notice or
knowledge of any pending or threatened order, judgment or decree of any
court, arbitrator or Governmental Authority which purports to enjoin or
restrain Agent or any Lender from making any Loans or issuing any Lender
Letters of Credit.
SECTION 4.
BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Agent and each Lender to enter into this Agreement,
to make Loans and to issue Lender Letters of Credit, Borrower represents and
warrants to Agent and each Lender that the following statements are and,
after giving effect to the transactions contemplated herein, will be true,
correct and complete:
4.1. ORGANIZATION, POWERS, CAPITALIZATION, GOOD STANDING, BUSINESS
AND SUBSIDIARIES
(A) ORGANIZATION AND POWERS. Each of the Loan Parties is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (which jurisdiction is set forth on SCHEDULE
4.1(A)). Each of the Loan Parties has all requisite corporate power and
authority to own and operate its properties, to carry on its business and to
enter into each Loan Document to which it is a party and to carry out the
transactions contemplated therein.
(B) CAPITALIZATION. The authorized Capital Stock of each of the Loan
Parties is as set forth on SCHEDULE 4.1(B). All issued and outstanding
shares of Capital Stock of each of the Loan Parties are duly authorized and
validly issued, fully paid and nonassessable, as to Borrower's Capital Stock,
free and clear of all Liens created by Borrower other than Permitted
Encumbrances and such shares were issued in compliance with all applicable
state and federal laws concerning the issuance of securities. The Capital
Stock of each of the Loan Parties is owned by the stockholders and in the
amounts set forth on SCHEDULE 4.1(B). No shares of the Capital Stock of any
Loan Party, other than those described above, are issued and outstanding.
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(C) QUALIFICATION. Each of the Loan Parties is duly qualified and in
good standing wherever necessary to carry on its present business and
operations, except in jurisdictions in which the failure to be qualified and
in good standing could not reasonably be expected to have a Material Adverse
Effect. All jurisdictions in which each Loan Party is qualified to do
business are set forth on SCHEDULE 4.1(C).
(D) CONDUCT OF BUSINESS. Each Loan Party is engaged only in the
businesses described on SCHEDULE 4.1(D).
(E) SUBSIDIARIES. Borrower has no Subsidiaries except as set forth on
SCHEDULE 4.1(E). SCHEDULE 4.1(E) accurately sets forth the percentage
ownership by Borrower of each of its Subsidiaries. As of the Closing Date,
Borrower has no Material Subsidiary.
4.2. AUTHORIZATION OF BORROWING ETC.
(A) AUTHORIZATION OF BORROWING. Borrower has the corporate power and
authority to incur the Obligations. The execution, delivery and performance
of this Agreement and each of the other Loan Documents and the consummation
of the transaction by Borrower contemplated therein have been duly authorized
by all necessary corporate and shareholder action. On the Closing Date, the
execution, delivery and performance of this Agreement and each of the other
Loan Documents by each other Loan Party signatory thereto will have been duly
authorized by all necessary corporate and, if required, shareholder action.
(B) NO CONFLICT. The execution, delivery and performance by each Loan
Party of this Agreement and each other Loan Document to which it is a party
and the consummation of the transactions contemplated herein do not and will
not: (1) violate any Requirement of Law applicable to Borrower or any Loan
Party, the articles or certificate of incorporation or charter or bylaws of
Borrower or any Loan Party, or any order, judgment or decree of any court or
other agency of government binding on Borrower or any Loan Party; (2)
conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under any Contractual Obligation of Borrower or
any Loan Party; (3) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Borrower or any Loan Party
(other than Liens in favor of Agent, for the benefit of Lenders); or (4)
require any approval or consent of any Person under any Contractual
Obligation of Borrower or any Loan Party; except, with respect to each of the
clauses (1) through (4) above, for (a) such approvals or consents which have
been obtained on or before the Closing Date, and (b) such violations,
conflicts, breaches, Liens and defaults as are disclosed on Schedule 4.2(B)
or which do not presently have, and could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
(C) GOVERNMENTAL CONSENTS. The execution, delivery and performance by
each Loan Party of this Agreement and each Loan Document to which it is a
party, and the consummation of the transactions contemplated therein do not
and will not require any
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registration with, consent or approval of, or notice to, or other action to,
with or by, any Governmental Authority except for filings required by federal
or state securities laws (which filings have been made and true and complete
copies of which have been delivered to Agent), filings required in connection
with the perfection of security interests granted pursuant to the Loan
Documents, and other filings, authorizations, consents and approvals, all of
which have been made or obtained or the absence of which would not be
reasonably expected to have a Material Adverse Effect.
(D) BINDING OBLIGATION. This Agreement is, and the other Loan
Documents, including, without limitation, the Notes, when executed and
delivered will be, the legally valid and binding obligations of the
applicable Loan Parties and Borrower, respectively, each enforceable against
such Loan Parties or Borrower, as applicable, in accordance with their
respective terms, except as such enforcement is subject to the effect of (i)
any applicable bankruptcy, insolvency, fraudulent transfer, reorganization or
other law relating to or affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.3. FINANCIAL CONDITION
All Financial Statements concerning any Loan Party which have been or
will hereafter be furnished by Borrower to Agent or any Lender pursuant to
this Agreement have been or will be prepared in accordance with GAAP
consistently applied (except as may be disclosed therein and subject to
routine year-end audit adjustment) and do or will present fairly the
financial condition of the corporations covered thereby as at the dates
thereof and the results of their operations for the periods then ended.
4.4. INDEBTEDNESS AND CONTINGENT OBLIGATIONS
As of the Closing Date, neither Borrower nor any of its Subsidiaries has
any Indebtedness, Contingent Obligations or Plan Costs, except as set forth
on SCHEDULE 4.4.
4.5. NO MATERIAL ADVERSE CHANGE; NO STOCK PAYMENTS
During the period from December 29, 1996, to and including the Closing
Date, no event or change has occurred that has caused or evidences, either
individually or together with such other events or changes, or could
reasonably be expected to have, a Material Adverse Effect. None of Borrower
or any of its Subsidiaries has, during the aforesaid period, directly or
indirectly declared, ordered, paid or made or set apart any sum or property
for any Restricted Junior Payment or agreed to do so, except as described in
the Plan.
4.6. TITLE TO PROPERTIES; LIENS
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Each of the Loan Parties has good, sufficient and legal title, subject
to Permitted Encumbrances, to all their respective material properties and
assets. Except for Permitted Encumbrances, all such properties and assets are
free and clear of Liens. To the best knowledge of Borrower after due
inquiry, there are no actual, threatened or alleged defaults with respect to
any leases of real property under which Borrower is lessee or lessor which in
the aggregate, presently has, or could reasonably be expected to have, a
Material Adverse Effect.
4.7. LITIGATION; ADVERSE FACTS
Except as set forth on SCHEDULE 4.7, as of the Closing Date, (i) there
are no judgments outstanding against any Loan Party or affecting any property
of any Loan Party and (ii) there is no action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration now pending
or, to the best knowledge of Borrower after reasonable investigation,
threatened against any Loan Party or affecting any property of any Loan Party
which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect. No Loan Party has received any opinion or
memorandum or legal advice from legal counsel to the effect that it is
exposed to any liability or disadvantage which could reasonably be expected
to have a Material Adverse Effect. The actions, charges, claims, demand,
suits, proceedings, petitions, investigations and arbitrations set forth on
SCHEDULE 4.7 or disclosed pursuant to subsection 5.1(N), if adversely
determined, will not result or could not reasonably be expected to result,
either individually or in the aggregate, in any Material Adverse Effect and
do not relate to and will not affect the consummation of the transactions
contemplated herein.
4.8. PAYMENT OF TAXES
Except as set forth on SCHEDULE 4.8 or to the extent permitted by
subsection 5.4, as of the Closing Date: (i) all material tax returns and
reports of the Loan Parties and each of their respective Subsidiaries (and
their predecessors in interest) required to be filed by any of them have been
timely filed, and all taxes, assessments, fees and other governmental charges
upon such Persons and upon their respective properties, assets, income and
franchises which are shown on such returns as due and payable have been paid
when due and payable; (ii) none of the United States income tax returns of
any Loan Party or any Person which filed consolidated tax returns on its
behalf are under audit; (iii) no tax Liens have been filed and no claims are
being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Borrower and each of its Subsidiaries in respect of
any taxes or other governmental charges are in accordance with GAAP and
sufficient to pay all such taxes and charges. No Loan Party is, as of the
Closing Date, party to any tax sharing arrangement or agreement with any
Person, or has incurred any Indebtedness or Contingent Liability in respect
of the tax sharing arrangement or any other such agreement or arrangement to
which, heretofore, it was a party or by which it was bound.
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4.9. ADVERSE AND AFFILIATE CONTRACTS
(A) ADVERSE CONTRACTS. None of the Loan Parties and none of its
respective Subsidiaries is a party to nor is it or any of its property
subject to or bound by any forward purchase contract, futures contract,
covenant not to compete, unconditional purchase, take or pay or other
agreement which restricts in any material respect its ability to conduct its
business or, either individually or in the aggregate, has a Material Adverse
Effect or could reasonably be expected to have a Material Adverse Effect.
(B) AFFILIATE CONTRACTS. None of the Loan Parties and none of its
respective Subsidiaries is a party to nor is it or any of its property
subject to or bound by, any contract with any Affiliate, except as disclosed
on SCHEDULE 4.9(B).
(C) CO-OP CONTRACTS. Neither Borrower nor any of its Subsidiaries is
party to any co-op advertising contracts or arrangements requiring Borrower's
performance of advertising or other marketing functions, except as disclosed
on SCHEDULE 4.9(C); and, except as disclosed on SCHEDULE 4.9(C), neither
Borrower nor any of its Subsidiaries is in default in the observance or
performance of any duties or obligations under any such contracts.
4.10. PERFORMANCE OF AGREEMENTS
None of the Loan Parties is in default in any material respect in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any material Contractual Obligation of any such
Person which will continue after the Closing Date (and no condition exists
that, with the giving of notice or the lapse of time or both, would
constitute such a material default) which could reasonably be expected to
have a Material Adverse Effect.
4.11. GOVERNMENTAL REGULATION
None of the Loan Parties is or after giving effect to any Loan will be,
subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940 or to any federal
or state statute or regulation limiting its ability to incur indebtedness for
borrowed money.
4.12. EMPLOYEE BENEFIT PLANS
(A) NO OTHER PLANS. No Loan Party nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plan or any
Multiemployer Plan other than those identified on SCHEDULE 4.12. Borrower
has provided Agent accurate and complete copies of all contracts, agreements
and documents described on SCHEDULE 4.12.
(B) ERISA AND IRC COMPLIANCE AND LIABILITY. Each Loan Party and each
ERISA Affiliate is in compliance with all applicable provisions of ERISA and
the regulations and published
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interpretations thereunder with respect to all Employee Benefit Plans except
where failure to comply would not result in a material liability to any Loan
Party and except for any required amendments for which the remedial amendment
period as defined in Section 401 (b) of the IRC has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the IRC has been determined by the Internal Revenue Service ("IRS") to be
so qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the IRC. No material liability has been
incurred by any Loan Party or by any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit
Plan or any Multiemployer Plan.
(C) FUNDING. No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the IRC) been
incurred (without regard to any waiver granted under Section 412 of the IRC),
nor has any funding waiver from the IRS been received or requested with
respect to any Pension Plan, nor has any Loan Party or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as
required by Section 412 of the IRC, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under Section 412
of the IRC or Section 302 of ERISA, nor has there been any event requiring
any disclosure under Section 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA with
respect to any Pension Plan.
(D) PROHIBITED TRANSACTIONS AND PAYMENTS. No Loan Party nor Borrower
nor any ERISA Affiliate has: (1) engaged in a nonexempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the IRC; (2)
incurred any liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and
unpaid; (3) failed to make a required contribution or payment to a
Multiemployer Plan; or (4) failed to make a required installment or other
required payment under Section 412 of the IRC.
(E) NO ERISA TERMINATION EVENT. No ERISA Termination Event has
occurred or is reasonably expected to occur.
(F) ERISA LITIGATION. No material proceeding, claim, lawsuit and/or
investigation is existing or, to the best knowledge of Borrower after due
inquiry, threatened concerning or involving any (1) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or
contributed to by any Loan Party or any ERISA Affiliate, (2) Pension Plan or
(3) Multiemployer Plan.
4.13. INTELLECTUAL PROPERTY
Borrower and each of its Subsidiaries owns, is licensed to use or
otherwise has the right to use, all patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or necessary for the
conduct of its business as currently conducted that are material to the
condition (financial or other), business or operations of Borrower or its
Subsidiaries (collectively called "INTELLECTUAL PROPERTY") and all such
Intellectual Property
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consisting of registered trademarks or issued patents is identified on
SCHEDULE 4.13 and fully protected and/or duly and properly registered, filed
or issued in the appropriate office and jurisdictions for such registrations,
filing or issuances. All Intellectual Property that is registered or for
which application for registration is pending is identified on SCHEDULE 4.13.
Except as disclosed in SCHEDULE 4.13, no claim has been asserted by any
Person with respect to the use of any Intellectual Property, or challenging
or questioning the validity or effectiveness of any Intellectual Property.
Except as disclosed in SCHEDULE 4.13, the use of such Intellectual Property
by Borrower and its Subsidiaries does not infringe on the rights of any
Person, subject to such claims and infringements as do not, in the aggregate,
give rise to any liabilities on the part of Borrower and its Subsidiaries
that are material to Borrower or its Subsidiaries.
4.14. BROKER'S FEES
No broker's or finder's fee, commission or similar compensation will be
payable with respect to the issuance of the Notes or any of the other
transactions contemplated hereby or by any Loan Documents, other than
reasonable fees to be paid by Borrower to The Robinson-Humphrey Company, Inc.
on the Closing Date. No other similar fees or commissions will be payable by
any Loan Party for any other services rendered to Borrower or any of its
Subsidiaries ancillary to the transactions contemplated hereby.
4.15. ENVIRONMENTAL COMPLIANCE
(A) NO ENVIRONMENTAL CLAIMS. Except as set forth on SCHEDULE 4.15(A),
there are no judgments or orders or, to Borrower's knowledge, after
reasonable investigation, claims, liabilities, investigations, litigation or
administrative proceedings, whether pending or threatened, relating to any
Hazardous Materials (collectively called "ENVIRONMENTAL CLAIMS",) asserted or
threatened against any Loan Party or relating to any real property currently
or, to the knowledge of Borrower, formerly owned, leased or operated by any
Loan Party. No Loan Party or any other Person has caused or permitted any
Hazardous Material to be used, generated, reclaimed, transported, released,
treated, stored or disposed of in any manner not in material compliance with
any Environmental Laws. Except as set forth on SCHEDULE 4.15(A), no Loan
Party has assumed (by contract or by operation of law) any liability of any
Person for cleanup, remediation compliance or required Capital Expenditures
in connection with any Environmental Claim. The items disclosed on SCHEDULE
4.15(A) pursuant to this subsection 4.15(A) could not reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect.
(B) STORAGE OF HAZARDOUS MATERIALS. Except as set forth on SCHEDULE
4.15(B), to Borrower's knowledge, after reasonable investigation, no
Hazardous Materials are or were stored or otherwise located, and no
underground storage tanks or surface impoundments are or were located, on
real property currently or, to the knowledge of Borrower, formerly owned,
leased or operated by any Loan Party or, to the knowledge of any executive
officer of
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Borrower, on adjacent parcels of real property, and no part of such real
property or, to the knowledge of Borrower, no part of such adjacent parcels
of real property, including the groundwater located thereon, is presently
contaminated by Hazardous Materials. The items disclosed on SCHEDULE 4.15(B)
pursuant to this subsection 4.15(B) could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 4.15(C), each Loan Party has been and is currently in material
compliance with all applicable Environmental Laws, including obtaining and
maintaining in effect all permits, licenses or other authorizations required
by applicable Environmental Laws. The items disclosed on SCHEDULE 4.15(C)
pursuant to this subsection 4.15(C) could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect.
4.16. EMPLOYEE MATTERS
Except as set forth on SCHEDULE 4.16, as of the Closing Date (a) no Loan
Party nor any of the respective employees of any Loan Party is subject to any
collective bargaining agreement, (b) no petition for certification or union
election is pending with respect to the employees of any Loan Party and no
union or collective bargaining unit has sought such certification or
recognition with respect to the employees of any Loan Party and (c) there are
no strikes, slowdowns, work stoppages or controversies pending or, to the
best knowledge of Borrower after due inquiry, threatened between any Loan
Party and its respective employees, other than employee grievances arising in
the ordinary course of business which could not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
Except as set forth on SCHEDULE 4.16, neither Borrower nor any of its
Subsidiaries is subject to an employment contract in respect of any executive
officers.
4.17. SOLVENCY
As of and from and after the date of this Agreement and after giving
effect to the consummation of the transactions contemplated herein, Borrower
will be Solvent.
4.18. DISCLOSURE
To Borrower's knowledge, after reasonable investigation, no
representation or warranty of Borrower, any of its Subsidiaries or any other
Loan Party contained in this Agreement, the Financial Statements referred to
in subsection 4.3, the other Loan Documents, or any other document,
certificate or written statement furnished to Agent or any Lender by or on
behalf of any such Person for use in connection with the Loan Documents or
the Loan Documents contain any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made. The Projections and pro forma
financial information contained in such materials are
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based upon good faith estimates and assumptions believed by such Persons to
be reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may, and
likely will, differ from the projected results. There is no material fact
relative to Borrower's business known to Borrower that could reasonably be
expected to have a Material Adverse Effect and that has not been disclosed
herein or in such other documents, certificates and statements furnished to
Agent or any Lender for use in connection with the transactions contemplated
hereby.
4.19. USE OF PROCEEDS AND MARGIN SECURITY
Borrower shall use the proceeds of all Loans for proper business
purposes (as described in the Recitals to this Agreement) consistent with all
applicable laws, statutes, rules and regulations. No portion of the proceeds
of any Loan shall be used by Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act.
4.20. INSURANCE
SCHEDULE 4.20 sets forth a complete and accurate description of all
policies of insurance that will be in effect as of the Closing Date for
Borrower and its Subsidiaries. Borrower and its Subsidiaries are adequately
insured under such policies, no notice of cancellation has been received with
respect to any of such policies and Borrower and its Subsidiaries are in
compliance with all conditions contained in such policies. Borrower shall at
all times maintain and keep in full force and effect those policies of life
insurance described on Schedule 4.20 with a sound and reputable insurer,
having a cash value (net of any loans thereon from the insurance company
issuer) in the aggregate amount of not less than $4,500,000, the owner and
beneficiary of which policies shall be Borrower and the proceeds and benefits
of which policies shall be collaterally assigned to Agent, for the benefit of
Lenders, pursuant to the Life Insurance Assignments; PROVIDED, HOWEVER, that,
upon Agent's receipt thereof after the death of a Participant in the SERP,
Agent shall deliver to Borrower the death benefit proceeds collected by Agent
under the Life Insurance Assignment of the life insurance policy on the life
of such Participant in an amount equal to the lesser of (a) the SERP Survivor
Benefits Payment payable by Borrower in a lump sum to the designated
beneficiary of such Participant, and (b) the amount which, when aggregated
with all other death benefit proceeds delivered by Agent to Borrower under
this Section 4.20 and any amounts borrowed against the cash surrender value
of any such life insurance policies for the payment described in the
following sentence, equals $3,000,000. Upon the death of R.B. Davenport III,
Borrower shall be allowed to borrow up to $850,000 in the aggregate against
the cash surrender value of any one or more such life insurance policies in
order to fund the SERP Survivor Benefits Payment due and payable by Borrower
upon Mr. Davenport III's death.
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Subject to the immediately preceding sentence, any monies due or to become
due under any such policy may be applied by Lenders to such of the
Obligations as Agent, on behalf of Lenders, in its sole discretion elects,
whether or not any of such Obligations are then due or payable or any Default
or Event of Default exists.
4.21. BANK ACCOUNTS
SCHEDULE 4.21 sets forth the account numbers and location of all bank
accounts of Borrower and its Subsidiaries.
4.22. COMPLIANCE WITH LAWS
To Borrower's knowledge, after reasonable investigation, each Loan Party
and each of its respective Subsidiaries are not in violation of any law,
ordinance, rule, regulation, order, policy, guideline or other requirement of
any domestic or foreign government or any instrumentality or agency thereof,
having jurisdiction over the conduct of their respective businesses or the
ownership of their respective properties, including, without limitation, any
violation relating to the Fair Labor Standards Act or any use, release,
storage, transport or disposal of any Hazardous Material, which violation
would subject any Loan Party or any such Subsidiary, or any of their
respective officers to criminal liability or could reasonably be expected to
have, either individually or together with all such other violations, a
Material Adverse Effect and no such violation has been alleged. Each Loan
Party has filed in a timely manner all reports, documents and other materials
required to be filed by them with any governmental bureau, agency or
instrumentality (and the information contained in each of such filings is
true, correct and complete in all material respects), except where failure to
make such filings could not reasonably be expected to have a Material Adverse
Effect. Each Loan Party has retained all records and documents required to
be retained by it pursuant to any law, ordinance, rule, regulation, order,
policy, guideline or other requirement of any governmental authority, except
where failure to retain such records would not subject any Loan Party or such
Subsidiary or any of their respective officers to criminal liability and
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
4.23. INVESTMENTS
Except as set forth on SCHEDULE 4.23, neither Borrower nor any of its
Subsidiaries has an Investment in any Person other than Investments permitted
under subsection 7.3.
4.24. TRADE RELATIONS
To Borrower's knowledge, after reasonable investigation: (i) there
exists no actual or, to Borrower's knowledge, after reasonable investigation,
threatened, termination, cancellation or limitation of, or any modification
or change in, the business relationship of Borrower with any supplier or
group of suppliers the loss of whose business, either individually or in the
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aggregate, could reasonably be expected to have a Material Adverse Effect,
and Borrower reasonably believes that, notwithstanding the consummation of
the transactions contemplated by this Agreement, each such supplier or group
of suppliers will continue a business relationship with Borrower on a basis
no less favorable to Borrower (including particularly as to payment terms and
credit lines) than that which was heretofore conducted with Borrower; and
(ii) there exists no condition or state of facts or circumstances which would
materially adversely affect Borrower or prevent Borrower from conducting its
business after the consummation of the transactions contemplated by this
Agreement in essentially the same manner in which it has heretofore been
conducted by it.
SECTION 5.
BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations
(other than Inchoate Indemnity Obligations) and termination of all Lender
Letters of Credit, unless the Requisite Lenders shall otherwise give their
prior written consent, Borrower shall perform and comply with, and shall
cause each of its Subsidiaries to perform and comply with, all covenants in
this Section 5 applicable to such Person.
5.1. FINANCIAL STATEMENTS AND OTHER REPORTS
Borrower will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of Financial Statements in
conformity with GAAP. Borrower will deliver to each Lender (unless herein
specified to be delivered to Agent only) the financial statements and other
reports described below.
(A) MONTHLY FINANCIALS. As soon as available and in any event within
thirty (30) days after the end of each fiscal month (except at the end of
each of Borrower's fiscal quarters, and then within fifty (50) days after the
end of the fiscal quarter) Borrower will deliver the consolidated and
consolidating balance sheet of Borrower (showing intercompany eliminations),
as at the end of such month and the related consolidated and consolidating
statements of income (showing intercompany eliminations), stockholders'
equity and cash flow for such month and for the period from the beginning of
the then current fiscal year to the end of such month, setting forth in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the most recent
Projections for the current Fiscal Year delivered to Lenders pursuant to
subsection 5.1(G).
(B) YEAR-END FINANCIALS. As soon as available and in any event within
one hundred (100) days after the end of each Fiscal Year, Borrower will
deliver: (l) the consolidated balance sheet of Borrower as at the end of such
year and the related consolidated
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statements of income, stockholders' equity and cash flow for such fiscal
year; (2) a schedule of the outstanding Indebtedness for borrowed money of
Borrower and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan; (3) a report
with respect to the Financial Statements from a Big Six Accounting Firm
selected by Borrower, which report shall be without Qualification and shall
state that (a) such consolidated financial statements present fairly the
consolidated financial position of Borrower and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years and (b) that the examination by such accountants in connection
with such consolidated Financial Statements has been made in accordance with
generally accepted auditing standards; and (4) copies of the consolidating
Financial Statements of Borrower and its Subsidiaries, including (a)
consolidating balance sheets of Borrower and its Subsidiaries as at the end
of such Fiscal Year showing intercompany eliminations and (b) related
consolidating statements of earnings of Borrower and its Subsidiaries showing
intercompany eliminations. As used in this subsection 5.1(B),
"QUALIFICATION" means, with respect to any certificate covering financial
statements, a qualification to such certificate (such as a "subject to" or
"except for" statement or emphasis paragraph therein) (a) resulting from a
limitation on the scope of examination of such financial statements or the
underlying data, (b) as to the capability of the Person whose financial
statements are certified to continue operations as a going concern, or (c)
which could be eliminated by changes in financial statements or notes thereto
covered by such certificate (such as by the creation of or increase in a
reserve or a decrease in the carrying value of assets) and which if so
eliminated by the making of any such change and after giving effect thereto
would occasion an Event of Default; PROVIDED, HOWEVER, that, without
limitation, neither of the following shall constitute a Qualification: (x) a
consistency exception relating to a change in accounting principles with
which the independent public accountants for the Person whose financial
statements are being certified have concurred, or (y) a qualification
relating to the outcome or disposition of threatened litigation, pending
litigation being contested in good faith, pending or threatened claims or
other contingencies, the impact of which litigation, claims or contingencies
cannot be determined with sufficient certainty to permit quantification in
such financial statements.
(C) BORROWER COMPLIANCE CERTIFICATE. Together with each delivery of
financial statements of Borrower and its Subsidiaries pursuant to subsections
5.1(A) and 5.1(B), Borrower will deliver a fully and properly completed
Compliance Certificate signed by Borrower's chief financial officer, vice
president finance or controller.
(D) ACCOUNTANTS' CERTIFICATION. Together with each delivery of
consolidated financial statements of Borrower and its Subsidiaries pursuant
to subsection 5.1(B), Borrower will deliver a written statement by its
independent certified public accountants
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which shall, to the extent consistent with any AICPA guidelines applicable
thereto, (a) state that the examination has included a review of the terms of
this Agreement as same relate to accounting matters and (b) state whether, in
connection with the examination, any condition or event that constitutes a
Default or an Event of Default has come to their attention and, if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof.
(E) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted to Borrower by
independent public accountants in connection with each annual, interim or
special audit of the financial statements of Borrower made by such
accountants, including the comment letter submitted by such accountants to
management in connection with their annual audit.
(F) MANAGEMENT REPORT. Together with each delivery of financial
statements of Borrower and its Subsidiaries pursuant to subsections 5.1(A)
and 5.1(B), Borrower will deliver a management report setting forth (1) sales
revenue and contribution to profits on a restaurant-by-restaurant basis
(including comparisons of same restaurant sales revenue activity
month-to-month), (2) an aggregate customer count for Borrower's restaurants
(including a comparison for the prior comparable period) and (3) a restaurant
count for restaurants operated by Borrower and restaurants operated by
Borrower's franchisees (including a comparison for the prior comparable
period).
(G) PROJECTIONS. As soon as available and in any event no later than
thirty (30) days prior to the end of each Fiscal Year of Borrower, Borrower
will deliver Projections of Borrower and its Subsidiaries for the forthcoming
three Fiscal Years, year by year, and for the forthcoming Fiscal Year, month
by month, in form satisfactory to Agent.
(H) SEC FILINGS AND PRESS RELEASES. Promptly but in any event within
five(5)Business Days after their becoming available, Borrower will deliver
copies of: (1) all financial statements, reports, notices and proxy
statements sent or made available by Borrower or any of its Subsidiaries to
their security holders; (2) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Borrower or any of
its Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority; and
(3) all press releases and other statements made available by Borrower or any
of its Subsidiaries to the public concerning developments in the business of
any such Person.
(I) EVENTS OF DEFAULT. Promptly and in any event within five (5)
Business Days after the Chairman, President or Chief Financial Officer of
Borrower obtains knowledge of any of the following events or conditions,
Borrower shall deliver a certificate of Borrower's chief executive officer or
other executive officer specifying the nature and period of existence of such
condition or event and what action Borrower has taken, is
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taking and proposes to take with respect thereto: (1) any condition or event
that constitutes an Event of Default or Default; (2) any notice that any
Person has given to Borrower or any of its Subsidiaries or any other action
taken with respect to a claimed default or event or condition of the type
referred to in subsection 8.1(B); or (3) any Material Adverse Effect.
(J) LITIGATION. Promptly and in any event within five (5) Business
Days after the Chairman, President or Chief Financial Officer of Borrower
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Loan Party
or any property of any Loan Party not previously disclosed by Borrower to
Agent or (2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against or
affecting any Loan Party or any property of any Loan Party, which, in each
case, is reasonably likely to have a Material Adverse Effect, Borrower will
promptly give notice thereof to Agent and each Lender and provide such other
information as may be reasonably available to it to enable Agent, Lenders and
their counsel to evaluate such matter.
(K) EMPLOYEE BENEFIT PLANS. With reasonable promptness, and in any
event within thirty (30) days after the same occur, Borrower will give notice
of and/or deliver to Agent copies of: (1) the establishment of any new
Employee Benefit Plan, Pension Plan or Multiemployer Plan, the commencement
of contributions to any Employee Benefit Plan, Pension Plan or Multiemployer
Plan to which any Loan Party or any of its ERISA Affiliates was not
previously contributing or any increase in the benefits of any existing
Employee Benefit Plan, Pension Plan or Multiemployer Plan; (2) each funding
waiver request filed with respect to any Employee Benefit Plan and all
communications received or sent by any Loan Party or any ERISA Affiliate with
respect to such request; and (3) the failure of any Loan Party or ERISA
Affiliate to make a required installment or payment under Section 302 of
ERISA or Section 412 of the IRC by the due date.
(L) ERISA TERMINATION EVENTS. Promptly and in any event within five (5)
Business Days after the Chairman, President or Chief Financial Officer of
Borrower's becoming aware of the occurrence of or forthcoming occurrence of
any (1) ERISA Termination Event or (2) prohibited transaction , as such term
is defined in Section 406 of ERISA or Section 4975 of the IRC, in connection
with any Pension Plan or any trust created thereunder, Borrower will deliver
to Agent a notice specifying the nature thereof, what action the applicable
Loan Party has taken, is taking or proposes to take with respect thereto and,
when known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto.
(M) ERISA NOTICES. With reasonable promptness but in any event within
thirty (30) days after their becoming available, Borrower will deliver to
Agent copies of: (1) any favorable or unfavorable determination letter from
the Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the IRC; (2) all notices received by any
Loan
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Party or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan; (3) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by any Loan Party or any ERISA Affiliate with the Internal Revenue
Service with respect to each Pension Plan; and (4) all notices received by
any Loan Party or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA. Borrower will notify Agent in writing within ten (10)
Business Days of any Loan Party obtaining knowledge or reason to know that
any Loan Party or any ERISA Affiliate has filed or intends to file a notice
of intent to terminate any Pension Plan under a distress termination within
the meaning of Section 4041(c) of ERISA.
(N) INSURANCE. As soon as available, but in any event not later than
ten (10) Business Days prior to the end of each Fiscal Year of Borrower,
Borrower will deliver a report in form and substance reasonably satisfactory
to Agent outlining all material insurance coverage maintained as of the date
of such report by Borrower and its Subsidiaries and all material insurance
coverage planned to be maintained by such Persons in the subsequent Fiscal
Year.
(O) NOTICE OF CORPORATE CHANGES. Borrower shall provide written notice
to the Agent and each Lender of (1) all jurisdictions in which Borrower or
any Subsidiary becomes qualified after the Closing Date to transact business,
(2) any material change after the Closing Date in the authorized and issued
Capital Stock or other equity interests of Borrower or any Subsidiary or any
other material amendment to their charter, by-laws or other organization
documents and (3) any Subsidiary created or acquired by Borrower or any
Subsidiary after the Closing Date (presuming a consent is obtained in respect
thereof pursuant to subsection 7.13), such notice, in each case, to identify
the applicable jurisdictions, capital structures or Subsidiaries, as
applicable.
(P) OTHER INFORMATION. With reasonable promptness, Borrower will
deliver such other information and data with respect to itself, any other
Loan Party or any Subsidiary of any Loan Party as from time to time may be
reasonably requested by Agent or any Lender.
5.2. ACCESS TO ACCOUNTANTS.
Borrower authorizes Lenders to discuss the financial condition of
Borrower and its Subsidiaries with Borrower's independent public accountants
upon reasonable notice to Borrower of its intention to do so. Borrower shall
be given the reasonable opportunity to participate in any such discussion.
Borrower shall deliver a letter to such accountants authorizing them to
comply with the provisions of subsection 5.1 and this subsection 5.2.
5.3. CORPORATE EXISTENCE ETC.
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Except as otherwise permitted by subsection 7.6, Borrower will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its corporate existence and all rights and franchises
material to its business.
5.4. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
Borrower will, and will cause each of its Subsidiaries to, pay (a) all
taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon and (b) all claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon
any of its properties or assets before any penalty or fine in any material
amount is incurred with respect thereto; provided that no such tax, charge or
claim need be paid if Borrower or one of its Subsidiaries is contesting same
in good faith by appropriate proceedings promptly instituted and diligently
conducted and if Borrower or such Subsidiary has established such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP. Borrower will not and will not permit any of its Subsidiaries to file
or consent to the filing of any consolidated income tax return with any
Person (other than Borrower, any of its Subsidiaries) or enter into, a tax
sharing or similar arrangement.
5.5. MAINTENANCE OF PROPERTIES; INSURANCE; CONDEMNATION.
Borrower will maintain or cause to be maintained in good repair, working
order and condition all material properties used in the business of Borrower
and its Subsidiaries and will make or cause to be made all appropriate
repairs, renewals and replacements thereof. Unless and except to the extent
that, with the prior approval of the Requisite Lenders, Borrower elects to
self-insure or co-insure in one or more respects, Borrower will maintain or
cause to be maintained, with insurers having an A.M. Best & Co. rating of
"A" or better or which otherwise are reasonably acceptable to Agent, public
liability and property damage insurance with respect to its business and
properties and the business and properties of its Subsidiaries against loss
or damage of the kinds customarily carried or maintained by corporations of
established reputation engaged in similar businesses and in amounts
acceptable to Agent and will deliver evidence thereof to Agent. If, at any
time hereafter, Borrower determines that any of its insurers has less than
the required rating prescribed above, Borrower shall promptly notify Agent
thereof and, if Agent so requests, within thirty (30) days thereafter,
Borrower shall cause such insurer to be replaced with another insurer having
at least the required rating or which is otherwise reasonably acceptable to
Agent. Borrower shall cause Agent, for the benefit of Lenders, to be named
as loss payee (in the case of property insurance on all property other than
Borrower's automobiles) and additional insured (in the case of liability
insurance) on all insurance policies pursuant to appropriate endorsements in
form and substance reasonably satisfactory to Agent. If, subsequent to the
Closing Date, all or any material portion of any of Borrower's properties
shall be destroyed or damaged by fire or any other casualty, whether insured
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or uninsured, or if any executive officer of Borrower obtains knowledge of
the institution of any proceedings for the condemnation of all or any
material part of its property, Borrower shall promptly, but within ten (10)
Business Days after the occurrence or receipt of knowledge thereof, notify
the Agent thereof. If and to the extent that as a result of the occurrence
of any of the foregoing matters, Agent, as loss payee or mortgagee, receives
any Net Proceeds of insurance or condemnation, Agent shall apply same (less
any expenses incurred by the Agent or Lenders in the collection thereof) to
outstanding Obligations in accordance with the provisions of subsection
2.4(D)(2).
5.6. INSPECTION; LENDER MEETINGS; PERIODIC AUDITS.
Borrower shall permit any authorized representatives designated by Agent or
by such Lender to visit and inspect any of the properties of Borrower or any of
its Subsidiaries, including its and their financial and accounting records, and
to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and business with its and their executive officers and
independent public accountants, at such reasonable times during normal business
hours within ten (10) days after Agent's request therefor, and as often as may
be reasonably requested; PROVIDED that Lenders shall coordinate such visits
through Agent (but Agent need not be present at any such meeting). Without in
any way limiting the foregoing, Borrower will participate and will cause its key
management personnel to participate in a meeting of Agent and Lenders at least
once during each fiscal year to be held at such time and at such place as may be
agreed to by Borrower and Agent. In addition, Agent shall have the right to
conduct periodic audits of Borrower's financial and accounting records and the
Collateral, at which any Lender may be present and attend, and the reasonable
out-of-pocket expenses of Agent in regard thereto, including, without
limitation, travel, meals and lodging, shall be reimbursed to Agent by Borrower;
PROVIDED, HOWEVER, that Borrower shall not be obligated to reimburse Agent for
such expenses for any such audits in excess of two (2) in any Fiscal Year in
which no Default or Event of Default shall have occurred.
5.7. ENVIRONMENTAL COMPLIANCE
(A) ENVIRONMENTAL LAWS. Borrower shall at all times comply with, and
cause its Subsidiaries to promptly comply with, all applicable Environmental
Laws except where any such noncompliance could not reasonably be expected to
have a Material Adverse Effect.
(B) REMEDIAL ACTION. Borrower shall promptly take, and cause its
Subsidiaries to promptly take, any and all necessary remedial actions in
response to the presence, storage, use, disposal, transportation, release or
discharge of any Hazardous Materials on, under or about any real property owned,
leased or operated by Borrower or its Subsidiaries except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect. In
the event that Borrower or any of its Subsidiaries undertakes any remedial
action with respect to any Hazardous Material on, under or about any real
property owned, leased or operated by,
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Borrower or such Subsidiaries, such Person shall conduct and complete such
remedial action in material compliance with all applicable Environmental
Laws, and in accordance with the policies, orders and directives of all
Governmental Authorities except when such Person's liability for such
presence, storage, use, disposal, transportation, release or discharge of
any Hazardous Material (or the scope of the order or directive at issue) is
being contested in good faith by such Person and appropriate reserves
therefor have been established in accordance with GAAP.
(C) FURTHER ASSURANCE. If Agent or any Lender at any time has a
reasonable basis to believe that there may be a material violation of any
Environmental Law by, or any material liability arising thereunder of, Borrower
or any of its Subsidiaries or related to any real property owned, leased or
operated by Borrower or any of its Subsidiaries or real property adjacent to
such real property, which, for each such case, could reasonably be expected to
have a Material Adverse Effect, then Borrower agrees, upon request from Agent or
such Lender, to provide, and cause its Subsidiaries to provide Agent and such
Lender with such reports, certificates, engineering studies or other written
material or data as Agent or such Lender may reasonably require so as to satisfy
Agent and such Lender that Borrower or such Subsidiary is in material compliance
with all applicable Environmental Laws.
5.8. ENVIRONMENTAL DISCLOSURE
(A) RELEASES. Borrower shall promptly advise Agent in writing and in
reasonable detail of: (1) any unlawful release, disposal or discharge by
Borrower or any of its Subsidiaries of any Hazardous Material required to be
reported to any federal, state or local governmental or regulatory agency under
all applicable Environmental Laws except such releases, disposals or discharges
pursuant to and in compliance with valid permits, authorizations or
registrations under said Environmental Laws that could have a Material Adverse
Effect; (2) any and all written communications sent or received by Borrower or
any of its Subsidiaries with respect to any Environmental Claims or any unlawful
release, disposal or discharge of Hazardous Material required to be reported to
any federal, state or local governmental or regulatory agency; (3) any remedial
action taken by Borrower or any of its Subsidiaries or any other Person in
response to any Hazardous Material on, under or about any real property owned,
leased or operated by Borrower or any such Subsidiaries, the existence of which
could result in an Environmental Claim that could have a Material Adverse
Effect; (4) the discovery by Borrower or any of its Subsidiaries of any
occurrence or condition on any real property adjoining or in the vicinity of any
real property owned, leased or operated by Borrower or any such Subsidiaries
that could cause such real property or any part thereof to be classified as
border-zone property or to be otherwise subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws; and (5) any request for information from any governmental agency that
indicates such agency is investigating whether Borrower or any such Subsidiaries
may be potentially responsible for an unlawful release, disposal or discharge of
Hazardous Materials.
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(B) PROPOSED ACTIVITIES. Borrower shall promptly notify Agent of any
proposed acquisition of stock, assets, or property by Borrower or any of its
Subsidiaries that could reasonably be expected to expose Borrower or any of its
Subsidiaries to, or result in, Environmental Claims that could have a Material
Adverse Effect.
5.9. COMPLIANCE WITH LAWS.
Borrower will (a) comply with and will cause each of its Subsidiaries to
comply with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority as now in effect and which may be imposed
in the future in all jurisdictions in which Borrower or its Subsidiaries are now
doing business or may hereafter be doing business, other than those laws, rules,
regulations and orders the noncompliance with which would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, and (b) maintain and will cause each of its Subsidiaries to maintain, as
the case may be, all licenses and permits now held or hereafter acquired by
Borrower, the loss, suspension, or revocation of which, or failure to renew,
could reasonably be expected to have a Material Adverse Effect.
5.10. ADDITIONAL MORTGAGED PROPERTY.
Agent may, in its discretion, or shall, at the direction of the Requisite
Lenders, from time to time designate real property or leasehold interests of any
Loan Party or any Subsidiary of any Loan Party after the date hereof as
"Additional Mortgaged Property," in which case Borrower shall as promptly as
possible (and in any event within sixty (60) days after such designation)
deliver to Agent a fully executed Mortgage, in form and substance reasonably
satisfactory to Agent, together with title insurance policies and surveys, if
required by Agent, and all other documents, instruments, certificates,
agreements and opinions described in subsection 3.1(I)(5) as applicable to
Mortgaged Property, to the extent requested by Agent. Borrower agrees that,
following the taking of the actions with respect to any Additional Mortgaged
Property required by the immediately preceding sentence, Agent shall have a
valid and enforceable (subject to the limitations set forth in subsection
4.2(D)) first priority mortgage on the respective Additional Mortgaged Property,
free and clear of all defects and encumbrances except for Permitted
Encumbrances.
5.11. CONCENTRATION ACCOUNT
Borrower shall cause all proceeds of the Collateral and all cash received
by it to be wire transferred or sent by ACH to, or deposited to, the
Concentration Account on a daily basis. Agent will instruct the financial
institution at which the Concentration Account is located to transfer all such
proceeds and cash immediately to Borrower's operating account unless and until
an Event of Default has occurred and is continuing.
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5.12. FURTHER ASSURANCES
(A) LOAN PARTIES. Borrower shall and shall cause each Loan Party to, from
time to time, promptly, but in any event within ten (10) Business Days after
Agent's request therefor, execute such guaranties, financing statements,
documents, security agreements and reports as Agent at any time may reasonably
request to evidence, perfect or otherwise implement the guaranties and security
for repayment of the Obligations provided for in the Loan Documents.
(B) SUBSIDIARY GUARANTIES. At Agent's request, made at the direction of
the Requisite Lenders at any time, in respect of any Material Subsidiaries, or
after the occurrence of, and during the continuation of, any Event of Default,
in respect of any other Subsidiaries, Borrower shall promptly, but in any event
within ten (10) Business Days after Agent's request therefor, cause the affected
Subsidiaries of Borrower promptly to guarantee the Obligations and to grant to
Agent, for the benefit of Lenders, a security interest in the real, personal and
mixed property of such Subsidiary to secure the Obligations. The documentation
for such guaranty or security shall be substantially similar to the Loan
Documents with such modifications as are reasonably requested by Agent.
SECTION 6.
FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any of the Commitments remain
in effect and until payment in full of all Obligations (other than Inchoate
Indemnity Obligations) and termination of all Lender Letters of Credit, unless
Requisite Lenders shall otherwise give their prior written consent, Borrower
shall comply with and shall cause each other Loan Party to comply with all
covenants applicable to such Person set forth below.
6.1. CAPITAL EXPENDITURE LIMITS.
The aggregate amount of all Capital Expenditures of Borrower and its
Subsidiaries on a consolidated basis will not exceed in each Applicable Period
described below the amount set forth below opposite such Applicable Period:
Applicable Period Amount
----------------- ------
Fiscal Quarter ending on or about $2,500,000.00
June 30, 1997
Two (2) Fiscal Quarters ending on $5,000,000.00
or about September 30, 1997
Three (3) Fiscal Quarters ending on $7,000,000.00
or about December 31, 1997
Four (4) Fiscal Quarters ending on $8,000,000.00
or about March 31, 1998, and each
period of four (4) Fiscal Quarters
ending on the last day of each Fiscal
Quarter thereafter
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PROVIDED, HOWEVER, Borrower may make in any Fiscal Year an additional $1,000,000
in Capital Expenditures for the purpose of acquiring assets of any of Borrower's
franchisees.
6.2. CAPITAL LEASE LIMITS.
The aggregate amount of all Capital Expenditures of Borrower and its
Subsidiaries on a consolidated basis financed under Capital Leases entered into
during any Fiscal Year of Borrower will not exceed $1,000,000.
6.3. OPERATING LEASE LIMITS.
The aggregate amount of all payments required to be made by Borrower and
its Subsidiaries on a consolidated basis under all operating leases will not
exceed in any Fiscal Year of Borrower the sum of all such payments made during
the most recently completed Fiscal Year of Borrower, PLUS $500,000.
6.4. FIXED CHARGE COVERAGE.
Borrower shall not permit Fixed Charge Coverage for each Applicable Period
set forth below to be less than the amount set forth below opposite such
Applicable Period:
Applicable Period Amount
----------------- ------
Fiscal Quarter ending on or about 1.25:1.00
September 30, 1997
Two (2) Fiscal Quarters ending on 1.30:1.00
or about December 31, 1997
Three (3) Fiscal Quarters ending 1.30:1.00
on or about March 31, 1998
Four (4) Fiscal Quarters ending on 1.35:1.00
or about June 30, 1998, and each
period of four (4) Fiscal Quarters
ending on the last day of each
Fiscal Quarter thereafter
6.5. EBITDA.
Borrower shall not permit EBITDA, for each Applicable Period set forth
below to be less than the amount set forth below opposite such Applicable
Period:
Applicable Period Amount
----------------- ------
Fiscal Quarter ending on or about $ 3,000,000.00
March 31, 1997
Two (2) Fiscal Quarters ending on $ 7,500,000.00
or about June 30, 1997
Three (3) Fiscal Quarters ending $12,000,000.00
on or about September 30, 1997
Four (4) Fiscal Quarters ending $17,000,000.00
on or about December 31, 1997
Four (4) Fiscal Quarters ending $17,000,000.00
on or about March 31, 1998
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Four (4) Fiscal Quarters ending $17,500,000.00
on or about June 30, 1998
Four (4) Fiscal Quarters ending $17,500,000.00
on or about September 30, 1998
Four (4) Fiscal Quarters ending $18,000,000.00
on or about December 31, 1998, and
each four (4) Fiscal Quarters
ending on the last day of each
Fiscal Quarter thereafter
6.6. TANGIBLE NET WORTH.
Borrower shall not permit Tangible Net Worth on the last day of each
Applicable Period set forth below to be less than the amount set forth below
opposite such Applicable Period:
Applicable Period Amount
----------------- ------
Fiscal Quarter ending on or about $42,000,000.00
June 30, 1997
Fiscal Quarter ending on or about $42,000,000.00
September 30, 1997
Fiscal Quarter ending on or about $42,500,000.00
December 31, 1997
Fiscal Quarter ending on or about $42,500,000.00
March 31, 1998
Fiscal Quarter ending on or about $43,000,000.00
June 30, 1998, and each Fiscal
Quarter thereafter
6.7. TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO.
Borrower shall not permit the ratio of Total Liabilities to Tangible Net
Worth for each Applicable Period set forth below to be greater than the ratio
set forth below opposite such Applicable Period:
Applicable Period Ratio
----------------- -----
Fiscal Quarter ending on or about 1.85:1.00
June 30, 1997
Fiscal Quarter ending on or about 1.75:1.00
September 30, 1997
Fiscal Quarter ending on or about 1.70:1.00
December 31, 1997
Fiscal Quarter ending on or about 1.70:1.00
March 31, 1998
Fiscal Quarter ending on or about 1.50:1.00
June 30, 1998, and each Fiscal
Quarter ending thereafter
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SECTION 7.
BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the Commitments remain
in effect and until payment in full of all Obligations (other than Inchoate
Indemnity Obligations) and termination of all Lender Letters of Credit, unless
the Requisite Lenders shall otherwise give their prior written consent, Borrower
shall comply with and shall cause each other Loan Party to comply with all
covenants in this Section 7 applicable to such Person.
7.1. INDEBTEDNESS.
Borrower will not and will not permit any of its Subsidiaries directly or
indirectly to create, incur, suffer to exist, assume, guarantee, or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
EXCEPT:
(A) OBLIGATIONS. The Obligations;
(B) CONTINGENT OBLIGATIONS. Indebtedness arising as a result of
Contingent Obligations permitted under subsection 7.4;
(C) PURCHASE MONEY DEBT. Purchase Money Indebtedness not to exceed One
Million Dollars ($1,000,000) in the aggregate in unpaid principal amount at any
one time outstanding;
(D) CAPITAL LEASES. Indebtedness incurred with respect to Capital Leases
permitted hereunder;
(E) EXISTING INDEBTEDNESS. Indebtedness described on SCHEDULE 4.4
existing on the Closing Date and not otherwise described in this subsection 7.1;
(F) TRADE DEBT. Indebtedness of Borrower to its trade creditors arising
in the ordinary course of business; and
(G) SUBORDINATED DEBT. Subordinated Debt not in excess of Twenty Million
Dollars ($20,000,000) in aggregate principal amount at any time outstanding,
provided that, at the time of incurrence of such Subordinated Debt, Borrower
delivers to Agent a certificate satisfactory to Agent by Borrower's chief
financial officer that (i) no Event of Default then exists or would occur as a
result of the incurrence of such Subordinated Debt, and (ii)if such Subordinated
Debt had been outstanding during the period of Borrower's four (4) fiscal
quarters ended most recently prior to the date of such certificate, after giving
effect to the results of Borrower's operations during such period, Borrower
would not violate any financial covenant of Section 6.
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7.2. LIENS AND RELATED MATTERS
(A) NO LIENS. Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create, incur, assume or permit to exist
any Lien on or with respect to any property or asset (including any document or
instrument with respect to goods or accounts receivable) of Borrower or any of
its Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, except Permitted Encumbrances.
(B) NO NEGATIVE PLEDGES. Neither Borrower nor any Subsidiary of Borrower
shall enter into or assume any agreement (other than the Loan Documents)
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
(C) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWER; NO
DISTRIBUTIONS TO SUBSIDIARIES. Except as provided herein, Borrower will not and
will not permit any of its Subsidiaries directly or indirectly to create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to:
(1) pay dividends or make any other distribution on any of such Subsidiary's
Capital Stock owned by Borrower or any Subsidiary of Borrower; (2) subject to
subordination provisions, pay any Indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary.
In addition, Borrower will make no loans or advances to, or Investments in, or
incur any Contingent Obligations on behalf of, any of its Subsidiaries, which
exceed, in aggregate amount at any one time outstanding, as to all of the
foregoing collectively, the sum of Five Hundred Thousand Dollars ($500,000).
7.3. INVESTMENTS; JOINT VENTURES
Borrower will not and will not permit any of its Subsidiaries directly or
indirectly to make or own any Investment in any Person, including, without
limitation, any Joint Venture, except as set forth on SCHEDULE 4.23 annexed
hereto, except as set forth in subsection 7.2(C), and except as follows:
(A) CASH EQUIVALENTS. Borrower and its Subsidiaries may make and own
Investments in Cash Equivalents; PROVIDED that such Cash Equivalents are not
subject to setoff rights in favor of the issuing bank arising from any banking
relationship of Borrower or its Subsidiaries; and
(B) TRAVEL ADVANCES. Borrower and its Subsidiaries may make loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business not to exceed Two Hundred Thousand
Dollars ($200,000), in the aggregate, at any time outstanding.
(C) STOCK PLAN ADVANCES. Borrower may make loans and advances to
employees for the purposes of paying payroll
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withholding taxes on the taxable income that arises upon the lapse of
restrictions on Capital Stock of Borrower issued under the Borrower's 1990
Restricted Stock Plan, as amended, in an amount not to exceed $1,500,000, in
the aggregate, at any time outstanding.
7.4. CONTINGENT OBLIGATIONS
Borrower will not and will not permit any of its Subsidiaries directly or
indirectly to create, incur, suffer to exist, assume, guarantee or otherwise
become or remain liable with respect to any Contingent Obligation, EXCEPT:
(A) ORDINARY COURSE. Contingent Obligations resulting from endorsement of
negotiable instruments for collection in the ordinary course of business;
(B) SCHEDULED LIABILITIES. Contingent Obligations existing on the Closing
Date and described in SCHEDULE 7.4 annexed hereto;
(C) LENDER LETTERS OF CREDIT. Contingent Obligations with respect to
Lender Letters of Credit;
(D) INDEMNITY. The Inchoate Indemnity Obligations and Contingent
Obligations under other indemnity agreements to: (i) to officers, directors,
underwriters and other Persons given in the ordinary course of, and pursuant to
the reasonable requirements of, Borrower's business in order to induce such
Person to perform services for Borrower (but expressly excluding therefrom, in
any event, any tax sharing, tax indemnity or similar arrangement not related to
the performance of such service); and (ii) in connection with the sale of assets
or Capital Stock;
(F) ASSET DISPOSITIONS. Contingent Obligations with respect to customary
indemnification and purchase price adjustment obligations incurred in connection
with Asset Dispositions;
(G) BONDS. Contingent Obligations incurred in the ordinary course of
business with respect to surety and appeal bonds, performance and return-of-
money bonds and other similar obligations not exceeding at any time outstanding
One Million Dollars ($1,000,000) in aggregate liability; and
(H) DEBT. Contingent Obligations with respect to Indebtedness permitted
by subsection 7.1.
7.5. RESTRICTED JUNIOR PAYMENTS.
Borrower will not and will not permit any of its Subsidiaries to directly
or indirectly declare, order, pay, make or set apart any sum for any Restricted
Junior Payment, except that (a) Subsidiaries of Borrower may make Restricted
Junior Payments to Borrower, and (b) that Borrower may make Restricted Junior
Payments to the holder of Subordinated Debt solely to pay regularly scheduled
installments of interest on such Subordinated Debt in accordance with the terms
of the Subordination Agreement, and no
- 69 -
Default or Event of Default exists at the time of or would result from the
making of any such Restricted Junior Payment.
7.6. RESTRICTION ON FUNDAMENTAL CHANGES.
Neither Borrower nor any of its Subsidiaries will: (a) amend, modify or
waive any term or provision of its articles of incorporation or by-laws unless
required by law; (b) enter into any transaction of merger or consolidation; (c)
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); (d) except to the extent permitted in subsection 7.6, convey,
sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any substantial part of its business or assets,
or the capital stock of or other equity interests in any of its Subsidiaries,
whether now owned or hereafter acquired; or (e) acquire by purchase or otherwise
all or any substantial part of the business or assets of, or Capital Stock or
other evidence of beneficial ownership of, any Person, except Borrower and its
Subsidiaries may make Capital Expenditures permitted under subsection 6.1,
Capital Leases permitted under subsection 6.2 and Investments permitted under
subsection 7.3.
7.7. DISPOSAL OF ASSETS OR SUBSIDIARY STOCK.
(A) ASSETS. Neither Borrower nor any of its Subsidiaries will sell,
lease, transfer or otherwise dispose of any of its property, business or assets,
or grant any Person an option to acquire any such property, business or assets,
except for (a) bona fide sales of Inventory to customers for fair value in the
ordinary course of business and dispositions of obsolete equipment not used or
useful in the business, (b) sale-leaseback transactions of any real property
acquired after the Closing Date conducted in the ordinary course of, and
pursuant to the reasonable requirements of, Borrower's business which otherwise
comply with subsections 6.2 and 6.3, (c) Asset Dispositions (including, but not
limited to, Sale Assets) if all of the following conditions are met
notwithstanding the prohibition set forth in subsection 7.5(d): (i) the market
value of assets sold or otherwise disposed of in any single transaction or
series of related transactions does not exceed Two Hundred Fifty Thousand
Dollars ($250,000) and the aggregate market value of assets sold or otherwise
disposed of in any Fiscal Year does not exceed Five Hundred Thousand Dollars
($500,000); (ii) the consideration received is at least equal to the fair market
value of such assets; (iii) the sole consideration received is cash; (iv) the
Net Proceeds of such Asset Disposition are applied as required by subsection
2.4(D)(2); (v) after giving effect to the sale or other disposition of the
assets included within the Asset Disposition and the repayment of Indebtedness
with the proceeds thereof, Borrower is in compliance on a pro forma basis with
the covenants set forth in Section 6 recomputed for the most recently ended
month for which information is available and is in compliance with all other
terms and conditions contained in this Agreement; and (vi) no Event of Default
shall have occurred and be continuing or shall result from such sale or other
disposition, and (d) charitable contributions not in excess of Three Hundred
Thousand Dollars ($300,000) during each Fiscal Year of Borrower if no
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Default or Event of Default shall have occurred and be continuing.
(B) CAPITAL STOCK. Borrower may from time to time offer and sell Capital
Stock in Borrower in transactions that either are registered under the
Securities Act of 1933, as amended, or in transactions that are exempt from the
registration requirements thereof, and as set forth on SCHEDULE 7.7. Borrower
will not otherwise, and will not permit any of its Subsidiaries directly or
indirectly to, sell, assign, pledge or otherwise encumber or dispose of any
shares of Capital Stock in Borrower or any Subsidiary, except to Borrower or
another Subsidiary of Borrower.
7.8. TRANSACTIONS WITH AFFILIATES.
Borrower will not and will not permit any of its Subsidiaries directly or
indirectly to enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of Borrower or with any director,
officer or employee of any Loan Party, including, without limitation, the
payment of any management, consulting or similar fees, except (a) as set forth
on SCHEDULE 7.8; or (b) for transactions in the ordinary course of and pursuant
to the reasonable requirements of the business of Borrower or any of its
Subsidiaries and upon fair and reasonable terms which are no less favorable to
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person that is not an Affiliate (and which, at the request of
Agent, are fully disclosed to Agent and Lenders). Notwithstanding the
foregoing, (i) no payments may be made with respect to any items set forth on
SCHEDULE 7.8 upon the occurrence and during the continuation of a Default or
Event of Default; and (ii) except to the extent set forth in SCHEDULE 7.8, no
consulting fees, management fees, directors' fees or other, similar fees shall
be paid in any event to any Affiliate of Borrower or any officer, director or
shareholder of Borrower or any such Affiliate in excess of Two Hundred Fifty
Thousand Dollars ($250,000), in the aggregate, as to all of such fees,
collectively, per each Fiscal Year.
7.9. ENVIRONMENTAL LIABILITIES.
Borrower will not and will not permit any Subsidiary to: (a) violate any
applicable Environmental Law if such violation could reasonably be expected to
have a Material Adverse Effect; or (b) dispose of any Hazardous Materials into
or onto or (except in accordance with applicable law) from, any real property
owned, leased or operated by any Loan Party in violation of any Environmental
Law; or (c) permit any Lien imposed pursuant to any Environmental Law to be
imposed or to remain on any real property owned, leased or operated by any Loan
Party.
7.10. CONDUCT OF BUSINESS.
From and after the Closing Date, Borrower will not and will not permit any
of its Subsidiaries to engage in any business other than businesses of the type
described on Schedule 4.1(D).
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7.11. FISCAL YEAR.
Neither Borrower nor any Subsidiary of Borrower shall change its Fiscal
Year.
7.12. COMPLIANCE WITH ERISA.
Neither Borrower nor any Subsidiary of Borrower shall:
(a) permit the occurrence of any ERISA Termination Event which would
result in a liability to any Loan Party or ERISA Affiliate in excess of Five
Hundred Thousand Dollars ($500,000);
(b) permit the present value of all benefit liabilities under all Pension
Plans to exceed the current value of the assets of such Pension Plans allocable
to such benefit liabilities by more than Five Hundred Thousand Dollars
($500,000);
(c) permit any accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the IRC) in excess of Five Hundred Thousand Dollars
($500,000) with respect to any Pension Plan, whether or not waived;
(d) fail to make any contribution or payment to any Multiemployer Plan
which any Loan Party or ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto
which results in or is likely to result in a liability in excess of Five Hundred
Thousand Dollars ($500,000);
(e) engage, or permit any Loan Party or ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975 of the IRC for
which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to
Section 4975 of the IRC in excess of Five Hundred Thousand Dollars ($500,000) is
imposed;
(f) permit the establishment of any Employee Benefit Plan providing post-
retirement welfare benefits or establish or amend any Employee Benefit Plan
which establishment or amendment could result in liability to any Loan Party or
ERISA Affiliate or increase the obligation of any Loan Party or ERISA Affiliate
to a Multiemployer Plan which liability or increase, individually or together
with all similar liabilities and increases, will exceed Five Hundred Thousand
Dollars ($500,000); or
(g) fail, or permit any Loan Party or ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance in all
material respects with the provisions of ERISA, the IRC and all other applicable
laws and the regulations and interpretations thereof, except where the foregoing
could not be reasonably expected to have a Material Adverse Effect.
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7.13. SUBSIDIARIES.
Borrower will not, and will not permit any of its Subsidiaries to,
establish, create or acquire any Subsidiary not in existence on the Closing
Date.
7.14. BANK ACCOUNTS.
Borrower will not, and will not permit any of its Subsidiaries to,
establish any new bank accounts unless the bank in which such account is
maintained agrees to deliver to the Concentration Account by ACH or wire
transfer daily all cash and proceeds deposited into such account. Borrower will
give Agent prompt written notice of its or any of its Subsidiaries establishing
any such new bank account, which notice identifies the account owner, account
number and bank.
7.15. FORGIVENESS OF DEBTS.
Borrower will not forgive, or permit any Subsidiary to forgive, any
Indebtedness, or grant any waivers, extensions, deferrals or releases in
connection therewith, or enter into any accord and satisfaction with respect
thereto, other than with respect to Indebtedness not in excess of One Hundred
Thousand Dollars ($100,000) in any Fiscal Year of Borrower.
SECTION 8.
DEFAULT, RIGHTS AND REMEDIES
8.1. EVENTS OF DEFAULT.
"EVENT OF DEFAULT" shall mean the occurrence or existence of any one or
more of the following:
(A) DEFAULT IN PAYMENT. Failure of Borrower to pay any installment of
principal, interest or premium, if any, owing on any Term Note on or within five
(5) days after the due date of such installment, or to pay on the due date
thereof any of the Revolving Loan or other Obligations that are not evidenced by
a Term Note (whether due at stated maturity, on demand, upon acceleration, or
otherwise); or
(B) CROSS-ACCELERATION. Any Indebtedness of Borrower (other than the
Loans, which are treated separately in clause (A) above) or any Contingent
Obligation of Borrower (other than the Lender Reimbursement Liabilities, which
are treated separately in clause (A) above) having an aggregate principal amount
in excess of One Million Dollars ($1,000,000), shall be in default and become or
be declared to be due prior to its stated maturity as a result thereof; or
(C) BREACH OF CERTAIN PROVISIONS. Failure of Borrower to perform or
comply with any term or condition contained in subsections 5.1, 5.3, 5.5, 5.6,
5.10, 5.11 or 5.12 of this
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Agreement; or contained in Section 6 or Section 7 of this Agreement; or
contained in Sections 3, 5, 6 or 7 of the Security Agreement; or
(D) BREACH OF WARRANTY. Any representation, warranty, certification or
other statement made by any Loan Party in any Loan Document or in any statement
or certificate at any time given by such Person in writing pursuant or in
connection with any Loan Document is false in any material respect on the date
made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Borrower or any other Loan Party
defaults in the performance of or compliance with any term contained in this
Agreement or the other Loan Documents and such default is not remedied or waived
within thirty (30) days after the earlier of: (i) Borrower's delivery of a
certificate in respect thereof pursuant to Section 5.1(L) or (ii) receipt by
Borrower of notice from Agent or any Lender of such default (other than
occurrences described in other provisions of this subsection 8.1 for which a
different grace or cure period is specified or which constitute immediate Events
of Default); or
(F) DEFAULT UNDER PLAN. Borrower defaults in the performance of or
compliance with any term contained in the Plan, which default results in or
could reasonably be expected to result in a Material Adverse Effect; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) A court
enters a decree or order for relief with respect to Borrower or any of its
Subsidiaries in an involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, which
decree or order is not stayed or other similar relief is not granted under any
applicable federal or state law; or (2) the continuance of any of the following
events for sixty (60) days unless dismissed, discharged, or bonded against in a
manner satisfactory to the Requisite Lenders: (a) an involuntary case is
commenced against Borrower or any of its Subsidiaries, under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a
decree or order of a court for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Borrower or any of its Subsidiaries, or over all or a substantial part of its
property, is entered; or (c) an interim receiver, trustee or other custodian is
appointed without the consent of Borrower or any of its Subsidiaries, for all or
a substantial part of the property of Borrower or any such Subsidiary; or
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) An order for
relief is entered with respect to Borrower or any of its Subsidiaries or
Borrower or any of its Subsidiaries commences a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case or to the conversion of an involuntary case to a voluntary
case under any such law or consents to the appointment of or taking possession
by a receiver, trustee or other custodian for
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all or a substantial part of its property; or (2) Borrower or any of its
Subsidiaries makes any assignment for the benefit of creditors; or (3) the
Board of Directors of Borrower or any of its Subsidiaries adopts any
resolution or otherwise authorizes action to approve any of the actions
referred to in this subsection 8.1(H) or in subsection 8.1(K); or
(I) GOVERNMENTAL LIENS. Any Lien is filed or recorded with respect to or
otherwise imposed upon all or any material part of the Collateral or the assets
of Borrower or any of its Material Subsidiaries by any Governmental Authority
which, when added to all other such Liens then outstanding, causes total sums
subject to such Liens to exceed Five Hundred Thousand Dollars ($500,000), which
is past due for payment and either: (i) such Lien, if imposed upon the
Collateral, has priority over the Lien of Agent thereon; or (ii) such Lien, if
it does not have such priority or is not imposed upon the Collateral, is not
stayed, vacated, paid or discharged within thirty (30) days; or
(J) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process (other than those described in subsection 8.1(I))
involving an amount in the aggregate at any time in excess of Five Hundred
Thousand Dollars ($500,000) is entered or filed against Borrower or any of its
Material Subsidiaries or any of their respective assets and remains
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days or
in any event later than five (5) days prior to the date of any proposed levy
thereunder; or
(K) DISSOLUTION. Any order, judgment or decree is entered against
Borrower or any of its Material Subsidiaries decreeing the dissolution or split
up of Borrower or that Subsidiary and such order remains undischarged or
unstayed for a period in excess of thirty (30) days; or
(L) SOLVENCY. Borrower or any of its Material Subsidiaries ceases to be
Solvent or admits in writing its present or prospective inability to pay its
debts as they become due; or
(M) INJUNCTION. Borrower or any of its Material Subsidiaries is enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order remains undischarged or unstayed for a period in
excess of thirty(30) days; or
(N) ERISA - PENSION PLANS. (1) Any Loan Party or any ERISA Affiliate
fails to make full payment when due of all amounts which, under the provisions
of any Pension Plan or Section 412 of the IRC, any Loan Party or any ERISA
Affiliate is required to pay as contributions thereto and such failure results
in or is likely to result in a Material Adverse Effect; or (2) an accumulated
funding deficiency in excess of Five Hundred Thousand Dollars ($500,000) occurs
or exists, whether or not waived, with respect to any Pension Plan; or (3) an
ERISA Termination Event occurs which
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results in or which reasonably could be expected to result in a Material
Adverse Effect; or
(O) ERISA - MULTIEMPLOYER PLANS. Any Loan Party or any ERISA Affiliate as
employers under one or more Multiemployer Plans makes a complete or partial
withdrawal from such Multiemployer Plans and the plan sponsor of such
Multiemployer Plans notifies such withdrawing employer that such employer has
incurred a withdrawal liability requiring payments in an amount exceeding Five
Hundred Thousand Dollars ($500,000); or
(P) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to Agent or any Lender to such
effect; or
(Q) DAMAGE, STRIKE, CASUALTY. Any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty which causes, for more than thirty (30) consecutive days beyond the
coverage period of any applicable business interruption insurance, the cessation
or substantial curtailment of revenue producing activities at any facility of
Borrower or any of its Material Subsidiaries if any such event or circumstance
has, or could reasonably be expected, to have, a Material Adverse Effect, taken
as a whole; or
(R) LICENSES AND PERMITS. The loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Material Subsidiaries, if such loss, suspension,
revocation or failure to renew could reasonably be expected to have a Material
Adverse Effect; or
(S) FAILURE OF SECURITY. Agent does not have or ceases to have a valid
and perfected first priority security interest in any material portion of the
Collateral (subject to Permitted Encumbrances); or
(T) CHANGE IN CONTROL. The change of one-third or more of the Continuing
Directors of Borrower within any twelve-month period; the change of one-half or
more of the Continuing Directors of Borrower within any twenty-four month
period; or the acquisition by any Person or "group" (as such term is used in
Section 13(b)(3) of the Exchange Act) of a direct or indirect majority (more
than 50%) interest in the voting power of the voting stock of Borrower by way of
merger, consolidation or otherwise. A "Continuing Director" shall mean any
member of the board of directors of Borrower who (i) was a member of such board
of directors on the Closing Date or (ii) was nominated for election or elected
to such board of directors with the affirmative vote of a majority of the
Continuing Directors who are members of such board at that time of such
nomination or election whether as a result of the addition of new members to
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replace Continuing Directors who die, resign or retire, an increase in the
number of directors, or otherwise.
8.2. SUSPENSION OR TERMINATION OF COMMITMENTS
Upon the occurrence of any Event of Default and during its continuance,
Agent may, at its election, and will, at the direction of the Requisite Lenders
cease making additional Loans on behalf of all Lenders, cause the Issuer to
cease issuing Lender Letters of Credit, and suspend or terminate all
Commitments. In addition thereto, and without limitation of the foregoing, upon
any Default under subsection 8.1(A) and during its continuance, Agent may, at
its election, and will, at the direction of the Requisite Lenders, cease making
additional Loans on behalf of all Lenders, cause the Issuer to cease issuing
Lender Letters of Credit, and suspend all Commitments. Upon the occurrence of
any Event of Default described in either of the foregoing subsections 8.1(G) or
8.1(H), all Commitments of the Lenders shall terminate automatically.
8.3. ACCELERATION
Upon the occurrence of any Event of Default described in the foregoing
subsections 8.1(G) or 8.1(H), the unpaid principal amount of and accrued
interest and fees on the Term Loans and the Revolving Loan, payments under the
Lender Letters of Credit and all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other requirements of any kind,
all of which are hereby expressly waived by Borrower. Upon the occurrence and
during the continuance of any other Event of Default, Agent may, and at the
direction of the Requisite Lenders, Agent shall, by written notice to Borrower
(a) declare all or any portion of the Loans and all or some of the other
Obligations to be, and the same shall forthwith become, immediately due and
payable together with accrued interest thereon, and (b) demand that Borrower
immediately deposit with Issuer an amount equal to the Lender Reimbursement
Liability to enable Agent to make payments under the Lender Letters of Credit
when required and such amount shall become immediately due and payable.
8.4. PERFORMANCE BY AGENT.
If Borrower shall fail to perform any covenant, duty or agreement contained
in any of the Loan Documents, Agent may per-form or attempt to perform such
covenant, duty or agreement on behalf of Borrower after the expiration of any
cure or grace periods set forth herein. In such event, Borrower shall, at the
request of Agent, promptly pay any amount reasonably expended by Agent in such
performance or attempted performance to Agent, together with interest thereon at
the rate of interest in effect on Advances upon the occurrence of an Event of
Default as specified in subsection 2.2(A) from the date of such expenditure
until paid. Notwithstanding the foregoing, it is expressly agreed that Agent
shall not have any liability or responsibility for the performance of any
obligation of Borrower under this Agreement or any other Loan Document.
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SECTION 9.
ASSIGNMENT AND PARTICIPATION
9.1. ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND NOTES.
(A) ASSIGNMENTS. Each Lender may, with the prior consent of the Agent,
which consent shall not be unreasonably withheld, assign its rights and delegate
its obligations under this Agreement and the other Loan Documents to an Eligible
Purchaser (as that term is defined in subsection (D) below); PROVIDED, HOWEVER,
that no Lender may make an assignment of less than all of its Total Loan
Commitments unless, upon giving effect to such assignment, both the assigning
Lender and the Eligible Purchaser receiving such assignment have Total Loan
Commitments each aggregating at least Ten Million Dollars ($10,000,000), it
being understood and agreed among Lenders that, at all times hereafter, each
Lender, to remain a Lender, shall be obliged to hold Total Loan Commitments in
the aforesaid minimum amount; nor, without the prior written consent of the
Agent, may any Lender assign any of its Revolving Loan Commitment without at the
same time assigning the same proportion of its Term Loan Commitment (and vice
versa). In the case of an assignment authorized under this subsection 9.1, upon
such assignment becoming effective, the Eligible Purchaser receiving such
assignment, shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were an original Lender hereunder,
and the assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitment or assigned portion thereof. Borrower hereby
acknowledges and agrees that any such assignment will give rise to a direct
obligation of Borrower to the Eligible Purchaser receiving such assignment and
that such Eligible Purchaser, upon such assignment becoming effective, shall be
considered to be a "Lender" for all purposes of this Agreement and the Loan
Documents. Each Lender intending to make an assignment to an Eligible Purchaser
pursuant hereto shall notify the Agent and Borrower in writing thereof at least
three (3) Business Days prior to the intended effective date of such assignment,
including therein the name, notice address and lending office of such intended
Eligible Purchaser and the amount of the Commitments of such Lender intended to
be assigned. Borrower will, on the effective date of each such assignment,
comply with its obligations under Section 2.1(E) of this Agreement in respect of
the issuance of Notes to such Eligible Person and, as applicable, the assigning
Lender, upon the surrender of the assigning Lender's Notes.
(B) PARTICIPATIONS. Each Lender may also sell participations in all or
any part of any Loans made by it to any Eligible Purchaser; PROVIDED, HOWEVER,
that (i) all amounts payable by Borrower hereunder shall be determined as if
that Lender had not sold such participation; and (ii) the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder, except solely in respect of the forgiveness of any
principal amount of any Loan.
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(C) NO RELIEF FROM OBLIGATIONS. Except as otherwise provided in this
subsection 9.1, no Lender shall, as between Borrower and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender. Each
Lender may furnish any information concerning Borrower and its Subsidiaries in
the possession of that Lender from time to time to assignees and participants
which are Eligible Purchasers (including prospective assignees and participants
which are Eligible Purchasers), subject to the provisions of subsection 10.22.
(D) ELIGIBLE PURCHASERS. For purposes of this subsection 9.1, an
"ELIGIBLE PURCHASER" shall be limited to the following: (i) a Lender or any
Affiliate thereof; (ii) a commercial bank having total assets in excess of
$1,000,000,000; (iii) a finance company, insurance company or other financial
institution, which is regularly engaged in making, purchasing or investing in
loans of the type made pursuant to this Agreement and having total assets in
excess of $1,000,000,000; (iv) a savings and loan association or savings bank
organized under the laws of the United States or any state thereof which has a
net worth, determined in accordance with GAAP, in excess of $500,000,000; or (v)
a finance company, insurance company, bank or other financial institution not
otherwise described in clauses (i) through (iv) above reasonably acceptable to
the Agent; PROVIDED, HOWEVER, that neither Borrower nor an Affiliate of a
Borrower shall qualify as an Eligible Purchaser under this definition.
9.2. AGENT
(A) APPOINTMENT. Each Lender hereby designates and appoints TBCC as
its Agent under this Agreement and the Loan Documents, and each Lender hereby
irrevocably authorizes Agent to take such action or to refrain from taking
such action on its behalf under the provisions of this Agreement and the Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Agent
is authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consents be obtained in certain
instances as provided in subsection 9.3. Agent agrees to act as such on the
express conditions contained in this subsection 9.2. Except as otherwise
expressly set forth herein, the provisions of this subsection 9.2 are solely
for the benefit of Agent and Lenders and neither Borrower nor any Loan Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, Agent
shall act solely as agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or
trust with or for Borrower or any Loan Party. Agent may perform any of its
duties hereunder, or under the Loan Documents, by or through its agents or
employees.
(B) NATURE OF DUTIES. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement
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or in the Loan Documents. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement
or any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement
or any of the Loan Documents except as expressly set forth herein or therein.
Each Lender shall make its own independent investigation of the financial
condition and affairs of Borrower in connection with the extension of credit
hereunder and shall make its own appraisal of the credit worthiness of
Borrower, and Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
the Closing Date hereunder or at any time or times thereafter. If Agent
seeks the consent or approval of any Lenders to the taking or refraining from
taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the Requisite
Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(C) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be obligated on the
terms set forth herein for performance of its express obligations hereunder, and
except that Agent shall be liable to each Lender with respect to its own gross
negligence or willful misconduct and the gross negligence or willful misconduct
of its officers, directors, employees and agents. In performing its functions
and duties hereunder, Agent shall exercise the same care which it would in
dealing with loans for its own account, but Agent shall not be responsible to
any Lender for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Loan Party. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Loan Documents or the financial condition of any
Loan Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect
to any actions or approvals which by the terms of this Agreement or of any of
the Loan Documents Agent is permitted or required to take or to grant, and if
such instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Requisite Lenders or all the Lenders, as
applicable. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under this Agreement, the Notes, or any of the other Loan Documents in
accordance with the instructions of Requisite Lenders.
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(D) RELIANCE. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it. Agent
shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by Agent in its sole discretion.
(E) INDEMNIFICATION. If and to the extent not reimbursed to Agent and
Issuer by any Loan Party, Lenders will reimburse and indemnify Agent for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent or any Issuer in any way relating to or arising out of this
Agreement or any of the Loan Documents or any action taken or omitted by
Agent or any Issuer under this Agreement for any of the Loan Documents, in
proportion to each Lender's Pro Rata Share; PROVIDED, HOWEVER, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from Agent's or, as the case may be, any Issuer's
gross negligence or willful misconduct. The obligations of Lenders under
this subsection 9.2(E) shall survive the payment in full of the Obligations
and the termination of this Agreement
(F) AGENT INDIVIDUALLY. With respect to its Total Loan Commitment, any
Loans made by it, and any Notes issued to it, Agent shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any
other Lender. The terms "Lenders" or "Requisite Lenders" or any similar
terms shall, unless the context clearly otherwise indicates, include Agent in
its individual capacity as a Lender or one of the Requisite Lenders. Agent
may lend money to, and generally engage in any kind of banking, trust or
other business with any Loan Party as if it were not acting as Agent pursuant
hereto.
(G) SUCCESSOR AGENT.
(1) RESIGNATION. If, at any time hereafter, Agent elects, the
Agent may resign as Agent. Such resignation shall take effect upon the
acceptance by a successor Agent of appointment pursuant to clause (2) below
or as otherwise provided below.
(2) APPOINTMENT OF SUCCESSOR. Upon any such notice of resignation
being given pursuant to clause (G)(1) above, the Requisite Lenders shall,
upon receipt of Borrower's prior consent which shall not unreasonably be
withheld, delayed or conditioned, appoint a successor Agent from among the
Lenders. If a successor Agent shall not have been so appointed within said
thirty (30)
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Business Day period, the retiring Agent, upon notice to Borrower, shall then
appoint a successor Agent from among the Lenders who shall serve as Agent
until such time, if any, as Requisite Lenders, upon receipt of Borrower's
prior written consent which shall not be unreasonably withheld, appoint a
successor Agent from among the Lenders as provided above.
(3) SUCCESSOR AGENT. Upon the acceptance of any appointment as
Agent under the Loan Documents by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents. After
any retiring Agent's resignation as Agent under the Loan Documents, the
provisions of this subsection 9.2 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
(H) COLLATERAL MATTERS.
(1) RELEASE OF COLLATERAL. Lenders hereby irrevocably authorize
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent upon any property covered by the Security Documents: (i) upon
termination of the Commitments and, in connection therewith, the termination
of all Lender Letters of Credit (or the provision of cash collateral in
regard thereto, if required pursuant to subsection 2.4(E)) and the full
payment and satisfaction of all Obligations (other than Inchoate Indemnity
Obligations); or (ii) constituting property being sold or disposed of if
Borrower certifies to Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry); or
(iii) constituting property leased to Borrower under a lease which has
expired or been terminated in a transaction permitted under this Agreement or
is about to expire and which has not been, and is not intended by Borrower to
be, renewed or extended. Upon request by Agent at any time, any Lender will
confirm in writing Agent's authority to release particular types or items of
property covered by the Security Documents pursuant to this subsection
9.2(H)(1).
(2) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without in
any manner limiting Agent's authority to act without any specific or further
authorization or consent by Requisite Lenders (as set forth in subsection
9.2(H)(1)), each Lender agrees to confirm in writing, upon request by
Borrower, the authority to release any property covered by the Security
Documents conferred upon Agent under clauses (i) through (iii) of subsection
9.2(H)(1). Prior to any termination of this Agreement, so long as no Event of
Default has occurred and is then continuing, upon receipt by Agent of
confirmation from the Requisite Lenders of its authority to release any
particular item or types of property covered by the Security Documents, and
upon at least five (5) Business Days prior written request by Borrower, Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
Agent for the benefit of Lenders herein or pursuant hereto upon such
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Collateral; PROVIDED, HOWEVER, that (i) Agent shall not be required to
execute any such document on terms which, in Agent's opinion, would expose
Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations
or any Liens upon (or obligations of any Loan Party, in respect of), all
interests retained by any Loan Party, including (without limitation) the
proceeds of any sale, all of which shall continue to constitute part of the
property covered by the Security Documents. The Foregoing shall not apply,
however, in respect of the release of any security interest or Lien by Agent,
on behalf of Lenders, in connection with a termination of this Agreement,
which shall be governed exclusively by subsections 2.5 and 9.2(H)(1).
(3) ABSENCE OF DUTY. Agent shall have no obligation whatsoever to
any Lender or any other Person to assure that the property covered by the
Security Documents exists or is owned by Borrower or is cared for, protected
or insured or has been encumbered or that the Liens granted to Agent herein
or pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority,
or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this subsection
9.2(H) or in any of the Loan Documents, it being understood and agreed that
in respect of the property covered by the Security Documents or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in property
covered by the Security Documents as one of the Lenders and that Agent shall
have no duty or liability whatsoever to any of the other Lenders; provided
that Agent shall exercise the same care which it would in dealing with loans
for its own account.
(I) AGENCY FOR PERFECTION. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting Lenders' security interest in
assets which, in accordance with Article 9 of the Uniform Commercial Code in
any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Agent obtain possession of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor, shall deliver such Collateral to Agent or in accordance with
Agent's instructions. Each Lender agrees that it will not have any right
individually to enforce or seek to enforce any Security Document or to
realize upon any collateral security for the Loans, it being understood and
agreed that such rights and remedies may be exercised only by Agent.
9.3. AMENDMENTS, CONSENTS AND WAIVERS FOR CERTAIN ACTIONS
Except as otherwise provided in subsection 9.2(H)(l), in subsection 10.3
and except as to matters set forth in other subsections hereof as requiring only
Agent's consent, the consent of Requisite Lenders will be required to amend,
modify, terminate, or waive any provision of this Agreement, including, but not
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limited to, any amendment, modification, termination, or waiver with regard to
Sections 6 and 7.
9.4. SET-OFF AND SHARING OF PAYMENTS.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, each Lender and each holder
of any Note is hereby authorized by Borrower at any time or from time to
time, with reasonably prompt subsequent notice to Borrower or to any other
Person (any prior or contemporaneous notice being hereby expressly waived) to
set off and to appropriate and to apply any and all (A) balances held by such
Lender or such holder at any of its offices for the account of Borrower or
any of its Subsidiaries (regardless of whether such balances are then due to
Borrower or its Subsidiaries), and (B) other property at any time held or
owing by such Lender or such holder to or for the credit or for the account
of Borrower or any of its Subsidiaries, against and on account of any of the
Obligations which are not paid when due; except that no Lender or any such
holder shall exercise any such right without the prior written consent of the
Agent. Any Lender or holder of any Note having a right to set off shall, to
the extent the amount of any such set off exceeds its Pro Rata Share of the
Obligations, purchase for cash (and the other Lenders or holders shall sell)
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share such excess
with each other Lender or holder in accordance with their respective Pro Rata
Shares. Borrower agrees, to the fullest extent permitted by law, that (a) any
Lender or holder may exercise its right to set off with respect to amounts in
excess of its Pro Rata Share of the Obligations and may sell participations
in such excess to other Lenders and holders, and (b) any Lender or holder so
purchasing a participation in the Loans made or other Obligations held by
other Lenders or holders may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as
if such Lender or holder were a direct holder of Loans and other Obligations
in the amount of such participation.
9.5. DISBURSEMENT OF FUNDS.
Agent may, on behalf of Lenders, disburse funds to Borrower for Loans
requested. Each Lender shall reimburse Agent on demand by 2:00 p.m.
(Chicago time) on the Business Day of demand for all funds disbursed on its
behalf by Agent (provided that if such demand is made on a day when such
Lender is authorized to close for business under the laws of the State in
which it is located and such Lender is, in fact, closed for business, such
payment may be made on the immediately succeeding Business Day), or if Agent
so requests, each Lender will remit to Agent its Pro Rata Share of any Loan
before Agent disburses same to Borrower. If any Lender fails to pay the
amount of its Pro Rata Share within one (1) Business Day after its receipt of
Agent's demand in accordance with the preceding sentence, Agent shall
promptly notify Borrower, and Borrower shall immediately repay such amount to
Agent. Pending Agent's receipt of such amount from Borrower, such Lender
shall
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remain obligated to Agent for reimbursement of such amount together with
accrued interest thereon at the Federal Funds Rate from the date of Agent's
disbursement of such amount until paid. Any repayment required pursuant to
this subsection 9.5 shall be without premium or penalty. Nothing in this
subsection 9.5 or elsewhere in this Agreement or the other Loan Documents,
including without limitation the provisions of subsection 9.6, shall be
deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitments hereunder
or to prejudice any rights that Agent or Borrower may have against any Lender
as a result of any default by such Lender hereunder.
9.6. DISBURSEMENTS OF ADVANCES, PAYMENTS AND INFORMATION.
(A) REVOLVING LOAN ADVANCES AND PAYMENTS; FEE PAYMENTS.
(1) The Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds between
Agent and each Lender, notwithstanding any terms to the contrary set forth in
Section 2, the Obligations and payments of principal and interest thereon
will be settled according to the procedures described in subsection
9.6(A)(2). Each Lender's obligation to fund its portion of any Advances made
by Agent to Borrower will commence on the date such Advances are made by
Agent. Such payments will be made by such Lender without set-off,
counterclaim or reduction of any kind.
(2) By not later than 12:00 noon(Atlanta time), and not less
frequently than once a week, or more frequently (including daily), if Agent
so elects (each such day being a "Settlement Date"), Agent will advise each
Lender by telephone, telex, or telecopy of the amount of each such Lender's
Pro Rata Share of the Obligations. In the event that payments are necessary
to adjust the amount of such Lender's Pro Rata Share of Obligations to such
Lender's Pro Rata Share of Obligations as of any Settlement Date, the party
from which such payment is due will pay the other, in same day funds, by wire
transfer to the other's account not later than 2:00 p.m.(Chicago time) on the
Settlement Date.
(3) On the first Business Day of each calendar month ("Interest
Settlement Date"), Agent will advise each Lender by telephone, telex, or
telecopy of the amount of such Lender's Pro Rata Share of interest on
Advances constituting Alternate Base Rate Loans as of the end of the last day
of the immediately preceding calendar month. Agent will pay to such Lender
by wire transfer to such Lender's account (as specified by such Lender from
time to time after the date hereof pursuant to the notice provisions
contained herein or in the applicable Lender Addition Agreement) not later
than 2:00 p.m.(Chicago time) on the Interest Settlement Date, such Lender's
Pro Rata Share of interest on such Advances constituting Alternate Base Rate
Loans.
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(B) AVAILABILITY OF LENDER'S PRO RATA SHARE.
(1) Unless Agent has been notified by a Lender prior to a Funding
Date of such Lender's intention not to fund its Pro Rata Share of the Loan
amount requested by Borrower, Agent may assume that such Lender will make
such amount available to Agent on the Settlement Date. If such amount is
not, in fact, made available to Agent by such Lender when due, Agent will be
entitled to recover such amount on demand from such Lender without set-off,
counterclaim or deduction of any kind.
(2) Nothing contained in this subsection 9.6(B) will be deemed to
relieve a Lender of its obligation to fulfill its Commitments or to prejudice
any rights Agent or Borrower may have against such Lender as a result of any
default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Pro Rata Share of any Revolving Loan made
after any acceleration of the Obligations with respect to any draw on a
Lender Letter of Credit.
(C) RETURN OF PAYMENTS.
(l) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent,
then Agent will be entitled to recover such amount from such Lender without
set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
person pursuant to any solvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
(D) DISSEMINATION OF INFORMATION.
Agent will use its best efforts to provide Lenders with any information
received by Agent from Borrower which is required to be provided to a Lender
hereunder; PROVIDED, HOWEVER, that Agent shall not be liable to Lenders for
any failure to do so, except to the extent that such failure is attributable
to Agent's gross negligence or willful misconduct.
9.7. DEFAULTING LENDER'S STATUS.
Notwithstanding anything contained herein to the contrary, but in
addition to provisions regarding the failure of a Lender to perform its
obligations hereunder set forth elsewhere in this Agreement, so long as any
Lender shall be in default in its
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obligation to fund its Pro Rata share of any Loan or shall have repudiated
its Commitment, then, such Lender shall not be entitled to receive any
payments of interest on its Loans or its share of any Commitment or other
fees payable hereunder, and solely for purposes of voting or consenting to
matters with respect to this Agreement, such Lender shall be deemed not to be
a "Lender" hereunder and such Lender's Commitment shall be deemed to be zero
($0), unless and until (a) all other Obligations have been fully paid and
satisfied, (b) such failure to fulfill its obligation to fund is cured and
such Lender shall have paid, as and to the extent provided in this Agreement,
to the applicable party, such amount then owing together with interest on the
amount of funds that such Lender failed to timely fund at the interest rate
prescribed therefor herein, or (c) the Obligations shall have been declared
(or otherwise shall have become) immediately due and payable and/or the
Commitments shall have been terminated. No Commitment of any Lender shall be
increased or otherwise affected by any such failure or rejection by any
Lender in any event, however.
SECTION 10.
MISCELLANEOUS
10.1. EXPENSES AND ATTORNEYS' FEES.
Whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to promptly pay all reasonable fees, costs and
expenses incurred by Agent and, where expressly so indicated below, the
Lenders in connection with any matters contemplated by or arising out of this
Agreement or the other Loan Documents including the following, and all such
reasonable fees, costs and expenses shall be part of the Obligations, payable
on demand and secured by the Collateral: (a) reasonable fees, costs and
expenses (including attorneys' fees and fees of environmental consultants,
industry consultants, accountants and other professionals retained by Agent)
incurred by the Agent in connection with (i) the examination, review, due
diligence investigation, documentation and closing of the financing
arrangements evidenced by the Loan Documents; (ii) the negotiation,
preparation, execution and administration of the Loan Documents, the Loans,
and any amendments, modifications and waivers relating thereto; (iii)in
creating, perfecting and maintaining perfection of Liens in favor of Agent,
on behalf of Lenders, pursuant to any Loan Document, including lien search
fees, filing and recording fees, taxes and expenses, title insurance policy
fees, reasonable fees and expenses of attorneys for providing such opinions
as Agent may reasonably request and fees and expenses of attorneys to Agent,
or in inspecting, verifying, protecting, preserving or restoring the
Collateral; (iv) the review, documentation, negotiation, closing and
administration of any subordination or intercreditor agreements; (b)
customary fees, costs and expenses incurred by the Agent in connection with
forwarding to Borrower the proceeds of Loans; (c) fees, costs, expenses and
bank charges, including bank charges for returned checks, incurred by Agent
in establishing, maintaining and handling lock box accounts, blocked accounts
or other accounts for collection of the Collateral; (d) fees, costs,
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expenses and bank charges incurred by any Issuer in establishing, maintaining
and administering Lender Letters of Credit; (e) reasonable fees, costs,
expenses (including reasonable attorneys' fees) and costs of settlement
incurred by the Agent in collecting upon or enforcing rights against the
Collateral; and (f) reasonable fees, costs and expenses (including reasonable
attorneys' fees and fees of other professionals retained by Agent or any
Lender) incurred by the Agent or any Lender in any action to enforce or
defend this Agreement or the other Loan Documents or to collect any payments
due from Borrower or any other Loan Party under this Agreement, the Notes or
any other Loan Document or incurred in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement,
whether in the nature of a "workout" or in connection with any insolvency or
bankruptcy proceedings or otherwise. Borrower hereby authorizes and directs
Agent, at Agent's option, to debit the Loan Account (by increasing the
principal balance of the Revolving Loan) in the amount of any such fees and
expenses when due; PROVIDED, HOWEVER, that to the extent that the aggregate
amount of all legal fees and expenses incurred by Agent through the Closing
Date that consist of Agent's counsel's fees, recording costs, filing fees,
documentary and intangibles taxes, lien search charges, title insurance fees
and premiums, survey costs and costs of any real estate appraisals and
environmental reports that are to be reimbursed by Borrower exceeds One
Hundred Thousand Dollars ($100,000) in the aggregate, Agent shall reduce the
origination fee under Section 2.3(A).
10.2. INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.1,
whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to indemnify, pay and hold Agent, Issuer, each Lender and any
holder of any of the Notes, and the officers, directors, employees, agents,
affiliates and attorneys of Agent, each Lender and such holders (collectively
called the "INDEMNITEES") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
Tax Liabilities, and broker's or finder's fees, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may
be imposed on, incurred by, or asserted against that Indemnitees, in respect
of any third party claim in any manner relating to or arising out of (a) the
negotiation, execution, delivery, performance, administration, or enforcement
of any of the Loan Documents, (b) any of the transactions contemplated by the
Loan Documents, (c) any breach by Borrower or any other Loan Party of any
representation, warranty, covenant, or other agreement contained in any of
the Loan Documents, (d) the presence, release, threatened release, disposal,
removal, or cleanup of any Hazardous Material located on, about, within or
affecting any of the properties or assets of any Loan Party or any of their
Subsidiaries or any violation of any applicable Environmental Law for which
any Loan Party is liable, (e) the use or proposed use of any Lender Letter of
Credit, (f) any and all taxes, levies, deductions, and
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charges imposed on Agent or a Lender or any of Agent's or a Lender's
correspondents in respect of any Lender Letter of Credit, (g) the statements
contained in the commitment letters, if any, delivered by any Lender, (h) any
Lender's agreement to make the Loans hereunder (excepting any disputes among
Lenders INTER SESE), or (i) the use or intended use of the proceeds of any of
the Loans to the foregoing liabilities herein collectively referred to as the
"INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, that Borrower shall have no
obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction and no obligation to any
Indemnitee in respect of disputes among Indemnitees INTER SESE. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any
law or public policy, Borrower shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or
any of them.
10.3. AMENDMENTS AND WAIVERS.
Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, the Notes or any
other Loan Document, or consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and
signed by the Requisite Lenders or Agent, as applicable, and the applicable
Loan Party; PROVIDED, HOWEVER, that, no amendment, modification, termination
or waiver shall, unless in writing and signed by all Lenders, Agent and the
applicable Loan Party do any of the following: (a) except to the extent
effected by any assignment permitted under subsection 9.1, change the
Commitment of any Lender or increase the Total Loan Commitments of the
Lenders; (b) forgive all or any of the principal amount of, reduce the rate
of interest on, or reduce the fees payable with respect to, any Loan; (c)
extend or postpone any scheduled maturity date for the payment of the
principal amount of any Loan; (d) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans, or the percentage of
Lenders which shall be required for Lenders or any of them to take any action
hereunder; (e) release Collateral (except if the sale or disposition of such
Collateral is permitted under subsection 9.2 or any other Loan Document) or
any Loan Party from any liabilities;(f) amend or waive this subsection 10.3
or the definitions of any terms used in this subsection 10.3 insofar as the
definitions affect the substance of this subsection 10.3; or (g) consent to
the assignment or other transfer by any Loan Party of any of its rights and
obligations under any Loan Document; and PROVIDED, FURTHER, that no
amendment, modification, termination or waiver affecting the rights or duties
of Agent under any Loan Document shall in any event be effective, unless in
writing and signed by Agent, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver shall
be effective only in the specific instance and for the specific purpose for
which it was given. No amendment, modification, termination or waiver shall
be required for Agent to take additional Collateral pursuant to any Loan
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Document. No amendment or modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of
the holder of that Note. No notice to or demand on Borrower or any other
Loan Party in any case shall entitle Borrower or any other Loan Party to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in
accordance with this subsection 10.3 shall be binding upon each holder of the
Notes at the time outstanding, each future holder of the Notes, and, if
signed by a Loan Party, on such Loan Party.
10.4. RETENTION OF BORROWER'S DOCUMENTS.
Agent and any Lender may, in accordance with Agent's or such Lender's
customary practices, destroy or otherwise dispose of all documents,
schedules, invoices or other papers, delivered by any Loan Party to Agent or
such Lender unless Borrower requests in writing that same be returned. Upon
Borrower's request and at Borrower's expense, Agent or such Lender shall
return such papers when Agent's or such Lender's actual or anticipated need
for same has terminated.
10.5. NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given shall be in writing addressed
to the respective party as set forth below and may be personally served,
telecopied, telexed or sent by overnight courier service or United States
mail and shall be deemed to have been given (a) if delivered in person, when
delivered; (b) if delivered by telecopy or telex, on the date of transmission
if transmitted before 4:00 p.m. (Chicago time) on a Business Day or, if not,
on the next succeeding Business Day; (c) if delivered by overnight courier,
two (2) Business Days after delivery to such courier properly addressed; or
(d) if by U.S. mail, five (5) Business Days after depositing in the United
States mail, with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: The Krystal Company
The Krystal Building
One Union Square
Chattanooga, Tennessee 37402
ATTENTION: Camden B. Scearce,
Chief Financial Officer
Telecopy No.: (423) 757-5622
If to Agent or to TBCC: Transamerica Business Credit
Corporation
Two Ravinia Drive, Suite 700
Atlanta, Georgia 30346
ATTENTION: Jeffrey S. Carbery
Telecopy No.: (770) 390-7017
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or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this subsection 10.5. A notice not given as provided above shall, if it is
in writing, be deemed given if and when actually received by the party to
whom given.
10.6. SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS.
All agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement, the making of the Loans
hereunder and the execution and delivery of the Notes. Notwithstanding
anything in this Agreement or implied by law to the contrary, all Inchoate
Indemnity Obligations and the agreements of Borrower with respect thereto and
otherwise set forth in subsections 2.2(H), 2.8, 2.9, 10.1, 10.2 and 10.16 and
the agreements of Lenders set forth in subsection 9.3 shall survive the
payment of the Loans and the termination of this Agreement. Subject to
subsection 10.8, all other representations, warranties and agreements of
Borrower, Agent and Lenders set forth in this Agreement shall terminate upon
payment of the Loans and the termination of this Agreement.
10.7. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any Lender or any holder of any Note
in the exercise of any power, right or privilege hereunder or under the Notes
or any other Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
All rights and remedies existing under this Agreement, the Notes and the
other Loan Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
10.8. MARSHALING; PAYMENTS SET ASIDE.
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of any Loan Party or any other party or against or in
payment of any or all of the Obligations. To the extent that any Loan Party
makes a payment or payments to Agent and/or any Lender, or Agent and/or any
Lender enforce their security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver
or any other party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as
if such payment had not been made or such enforcement or setoff had not
occurred.
10.9. INDEPENDENCE OF COVENANTS.
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All covenants hereunder shall be given in any jurisdiction independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
10.10. SEVERABILITY.
The invalidity, illegality or unenforceability in any jurisdiction of
any provision in or obligation under this Agreement, the Notes or other Loan
Documents shall not affect or impair the validity, legality or enforceability
of the remaining provisions or obligations under this Agreement, the Notes or
other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11. LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF
LENDERS' RIGHTS.
The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other
Lender hereunder. In the event that any Lender at any time should fail to
make a Loan as herein provided, the Lenders, or any of them, at their sole
option, may make the Loan that was to have been made by the Lender so failing
to make such Loan. Nothing contained in any Loan Document and no action taken
by Agent or any Lender pursuant hereto or thereto shall be deemed to
constitute Lenders to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and, subject to the terms of
any Lender Addition Agreement, each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.12. HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.13. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.14. SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTES.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns
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except that Borrower may not assign its rights or obligations hereunder
without the written consent of all Lenders. Lenders' rights of assignment
are subject to subsection 9.1.
10.15. NO FIDUCIARY RELATIONSHIP.
No provision in this Agreement or in any of the other Loan Documents and
no course of dealing between the parties shall be deemed to create any
fiduciary duty by Agent or any Lender to Borrower or any other Loan Party.
10.16. LIMITATION OF LIABILITY.
Neither Agent nor any Lender, nor any affiliate, officer, director,
employee, attorney, or agent of Agent or any Lender shall have any liability
with respect to, and Borrower hereby waives, releases, and agrees not to sue
any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or
any of the other Loan Documents.
10.17. NO DUTY.
All attorneys, accountants, appraisers, and other professional Persons
and consultants retained by Agent or any Lender shall have the right to act
exclusively in the interest of Agent or such Lender and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to Borrower or any of Borrower's shareholders or
any other Person.
10.18. ENTIRE AGREEMENT.
This Agreement, the Notes, and the other Loan Documents referred to
herein embody the final, entire agreement among the parties hereto and
supersede any and all prior commitments, agreements, representations, and
understandings, whether written or oral, relating to the subject matter
hereof and may not be contradicted or varied by evidence of prior,
contemporaneous, or subsequent oral agreements or discussions of the parties
hereto. There are no oral agreements among the parties hereto.
10.19. CONSTRUCTION.
Agent, Borrower and each Lender acknowledge that each of them has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the Other Loan Documents with its
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by Agent, Borrower and each Lender.
10.20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
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BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY
AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT, SUCH NOTE, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION.
BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND SUCH OTHER PERSONS
AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY AGREE IN WRITING
TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED
MAIL TO BORROWER AT ITS ADDRESS PROVIDED IN SUBSECTION 10.5 EXCEPT THAT
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY
SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED
BY BORROWER REFUSES TO ACCEPT SERVICE, BORROWER HEREBY AGREES THAT SERVICE
UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.
10.21. WAIVER OF JURY TRIAL.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, AGENT AND
EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE
LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. BORROWER, AGENT AND EACH LENDER ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
LENDERS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWER, AGENT AND EACH LENDER FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED
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THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS,
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS OR THE LENDER
LETTERS OF CREDIT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.22. CONFIDENTIALITY.
Each Lender agrees to use all commercially reasonable efforts to keep
any non-public information delivered or made available to such Lender
pursuant to the Loan Documents confidential from any Person other than
Persons employed or retained by such Lender who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans;
PROVIDED that, nothing herein shall prevent any Lender from disclosing such
information to any bona fide assignee, transferee or participant that has
agreed to comply with this subsection 10.22 in connection with the
contemplated assignment or transfer of any Loans or participation therein or
as required or requested by any governmental agency or representative thereof
or pursuant to legal process or as required in connection with the exercise
of any remedy under the Loan Documents.
10.23. PUBLICITY.
Borrower authorizes Agent to publicize and place "tombstone"
advertisements with respect to the financing arrangements set forth in this
Agreement and the transactions contemplated hereby.
10.24. COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents, or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute
but one and the
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same instrument. This Agreement shall become effective upon the execution of
a counterpart hereof by each of the parties hereto.
WITNESS THE DUE EXECUTION HEREOF BY THE RESPECTIVE DULY AUTHORIZED
OFFICERS OF THE UNDERSIGNED UNDER SEAL AS OF THE DATE FIRST WRITTEN ABOVE.
"BORROWER"
THE KRYSTAL COMPANY
By: /s/ Phillip E. McNeely
-----------------------------
Phillip E. McNeely,
Vice President
Attest: /s/ Camden B. Scearce
-------------------------
Camden B. Scearce,
Secretary
[CORPORATE SEAL]
"AGENT"
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Jeffrey S. Carbery
-----------------------------
Title: Senior Account Executive
--------------------------
"LENDERS"
TOTAL LOAN COMMITMENT: TRANSAMERICA BUSINESS CREDIT
$53,000,000.00 CORPORATION
By: /s/ Jeffrey S. Carbery
-----------------------------
LENDING OFFICE:
9399 West Higgins Road Name: /s Jeffrey S. Carbery
Suite 600 --------------------------
Rosemont, Illinois 60018
Title: Senior Account Executive
--------------------------
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ACKNOWLEDGMENT
STATE OF GEORGIA )
) ss.:
COUNTY OF FULTON )
On the 22nd day of April, 1997, before me personally came Phillip E.
McNeely, to me known, who, being by me duly sworn, did depose and say that he
resides at 604 Dunsinane Road, Signal Mountain, Tennessee 37377; that he is a
Vice President of THE KRYSTAL COMPANY, the corporation described herein and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the board of directors of said
corporation and that he signed his name thereto by like authority.
/s/ Shannon D. Sparks
--------------------------------
Notary Public
My Commission Expires:
June 17, 2000
--------------------------------
[NOTARIAL SEAL]
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