1
EXHIBIT 10.8
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
among
CKE RESTAURANTS, INC.,
THE LENDERS NAMED HEREIN
and
PARIBAS
As Agent
DATED AS OF NOVEMBER 24, 1999
2
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.........................................................................................1
Section 1.1 Definitions. ..................................................................1
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES..............................................................27
Section 2.1 Term Loans. ..................................................................27
Section 2.2 Revolving Loans................................................................27
Section 2.3 Notice of Borrowing. .........................................................28
Section 2.4 Disbursement of Funds. .......................................................28
Section 2.5 Notes..........................................................................29
Section 2.6 Interest. ....................................................................30
Section 2.7 Interest Periods. ............................................................31
Section 2.8 Minimum Amount of Eurodollar Loans. ..........................................32
Section 2.9 Conversion or Continuation. ..................................................32
Section 2.10 Voluntary Reduction of Commitments. .........................................33
Section 2.11 Voluntary Prepayments. ......................................................33
Section 2.12 Mandatory Prepayments. ......................................................34
Section 2.13 Application of Prepayments. .................................................37
Section 2.14 Method and Place of Payment. ................................................37
Section 2.15 Fees. .......................................................................38
Section 2.16 Interest Rate Unascertainable, Increased Costs, Illegality. .................39
Section 2.17 Funding Losses. .............................................................40
Section 2.18 Increased Capital. ..........................................................41
Section 2.19 Taxes. ......................................................................41
Section 2.20 Use of Proceeds. ............................................................42
Section 2.21 Collateral Security...........................................................42
Section 2.22 Replacement of Certain Lenders................................................45
SECTION 3. LETTERS OF CREDIT..................................................................................45
Section 3.1 Issuance of Letters of Credit, etc.............................................46
Section 3.2 Letter of Credit Fees..........................................................47
Section 3.3 Obligation of Borrower Absolute, etc...........................................48
SECTION 4. CONDITIONS PRECEDENT...............................................................................50
Section 4.2 Conditions Precedent to Initial Loans. .......................................51
Section 4.3 Conditions Precedent to All Loans..............................................57
ii
3
Page
----
SECTION 5. REPRESENTATIONS AND WARRANTIES.....................................................................58
Section 5.1 Corporate Status. ............................................................58
Section 5.2 Corporate Power and Authority. ................................................58
Section 5.3 No Violation. ................................................................59
Section 5.4 Litigation. ...................................................................59
Section 5.5 Financial Statements; Financial Condition; etc. ..............................59
Section 5.6 Solvency. ....................................................................59
Section 5.7 Projections. .................................................................59
Section 5.8 Material Adverse Change. .....................................................60
Section 5.9 Use of Proceeds; Margin Regulations. .........................................60
Section 5.10 Governmental and Other Approvals. ...........................................60
Section 5.11 Security Interests and Liens. ................................................60
Section 5.12 Tax Returns and Payments. ...................................................60
Section 5.13 ERISA.........................................................................61
Section 5.14 Investment Company Act; Public Utility Holding Company Act. .................61
Section 5.15 Second A&R Closing Date Transactions. .......................................62
Section 5.16 Representations and Warranties in Transaction Documents. ....................62
Section 5.17 True and Complete Disclosure. ...............................................62
Section 5.18 Corporate Structure; Capitalization...........................................62
Section 5.19 Environmental Matters. ......................................................63
Section 5.20 Intellectual Property. ......................................................64
Section 5.21 Ownership of Property; Restaurants. .........................................64
Section 5.22 No Default. .................................................................64
Section 5.23 Licenses, etc. ..............................................................64
Section 5.24 Compliance with Law. ........................................................64
Section 5.25 No Burdensome Restrictions. .................................................65
Section 5.26 Brokers' Fees. ..............................................................65
Section 5.27 Labor Matters. ..............................................................65
Section 5.28 Indebtedness of the Borrower and Its Subsidiaries.............................65
Section 5.29 Other Agreements..............................................................65
Section 5.30 Immaterial Subsidiaries.......................................................65
Section 5.31 Franchise Agreements and Franchisees..........................................65
SECTION 6. AFFIRMATIVE COVENANTS..............................................................................66
Section 6.1 Information Covenants. ........................................................66
Section 6.2 Books, Records and Inspections. ..............................................70
Section 6.3 Maintenance of Insurance. ....................................................70
Section 6.4 Taxes. .......................................................................71
Section 6.5 Corporate Franchises. ........................................................71
Section 6.6 Compliance with Law. .........................................................71
Section 6.7 Performance of Obligations. ..................................................71
Section 6.8 Maintenance of Properties. ...................................................71
iii
4
Page
----
Section 6.9 Compliance with Terms of Leaseholds. .........................................71
Section 6.10 Compliance with Environmental Laws. .........................................72
Section 6.11 Subsidiary Guarantors. ......................................................72
Section 6.12 Immaterial Subsidiaries.......................................................72
Section 6.13 [Intentionally Omitted].......................................................73
Section 6.14 Year 2000.....................................................................73
SECTION 7. NEGATIVE COVENANTS.................................................................................73
Section 7.1 Financial Covenants............................................................73
Section 7.2 Indebtedness. ................................................................76
Section 7.3 Liens. .......................................................................78
Section 7.4 Restriction on Fundamental Changes.............................................79
Section 7.5 Sale of Assets. ..............................................................80
Section 7.6 Contingent Obligations.........................................................81
Section 7.7 Dividends......................................................................81
Section 7.8 Advances, Investments and Loans. ..............................................82
Section 7.9 Transactions with Affiliates. .................................................88
Section 7.10 Limitation on Voluntary Payments and Modifications of Certain Documents. .....88
Section 7.11 Changes in Business. .........................................................89
Section 7.12 Certain Restrictions. ........................................................89
Section 7.13 Lease Obligations.............................................................90
Section 7.14 Hedging Agreements. .........................................................91
Section 7.15 Plans. .......................................................................91
Section 7.16 Fiscal Year; Fiscal Quarter. .................................................91
SECTION 8. EVENTS OF DEFAULT..................................................................................92
Section 8.1 Events of Default. ............................................................92
Section 8.2 Rights and Remedies..........................................................95
SECTION 9. THE AGENT..........................................................................................96
Section 9.1 Appointment....................................................................96
Section 9.2 Delegation of Duties...........................................................97
Section 9.3 Exculpatory Provisions. ......................................................97
Section 9.4 Reliance by Agent..............................................................97
Section 9.5 Notice of Default. ...........................................................97
Section 9.6 Non-Reliance on Agent and Other Lenders. .....................................98
Section 9.7 Indemnification. .............................................................98
Section 9.8 Agent in its Individual Capacity...............................................99
Section 9.9 Successor Agent. .............................................................99
iv
5
Page
----
SECTION 10. MISCELLANEOUS......................................................................................99
Section 10.1 Payment of Expenses, Indemnity, etc..........................................99
Section 10.2 Right of Setoff.............................................................100
Section 10.3 Notices. ..................................................................101
Section 10.4 Successors and Assigns; Participation; Assignments..........................101
Section 10.5 Amendments and Waivers. ...................................................103
Section 10.6 No Waiver; Remedies Cumulative. ............................................105
Section 10.7 Sharing of Payments. ......................................................105
Section 10.8 Application of Collateral Proceeds...........................................106
Section 10.9 Governing Law; Submission to Jurisdiction. ................................107
Section 10.10 Counterparts. ............................................................107
Section 10.11 [Intentionally Omitted].....................................................107
Section 10.12 Amendment and Restatement. ................................................107
Section 10.13 [Intentionally Omitted].....................................................108
Section 10.14 Headings Descriptive. ....................................................108
Section 10.15 Marshalling; Recapture. ..................................................108
Section 10.16 Severability. ............................................................108
Section 10.17 Independence of Covenants...................................................108
Section 10.18 Survival. ................................................................109
Section 10.19 Domicile of Loans. .......................................................109
Section 10.20 Limitation of Liability. .................................................109
Section 10.21 Calculations; Computations. ..............................................109
Section 10.22 WAIVER OF TRIAL BY JURY. .................................................109
v
6
THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 24,
1999, but effective for all purposes as of November 2, 1999, among CKE
Restaurants, Inc., a Delaware corporation (the "Borrower"), the Lenders (as
hereinafter defined) and Paribas, acting in its capacity as agent for the
Lenders.
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural number the singular.
"Acquiring Subsidiary" shall have the meaning provided in Section
2.21(b).
"Acquisition" means any transaction, or any series of related
transactions, consummated after the Second A&R Closing Date, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or assets of
any Person or division thereof (other than assets acquired by the Borrower or
any of its Subsidiaries in the ordinary course of its business), whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of related
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors or a
majority (by percentage or voting power) of the outstanding partnership
interests of a partnership or of the outstanding equity interests of a limited
liability company.
"Adjusted Consolidated EBITDA" shall mean, with respect to the Borrower
for any period, Consolidated EBITDA of the Borrower for such period, as adjusted
to give effect to (i) the Consolidated EBITDA for such period attributable to
any business or Person acquired by the Borrower or any Subsidiary during such
period pursuant to a Permitted Acquisition with respect to which the conditions
set forth in Section 7.8(f) have been satisfied as if such business or Person
had been so acquired on the first day of such period and (ii) the Consolidated
EBITDA for such period attributable to any business or Person disposed of by the
Borrower or any Subsidiary during such period as if such business or Person had
been so disposed of on the first day of such period; provided that the
adjustments described in the foregoing clauses (i) and (ii) shall be made only
in such amounts as are agreed to by the Agent and the Borrower and only if the
Lenders have received audited financial statements for such business or Person
being acquired or disposed of for such period or for the most recent fiscal year
of such business or Person which financial statements are audited by independent
certified public accountants acceptable to the Agent prior to such adjustment.
"Adjusted Leverage Ratio" shall mean with respect to the Borrower on a
consolidated basis with its Subsidiaries, at any date, the ratio of (a)(i)
Consolidated Total Debt plus (ii) the product of (A) seven multiplied by (B) an
amount equal to Consolidated Rentals for
7
the period of four (4) consecutive fiscal quarters of the Borrower (taken as one
accounting period) most recently ended on or prior to such date minus rent
expense attributable to Sale and Leaseback Transactions determined in accordance
with GAAP for such period minus Consolidated Rentals attributable to any
Restaurant(s) sold by the Borrower or any of its Subsidiaries during the
thirteen four-week periods most recently ended on or prior to the date of
determination to (b) Consolidated EBITDAR for the period of four (4) consecutive
fiscal quarters most recently ended on or prior to such date minus the amount of
any EBITDA Adjustments during the thirteen four-week periods most recently ended
on or prior to the date of determination, minus Consolidated Rentals
attributable to any Restaurant(s) sold by the Borrower or any of its
Subsidiaries during the thirteen four-week periods most recently ended on or
prior to the date of determination.
"Advantica" shall mean Advantica Restaurant Group, Inc., a Delaware
corporation.
"Affected Lender" shall have the meaning provided in Section 2.22.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person if
such Person possesses, directly or indirectly, the power to (i) vote 10% or more
of the Voting Stock of such other Person or (ii) direct or cause the direction
of the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise. No Lender shall be
deemed to be an Affiliate of the Borrower as a result of its being a party to
this Agreement.
"Agent" shall mean Paribas (and its successors) acting in its capacity
as agent for the Lenders and any successor agent appointed in accordance with
Section 9.9.
"Agent's Office" shall mean the office of the Agent located at Chicago,
Illinois, or such other office as the Agent may hereafter designate in writing
as such to the other parties hereto.
"Agreement" shall mean this Third Amended and Restated Credit Agreement
as the same may from time to time hereafter be modified, restated, supplemented
or amended.
"Applicable Margin" means, with respect to the Commitment Fee and each
Eurodollar Loan or Base Rate Loan that is a Revolving Loan, the rate of interest
per annum shown below for the range of Leverage Ratio specified below:
2
8
Leverage Ratio Eurodollar Loans Base Rate Loans Commitment Fee
-------------- ---------------- --------------- --------------
less than 1.5 to 1.0 1.250% 0.00% 0.375%
1.5 to 1.0 or greater, but less
than 2.0 to 1.0 1.500% 0.250% 0.375%
2.0 to 1.0 or greater, but less
than 2.5 to 1.0 1.875% 0.625% 0.375%
2.5 to 1.0 or greater, but less
than 3.0 to 1.0 2.125% 0.875% 0.500%
3.0 to 1.0 or greater 2.250% 1.000% 0.500%
(a) The Leverage Ratio shall be calculated as of the end of each fiscal
quarter of the Borrower, commencing with the fiscal quarter ending November 2,
1998, and shall be reported to the Agent pursuant to the Second A&R Closing
Compliance Certificate with respect to the first calculation and pursuant to a
Compliance Certificate delivered by the Borrower in accordance with Section
6.1(e) hereof with respect to each subsequent calculation. On the Second A&R
Closing Date with respect to the first calculation and not later than two (2)
Business Days after receipt by the Agent of each Compliance Certificate
delivered by the Borrower in accordance with Section 6.1(e) for each fiscal
quarter or fiscal year of the Borrower, as applicable, with respect to each
subsequent calculation, the Agent shall determine the Leverage Ratio for the
applicable period and shall promptly notify the Borrower and the Lenders of such
determination and of any change in each Applicable Margin resulting therefrom.
Each Applicable Margin shall be adjusted (upwards or downwards, as appropriate),
if necessary, based on the Leverage Ratio as of the end of the fiscal quarter
immediately preceding the date of determination; provided however that for the
period commencing on the Second A&R Closing Date and ending on the date which
occurs six (6) months after the Second A&R Closing Date, if the Leverage Ratio
is less than 2.5 to 1.0, the Applicable Margin with respect to Eurodollar Loans
shall be 1.50% per annum and with respect to Commitment Fees shall be 0.50% per
annum. The adjustment, if any, to the Applicable Margin shall be effective
commencing on the third (3rd) Business Day after the receipt by the Agent of
such quarterly or annual financial statements delivered in accordance with
Sections 6.1(a) and 6.1(b) and such related Compliance Certificate of the
Borrower delivered in accordance with Section 6.1(e) and shall be effective from
and including the third (3rd) Business Day after the date the Agent receives
such Compliance Certificate to but excluding the third (3rd) Business Day after
the date on which the next Compliance Certificate is required to be delivered
pursuant to Section 6.1(e); provided, however, that, in the event that the
Borrower shall fail at any time to furnish to the Lenders such financial
3
9
statements and any such Compliance Certificate required to be delivered pursuant
to Sections 6.1(a), 6.1(b) and 6.1(e), for purposes of determining the
Applicable Margin, the Leverage Ratio shall be deemed to be greater than or
equal to 3.0 to 1.0 at all times until the third (3rd) Business Day after such
time as all such financial statements and each such Compliance Certificate are
so received by the Agent and the Lenders. Each determination of the Leverage
Ratio and each Applicable Margin by the Agent in accordance with this definition
shall be conclusive and binding on the Borrower and the Lenders absent manifest
error.
(b) Notwithstanding the foregoing, for the third and fourth fiscal
quarters of the Borrower's fiscal year 2000, until such time as an adjustment to
the Applicable Margin is required pursuant to sub-section (a) above as a result
of the Leverage Ratio reflected in the Compliance Certificate for the fourth
fiscal quarter of the Borrower's fiscal year 2000, the Applicable Margin with
respect to Revolving Loans that are Eurodollar Loans shall be 2.25%, and the
Applicable Margin with respect to Revolving Loans that are Base Rate Loans will
be 1.0%, in each case regardless of the actual Leverage Ratio of the Borrower
during either of such fiscal quarters.
"Asset Disposition" shall mean any conveyance, sale, lease, license,
transfer or other disposition by the Borrower or any of its Subsidiaries
subsequent to the Second A&R Closing Date of any asset (including by way of (i)
a sale and leaseback transaction, (ii) the sale or other transfer of any of the
capital stock of any Subsidiary of the Borrower or any of its Subsidiaries and
(iii) any total or partial loss, destruction or condemnation of any asset), but
excluding (A) sales of inventory in the ordinary course of business, (B)
licenses of intellectual property to franchisees in the ordinary course of
business, (C) the sale or other disposition of assets with a fair market value
not in excess of $1,000,000 in respect of any transaction or series of related
transactions, but only to the extent that the aggregate fair market value of all
assets subject to Asset Dispositions of the Borrower and its Subsidiaries in any
fiscal year does not exceed $2,000,000, (D) leases and subleases of real and
personal property of the Borrower or any of its Subsidiaries to any of their
respective franchisees in the ordinary course of business and consistent with
past practices, and (E) sales, transfers or other dispositions of any property
or assets by the Borrower or any of its wholly-owned Subsidiaries to the
Borrower or any of its wholly-owned Domestic Subsidiaries provided that all
documents or opinions required to be delivered to the Agent pursuant to Section
2.21 have been delivered to the Agent and the Borrower has provided the Agent
with written notice of such sale, transfer or other disposition at least ten
(10) days prior to the date of any such sale, transfer or other disposition and
provided further that the Agent and Lenders shall not be deemed to have released
their security interest in any such property or assets.
"Assignee" shall have the meaning provided in Section 10.4(c).
"Assignment Agreement" shall have the meaning provided in Section
10.4(d).
4
10
"Authorized Officer" of any Person shall mean any of the President, the
Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, any Senior Vice President, any Executive Vice President, any Vice
President, the Controller, the Treasurer or Assistant Treasurer of such Person,
acting singly.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Base Rate" shall mean, at any particular date, the higher of (i) the
rate of interest publicly announced by Morgan Guaranty Trust Company of New York
in New York, New York from time to time as its "base rate" changing as and when
such base rate changes and (ii) the Federal Funds Rate plus 0.50%. The base rate
is not intended to be the lowest rate of interest charged by Morgan Guaranty
Trust Company of New York in connection with extensions of credit to debtors.
"Base Rate Loans" shall mean Loans made and/or being maintained at a
rate of interest based upon the Base Rate.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower Pledge Agreement" shall mean a pledge agreement substantially
in the form of the Amended and Restated Borrower Pledge Agreement set forth as
Exhibit C hereto, as the same may be amended, restated, modified or supplemented
from time to time.
"Borrower Security Agreement" shall mean a security agreement
substantially in the form of the Amended and Restated Borrower Security
Agreement set forth as Exhibit D hereto duly executed and delivered to the Agent
by the Borrower, as the same may be amended, restated, modified or supplemented
from time to time.
"Borrowing" shall mean the incurrence of one Type of Loan of one
Facility from all the Lenders on a given date (or resulting from conversions or
continuations on a given date) having, in the case of Eurodollar Loans, the same
Interest Period.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in Chicago, Los Angeles or New York City a legal holiday or a day on which
banking institutions are authorized or required by law or other government
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) and which is also a day
for trading by and between banks for U.S. dollar deposits in the relevant London
interbank Eurodollar market.
5
11
"Capital Expenditures" shall mean, for any period, all expenditures
(whether paid in cash or accrued as a liability, including the portion of
Capitalized Leases of the Borrower and its Subsidiaries originally incurred
during such period that is capitalized on the consolidated balance sheet of the
Borrower and its Subsidiaries) by the Borrower and its Subsidiaries during such
period that, in conformity with GAAP, are included in "capital expenditures",
"additions to property, plant or equipment" or comparable items in the
consolidated financial statements of the Borrower and its Subsidiaries
(excluding any expenditures for assets that would be included in "capital
expenditures," "additions to property, plant or equipment" or in comparable
items in the consolidated financial statements of the Borrower and its
Subsidiaries in conformity with GAAP which assets are acquired in a Permitted
Acquisition).
"Capital Stock" shall mean any and all shares of, or interests or
participations in, corporate stock (or other instruments or securities
evidencing ownership).
"Capitalized Lease" shall mean with respect to any Person, (i) any
lease of property, real or personal, the obligations under which are capitalized
on the consolidated balance sheet of such Person, and (ii) any other such lease
of such Person to the extent that the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of the lessee.
"Capitalized Lease Obligations" with respect to any Person, shall mean
at any time of determination all obligations of such Person under or in respect
of Capitalized Leases of such Person.
"Cash Collateralize" shall mean the pledge and deposit with or delivery
to the Agent, for the benefit of the Agent, the Issuing Bank and the Lenders,
cash or deposit account balances pursuant to documentation in form and substance
reasonably satisfactory to the Agent and the Issuing Bank; such documentation
shall irrevocably authorize the Agent to apply such cash collateral to
reimbursement of the Issuing Bank for draws under Letters of Credit as and when
occurring, and in all cases to payment of other Obligations as and when due.
Cash collateral shall be maintained in blocked deposit accounts at the Agent or
a Lender.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 360 days from the date of acquisition, (ii) time deposits and certificates
of deposit of any Lender or any domestic commercial bank of recognized standing
having capital and surplus in excess of $100,000,000 with maturities of not more
than 180 days from the date of acquisition, (iii) fully secured repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) entered into with any bank meeting the
qualifications specified in clause (ii) above, and (iv) commercial paper issued
by the parent corporation of any Lender or any domestic commercial bank of
6
12
recognized standing having capital and surplus in excess of $500,000,000 and
commercial paper rated at least A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or at least P-1 or the equivalent thereof by Moody's
Investor Services, Inc. and in each case maturing within 180 days after the date
of acquisition.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"Collateral" shall mean all property and interests in property now
owned or hereafter acquired in or upon which a Lien has been or is purported or
intended to have been granted to the Agent or any Lender or any Interest Rate
Hedge Provider under any of the Security Documents.
"Commitment" shall mean, for each Lender at any given time, the sum of
such Lender's Term Loan Pro Rata Share and its Revolving Loan Commitment.
"Commitment Fees" shall have the meaning provided in Section 2.15(b).
"Compliance Certificate" shall have the meaning provided in Section
6.1(e).
"Consents" shall have the meaning provided in Section 4.2(v).
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period minus the amount of such
Consolidated Interest Expense for such period not paid or payable in cash.
"Consolidated EBITDA" shall mean, for any Person during any period, the
sum of (i) Consolidated Net Income for such period plus (ii) to the extent
deducted in the calculation of Consolidated Net Income for such period,
Consolidated Interest Expense for such period plus (iii) to the extent deducted
in the calculation of Consolidated Net Income for such period, federal and state
income taxes for such period, plus (iv) to the extent deducted in the
calculation of Consolidated Net Income for such period, depreciation and
amortization expense for such period, plus (v) to the extent deducted in the
calculation of Consolidated Net Income for such period, all extraordinary losses
for such period, minus (vi) to the extent included in the calculation of
Consolidated Net Income for such period, all extraordinary gains for such
period, all determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
"Consolidated EBITDAR" shall mean, during any period (i) Adjusted
Consolidated EBITDA for the Borrower and its Subsidiaries for such period plus
(ii) to the extent deducted in the calculation of Consolidated Net Income of the
Borrower and its Subsidiaries for such period, Consolidated Rentals for such
period.
7
13
"Consolidated Interest Expense" shall mean, for any Person and for any
period, the total interest expense (including, without limitation, interest
expense attributable to Capitalized Leases in accordance with GAAP, but
excluding any non-cash interest expense attributable to the amortization or
write-off of deferred financing costs) of such Person and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean for any Person and for any period
the net income (or loss) of such Person and its Subsidiaries on a consolidated
basis for such period (taken as a single accounting period) as determined in
accordance with GAAP minus (or plus) income (or losses) attributable to
Investments of the Borrower or any of its Subsidiaries which Investments are
accounted for under the equity method of accounting to the extent no cash is
received with respect to any such income (or no cash is paid with respect to any
such loss) plus (or minus) any federal or state income tax expense (or benefit)
attributable to such income (or losses) from such Investments minus to the
extent included in the calculation of Consolidated Net Income for such period,
gains for such period (net of any applicable state or federal expense) resulting
from any sale by the Borrower or any of its Subsidiaries of a Restaurant of the
Borrower or such Subsidiary plus to the extent included in the calculation of
Consolidated Net Income for such period, losses for such period (net of any
applicable state or federal tax benefit) resulting from any sale by the Borrower
or any of its Subsidiaries of a Restaurant of the Borrower or such Subsidiary,
plus any reserves (net of any applicable state or federal tax benefit)
established in accordance with GAAP for closures of Restaurants or non-cash
reductions in the carrying value of Restaurant-related assets plus any non-cash
interest expense attributable to the amortization or write-off of deferred
financing costs.
"Consolidated Rentals" shall mean, for the Borrower and its
Subsidiaries for any period, the aggregate rent expense for the Borrower and its
Subsidiaries for such period, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean, at any time, the excess
of (i) the total assets of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP minus goodwill and any other items
that are classified as intangibles in accordance with GAAP, minus (ii) all
liabilities of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"Consolidated Total Debt" shall mean, at any time, all Indebtedness of
the Borrower and its Subsidiaries (other than undrawn amounts under letters of
credit issued for the account of the Borrower or any of its Subsidiaries) as
determined on a consolidated basis, including, without limitation, all Sale and
Leaseback Debt.
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person,
8
14
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Controlling Stockholders" shall mean (i) William P. Foley II, (ii)
Cannae Limited Partnership, a Nevada Limited Partnership, (iii) Fidelity
National Financial, Inc., a Delaware corporation and (iv) any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with any of the foregoing. For purposes of this definition, the term "control"
(including the terms "controlled by" and "under common control with") of a
Person means the possession, directly or indirect, of (A) the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by contract or otherwise or (B) the power
to vote 51% or more of the Voting Stock of such Person. No Lender shall be
deemed to be a Controlling Stockholder as a result of its being a party to this
Agreement.
"Conversion" shall have the meaning provided in Section 2.21(b).
"Convertible Subordinated Note Indenture" shall mean that certain
Indenture between the Borrower and Chase Manhattan Bank and Trust Company, N.A.,
as trustee, dated as of March 13, 1998, as the same may be amended, restated,
supplemented or otherwise modified in accordance with the terms of this
Agreement.
"Convertible Subordinated Notes" shall mean the Convertible
Subordinated Notes issued by the Borrower pursuant to the Convertible
Subordinated Note Indenture, in the original aggregate principal amount of
$197,225,000, as the same may be amended, restated, supplemented or otherwise
modified in accordance with the terms of this Agreement; provided that such
Convertible Subordinated Notes shall at all times be subordinated in respect of
the Obligations on subordination terms contained in the Convertible Subordinated
Note Indenture.
"Credit Exposure" shall have the meaning provided in Section 10.4(b).
9
15
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning provided in Section 2.6(c).
"Dividends" shall have the meaning provided in Section 7.7.
"Domestic Lending Office" shall mean, as to any Lender, the office of
such Lender designated as such on Annex I, or such other office designated by
such Lender from time to time by written notice to the Agent and the Borrower.
"Domestic Subsidiary" shall mean any wholly-owned Subsidiary of the
Borrower that is organized under the laws of a state of the United States of
America, and which is a party to the Subsidiary Security Agreement, the Guaranty
and, if required pursuant to Section 2.21, a Subsidiary Pledge Agreement.
"EBITDA Adjustment" means an amount equal to the amount of Consolidated
EBITDA attributable to any Restaurant(s) sold by the Borrower or any of its
Subsidiaries during the thirteen four-week periods most recently ended on or
prior to the date of determination, minus, the aggregate amount of royalty
payments (determined on a pro forma basis) that would have been due the Borrower
or any of its Subsidiaries during such thirteen four-week periods had such sale
occurred on the first day of such thirteen four-week periods as a result of such
sale as determined on a pro forma basis; provided, however, that in the event
that any such Restaurant sold is permanently closed within one year after such
sale, the foregoing adjustment for pro forma royalty payments shall be reduced
by an amount equal to the pro forma royalty payments attributable to such
Restaurant to the extent included in computing the EBITDA Adjustment.
"Employee Stock Loan" shall mean a loan made by the Borrower or any of
its Subsidiaries to an employee or director of the Borrower or any of its
Subsidiaries, the purpose of which is to finance the acquisition by such
employee or director of the capital stock of the Borrower.
"Environmental Affiliate" shall mean, with respect to any Person, any
other Person whose liability for any Environmental Claim such Person has or may
have retained, assumed or otherwise become liable for (contingently or
otherwise), either contractually or by operation of law.
"Environmental Approvals" shall mean any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person, any
notice, claim, demand or similar communication (written or oral) by any other
Person alleging potential
10
16
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, fines or
penalties arising out of, based on or resulting from (i) the presence, or
release into the environment, of any Material of Environmental Concern at any
location, whether or not owned by such Person or (ii) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health, safety
or the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"Equity Interests" shall mean Capital Stock and warrants, options or
other rights to acquire Capital Stock.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time. Section references to ERISA are to ERISA, as in
effect at the Second A&R Closing Date and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" means a group consisting of any ERISA Person
and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with such Person
that, together with such Person, are treated as a single employer under
regulations of the PBGC.
"ERISA Person" shall have the meaning set forth in Section 3(9) of
ERISA for the term "person."
"ERISA Plan" means (i) any Plan that (x) is not a Multiemployer Plan
and (y) has Unfunded Benefit Liabilities in excess of $2,000,000 and (ii) any
Plan that is a Multiemployer Plan.
"Eurocurrency Reserve Requirements" shall mean, with respect to each
day during an Interest Period for Eurodollar Loans, that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Federal
Reserve Board or other governmental authority or agency having jurisdiction with
respect thereto for determining the maximum reserves (including, without
limitation, basic, supplemental, marginal and emergency reserves) for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D) maintained by a member bank of the Federal Reserve System.
11
17
"Eurodollar Base Rate" shall mean, with respect to each day during an
Interest Period for Eurodollar Loans, the rate per annum (rounded upwards to the
nearest whole multiple of one-sixteenth of one percent) equal to the rate per
annum at which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period in an amount substantially equal to such Reference
Bank's Eurodollar Loan comprising part of such Borrowing to be outstanding
during such Interest Period and for a period equal to such Interest Period. The
Eurodollar Base Rate for any Interest Period for each Eurodollar Loan comprising
part of the same Borrowing shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from the Reference Banks
two Business Days before the first day of such Interest Period, subject,
however, to the provisions of Section 2.7.
"Eurodollar Lending Office" shall mean, as to any Lender, the office of
such Lender designated as such on Annex I, or such other office designated by
such Lender from time to time by written notice to the Agent and the Borrower.
"Eurodollar Loans" shall mean Loans made and/or being maintained at a
rate of interest provided in Section 2.6(b).
"Eurodollar Rate" shall mean with respect to each day during an
Interest Period for Eurodollar Loans, a rate per annum determined for such day
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
"Event of Default" shall have the meaning provided in Section 8.
"Excluded Resales" shall mean any sale by the Borrower or any of its
Subsidiaries of a Restaurant of the Borrower or such Subsidiary so long as (i)
such Restaurant was acquired by the Borrower or such Subsidiary from a
franchisee with the intent of reselling such Restaurant and (ii) such sale
occurs within twelve (12) months of the acquisition of such Restaurant by the
Borrower or such Subsidiary.
"Existing Debt" shall have the meaning provided in Section 4.2(r)(ii).
"Existing Property Sale and Leaseback Transaction" shall have the
meaning provided in Section 7.13(a).
"Facility" shall mean either or both of the Term Loans and the
Revolving Loans.
12
18
"Facility Conversion" means, collectively, (a) the conversion of a
portion of the Revolving Loans to Term Loans having an aggregate principal
balance not to exceed $200,000,000, in accordance with the terms of Section
2.1(a) and (b) the reduction of the Revolving Loan Commitment by the amount of
the Term Loans resulting from such conversion in accordance with the terms of
Section 2.1(b).
"Facility Conversion Date" means that date designated by the Agent
following receipt by the Agent of the written consent of 100% of the Lenders to
the Facility Conversion.
"Federal Funds Rate" shall mean, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately 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 at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time.
"Fee Letters" shall mean, collectively, (i) that certain fee letter
entered into between the Borrower and the Agent dated as of March 4, 1999, as
amended, restated or otherwise modified from time to time, and (ii) that certain
fee letter entered into between the Borrower and the Agent dated as of the date
hereof, as amended, restated or otherwise modified from time to time.
"Fees" shall mean all amounts payable pursuant to Section 2.15.
"FEI" shall mean Flagstar Enterprises, Inc., an Alabama corporation and
any successor entity permitted pursuant to the terms of this Agreement.
"FEI Acquisition" shall mean the acquisition of FEI and its
Subsidiaries and the other transactions contemplated by the FEI Acquisition
Documents.
"FEI Acquisition Documents" shall mean the FEI Purchase Agreement and
all agreements and instruments executed and delivered in connection therewith.
"FEI Guaranties" shall mean guaranties of obligations of FEI that the
Borrower incurs pursuant to Section 6.12(a) of the FEI Purchase Agreement.
13
19
"FEI Purchase Agreement" shall mean the Stock Purchase Agreement among
Advantica, Spartan Holdings, Inc., a New York corporation, FEI and the Borrower,
dated as of February 18, 1998, together with all schedules and exhibits referred
to therein, each as previously delivered to the Agent and the Lenders, without
giving effect to any amendment, modification or waiver of any material term
thereof effected without the written consent of the Required Lenders.
"50% Mandatory Prepayment" shall have the meaning set forth in Section
2.12(a)(i).
"Final Maturity Date" shall mean the later of the Revolving Loan
Maturity Date or the Term Loan Maturity Date.
"Fixed Charges" shall mean, without duplication, with respect to the
Borrower and its Subsidiaries for any period, (i) all Consolidated Cash Interest
Expense (excluding in respect of Capitalized Leases of the Borrower and its
Subsidiaries) for such period, plus (ii) scheduled payments due in such period
for principal of the Loans (including only such payments made due to scheduled
reductions in the Commitments during such period) and other permitted
Indebtedness, plus (iii) all federal and state income taxes paid in cash by the
Borrower or any of its Subsidiaries for such period, plus (iv) all scheduled
amortization during such period (including principal and interest) of
Capitalized Leases under which the Borrower or any of its Subsidiaries is the
lessee plus (v) the aggregate rent expense determined in accordance with GAAP
for such period attributable to Sale and Leaseback Transactions, all determined
on a consolidated basis for the Borrower and its Subsidiaries for such period.
"Franchise Agreements" shall mean any and all agreements that create a
franchise or license to which the Borrower or any of its Subsidiaries is a party
(as franchisee, licensee, franchisor or licensor) relating to the operation or
development of any Restaurant or Restaurants, including such franchise and/or
license agreements to which any of Borrower or any of its Subsidiaries is a
party as of the Second A&R Closing Date and such franchise and/or license
agreements entered into from time to time after the Second A&R Closing Date by
the Borrower or any of its Subsidiaries and shall include all other rights under
such agreements regardless of their nature.
"Franchisee Construction Debt" shall have the meaning provided in
Section 7.2(j).
"GAAP" shall mean (i) for purposes of determining compliance with the
covenants set forth in Section 7 hereof, United States generally accepted
accounting principles as in effect on the Second A&R Closing Date and consistent
with those utilized in the preparation of the financial statements referred to
in Section 5.5 and (ii) for all other purposes, United States generally accepted
accounting principles as in effect as of the date of determination.
"Guarantor" shall mean each Subsidiary of the Borrower that shall be
required by the terms of this Agreement to enter into a Guaranty from time to
time.
14
20
"Guaranty" shall mean a guaranty substantially in the form of the
Amended and Restated Guaranty set forth as Exhibit E hereto duly executed and
delivered to the Agent for itself, the Lenders and any Interest Rate Hedge
Providers by each Subsidiary of the Borrower (other than Immaterial Subsidiaries
which are not Subordinated Guarantors), as the same may be amended, restated,
modified or supplemented from time to time.
"Hardee's" shall mean Hardee's Food Systems, Inc., a North Carolina
corporation or any successor entity permitted pursuant to the terms of this
Agreement.
"Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended.
"Hedging Agreements" shall mean any interest rate protection agreements
(including, without limitation, any interest rate swaps, caps, floors, collars,
options, futures and similar agreements) and swaps (including, without
limitation, any caps, floors, collars, options, futures and similar agreements)
relating to currencies, commodities or securities, and similar agreements.
"Immaterial Investments"shall mean, at any time, (a) any Investment
owned by the Borrower or any Subsidiary consisting of Capital Stock of any
Person that is not a Subsidiary of the Borrower and which, when added to all
other Investments held by the Borrower and/or its Subsidiaries consisting of
Capital Stock of such Person does not exceed $1,000,000 at any one time
outstanding and (b) any Investment owned by the Borrower or any Subsidiary
consisting of an Instrument payable by any Person that is not a Subsidiary of
the Borrower and which, when added to all other Investments held by the Borrower
and/or its Subsidiaries consisting of Instruments payable by such Person does
not exceed $2,000,000 at any one time outstanding.
"Immaterial Subsidiaries" shall mean any Subsidiary of the Borrower
with assets of less than $1,500,000 (as determined in accordance with GAAP),
which is designated by the Borrower as an Immaterial Subsidiary on Schedule 5.30
or pursuant to Section 6.12; provided that the aggregate amount of assets of all
Subsidiaries designated as Immaterial Subsidiaries shall not at any time exceed
$10,000,000 (as determined in accordance with GAAP).
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 90 days or
less incurred in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture, acceptance or
similar instrument, (iii) the principal component of all Capitalized Lease
Obligations of such Person, (iv) the face amount of all letters of credit issued
for the account of such Person and, without duplication, all unreimbursed
amounts drawn thereunder, and all obligations of such Person, contingent or
otherwise, under acceptances or similar facilities, (v) all indebtedness of any
other Person secured by any Lien on any property owned by such Person, whether
or
15
21
not such indebtedness has been assumed in an amount equal to the lesser of the
fair market value at such date of such property subject to such Lien securing
such Indebtedness and the amount of the Indebtedness secured by such Lien, (vi)
all indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even if the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property),
(vii) all Contingent Obligations of such Person, (viii) all payment obligations,
whether absolute or contingent, matured or unmatured, present or future, due or
to become due, now existing or hereafter arising, of such Person under any
Hedging Agreements, (ix) all Redeemable Stock, (x) all Sale and Leaseback Debt
and (xi) all indebtedness and other obligations of the types specified in
clauses (i) through (x) above of any joint venture or partnership for which such
Person is liable.
"Indemnitee" shall have the meaning provided in Section 10.1(c).
"Initial Debt Issuance" shall have the meaning provided in Section
4.2(q).
"INS" shall mean the United States Immigration and Naturalization
Service or any governmental body succeeding to its functions.
"Instrument" shall have the meaning ascribed thereto in the UCC.
"Interest Period" shall have the meaning provided in Section 2.7.
"Interest Rate Agreements" shall mean any and all interest rate
protection agreements, including, without limitation, any interest rate swaps,
caps, collars, floors and similar agreements.
"Interest Rate Hedge Providers" shall mean any Lender that provides an
Interest Rate Agreement to the Borrower as permitted pursuant to Section 7.14(a)
and that executes and delivers an agency agreement, in form and substance
satisfactory to the Agent.
"Investment" of a Person shall mean any loan, advance, extension of
credit or commitment to make any such loan, advance or extension of credit
(other than accounts receivable arising in the ordinary course of business),
deposit account or contribution of capital by such Person to any other Person or
any investment in, or purchase or other acquisition (whether by purchase,
merger, consolidation or otherwise) of, the stock, partnership interests, notes,
bonds, debentures or other securities, including options and warrants, of, or
other ownership interests in, any other Person made by such Person (whether for
cash, property, services, securities or otherwise).
"Issue" shall mean, with respect to any Letter of Credit, to issue or
to extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
16
22
"Issuing Bank" shall mean Paribas (and its successors), in its capacity
as issuer of one or more Letters of Credit hereunder.
"L/C Amendment Application" shall mean an application form for
amendment of outstanding Letters of Credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Application" shall mean an application form for issuance of
Standby Letters of Credit or Trade Letters of Credit, as appropriate, as shall
at any time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Commitment" shall mean the commitment of the Issuing Bank to
Issue, and the commitment of the Lenders severally to participate in, Letters of
Credit from time to time Issued or outstanding under Section 3, in an aggregate
amount not to exceed on any date the amount of $75,000,000, provided, that the
L/C Commitment is part of the Total Revolving Loan Commitment, rather than a
separate, independent commitment.
"L/C Obligations" shall mean at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit.
"L/C Related Documents" shall mean the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Bank's standard form
documents for standby or commercial letter of credit issuances, as appropriate.
"Lenders" shall mean the persons listed on Schedule 1.1 hereto and the
persons which from time to time become a party hereto in accordance with Section
10.4(d).
"Letters of Credit" shall mean any letters of credit Issued by the
Issuing Bank pursuant to Section 3.
"Leverage Ratio" shall mean, with respect to the Borrower on a
consolidated basis with its Subsidiaries, at any date, the ratio of (a)
Consolidated Total Debt of the Borrower and its Subsidiaries to (b) (i) Adjusted
Consolidated EBITDA of the Borrower and its Subsidiaries for the period of four
(4) consecutive fiscal quarters most recently ended on or prior to such date
plus (ii) to the extent deducted in the calculation of Consolidated Net Income
of the Borrower and its Subsidiaries for such period, all rent expense
determined in accordance with GAAP for such period attributable to Sale and
Leaseback Transactions, minus (iii) the amount of any EBITDA Adjustment, all
determined on a consolidated basis for the Borrower and its Subsidiaries for
such period.
17
23
"Lien" shall mean any mortgage, deed of trust, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other security agreement of any
kind or nature whatsoever, whether or not filed, recorded or otherwise perfected
under applicable law, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same effect as any of the foregoing and the filing of any financing statement or
similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.
"Liquidating Distribution" shall mean any extraordinary, liquidating or
other distribution in return of capital with respect to any Equity Interest of
any Person (other than a Subsidiary of any Domestic Subsidiary) owned by a Loan
Party which Equity Interest is pledged pursuant to any of the Security
Documents.
"Loan Documents" shall mean this Agreement, the Notes, the Guaranty,
each Letter of Credit, each L/C Related Document, the Fee Letters, the Security
Documents, each Interest Rate Agreement permitted to be entered into pursuant to
Section 7.14(a) and all other documents, instruments and agreements executed
and/or delivered in connection herewith or therewith or required or contemplated
hereunder or thereunder, as the same may be amended, restated, modified or
supplemented and in effect from time to time.
"Loan Party" shall mean and include the Borrower and each Guarantor.
"Loans" shall mean and include the Term Loans and the Revolving Loans.
"Margin Stock" shall have the meaning provided such term in Regulation
U of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the business, operations, properties, assets, performance, prospects or
condition (financial or otherwise) of the Borrower and its Subsidiaries, taken
as a whole, or (ii) the ability of any Loan Party to perform, or of the Agent or
any of the Lenders to enforce, any of such Loan Party's material Obligations
under any Loan Document to which it is or is to be a party.
"Material Leases" shall have the meaning provided in Section 6.9.
"Materials of Environmental Concern" shall mean and include chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products, asbestos and radioactive materials.
18
24
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Net Debt Proceeds" means all cash proceeds received by the Borrower or
any of its Subsidiaries from the incurrence of, or the issuance of any
instruments relating to, any Indebtedness (other than (i) Indebtedness borrowed
by the Borrower under this Agreement, (ii) Indebtedness permitted to be incurred
pursuant to Section 7.2(g), (iii) Indebtedness permitted to be incurred pursuant
to Section 7.2(i), and (iv) Indebtedness permitted to be incurred pursuant to
Section 7.2(m) with respect to Sale and Leaseback Transactions), in each case
net of reasonable and customary underwriting fees and discounts, brokerage
commissions and other similar reasonable and customary costs and expenses
directly attributable to such issuance or incurrence.
"Net Equity Proceeds" shall mean all cash proceeds received by the
Borrower or any of its Subsidiaries from any capital contribution or the
issuance of any Equity Interests or other equity securities of the Borrower or
any of its Subsidiaries (other than the issuance of common stock (A) of the
Borrower issued to employees, consultants or directors of the Borrower or any of
its Subsidiaries pursuant to an employee stock option or purchase plan approved
by the Board of Directors of the Borrower or (B) of any Subsidiary of the
Borrower to the Borrower or any wholly-owned Subsidiary of the Borrower), net of
any reasonable and customary brokerage commissions, underwriting fees and
discounts and any other similar reasonable and customary costs or expenses
directly attributable to such issuance.
"Net Sale Proceeds" shall mean, with respect to (a) any Asset
Disposition, all proceeds in the form of cash or cash equivalents received by
the Borrower or any of its Subsidiaries from or in respect of such Asset
Disposition (including any cash proceeds received as income or other proceeds of
any noncash proceeds of such Asset Disposition and including any insurance
payment or condemnation award in respect of any assets of the Borrower or any of
its Subsidiaries) and (b) any Liquidating Distribution, all proceeds in the form
of cash or cash equivalents received by the Borrower or any of its Subsidiaries
from or in respect of any Liquidating Distribution, in the case of the foregoing
clauses (a) and (b), net of (i) reasonable and customary expenses incurred or
reasonably expected to be incurred in connection with such Asset Disposition or
Liquidating Distribution, (ii) any income, franchise, transfer or other tax
payable by the Borrower or such Subsidiary in connection with such Asset
Disposition or Liquidating Distribution and (iii) any Indebtedness secured by a
Lien on such property or assets and required to be repaid as a result of such
Asset Disposition, in each case with respect to the foregoing clause (i) to the
extent, but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash or cash equivalents, actually paid to a Person that is not
an Affiliate and are properly attributable to such transaction or to the asset
that is the subject thereof; provided, however, that Net Sale Proceeds shall not
include any such proceeds from Excluded Resales.
19
25
"New Property Sale and Leaseback Transaction" shall have the meaning
provided in Section 7.13(a).
"New Subordinated Note Indenture" shall mean that certain Indenture
among the Borrower, certain Subsidiaries of the Borrower, and Chase Manhattan
Bank and Trust Company, National Association, as trustee, dated as of March 4,
1999, as the same may be amended, restated, supplemented or otherwise modified
in accordance with the terms of this Agreement.
"Notes" shall mean and include each Revolving Note and each Term Note.
"New Subordinated Notes" shall mean the Senior Subordinated Notes
issued by the Borrower pursuant to the New Subordinated Note Indenture, in a
maximum principal amount not to exceed $287,500,000 in the aggregate, of which
$200,000,000 were issued as of the Second A&R Closing Date at the rate of 9-1/8%
and due 2009 (the "Original Notes") and of which up to an additional $87,500,000
may be issued at the Borrower's option at any time after the Second A&R Closing
Date on terms no less favorable to the Borrower than the terms of the Original
Notes and with a maturity date of February 28, 2005, or thereafter, as the same
may be amended, restated, supplemented or otherwise modified in accordance with
the terms of this Agreement; provided that such New Subordinated Notes shall at
all times be subordinated in respect of the Obligations on subordination terms
contained in the New Subordinated Note Indenture; provided, further, that the
term "New Subordinated Notes" shall include any notes or instruments exchanged
for then outstanding New Subordinated Notes pursuant to the New Subordinated
Note Indenture.
"Non-Utilization Fee" shall have the meaning provided in Section
2.15(c).
"Note" means a Term Note or a Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section
2.3(a).
"Notice of Conversion or Continuation" shall have the meaning provided
in Section 2.9(b).
"Obligations" shall mean all obligations, liabilities and indebtedness
of every kind, nature and description of the Borrower and the other Loan Parties
from time to time owing to the Agent or any Lender or any Indemnitee under or in
connection with this Agreement or any other Loan Document, whether direct or
indirect, primary or secondary, joint or several, absolute or contingent, due or
to become due, now existing or hereafter arising and however acquired and shall
include, without limitation, all principal and interest on the Loans and, to the
extent chargeable under any Loan Document, all charges, expenses, fees and
attorney's fees.
20
26
"Original Credit Agreement" shall mean that certain Second Amended and
Restated Credit Agreement dated as of the Second A&R Closing Date, among the
Borrower, the lenders party thereto and Paribas, as Agent, as amended prior to
the date hereof.
"Participant" shall have the meaning provided in Section 10.4(b).
"Paydown Amount" shall have the meaning provided in Section 2.12(b).
"Paydown Condition" shall mean the point in time at which the Borrower
shall have prepaid the outstanding Loans (and such Loans and all Commitments in
connection therewith shall have been permanently reduced) in the aggregate
amount of $75,000,000 with the Net Proceeds of Asset Dispositions of Restaurants
occurring on or after the date hereof in accordance with the provisions of
Section 2.12(a)(ii)(B).
"Payment Date" shall mean the fifteenth day of each March, June,
September and December of each year.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any Acquisition by the Borrower or
any of its Subsidiaries that has been approved by the board of directors (or
other governing body, if applicable) of the Person which is the subject of such
Acquisition so long as the Person acquired in connection therewith is engaged
primarily in, or the assets or business acquired in connection therewith relate
primarily to, the food service business.
"Permitted Redemption" shall mean the redemption and repurchase on or
after October 23, 1998 by the Borrower of Convertible Subordinated Notes for a
purchase price not to exceed $85,000,000 in the aggregate, provided that (i) the
purchase price paid by the Borrower for such Convertible Subordinated Notes
shall be made at a discount equal to no less than 15% of the par value of such
Convertible Subordinated Notes in the aggregate, (ii) no redemption or
repurchase shall occur on or after July 23, 1999 and (iii) any such Convertible
Subordinated Notes that are redeemed and repurchased shall be delivered to the
"trustee" under the Convertible Subordinated Note Indenture for cancellation and
shall not be reissued.
"Permitted Restaurant Acquisition" shall mean a Permitted Acquisition
of a Carl's Jr. or a Hardee's Restaurant by the Borrower or any of its
Subsidiaries from a franchisee.
"Permitted Subordinated Debt" shall mean Indebtedness of the Borrower
or any Subsidiary of the Borrower incurred after the Second A&R Closing Date,
(A) with respect to which no principal payments are due prior to the date which
is one year and one day after the Final Maturity Date and (B) which is
subordinated as to exercise of remedies and in right of
21
27
payment to the Borrower's Obligations and such Subsidiary's Obligations,
respectively, under the Loan Documents on, and is otherwise subject to, terms
and conditions (including, without limitation, terms in respect of maturities,
covenants, defaults and remedies and interest rates) approved in writing by the
Agent and in any event shall not include Indebtedness issued pursuant to the
Subordinated Notes.
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.
"Plan" means any employee benefit plan covered by Title IV of ERISA,
the funding requirements of which:
(i) were the responsibility of the Borrower or a member of its
ERISA Controlled Group at any time within the six years immediately
preceding the Second A&R Closing Date,
(ii) are currently the responsibility of the Borrower or a
member of its ERISA Controlled Group, or
(iii) hereafter become the responsibility of the Borrower or a
member of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
"Prepayment" shall have the meaning provided in Section 7.10.
"Pro Rata Share" as to any Lender shall mean:
(a) with respect to all payments, computations and determinations
relating to the Term Loan Pro Rata Share or the Term Loan of any Lender, the
percentage obtained by dividing (i) the outstanding principal balance of such
Lender's Term Loan by (ii) the aggregate outstanding principal balance of the
Term Loans;
(b) with respect to all payments, computations and determinations
relating to the Revolving Loan Commitment or the Revolving Loans of any Lender,
or such Lender's interest in Letters of Credit (including, without limitation,
determinations of the commitment fee under Section 2.15(b) and Letter of Credit
fees under Section 3.2), the percentage obtained by dividing (i) such Lender's
Revolving Loan Commitment (or the aggregate outstanding principal balance of
such Lender's Revolving Loans and all L/C Obligations in which such Lender has
an interest, if the Revolving Loan Commitments have been terminated pursuant to
the terms of this Agreement) by (ii) the Total Revolving Loan Commitment (or the
aggregate outstanding
22
28
principal balance of the Revolving Loans and all L/C Obligations, if the
Revolving Loan Commitments have been terminated pursuant to the terms of this
Agreement); and
(c) for all other purposes with respect to each Lender, the percentage
obtained by dividing (i) the sum of (A) the outstanding principal balance of
such Lender's Term Loan and (B) such Lender's Revolving Loan Commitment (or the
aggregate outstanding principal balance of such Lender's Revolving Loans and all
L/C Obligations in which such Lender has an interest, if the Revolving Loan
Commitments have been terminated pursuant to the terms of this Agreement) by
(ii) the sum of (A) the aggregate outstanding principal balance of the Term
Loans and (B) the Total Revolving Loan Commitment (or the aggregate outstanding
principal balance of the Revolving Loans and all L/C Obligations, if the
Revolving Loan Commitments have been terminated pursuant to the terms of this
Agreement).
"Purchasing Lenders" shall have the meaning provided in Section
10.4(d).
"Rate Hedging Obligations" shall mean any and all obligations of any
Loan Party to any Interest Rate Hedge Provider under Interest Rate Agreements
permitted pursuant to Section 7.14(a).
"Redeemable Stock" means any Equity Interest which, by its terms, or
upon the happening of any event matures, is mandatorily redeemable or
repurchaseable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to one year and one day after the Final Maturity
Date, or is, by its terms or upon the happening of any event, required to be
redeemed or repurchased, redeemable or repurchaseable at the option of the
holder thereof, in whole or in part, at any time prior to one year and one day
after the Final Maturity Date.
"Reduction Amount" shall have the meaning provided in Section 2.12(b).
"Reference Banks" shall mean Paribas and its successors, Wells Fargo
Bank N.A., U.S. National Bank Association and BankBoston, N.A.
"Regulation D" shall mean Regulation D of the Federal Reserve Board as
from time to time in effect and any successor to all or any portion thereof.
"Related Businesses" shall mean any Persons (other than individuals)
engaged primarily in, or the assets or business of which relate primarily to,
the food service business.
"Replacement Lender" shall have the meaning provided in Section 2.22.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA (other than a Reportable Event as to which the provision of 30 days notice
to the PBGC is waived under
23
29
applicable regulations), or is the occurrence of any of the events described in
Section 4068(f) or 4063(a) of ERISA.
"Required Holders" shall mean William P. Foley II and C. Thomas
Thompson.
"Required Lenders" shall mean all Lenders whose Pro Rata Shares, in the
aggregate, are greater than 50%.
"Restaurant" shall mean any quick service restaurant.
"Revolving Loan Commitment" shall mean at any time, for any Lender, (a)
prior to the Facility Conversion Date, the amount set forth opposite such
Lender's name on Schedule 1.1 hereto under the heading "Current Revolving Loan
Commitment," as such amount may be reduced from time to time pursuant to the
terms of this Agreement and (b) on and after the Facility Conversion Date,
"Reduced Revolving Loan Commitment, as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"Revolving Loan Maturity Date" shall mean February 28, 2004.
"Revolving Loans" shall have the meaning provided in Section 2.2(a).
"Revolving Note" shall have the meaning provided in Section 2.5(a).
"Sale and Leaseback Debt" shall mean, at any date, with respect to all
Sale and Leaseback Transactions of the Borrower and its Subsidiaries, the
product of (A) seven (7.0) and (B) the aggregate annual rent expense for the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP for the period of four fiscal quarters commencing on the first day of
the next fiscal quarter attributable to such Sale and Leaseback Transactions,
whether or not actually paid.
"Sale and Leaseback Transactions" shall mean Existing Property Sale and
Leaseback Transactions and New Property Sale and Leaseback Transactions in each
case permitted to be entered into by the Borrower or any of its Subsidiaries
pursuant to Section 7.13(a).
"Second A&R Closing Compliance Certificate" shall have the meaning
provided in Section 4.2(p).
"Second A&R Closing Date" shall mean March 4, 1999.
"Secured Parties" shall have the meaning provided in the Borrower
Security Agreement and the Subsidiary Security Agreement.
24
30
"Security Documents" shall mean and include the Borrower Security
Agreement, the Subsidiary Security Agreement, the Guaranty, the Borrower Pledge
Agreement, the Subsidiary Pledge Agreements and all other security agreements,
pledge agreements, assignments and similar agreements executed in connection
with the Loan Documents.
"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.
"Standby Letter of Credit" shall mean any standby letter of credit
issued by the Issuing Bank pursuant to Section 3 and which is not a Trade Letter
of Credit.
"Subordinated Debt Documents" shall mean the Subordinated Notes and the
Subordinated Note Indentures.
"Subordinated Guarantor" shall mean each Subsidiary of the Borrower
that guarantees any Indebtedness or other obligations of the Borrower or any
Subsidiary of the Borrower under or with respect to any of the New Subordinated
Notes.
"Subordinated Note Indentures" shall mean the Convertible Subordinated
Note Indenture and the New Subordinated Note Indenture.
"Subordinated Notes" shall mean the Convertible Subordinated Notes and
the New Subordinated Notes.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned or controlled by such Person
directly
25
31
or indirectly through one or more Subsidiaries and (ii) any partnership, limited
liability company, association, joint venture or other entity in which such
Person, directly or indirectly through one or more Subsidiaries, is either a
general partner or has a more than 50% equity interest at the time. Unless
otherwise expressly provided, all references to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Pledge Agreement" shall mean each pledge agreement
substantially in the form of the Amended and Restated Subsidiary Pledge
Agreement set forth as Exhibit F hereto duly executed and delivered to the Agent
by each Subsidiary of the Borrower which owns any equity interest of any Person,
as the same may be amended, restated, modified or supplemented from time to
time.
"Subsidiary Security Agreement" shall mean a security agreement
substantially in the form of the Amended and Restated Subsidiary Security
Agreement set forth as Exhibit G hereto duly executed and delivered to the Agent
by each Subsidiary of the Borrower (other than Immaterial Subsidiaries), as the
same may be amended, restated, modified or supplemented from time to time.
"Surviving Debt" shall have the meaning provided in Section 4.2(r).
"Term Loan" shall have the meaning provided in Section 2.1.
"Term Loan Pro Rata Share" shall mean at any time, for any Lender, the
amount set forth opposite such Lender's name on Schedule 1.1 hereto under the
heading "Term Loan Pro Rata Share," as such amount may be reduced from time to
time pursuant to the terms of this Agreement.
"Term Loan Maturity Date" shall mean February 28, 2004.
"Term Note" shall have the meaning provided in Section 2.5(a).
"Term Loan Paydown" shall have the meaning set forth in Section 2.1.
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan or the
treatment of an amendment to an ERISA Plan as a termination under ERISA, or
(iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate an ERISA Plan or to appoint a trustee to administer any ERISA Plan.
"Total Commitment" shall mean, at any time, the sum of the Commitments
of all of the Lenders at such time.
26
32
"Total Revolving Loan Commitment" shall have the meaning set forth in
Section 2.2(a).
"Total Term Loan Pro Rata Share" shall mean the aggregate principal
amount of the Term Loan Pro Rata Shares, but shall in no event exceed
$200,000,000.
"Trade Letter of Credit" shall mean any Letter of Credit that is issued
pursuant to Section 3 for the benefit of a supplier of inventory to the Borrower
or any of its Subsidiaries to effect payment for such inventory.
"Transaction Costs" shall mean all costs and expenses paid or payable
by any Loan Party relating to the Transactions including, without limitation,
investment banking fees, financing fees, advisory fees, appraisal fees, legal
fees and accounting fees.
"Transaction Documents" shall mean the Loan Documents and the
Subordinated Debt Documents.
"Transactions" shall mean the Initial Debt Issuance and each of the
transactions contemplated by the Transaction Documents.
"Transferee" shall have the meaning provided in Section 10.4(e).
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
"Unfunded Benefit Liabilities" means with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
"Unused Portion" shall mean at any time with respect to the Revolving
Loans, the amount by which the Total Revolving Loan Commitment in effect at such
time exceeds the sum of (i) the aggregate principal amount of the Revolving
Loans outstanding at such time and (ii) the aggregate amount of L/C Obligations
outstanding at such time.
"Voting Stock" shall mean capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
27
33
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.
Section 2.1 Term Loans. Subject to and upon the terms and conditions
herein set forth, each Lender severally and not jointly agrees that on the
Facility Conversion Date, that portion of such Lender's Revolving Loans
outstanding on the date thereof equal to the Term Loan Pro Rata Share of such
Lender shall be converted to a term loan (each such loan, a "Term Loan"). The
Term Loan of each Lender made on the Facility Conversion Date shall be initially
made as a Base Rate Loan or a Eurodollar Loan (subject to the other terms of
this Agreement, including without limitation, Section 2.3 and Section 2.17) and
may thereafter be maintained at the option of the Borrower as a Base Rate Loan
or a Eurodollar Loan, in accordance with the provisions hereof. Once repaid,
Term Loans may not be reborrowed. Commencing on the first Payment Date following
the second anniversary of the Second A&R Closing Date, the Term Loans shall be
repaid, without premium or penalty, by the Borrower in consecutive quarterly
installments of $4,166,667 (each, a "Term Loan Paydown"). The Term Loans shall
mature on the Term Loan Maturity Date and shall be repaid in full, without
premium or penalty, by the Borrower, on the Term Loan Maturity Date; provided
however, that the last such installment due on the Term Loan Maturity Date shall
be in the amount necessary to repay in full the aggregate unpaid principal
balance of the Term Loans.
Section 2.2 Revolving Loans. (a) Subject to and upon the terms and
conditions herein set forth, each Lender severally and not jointly agrees, at
any time and from time to time on and after the Second A&R Closing Date and
prior to the Revolving Loan Maturity Date, to make revolving loans
(collectively, "Revolving Loans") to the Borrower, which Revolving Loans shall
not exceed in aggregate principal amount at any time outstanding (i) the
Revolving Loan Commitment of such Lender at such time minus (ii) such Lender's
Pro Rata Share of the L/C Obligations at such time; provided that at no time
shall the aggregate outstanding principal amount of the Revolving Loans of all
of the Lenders plus the L/C Obligations of all of the Lenders exceed the Total
Revolving Loan Commitment. The sum of the Revolving Loan Commitments of all of
the Lenders (the "Total Revolving Loan Commitment") as of the date hereof shall
be reduced to $400,000,000. In the event that as of the date hereof, the
aggregate outstanding principal amount of the Revolving Loans exceeds the Total
Revolving Loan Commitment, the Borrower shall immediately prepay the Revolving
Loans in the amount of any such excess. The Revolving Loans of each Lender made
on the Second A&R Closing Date shall be initially made as a Base Rate Loan or a
Eurodollar Loan (subject to the other terms of this Agreement, including without
limitation, Section 2.3 and Section 2.17) and may thereafter be maintained at
the option of the Borrower as a Base Rate Loan or a Eurodollar Loan, in
accordance with the provisions hereof. As of the Facility Conversion Date, the
Total Revolving Loan Commitment shall be automatically reduced by the amount of
the Term Loan.
(b) Revolving Loans may be voluntarily prepaid pursuant to
Section 2.11, and, subject to the other provisions of this Agreement, any
amounts so prepaid may be reborrowed. Each Lender's Revolving Loan Commitment
shall expire, and each Revolving Loan
28
34
shall mature on, the Revolving Loan Maturity Date, without further action on the
part of the Lenders or the Agent.
(c) Each Borrowing of Revolving Loans shall be in the aggregate
minimum amount of $1,000,000 or any integral multiple of $500,000 in excess
thereof.
Section 2.3 Notice of Borrowing. (a) Whenever the Borrower desires to
borrow Revolving Loans hereunder, it shall give the Agent at the Agent's Office
prior to 12:00 Noon, Chicago time, on the Business Day of such borrowing by
telex, facsimile or telephonic notice (promptly confirmed in writing) of each
Base Rate Loan, and at least three Business Days' prior telex, facsimile or
telephonic notice (promptly confirmed in writing) of each Eurodollar Loan to be
made hereunder. Each such notice shall be in the form of Exhibit J hereto (a
"Notice of Borrowing") shall be irrevocable and shall specify (i) the aggregate
principal amount of the requested Revolving Loans, (ii) the date of Borrowing
(which shall be a Business Day), and (iii) whether such Loans shall consist of
Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial
Interest Period to be applicable thereto (provided, that no Eurodollar Loans may
be requested or made when any Default or Event of Default has occurred and is
continuing).
(b) Promptly after receipt of a Notice of Borrowing, the Agent
shall provide each Lender with a copy thereof and inform each Lender as to its
Pro Rata Share of the Loans requested thereunder.
Section 2.4 Disbursement of Funds. (a) No later than 2:00 P.M., Chicago
time, on the date specified in each Notice of Borrowing, each Lender will make
available its Pro Rata Share of the Loans requested to be made on such date, in
U.S. dollars and immediately available funds, at the Agent's Office. After the
Agent's receipt of the proceeds of such Loans, the Agent will make available to
the Borrower by depositing in the Borrower's account at the Agent's Office the
aggregate of the amounts so made available in the type of funds actually
received.
(b) Unless the Agent shall have been notified by any Lender prior
to the date of a Borrowing that such Lender does not intend to make available to
the Agent its portion of the Loans to be made on such date, the Agent may assume
that such Lender has made such amount available to the Agent on such date and
the Agent in its sole discretion may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Lender and the Agent has made
such amount available to the Borrower, the Agent shall be entitled to recover
such corresponding amount on demand from such Lender. If such Lender does not
pay such corresponding amount forthwith upon the Agent's demand therefor, the
Agent shall promptly notify the Borrower and the Borrower shall immediately
repay such corresponding amount to the Agent. The Agent shall also be entitled
to recover from such Lender or the Borrower, as the case may be, interest on
such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to the date
such
29
35
corresponding amount is recovered by the Agent, at a rate per annum equal to the
then applicable rate of interest, calculated in accordance with Section 2.6, for
the respective Loans. Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Lender as a result of any default by
such Lender hereunder. Notwithstanding anything contained herein or in any other
Loan Document to the contrary, the Agent may apply all funds and proceeds of
Collateral available for the payment of any Obligations first to repay any
amount owing by any Lender to the Agent as a result of such Lender's failure to
fund its Loans hereunder.
Section 2.5 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, each Lender's Loans shall be evidenced by (i) in the case
of such Lender's Term Loans, a promissory note (as the same may be amended,
restated, supplemented or otherwise modified from time to time, a "Term Note")
duly executed and delivered by the Borrower substantially in the form of Exhibit
A hereto in a principal amount equal to such Lender's Term Loan with blanks
appropriately completed in conformity herewith and (ii) in the case of such
Lender's Revolving Loans, a promissory note (as the same may be amended,
restated, supplemented or otherwise modified from time to time, a "Revolving
Note") duly executed and delivered by the Borrower substantially in the form of
Exhibit B hereto in a principal amount equal to such Lender's Revolving Loan
Commitment, with blanks appropriately completed in conformity herewith. Each
Note issued to a Lender shall (x) be payable to the order of such Lender, (y) be
dated the date such Note was issued, and (z) mature on the Term Loan Maturity
Date or the Revolving Loan Maturity Date, as the case may be. On or before the
Facility Conversion Date, Lenders, the Agent and the Borrower shall make
appropriate arrangements so that all Revolving Notes held by the Lenders shall
be surrendered to the Borrower for cancellation and replacement Revolving Notes
and new Term Notes in exchange therefor shall be issued to each Lender, in each
case in notional amounts reflecting the results of the Facility Conversion.
(b) Each Lender is hereby authorized, at its option, either (i)
to endorse on the schedule attached to its Revolving Note (or on a continuation
of such schedule attached to such Revolving Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Revolving Loan
evidenced thereby and the date and amount of each principal and interest payment
in respect thereof, or (ii) to record such Revolving Loans and such payments in
its books and records. Such schedule or such books and records, as the case may
be, shall constitute prima facie evidence of the accuracy of the information
contained therein.
Section 2.6 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Revolving Loan that is a Base
Rate Loan from the date of the making of such Revolving Loan until such
Revolving Loan shall be paid in full at a rate per annum which shall be equal to
(i) the Applicable Margin plus (ii) the Base Rate in effect from time to time,
such rate to change as and when the Base Rate changes, such interest to be
computed on the basis of a 365 or 366-day year, as the case may be, and paid for
the actual number of days elapsed, subject to the provisions of clause (c) of
this Section 2.6. The Borrower
30
36
agrees to pay interest in respect of the unpaid principal amount of each Term
Loan that is a Base Rate Loan from the date of the making of such Loan until
such Loan shall be paid in full at a rate per annum which shall be equal to (i)
1.25% plus (ii) the Base Rate in effect from time to time, such rate to change
as and when the Base Rate changes, such interest to be computed on the basis of
a 365 or 366-day year, as the case may be, and paid for the actual number of
days elapsed, subject to the provisions of clause (c) of this Section 2.6.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Revolving Loan that is a Eurodollar Loan from the date
of the making of such Loan until such Loan shall be paid in full at a rate per
annum which shall be equal to the sum of (i) the Applicable Margin plus (ii) the
relevant Eurodollar Rate, such interest to be computed on the basis of a 360-day
year and paid for the actual number of days elapsed, subject to the provisions
of clause (c) of this Section 2.6. The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Term Loan that is a Eurodollar
Loan from the date of the making of such Loan until such Loan shall be paid in
full at a rate per annum which shall be equal to the sum of (i) 2.50% plus (ii)
the relevant Eurodollar Rate, such interest to be computed on the basis of a
360-day year and paid for the actual number of days elapsed, subject to the
provisions of clause (c) of this Section 2.6.
(c) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of all
Loans and, to the extent permitted by law, overdue interest in respect of all
Loans, shall bear interest at a rate per annum (the "Default Rate") equal to (i)
for Revolving Loans, (x) the sum of two percent (2%) plus (y) the Applicable
Margin applicable to Revolving Loans that are Base Rate Loans plus (z) the Base
Rate in effect from time to time, and shall be payable on demand, and (ii) for
Term Loans, the sum of two percent (2%) plus (x) 1.25% plus (y) the Base Rate in
effect from time to time, and shall be payable on demand.
(d) Interest on each Loan shall accrue from and including the
date of the Borrowing thereof to but excluding the date of any repayment thereof
(provided that any Loan borrowed and repaid on the same day shall accrue one
day's interest) and shall be payable (i) in respect of each Base Rate Loan,
quarterly in arrears on each Payment Date, (ii) in respect of each Eurodollar
Loan, on the last day of each Interest Period applicable to such Loan and, in
the case of an Interest Period of six months, on the date occurring three months
from the first day of such Interest Period and on the last day of such Interest
Period, and (iii) in the case of all Loans, on any prepayment or conversion (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand. Each determination by the Agent
of an interest rate hereunder shall, except for manifest error, be final,
conclusive and binding for all purposes.
(e) Each Reference Bank agrees to furnish to the Agent timely
information for the purpose of determining each Eurodollar Base Rate. If any one
or more of the
31
37
Reference Banks shall not furnish such timely information to the Agent for the
purpose of determining any such interest rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the remaining
Reference Banks. The Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.6(b), and the rate, if any, furnished by each Reference Bank for the
purpose of determining the interest rate under Section 2.6(b).
(f) If fewer than two Reference Banks furnish timely information
to the Agent for determining the Eurodollar Base Rate for any Eurodollar Loan,
(i) the Agent shall forthwith notify the Borrower and
the Lenders that the interest rate cannot be determined for such
Eurodollar Loan,
(ii) each such Eurodollar Loan will automatically, on
the last day of the then existing Interest Period therefor, convert
into a Base Rate Loan (or if such Loan is then a Base Rate Loan, will
continue as a Base Rate Loan), and
(iii) the obligation of the Lenders to make, or to
convert Loans into, Eurodollar Loans shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances
causing suspension no longer exist.
Section 2.7 Interest Periods. (a) The Borrower shall, in each Notice of
Borrowing or Notice of Conversion or Continuation in respect of the making of,
conversion into or continuation of a Eurodollar Loan, select the interest period
(each an "Interest Period") applicable to such Eurodollar Loan, which Interest
Period shall, at the option of the Borrower, be either a one-month, two-month,
three-month or six-month period, provided that:
(i) the initial Interest Period for any Eurodollar
Loan shall commence on the date of the making of such Loan (including
the date of any conversion from a Base Rate Loan) and each Interest
Period occurring thereafter in respect of such Loan shall commence on
the date on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day, provided, however, that if any
Interest Period would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the
next preceding Business Day;
32
38
(iii) if any Interest Period begins on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) no Interest Period in respect of any Revolving
Loan or any Term Loan shall extend beyond the Revolving Loan Maturity
Date or the Term Loan Maturity Date, as the case may be; and
(v) no Interest Period in respect of a Term Loan
shall extend beyond any date upon which a repayment of the Term Loans
is required to be made pursuant to Section 2.1 unless the aggregate
principal amount of Term Loans which are Base Rate Loans or which have
Interest Periods which will expire on or before such date is equal to
or in excess of the amount of the Term Loan repayment required to be
made on such date.
(b) If upon the expiration of any Interest Period, the Borrower
has failed to elect a new Interest Period to be applicable to the respective
Eurodollar Loan as provided above, the Borrower shall be deemed to have elected
to convert such Eurodollar Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
Section 2.8 Minimum Amount of Eurodollar Loans. All borrowings,
conversions, continuations, payments, prepayments and selection of Interest
Periods hereunder shall be made or selected so that, after giving effect
thereto, (i) the aggregate principal amount of any Borrowing comprised of
Eurodollar Loans shall not be less than $3,000,000 or an integral multiple of
$500,000 in excess thereof, and (ii) there shall be no more than twenty (20)
Borrowings comprised of Eurodollar Loans outstanding at any time.
Section 2.9 Conversion or Continuation. (a) Subject to the other
provisions hereof, the Borrower shall have the option (i) to convert at any time
all or any part of outstanding Base Rate Loans which comprise part of the same
Borrowing to Eurodollar Loans, (ii) to convert all or any part of outstanding
Eurodollar Loans which comprise part of the same Borrowing to Base Rate Loans,
on the expiration date of the Interest Period applicable thereto, or (iii) to
continue all or any part of outstanding Eurodollar Loans which comprise part of
the same Borrowing as Eurodollar Loans for an additional Interest Period, on the
expiration of the Interest Period applicable thereto; provided that no Loan may
be continued as, or converted into, a Eurodollar Loan when any Default or Event
of Default has occurred and is continuing.
(b) In order to elect to convert or continue a Loan under this
Section 2.9, the Borrower shall deliver an irrevocable notice thereof (a "Notice
of Conversion or Continuation") to the Agent no later than 12:00 Noon, Chicago
time, (i) on the Business Day of the proposed conversion date in the case of a
conversion to a Base Rate Loan and (ii) at least three
33
39
Business Days in advance of the proposed conversion or continuation date in the
case of a conversion to, or a continuation of, a Eurodollar Loan. A Notice of
Conversion or Continuation shall specify (w) the requested conversion or
continuation date (which shall be a Business Day), (x) the amount and Facility
of the Loan to be converted or continued, (y) whether a conversion or
continuation is requested, and (z) in the case of a conversion to, or a
continuation of, a Eurodollar Loan, the requested Interest Period. Promptly
after receipt of a Notice of Conversion or Continuation under this Section
2.9(b), the Agent shall provide each Lender with a copy thereof.
Section 2.10 Voluntary Reduction of Commitments. Upon at least three
Business Day's prior irrevocable written notice (or telephonic notice promptly
confirmed in writing) to the Agent (which notice the Agent shall promptly
transmit to each of the Lenders), the Borrower shall have the right, without
premium or penalty, to permanently reduce each Lender's Pro Rata Share of all or
part of the Total Revolving Loan Commitment, provided that any such partial
reduction shall be in the minimum aggregate amount of $1,000,000 or any integral
multiple of $500,000 in excess thereof.
Section 2.11 Voluntary Prepayments. The Borrower shall have the right
to prepay the Loans in whole or in part from time to time on the following terms
and conditions: (i) the Borrower shall give the Agent written notice (or
telephonic notice promptly confirmed in writing), which notice shall be
irrevocable, of its intent to prepay the Loans, at least three Business Days
prior to a prepayment of Eurodollar Loans and on the Business Day of a
prepayment of Base Rate Loans, which notice shall specify the amount of such
prepayment and what Types of Loans and which Facilities are to be prepaid and,
in the case of Eurodollar Loans, the specific Borrowing(s) pursuant to which
made, and which notice the Agent shall promptly transmit to each of the Lenders,
(ii) each prepayment shall be in an aggregate principal amount of $1,000,000 or
any integral multiple of $500,000 in excess thereof and (iii) partial
prepayments of the Term Loans shall be applied to the scheduled installments of
principal thereof in the inverse order of maturity; provided that if any
prepayment of Eurodollar Loans is made pursuant to this Section 2.11 on a day
which is not the last day of the Interest Period applicable thereto, the
Borrower shall pay to each Lender all amounts due in connection with such
prepayment pursuant to Section 2.17.
Section 2.12 Mandatory Prepayments.
(a)(i) If the Borrower and/or its Subsidiaries shall cease for
any reason to own and operate (whether or not the Borrower or any such
Subsidiary shall own or lease the real property on which any such
Restaurant is located) (A) less than 1800 Restaurants or (B) less than
425 Carl's Jr. Restaurants, the Borrower shall prepay the outstanding
Loans in an amount (without duplication) equal to 50% of the amount of
Net Sale Proceeds with respect to any Asset Disposition of a Restaurant
or Restaurants (other than any Restaurant or Restaurants sold in an
Asset Disposition described in Section 2.12(a)(ii)(B) below) that
results in such event or any subsequent Asset Disposition of a
Restaurant occurring when the number of Restaurants owned and operated
by the
34
40
Borrower and its Subsidiaries is less than 1800 Restaurants or less
than 425 Carl's Jr. Restaurants, within 10 days of the date on which
the event giving rise to such Net Sale Proceeds occurs (a "50%
Mandatory Prepayment"), in accordance with the provisions of Section
2.13.
(ii) (A) Upon the consummation of any Asset Disposition after
March 1, 1998 (excluding any Sale and Leaseback Transaction of the
Borrower or any of its Subsidiaries permitted pursuant to Section
7.13(a) and any Asset Dispositions subject to Section 2.12(a)(ii)(B)
below, and including any Asset Disposition giving rise to a 50%
Mandatory Prepayment pursuant to Section 2.12(a)(i)), or upon receipt
by any Loan Party of any Liquidating Distribution, in each case within
three hundred sixty (360) days after the Borrower or any of its
Subsidiaries receives any Net Sale Proceeds with respect to any such
Asset Disposition or Liquidating Distribution after March 1, 1998, the
Borrower shall prepay the outstanding Loans in an amount equal to 100%
of the amount of such Net Sale Proceeds (or, in the event that a 50%
Mandatory Prepayment has occurred with respect to the subject of such
Asset Disposition, in an amount equal to the difference between the
amount of such Net Sale Proceeds and the amount of such 50% Mandatory
Prepayment), in accordance with the provisions of Section 2.13;
provided, however, that such Net Sale Proceeds which the Borrower or
such Subsidiary shall, within three hundred sixty (360) days after the
receipt thereof, use to reinvest in the business of the Borrower or its
Subsidiaries in non-current assets as permitted by the terms of this
Agreement, shall not be included in determining the aggregate Net Sale
Proceeds pursuant to this sentence for such period; provided further
that, if an Event of Default shall have occurred and be continuing on
the date such Net Sale Proceeds are received by the Borrower or any of
its Subsidiaries or at any time during such applicable three hundred
sixty day period, then the Borrower shall prepay the outstanding Loans
in an amount equal to 100% of such Net Sale Proceeds (or, if any
portion of such proceeds shall have been reinvested prior to the
occurrence of such Event of Default, 100% of such remaining amount of
Net Sale Proceeds not so reinvested) on the later of the date such Net
Sale Proceeds are received by the Borrower or any of its Subsidiaries
or the date of the occurrence of such Event of Default in accordance
with the provisions of Section 2.13.
(B) Upon the consummation of any Asset Disposition of any Restaurant or
Restaurants occurring on or after the date hereof and prior to the occurrence of
the Paydown Condition, within ten (10) days after the Borrower or any of its
Subsidiaries receives any Net Sale Proceeds with respect to any such Asset
Disposition, the Borrower shall prepay the outstanding Loans in an amount equal
to 100% of the amount of such Net Sale Proceeds, in accordance with the
provisions of Section 2.13; provided, however, that the maximum amount of
prepayments which the Borrower shall be obligated to make pursuant to this
Section 2.12(a)(ii)(B) shall be $75,000,000.
35
41
(b) Upon the consummation of any Asset Disposition which
constitutes the sale portion of a Sale and Leaseback Transaction permitted
pursuant to Section 7.13(a) after March 1, 1998, (1) within thirty (30) days
after the Borrower or any of its Subsidiaries receives any Net Sale Proceeds
with respect to any such Asset Disposition that constitutes an Existing Property
Sale and Leaseback Transaction, the Borrower shall prepay the outstanding Loans
in an amount equal to the lesser of (x) 25% of the amount of such Net Sale
Proceeds (without giving effect to any amounts reinvested in the business of the
Borrower or its Subsidiaries during such 30 day period, notwithstanding anything
to the contrary contained herein) and (y) the then outstanding Obligations under
the Loans (the "Paydown Amount") in accordance with the provisions of Section
2.13 and (2) within five hundred forty (540) days after the Borrower or any of
its Subsidiaries receives any Net Sale Proceeds with respect to any Asset
Disposition, the Borrower shall prepay the outstanding Loans in an amount equal
to the lesser of (x) 100% of such Net Sale Proceeds and (y) the then outstanding
Obligations under the Loans (in each case, less the Paydown Amount to the extent
paid) (the "Reduction Amount"), in accordance with the provisions of Section
2.13; provided, however, that such Net Sale Proceeds which the Borrower or such
Subsidiary shall, within five hundred forty (540) days after the receipt
thereof, use to reinvest in the business of the Borrower or its Subsidiaries in
non-current assets as permitted by the terms of this Agreement, shall not be
included in determining the aggregate Net Sale Proceeds with respect to the sale
portion of Sale and Leaseback Transactions permitted pursuant to Section 7.13(a)
for such period; provided further that, if an Event of Default shall have
occurred and be continuing on the date such Net Sale Proceeds are received by
the Borrower or any of its Subsidiaries or at any time during such applicable
five hundred forty (540) day period, then the Borrower shall prepay the
outstanding Loans in an amount equal to 100% of such Net Sale Proceeds (or, if
any portion of such proceeds shall have been reinvested prior to the occurrence
of such Event of Default, 100% of such remaining amount of Net Sale Proceeds not
so reinvested) on the later of the date such Net Sale Proceeds are received by
the Borrower or any of its Subsidiaries or the date of the occurrence of such
Event of Default in accordance with the provisions of Section 2.13.
(c) On each date on which the Borrower or any of its Subsidiaries
receives any Net Equity Proceeds, the Borrower shall prepay the outstanding
Loans in an amount equal to (i) 50% of such Net Equity Proceeds if both (A) the
Leverage Ratio as of the end of the fiscal quarter immediately preceding such
date as to which financial statements are required to have been delivered
pursuant to Section 6.1(a) and 6.1(b), as applicable, on a pro forma basis after
giving effect to any prepayment made by the Borrower pursuant to clause (ii)(A)
of this Section 2.12(b), is less than 2.0 to 1.0 and (B) no Default or Event of
Default has occurred or is continuing as a result of the Borrower's failure to
deliver any financial statement or Compliance Certificate as and when required
pursuant to Section 6.1(a), 6.1(b) or 6.1(e), as applicable and (ii) 75% of such
Net Equity Proceeds if either (A) the Leverage Ratio as of the end of the fiscal
quarter immediately preceding such date as to which financial statements are
required to have been delivered pursuant to Section 6.1(a) or 6.1(b), as
applicable, is greater than or equal to 2.0 to 1.0 (but only until the Leverage
Ratio is less than 2.0 to 1.0, at which time clause (i) of this
36
42
Section 2.12(b) shall apply (unless clause (ii)(B) of this Section 2.12(b) shall
then be applicable)) or (B) any Default or Event of Default has occurred and is
continuing as a result of the Borrower's failure to deliver any financial
statement or Compliance Certificate as and when required pursuant to Section
6.1(a), 6.1(b) or 6.1(e), as applicable, in each case in accordance with the
provisions of Section 2.13.
(d) On each date on which the Borrower or any of its Subsidiaries
receives any Net Debt Proceeds, becomes or remains liable with respect to
Indebtedness with respect to Capitalized Leases in excess of $130,000,000 in the
aggregate at any one time outstanding for the Borrower and its Subsidiaries, or
assumes any Indebtedness in connection with a Permitted Acquisition pursuant to
Section 7.2(l), the Borrower shall prepay the outstanding Loans in an amount
equal to 100% of such Net Debt Proceeds, 100% of the amount by which the
aggregate amount of Indebtedness of the Borrower and its Subsidiaries with
respect to Capitalized Leases exceeds $130,000,000 on such date or 100% of the
aggregate principal amount of any such Indebtedness assumed in connection with a
Permitted Acquisition, respectively, in accordance with the provisions of
Section 2.13.
(e) On each day on which the Total Revolving Loan Commitment is
reduced pursuant to Section 2.10 the Borrower shall prepay the Revolving Loans
to the extent, if any, that the outstanding principal amount of the Revolving
Loans exceeds such reduced Total Revolving Loan Commitment.
(f) If at any time and for any reason the aggregate principal
amount of Revolving Loans plus the L/C Obligations then outstanding are greater
than the Total Revolving Loan Commitment, the Borrower shall immediately prepay
the Revolving Loans in an amount equal to such excess. In addition, to the
extent at any time and for any reason, the Total Revolving Loan Commitment minus
the aggregate principal amount of Revolving Loans then outstanding, is less than
the amount of L/C Obligations outstanding at such time, the Borrower shall Cash
Collateralize the L/C Obligations in an amount equal to the amount by which such
L/C Obligations exceed the amount equal to the difference between the Total
Revolving Loan Commitment and such aggregate principal amount of Revolving
Loans.
(g) Nothing in this Section 2.12 shall be construed to constitute
the Lenders' consent to any transactions referred to in Sections 2.12(a),
2.12(b), 2.12(c) or 2.12(d) above which transaction is not expressly permitted
by the terms of this Agreement.
Section 2.13 Application of Prepayments. (a) All prepayments of the
Loans required by clauses (a) through (d) of Section 2.12 shall be applied
first, to prepay the Term Loans until such Term Loans shall have been repaid in
full, together with accrued and unpaid interest thereon, second, to prepay the
Revolving Loans until such Revolving Loans shall have been repaid in full,
together with accrued and unpaid interest thereon, and third, to Cash
Collateralize the then outstanding Letters of Credit and, fourth, to all other
outstanding Obligations. If (i) at the time of any prepayment of the principal
amount of the Revolving Loans
37
43
pursuant to the preceding sentence (other than any prepayment required by
Section 2.12(a)(ii)(B)) either (A) the Leverage Ratio as of the end of the
fiscal quarter immediately preceding such date as to which financial statements
are required to have been delivered pursuant to Section 6.1(a) or 6.1(b), as
applicable, is greater than or equal to 2.0 or (B) any Default has occurred and
is continuing as a result of the Borrower's failure to deliver any financial
statement or Compliance Certificate as and when required pursuant to Section
6.1(a), 6.1(b) or 6.1(e), as applicable, then simultaneously with any prepayment
of the principal amount of the Revolving Loans pursuant to the preceding
sentence, each Lender's Revolving Loan Commitment shall be permanently reduced
by such Lender's Pro Rata Share of such prepayment and, (ii) at the time of any
prepayment of the principal amount of the Revolving Loans pursuant to the
preceding sentence (other than any prepayment required by Section
2.12(a)(ii)(B)), both (A) the Leverage Ratio as of the end of the fiscal quarter
immediately preceding such date as to which financial statements are required to
have been delivered pursuant to Section 6.1(a) and 6.1(b), as applicable, is
less than 2.0 and (B) no Default has occurred or is continuing as a result of
the Borrower's failure to deliver any financial statement or Compliance
Certificate as and when required pursuant to Section 6.1(a), 6.1(b) or 6.1(e),
as applicable, then, any Revolving Loans repaid pursuant to the preceding
sentence may be reborrowed, subject to the other terms of this Agreement.
(b) Simultaneously with any prepayment of the principal amount of
Revolving Loans pursuant to Section 2.12(a)(ii)(B), each Lender's Revolving Loan
Commitment shall be permanently reduced by such Lender's Pro Rata Share of such
prepayment. All prepayments of the Term Loans required by clauses (a) through
(d) of Section 2.12 shall be applied pro rata to the scheduled installments of
principal thereof.
Section 2.14 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Notes shall be made to the Agent for the account of the Lenders entitled
thereto not later than 2:00 P.M., Chicago time, on the date when due and shall
be made in lawful money of the United States of America in immediately available
funds at the Agent's Office, and any funds received by the Agent after such time
shall, for all purposes hereof (including the following sentence), be deemed to
have been paid on the next succeeding Business Day. Except as otherwise
specifically provided herein, the Agent shall thereafter cause to be distributed
on the date of receipt thereof to each Lender in like funds its Pro Rata Share
of payments so received.
(b) Whenever any payment to be made hereunder or under any Note
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable at the applicable rate
during such extension.
38
44
(c) All payments made by the Borrower hereunder and under the
other Loan Documents shall be made irrespective of, and without any reduction
for, any setoff or counterclaims.
Section 2.15 Fees. (a) The Borrower agrees to pay the fees in the
amounts and on the dates specified in the Fee Letters.
(b) The Borrower agrees to pay to the Agent for the account of
each Lender a commitment fee (the "Commitment Fee") for each day computed at the
per annum rate equal to the Applicable Margin (determined for the Commitment Fee
in accordance with the definition of Applicable Margin) multiplied by each such
Lender's Pro Rata Share of the average daily Unused Portion, from and including
the Second A&R Closing Date to the Revolving Loan Maturity Date.
(c) Upon the consummation of any Sale and Leaseback Transaction
by the Borrower or any of its Subsidiaries pursuant to Section 7.13(a), in the
event that the Borrower uses less than seventy-five percent (75%) of the
proceeds of any such Sale and Leaseback Transaction to prepay the Revolving
Loans and to permanently reduce each Lender's Revolving Loan Commitment pursuant
to Section 2.13 hereof within 30 days of receipt of such proceeds by the
Borrower or any such Subsidiary of the Borrower, the Borrower agrees to pay to
the Agent for the account of each Lender a non-utilization fee (the
"Non-Utilization Fee"). The Non-Utilization Fee for each day shall be computed
at the rate per annum of 0.125% multiplied by each such Lender's Pro Rata Share
of the Unused Portion; provided that the Non-Utilization Fee shall only be
payable for each quarterly period ending on a Payment Date during which the
average daily Unused Portion exceeds 70% of the Total Revolving Loan Commitment
in effect at such time, and shall be paid in addition to the Commitment Fee.
(d) The Commitment Fee shall accrue from and including the Second
A&R Closing Date to but excluding the Revolving Loan Maturity Date. The
Non-Utilization Fee shall accrue for each quarterly period as described in
clause (c) of this Section 2.15 until the Revolving Loan Maturity Date. Accrued
fees under this Section 2.15 shall be payable on the Second A&R Closing Date and
payable quarterly in arrears on each Payment Date, commencing April 15, 1999,
and on the Revolving Loan Maturity Date or such earlier date, if any, on which
the Revolving Loan Commitment shall terminate in accordance with the terms
hereof. The Commitment Fee, the Non-Utilization Fee and all other fees due under
the Loan Documents (collectively the "Fees") shall be calculated on the basis of
a 360-day year for the actual number of days elapsed.
Section 2.16 Interest Rate Unascertainable, Increased Costs,
Illegality. (a) In the event that the Agent, in the case of clause (i) below, or
any Lender, in the case of clauses (ii) and (iii) below, shall have determined
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
39
45
(i) on any date for determining the Eurodollar Rate for any
Interest Period, that by reason of any changes arising after the Second
A&R Closing Date affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of the Eurodollar
Rate; or
(ii) at any time, that the relevant Eurodollar Rate applicable
to any of its Loans shall not represent the effective pricing to such
Lender for funding or maintaining a Eurodollar Loan, or such Lender
shall incur increased costs or reductions in the amounts received or
receivable hereunder in respect of any Eurodollar Loan, in any such
case because of (x) any change since the Second A&R Closing Date in any
applicable law or governmental rule, regulation, guideline or order or
any interpretation thereof and including the introduction of any new
law or governmental rule, regulation, guideline or order (such as for
example but not limited to a change in official reserve requirements,
but, in all events, excluding reserves required under Regulation D of
the Federal Reserve Board to the extent included in the computation of
the Eurodollar Rate), whether or not having the force of law and
whether or not failure to comply therewith would be unlawful, and/or
(y) other circumstances affecting such Lender or the interbank
Eurodollar market or the position of such Lender in such market; or
(iii) at any time, that the making or continuance by it of any
Eurodollar Loan has become unlawful by compliance by such Lender in
good faith with any law or governmental rule, regulation, guideline or
order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) or has become
impracticable as a result of a contingency occurring after the Second
A&R Closing Date which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, the Agent or such Lender shall, promptly after
making such determination, give notice (by telephone promptly confirmed in
writing) to the Borrower and (if applicable) the Agent of such determination
(which notice the Agent shall promptly transmit to each of the other Lenders).
Thereafter (x) in the case of clause (i) above, the Borrower's right to request
Eurodollar Loans shall be suspended, and any Notice of Borrowing or Notice of
Conversion or Continuation given by the Borrower with respect to any Borrowing
of Eurodollar Loans which has not yet been made shall be deemed cancelled and
rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower
shall pay to such Lender, upon such Lender's delivery of a written demand
therefor to the Borrower with a copy to the Agent, such additional amounts (in
the form of an increased rate of interest, or a different method of calculating
interest, or otherwise, as such Lender in its sole discretion shall determine)
as shall be required to compensate such Lender for such increased costs or
reduction in amounts received or receivable
40
46
hereunder and (z) in the case of clause (iii) above, the Borrower shall take one
of the actions specified in clause (b) below as promptly as possible and, in any
event, within the time period required by law. The written demand provided for
in clause (y) shall demonstrate in reasonable detail the calculation of the
amounts demanded and shall, absent manifest error, be final and conclusive and
binding upon all of the parties hereto.
(b) In the case of any Eurodollar Loan or requested Eurodollar
Loan affected by the circumstances described in clause (a)(ii) above, the
Borrower may, and in the case of any Eurodollar Loan affected by the
circumstances described in clause (a)(iii) above the Borrower shall, either (i)
if any such Eurodollar Loan has not yet been made but is then the subject of a
Notice of Borrowing or a Notice of Conversion or Continuation, be deemed to have
cancelled and rescinded such notice, or (ii) if any such Eurodollar Loan is then
outstanding, require the affected Lender to convert each such Eurodollar Loan
into a Base Rate Loan at the end of the applicable Interest Period or such
earlier time as may be required by law, in each case by giving the Agent notice
(by telephone promptly confirmed in writing) thereof on the Business Day that
the Borrower was notified by the Lender pursuant to clause (a) above; provided,
however, that all Lenders whose Eurodollar Loans are affected by the
circumstances described in clause (a) above shall be treated in the same manner
under this clause (b).
(c) In the event that the Agent determines at any time following
its giving of notice based on the conditions described in clause (a)(i) above
that none of such conditions exist, the Agent shall promptly give notice thereof
to the Borrower and the Lenders, whereupon the Borrower's right to request
Eurodollar Loans from the Lenders and the Lenders' obligation to make Eurodollar
Loans shall be restored.
(d) In the event that a Lender determines at any time following
its giving of a notice based on the conditions described in clause (a)(iii)
above that none of such conditions exist, such Lender shall promptly give notice
thereof to the Borrower and the Agent, whereupon the Borrower's right to request
Eurodollar Loans from such Lender and such Lender's obligation to make
Eurodollar Loans shall be restored.
Section 2.17 Funding Losses. The Borrower shall compensate each Lender,
upon such Lender's delivery of a written demand therefor to the Borrower, with a
copy to the Agent (which demand shall set forth the basis for requesting such
amounts and shall, absent manifest error, be final and conclusive and binding
upon all of the parties hereto), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by such Lender in connection with the liquidation or reemployment of
deposits or funds required by it to make or carry its Eurodollar Loans), that
such Lender sustains: (i) if for any reason (other than a default by such
Lender) a Borrowing of, or conversion from or into, or a continuation of,
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion or Continuation (whether or not rescinded,
cancelled or withdrawn or deemed rescinded, cancelled or withdrawn, pursuant to
Section 2.16(a) or 2.16(b) or otherwise), (ii) if
41
47
any prepayment or repayment (including, without limitation, payment after
acceleration) or conversion of any of its Eurodollar Loans occurs on a date
which is not the last day of the Interest Period applicable thereto, (iii) if
any prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by the Borrower, or (iv) as a consequence of any
default by the Borrower in repaying its Eurodollar Loans or any other amounts
owing hereunder in respect of its Eurodollar Loans when required by the terms of
this Agreement. Calculation of all amounts payable to a Lender under this
Section 2.17 shall be made on the assumption that such Lender has funded its
relevant Eurodollar Loan through the purchase of a Eurodollar deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of such
Eurodollar Loan with a maturity equivalent to the Interest Period applicable to
such Eurodollar Loan, and through the transfer of such Eurodollar deposit from
an offshore office of such Lender to a domestic office of such Lender in the
United States of America, provided that each Lender may fund its Eurodollar
Loans in any manner that it in its sole discretion chooses and the foregoing
assumption shall only be made in order to calculate amounts payable under this
Section 2.17.
Section 2.18 Increased Capital. If any Lender shall have determined
that compliance with any applicable law, rule, regulation, guideline, request or
directive (whether or not having the force of law) of any governmental
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital or assets of such Lender or any
Person controlling such Lender as a consequence of its commitments or
obligations hereunder, then from time to time, upon such Lender's delivering a
written demand therefor to the Agent and the Borrower (with a copy to the
Agent), the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Person for such reduction.
Section 2.19 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority excluding, in the case of the Agent and each Lender, net income and
franchise taxes imposed on the Agent or such Lender by the jurisdiction under
the laws of which the Agent or such Lender is organized or any political
subdivision or taxing authority thereof or therein, or by any jurisdiction in
which such Lender's Domestic Lending Office or Eurodollar Lending Office, as the
case may be, is located or any political subdivision or taxing authority thereof
or therein (all such non-excluded taxes, levies, imposts, deductions, charges or
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or under
the Notes, the amounts so payable to the Agent or such Lender shall be increased
to the extent necessary to yield to the Agent or such Lender (after payment of
all Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the Borrower, as promptly as possible thereafter, the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
42
48
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Taxes when
due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this Section 2.19 shall survive the termination
of this Agreement and the payment of the Notes and all other Obligations.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (including each Purchasing Lender
that becomes a party to this Agreement pursuant to Section 10.4) agrees that,
prior to the first date on which any payment is due to it hereunder, it will
deliver to the Borrower and the Agent (i) two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224 or successor applicable form,
as the case may be, certifying in each case that such Lender is entitled to
receive payments under this Agreement and the Notes payable to it, without
deduction or withholding of any United States federal income taxes, and (ii) an
Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax. Each Lender which delivers to the Borrower and the Agent a Form 1001 or
4224 and Form W-8 or W-9 pursuant to the preceding sentence further undertakes
to deliver to the Borrower and the Agent two further copies of the said letter
and Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or
other manner of certification, as the case may be, on or before the date that
any such letter or form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent letter and form previously
delivered by it to the Borrower, and such extensions or renewals thereof as may
reasonably be requested by the Borrower, certifying in the case of a Form 1001
or 4224 that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes,
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
letter or form with respect to it and such Lender advises the Borrower that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.
Section 2.20 Use of Proceeds. The proceeds of the Loans shall be used
for the Borrower's working capital and general corporate purposes which shall
include, but not be limited to, Restaurant renovations and Permitted
Acquisitions.
Section 2.21 Collateral Security.
(a) As security for the payment of the Obligations, the Borrower
shall cause to be granted to the Agent, for the ratable benefit of the Lenders,
a first priority perfected
43
49
Lien on and security interest in all of the following, whether now or hereafter
existing or acquired subject only to the Liens permitted to be incurred pursuant
to Section 7.3 hereof: (i) all of the shares of capital stock (or other equity
interests of each Subsidiary if such Subsidiary is not a corporation) of each
Subsidiary of the Borrower now or hereafter directly or indirectly owned by the
Borrower and all proceeds thereof, all as more specifically described in the
Borrower Pledge Agreement and the Subsidiary Pledge Agreements; (ii) certain of
the assets of the Borrower and all proceeds thereof, all as more specifically
described in the Borrower Security Agreement; and (iii) certain of the assets of
each Subsidiary now or hereafter directly or indirectly owned by the Borrower
and all proceeds thereof, all as more specifically described in the Subsidiary
Security Agreement. To the extent the Agent for the benefit of the Lenders does
not have a first priority perfected security interest in any assets of the
Borrower or any other Loan Party required to be pledged as described above which
is of the type described in the Borrower Security Agreement, the Borrower Pledge
Agreement, the Subsidiary Pledge Agreement or the Subsidiary Security Agreement,
the Borrower will grant, and cause each other Loan Party to grant, to the Agent
for itself and the benefit of the Lenders a first priority perfected security
interest in such assets subject only to the Liens permitted pursuant to Section
7.3 hereof. In connection with any sales of assets permitted hereunder, the
Agent will release and terminate the liens and security interests granted under
the Security Documents with respect to such assets and no further consent of the
Lenders will be required with respect to any such release.
(b) Concurrently with the consummation of any Permitted
Acquisition or any other acquisition of any asset (whether by purchase, merger,
contribution, license or otherwise) which is of the type described in the
Borrower Security Agreement, the Subsidiary Security Agreement, the Borrower
Pledge Agreement or the Subsidiary Pledge Agreement by the Borrower or any
Subsidiary of the Borrower (other than a Subsidiary which, after giving effect
to any such acquisition, is an Immaterial Subsidiary, except as otherwise
provided in Section 6.11 or any Security Document) (an "Acquiring Subsidiary")
or the formation of any new Subsidiary (other than a Subsidiary which, after
giving effect to any such acquisition, is an Immaterial Subsidiary, except as
otherwise provided in Section 6.11 or any Security Document) of the Borrower or
upon an Immaterial Subsidiary ceasing to qualify or be designated as an
Immaterial Subsidiary (conversion from the status of an Immaterial Subsidiary to
a Subsidiary which is not an Immaterial Subsidiary is hereinafter referred to as
a "Conversion"), the Borrower shall
(i) in the case of a Permitted Acquisition of stock or other
equity interest or any other acquisition of stock or other equity
interest (whether by purchase, merger, contribution, license or
otherwise) by the Borrower or any such Acquiring Subsidiary of the
Borrower or the formation of such a new Subsidiary or a Conversion: (A)
deliver or cause to be delivered to the Agent all of the certificates
representing the capital stock (or other equity interest if such equity
interests are represented by a certificate or certificates) of such new
Subsidiary which is being acquired or formed or converted (or
Investment if such Investment is not an Immaterial Investment),
beneficially owned by the Borrower
44
50
or such Acquiring Subsidiary, as additional collateral for the
Obligations, to be held by the Agent in accordance with the terms of
the Borrower Pledge Agreement or a Subsidiary Pledge Agreement, as the
case may be; and (B) cause such Acquiring Subsidiary (which is not
already a party thereto) or new Subsidiary which is being acquired or
formed or converted to deliver to the Agent (1) duly executed
counterpart signature pages to each of the Guaranty, and the Subsidiary
Security Agreement, in the forms attached respectively thereto as Annex
I, together with the authorization to the Agent and the Lenders to
attach such signature pages to the Guaranty and the Subsidiary Security
Agreement, respectively, the effect of which shall be that as of the
date set forth on such signature pages such Acquiring Subsidiary or
such new or converted Subsidiary, as the case may be, shall become a
party to each such agreement and be bound by the terms thereof and any
revisions to the schedules to the Subsidiary Security Agreement
necessary in connection therewith, (2) if such new or converted
Subsidiary owns any capital stock or other equity interest or if such
Acquiring Subsidiary is not already a party to a Subsidiary Pledge
Agreement, a Subsidiary Pledge Agreement duly executed by such new or
converted Subsidiary or such Acquiring Subsidiary, as the case may be,
or if such new or converted Subsidiary owns any copyrights, trademarks,
patents or other intellectual property, such additional Security
Documents as requested by the Agent, (3) such Uniform Commercial Code
financing statements as shall be required to perfect the security
interest of the Agent and the Lenders in the Collateral being pledged
by such new Subsidiary pursuant to the Subsidiary Security Agreement,
and (4) ten (10) days prior written notice of any such Permitted
Acquisition, other acquisition, formation or Conversion.
(ii) in the case of a Permitted Acquisition of assets or any
other acquisition of assets (including equity interests of a Person
other than a corporation) (whether by purchase, merger, contribution,
license or otherwise) by the Borrower or any such Acquiring Subsidiary
which is of the type described in the Borrower Security Agreement or
the Subsidiary Security Agreement or the formation of such a new
Subsidiary or a Conversion into a Person which in either case is not a
corporation, deliver or cause to be delivered by the Borrower or such
Acquiring Subsidiary acquiring such assets or forming such new
Subsidiary, (A) such Uniform Commercial Code financing statements as
shall be required to perfect the security interest of the Agent and the
Lenders in the assets being so acquired, (B) if such assets include
copyrights, trademarks, patents or other intellectual property, such
additional Security Documents as requested by the Agent, (C) any
additional instruments or documents evidencing the security interest of
the Agent reasonably required by the Agent and (D) ten (10) days prior
written notice of any such Permitted Acquisition, other acquisition,
formation or Conversion; and
45
51
(iii) in any case (A) provide such other documentation,
including, without limitation, one or more opinions of counsel
reasonably satisfactory to the Agent, articles of incorporation,
by-laws and resolutions, which in the reasonable opinion of the Agent
is necessary or advisable in connection with such Permitted Acquisition
or formation of such new Subsidiary or other acquisition (whether by
purchase, merger, contribution or otherwise) or Conversion, (B) cause
any newly formed or acquired Immaterial Subsidiary which is or is to
become a Subordinated Guarantor, to execute and deliver a counterpart
to the Guaranty, and (C) if, as a result of the consummation of any
transaction or transactions, there is a significant change in the
information provided by the Borrower on Schedule 5.18, promptly provide
the Agent with a new schedule which reflects the then current corporate
structure of the Borrower and its Subsidiaries certified by an
Authorized Officer of the Borrower.
Section 2.22 Replacement of Certain Lenders. If a Lender ("Affected
Lender") shall have requested compensation from the Borrower under Sections
2.16, 2.18 or 2.19 to recover Taxes or other additional costs incurred by such
Lender which are not being incurred generally by the other Lenders, or delivered
a notice pursuant to Section 2.16(a)(iii) claiming that such Lender is unable to
extend Eurodollar Loans to the Borrower for reasons not generally applicable to
the other Lenders, then, in any such case, so long as no Default or Event of
Default exists, the Borrower may make written demand on such Affected Lender
(with a copy to the Agent) for the Affected Lender to assign, and such Affected
Lender shall assign pursuant to one or more duly executed assignment and
acceptance agreements in substantially the form of Exhibit I thirty (30)
Business Days after the date of such demand, to one or more financial
institutions that comply with the provisions of Section 10.4(c) and 10.4(d) (and
that are reasonably acceptable to the Agent) which the Borrower shall have
engaged for such purpose ("Replacement Lender"), all of such Affected Lender's
rights and obligations under this Agreement and the other Loan Documents
(including its Revolving Loan Commitment, all Loans owing to it, all of its
participation interests in outstanding Letters of Credit, and its obligation to
participate in additional Letters of Credit hereunder) in accordance with
Section 10.4(c) and 10.4(d). Further, with respect to any such assignment, the
Affected Lender shall have concurrently received, in cash, all amounts due and
owing to such Affected Lender hereunder or under any other Loan Document,
including the aggregate outstanding principal amount of the Loans owed to such
Lender, together with accrued interest thereon through the date of such
assignment from the Replacement Lender, amounts payable under Sections 2.16,
2.18 and 2.19 with respect to such Affected Lender and compensation payable
under Section 2.15; provided that upon such Affected Lender's replacement, such
Affected Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.16, 2.17, 2.18, 2.19 and 10.1 accruing
with respect to such Affected Lender prior to the date such Affected Lender is
replaced, as well as to any fees accrued for its account hereunder prior to
being replaced and not yet paid, and shall continue to be obligated under
Section 9.7.
46
52
SECTION 3. LETTERS OF CREDIT.
Section 3.1 Issuance of Letters of Credit, etc. (a) Subject to the
terms and conditions hereof, at any time and from time to time from the Second
A&R Closing Date through the day prior to the Revolving Loan Maturity Date, the
Issuing Bank shall issue such Letters of Credit for the account of the Borrower
or any Subsidiary of the Borrower which is a party to the Guaranty as Borrower
may request by an L/C Application; provided that, giving effect to such Letter
of Credit, (x) the sum of the L/C Obligations then outstanding plus the then
outstanding aggregate principal amount of the Revolving Loans shall not exceed
the Total Revolving Loan Commitment and (y) the aggregate L/C Obligations then
outstanding shall not exceed the L/C Commitment. Unless all the Lenders and the
Issuing Bank otherwise consent in writing, the term of any Letter of Credit
shall not exceed 12 months. No Letter of Credit shall expire by its terms after
the Revolving Loan Maturity Date. No Letter of Credit shall be issued except in
the ordinary course of business of the Borrower or any of its Subsidiaries or in
connection with Permitted Acquisitions with respect to which the conditions set
forth in Section 7.8(f) have been satisfied, each Letter of Credit shall be used
solely (a) to support obligations of the Borrower and its Subsidiaries not
prohibited hereunder, other than Indebtedness for borrowed money (except that
Letters of Credit may support the obligations of the Borrower and its
Subsidiaries in respect of the industrial revenue bond identified on Schedule
7.2), and (b) for the purposes described in the definition of "Trade Letter of
Credit".
(b) The Borrower shall submit the L/C Application for the
Issuance of any Letter of Credit to the Issuing Bank at least five Business Days
prior to the date when required. Upon Issuance of a Letter of Credit, the
Issuing Bank shall promptly notify the Lenders of the amount and terms thereof.
(c) Upon the Issuance of a Letter of Credit, each Lender that has
made a Revolving Loan Commitment shall be deemed to have purchased a pro rata
participation, from the Issuing Bank in an amount equal to that Lender's Pro
Rata Share, in the Letter of Credit. Without limiting the scope and nature of
each Lender's participation in any Letter of Credit, to the extent that the
Issuing Bank has not been reimbursed by Borrower for any payment to a
beneficiary of a Letter of Credit in respect of a drawing under such Letter of
Credit made by the Issuing Bank under any Letter of Credit, each Lender shall,
pro rata according to its Pro Rata Share, reimburse the Issuing Bank promptly
upon demand for the amount of such payment. The obligation of each Lender to so
reimburse the Issuing Bank shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of Borrower to reimburse the Issuing Bank for the amount
of any payment made by the Issuing Bank under any Letter of Credit together with
interest as hereinafter provided.
(d) Upon the making of any payment with respect to any Letter of
Credit by the Issuing Bank, Borrower shall be deemed to have submitted a Notice
of Borrowing for a
47
53
Revolving Loan consisting of a Base Rate Loan in the amount of such payment, and
the Agent shall without notice to or the consent of Borrower cause Revolving
Loans to be made by the Lenders in an aggregate amount equal to the amount paid
by the Issuing Bank on that Letter of Credit, but not exceeding the Total
Revolving Loan Commitment minus the then outstanding principal amount of
Revolving Loans and minus all other then outstanding L/C Obligations, and for
this purpose, the conditions precedent set forth in Section 4 hereof shall not
apply. The proceeds of such Revolving Loans shall be paid to the Issuing Bank to
reimburse it for the payment made by it under the Letter of Credit. Promptly
following any Revolving Loans made under this Section 3.1(d), the Agent shall
notify Borrower thereof.
(e) To the extent that any Loans made pursuant to Section 3.1(d)
are insufficient to reimburse the Issuing Bank in full, Borrower agrees to pay
to the Issuing Bank with respect to each Letter of Credit, within one Business
Day after demand therefor, a principal amount equal to any payment made by the
Issuing Bank under that Letter of Credit, together with interest on such amount
from the date of any payment made by the Issuing Bank through the date of
payment by Borrower at the Default Rate. The principal amount of any such
payment made by Borrower to the Issuing Bank shall be used to reimburse the
Issuing Bank for the payment made by it under the Letter of Credit. Each Lender
that has reimbursed the Issuing Bank pursuant to Section 3.1(d) for its Pro Rata
Share of any payment made by the Issuing Bank under a Letter of Credit shall
thereupon acquire a pro rata participation, to the extent of such reimbursement,
in the claim of the Issuing Bank against Borrower under this Section 3.1(e).
(f) The Issuance of any supplement, modification, amendment,
renewal or extension to or of any Letter of Credit shall be treated in all
respects the same as the Issuance of a new Letter of Credit.
Section 3.2 Letter of Credit Fees. Borrower shall pay (i) a letter of
credit fee to the Agent equal to a per annum rate equal to the then effective
Applicable Margin for Eurodollar Loans times the stated amount of each Standby
Letter of Credit for the term of each such Letter of Credit for the account of
the Lenders who have made Revolving Loan Commitments, according to their
respective Pro Rata Shares, in each case payable quarterly in arrears on each
Payment Date, commencing on March 15, 1999, and (ii) a letter of credit fee to
the Agent equal to 0.50% of the stated amount of each Trade Letter of Credit as
of the date of Issuance thereof, payable for the account of the Lenders who have
made Revolving Loan Commitments, according to their respective Pro Rata Shares,
in each case payable quarterly in arrears on each Payment Date, commencing on
March 15, 1999. Upon (A) the issuance of each Letter of Credit, Borrower shall
also pay to the Agent for the account of the Issuing Bank an amount equal to the
greater of (i) $500 or (ii) 0.125% of the stated amount of such Letter of Credit
as an issuance fee; (B) the amendment of each Letter of Credit, Borrower shall
pay to the Agent for the account of the Issuing Bank the amendment fees, in each
case, as the Issuing Bank normally charges in connection with a Letter of Credit
and activity pursuant thereto, in either case which fees shall be solely for the
account of the Issuing Bank; and (C) the incurrence of any reasonable
out-of-
48
54
pocket costs and expenses in connection with the maintenance of any
Letter of Credit, Borrower shall pay to the Agent for the account of the Issuing
Bank the amount of such out-of-pocket costs and expenses so incurred.
Section 3.3 Obligation of Borrower Absolute, etc. (a) The obligation of
Borrower to pay to the Issuing Bank the amount of any payment made by the
Issuing Bank under any Letter of Credit shall be absolute, unconditional and
irrevocable. Without limiting the foregoing, such obligation of Borrower shall
not be affected by any of the following circumstances:
(1) any lack of validity or enforceability of the
Letter of Credit, this Agreement or any other agreement or instrument
relating thereto;
(2) any amendment or waiver of or any consent to
departure from the Letter of Credit, this Agreement or any other
agreement or instrument relating thereto;
(3) the existence of any claim, setoff, defense or
other rights which the Borrower or any Subsidiary of the Borrower may
have at any time against the Issuing Bank, any Lender, the Agent, any
beneficiary of the Letter of Credit (or any Persons for whom any such
beneficiary may be acting) or any other Person, whether in connection
with the Letter of Credit, this Agreement or any other agreement or
instrument relating thereto, or any unrelated transactions;
(4) any demand, statement or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever so long as any such
document appeared to comply with the terms of the Letter of Credit;
(5) payment by the Issuing Bank in good faith under
the Letter of Credit against presentation of a draft or any
accompanying document which does not strictly comply with the terms of
the Letter of Credit;
(6) the existence, character, quality, quantity,
condition, packing, value or delivery of any property purported to be
represented by documents presented in connection with any Letter of
Credit or for any difference between any such property and the
character, quality, quantity, condition or value of such property as
described in such documents;
49
55
(7) the time, place, manner, order or contents of
shipments or deliveries of property as described in documents
presented in connection with any Letter of Credit or the existence,
nature and extent of any insurance relative thereto;
(8) the solvency or financial responsibility of any
party issuing any documents in connection with a Letter of Credit;
(9) any failure or delay in notice of shipments or
arrival of any property; and
(10) any other circumstances whatsoever.
(b) As among the Borrower, the Lenders, the Issuing Bank and the
Agent, the Borrower assumes all risks of the acts and omissions of, or misuse of
such Letter of Credit by, the beneficiary of any Letter of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the Letter of Credit applications and Letter of Credit reimbursement agreements
executed by the Borrower at the time it requests any Letter of Credit, the
Agent, the Issuing Bank and the Lenders shall not be responsible;
(i) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection
with the application for and issuance of the Letters of Credit, even if
it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a 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 the failure of the beneficiary of a Letter of Credit
to comply duly with conditions required in order to draw upon such
Letter of Credit;
(iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex, or other similar form of teletransmission or otherwise;
(v) for errors in interpretation of technical trade terms;
50
56
(vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Letter of
Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the
control of the Agent, the Issuing Bank and the Lenders including,
without limitation, any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or governmental
authority.
None of the above shall affect, impair, or prevent the vesting of any of the
Issuing Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Issuing Bank under or in connection with Letters of Credit issued by it or any
related certificates shall not, in the absence of gross negligence or willful
misconduct, put the Issuing Bank under any resulting liability to the Borrower
or relieve the Borrower of any of its obligations hereunder to any such Person.
(d) The Issuing Bank shall be entitled to the protection accorded
to the Agent pursuant to Section 9, mutatis mutandis.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1 Conditions Precedent to the Effectiveness of this
Agreement. This Agreement shall become effective as of the date first written
above upon the satisfaction of the following conditions precedent:
(a) Loan Documents.
(i) Credit Agreement. The Borrower and the Required Lenders
shall have executed and delivered this Agreement to the Agent.
(ii) Notes. The Borrower shall have executed and delivered to
each of the Lenders the appropriate Notes in the amount, maturity and
as otherwise provided herein.
(iii) Guaranty. Each Guarantor shall have reaffirmed its
Guaranty in writing in form and substance satisfactory to the Agent and
the Required Lenders.
51
57
(b) Opinions of Counsel. The Agent shall have received a legal
opinion, dated the date hereof, from Stradling Yocca Carlson & Rauth, counsel to
the Loan Parties, with respect to such matters as requested by the Agent and in
form and substance satisfactory to the Agent.
(c) Officer's Certificate. Each of the conditions precedent set
forth in Sections 4.3(a), (b), (c) and (d) shall be true and correct, and the
Agent and the Lenders shall have received a certificate of the President or Vice
President of the Borrower, dated as of the date hereof, certifying as such.
(d) Fees and Expenses. The Agent shall have received, for its
account and for the account of each Lender, as applicable, all Fees and other
fees and expenses due and payable hereunder and under the other Loan Documents
on or before the date hereof, including, without limitation, the reasonable fees
and expenses accrued through the date hereof, of Skadden, Arps, Slate, Meagher &
Flom (Illinois) and any other counsel retained by the Agent.
(e) Reduction in Outstanding Balance. The aggregate outstanding
balance of all Loans outstanding shall not exceed $400,000,000.
(f) Additional Matters. The Agent shall have received such other
certificates, opinions, documents and instruments as may have been reasonably
requested by the Agent or any Lender.
Section 4.2 Conditions Precedent to Initial Loans. The obligation of
each Lender to make its initial Loans and of the Issuing Bank to Issue any
Letter of Credit on the Second A&R Closing Date is subject to the satisfaction
on the Second A&R Closing Date of the following conditions precedent:
(a) Loan Documents.
(i) Credit Agreement. The Borrower shall have executed and
delivered the Original Agreement to the Agent.
(ii) Notes. The Borrower shall have executed and delivered to
each of the Lenders the appropriate Notes in the amount, maturity and
as otherwise provided herein.
(iii) Borrower Security Agreement. The Borrower shall have
executed and delivered to the Agent the Borrower Security Agreement.
52
58
(iv) Subsidiary Security Agreement. Each Subsidiary of the
Borrower (other than any such Subsidiary which is an Immaterial
Subsidiary) shall have duly executed and delivered to the Agent the
Subsidiary Security Agreement.
(v) Borrower Pledge Agreement. The Borrower shall have
executed and delivered to the Agent the Borrower Pledge Agreement.
(vi) Subsidiary Pledge Agreements. Each Subsidiary of the
Borrower that owns any Equity Interest in any Person as of the Second
A&R Closing Date (other than an equity interest in Boston West, L.L.C.
and other than in an Immaterial Subsidiary) shall have duly executed
and delivered to the Agent a Subsidiary Pledge Agreement.
(vii) Guaranty. Each Subsidiary of the Borrower (other than
any Immaterial Subsidiary that is not a Subordinated Guarantor) shall
have executed and delivered to the Agent the Guaranty.
(b) Opinions of Counsel. The Agent shall have received (A) a
legal opinion, dated the Second A&R Closing Date, from Stradling Yocca Carlson &
Rauth, counsel to the Loan Parties, substantially in the form set forth as
Exhibit H-1 hereto, (B) legal opinions, dated the Second A&R Closing Date, from
Locke Liddell & Sapp LLP, special Texas counsel to the Loan Parties
substantially in the form of Exhibit H-2 hereto, Kilpatrick Stockton LLP,
special North Carolina and Georgia counsel to the Loan Parties substantially in
the form of Exhibit H-3 hereto, and Burr & Forman LLP, special Alabama counsel
to the Loan Parties substantially in the form of Exhibit H-4 hereto, and (C)
such other legal opinions, each dated the Second A&R Closing Date, from local
counsel to the Loan Parties as requested by the Agent with respect to such
matters as requested by the Agent and in form and substance satisfactory to the
Agent.
(c) Corporate Documents. The Agent shall have received the
Certificate of Incorporation, partnership agreement or other similar
organizational document of each of the Loan Parties as amended, modified or
supplemented to the Second A&R Closing Date, (other than in the case of a
general partnership) certified to be true, correct and complete by the
appropriate Secretary of State as of a date not more than ten Business Days
prior to the Second A&R Closing Date, together with a good standing certificate
from such Secretary of State and a good standing certificate from the
Secretaries of State (or the equivalent thereof) of each other State in which
each of them is required to be qualified to transact business, each to be dated
a date not more than ten Business Days prior to the Second A&R Closing Date and
a bring-down good standing certificate or telephonic confirmation from the
appropriate Secretary of State in each jurisdiction of incorporation of each
Loan Party dated the Second A&R Closing Date.
53
59
(d) Certified Resolutions, etc. The Agent shall have received a
certificate of the Secretary or Assistant Secretary of each of the Loan Parties
or of a general partner in the case of each Loan Party which is a partnership
and dated the Second A&R Closing Date certifying (i) the names and true
signatures of the incumbent officers of such Person authorized to sign the
applicable Loan Documents, (ii) the By-Laws of such Person as in effect on the
Second A&R Closing Date, (iii) the resolutions of such Person's Board of
Directors approving and authorizing the execution, delivery and performance of
all Transaction Documents executed by such Person, and (iv) that there have been
no changes in the Certificate of Incorporation of such Person since the date of
the most recent certification thereof by the appropriate Secretary of State or,
in the case of a partnership or other similar entity, the partnership agreement
or other similar organizational document.
(e) Transaction Documents. The Agent shall have received copies
of the Transaction Documents (other than the Loan Documents) and any amendments,
waivers or supplements thereto, certified as of the Second A&R Closing Date by
the President or Vice President, of the Borrower to be true, correct and
complete copies of such documents, which documents shall be in form and
substance satisfactory to the Agent. The Agent shall have received copies of all
documents relating to existing Indebtedness for borrowed money or evidenced by a
note, bond, debenture, acceptance or similar instrument of the Borrower and its
Subsidiaries that shall be outstanding in each case in a principal amount in
excess of $2,000,000 on and after the Second A&R Closing Date, including,
without limitation, terms of amortization, interest, premiums, fees, expenses,
maturity, amendments, covenants, events of default and remedies, certified as of
the Second A&R Closing Date as such by the President or Vice President of the
Borrower.
(f) Process Agent. Each Loan Party shall have appointed an agent
satisfactory to the Agent for service of process in connection with any action
or proceeding arising under or relating to the Loan Documents, and such agent
shall have accepted such appointment in writing.
(g) Officer's Certificate. The Agent and the Lenders shall have
received a certificate of the President or Vice President of the Borrower, dated
the Second A&R Closing Date, certifying that (i) the Transaction Documents
(other than the Loan Documents) are in full force and effect and no material
term or condition thereof has been amended from the form thereof delivered to
the Agent, or waived, except as disclosed to the Agent or its counsel prior to
the execution of this Agreement, (ii) each of the Loan Parties and, to the best
of his or her knowledge, the other parties to the Transaction Documents, have
performed or complied in all material respects with all agreements and
conditions contained in such Transaction Documents and any agreements or
documents referred to therein required to be performed or complied with by each
of them on or before the Second A&R Closing Date and no material condition to
closing by the Borrower or any of its Subsidiaries and set forth therein has
been waived, (iii) subject to the foregoing, neither any Loan Party nor, to the
best of his or her knowledge, any such other
54
60
party is in default in the performance or compliance with any of the material
terms or provisions thereof, except to the extent that performance thereof or
compliance therewith or default has been waived with the prior written consent
of the Lenders, (iv) all of the representations and warranties of the Borrower
and each other Loan Party contained in the Transaction Documents are true and
correct, (v) after giving effect to the execution and delivery of the
Transaction Documents by each of the Loan Parties and consummation of the
Transactions thereunder, no Default or Event of Default shall have occurred and
be continuing and (vi) since January 31, 1999, no event or change has occurred
that has caused or evidences a Material Adverse Effect.
(h) Solvency Certificate. The Agent shall have received a
certificate signed by the Chief Financial Officer of the Borrower containing
conclusions that the Borrower and its Subsidiaries are Solvent before and after
giving effect to the Transactions.
(i) Insurance. The Agent shall have received a certificate of
insurance demonstrating insurance coverage in respect of each of the Loan
Parties of types, in amounts, with insurers and with other terms reasonably
satisfactory to the Agent.
(j) Lien Search Reports. The Agent shall have received
satisfactory reports of UCC, tax lien, judgment and litigation searches with
respect to the Borrower and each of the other Loan Parties in each of the
locations requested by the Agent.
(k) UCC-1 Financing Statements. The Agent shall have received
originals of each UCC-1 financing statement (i) duly executed by an Authorized
Officer of the Borrower as debtor naming the Agent as secured party and filed in
the jurisdictions set forth in Schedule I to the Borrower Security Agreement and
(ii) duly executed by an Authorized Officer of each other Loan Party as debtor
naming the Agent as secured party and filed in the appropriate jurisdictions set
forth in Schedule I to the Subsidiary Security Agreement.
(l) Pro Forma Balance Sheet. The Agent shall have received a pro
forma consolidated balance sheet of the Borrower and its Subsidiaries, dated as
of November 2, 1998, giving effect to the Transactions and the payment or
accrual of all estimated Transaction Costs, certified by the chief financial
officer of the Borrower.
(m) [Intentionally Omitted.]
(n) Pledged Collateral. The Agent shall have received (i) the
original stock, membership interest or partnership interest certificates
evidencing the Pledged Stock (as defined in the Borrower Pledge Agreement and
each Subsidiary Pledge Agreement) pursuant to the Borrower Pledge Agreement and
each Subsidiary Pledge Agreement (other than certificates representing any
shares of Pledged Stock of any Immaterial Subsidiary and any shares of Pledged
Stock which evidence an Immaterial Investment), together with undated stock
powers or similar instruments of assignment duly executed in blank in connection
therewith and (ii) each
55
61
original Instrument pursuant to the Borrower Pledge Agreement and each
Subsidiary Pledge Agreement (other than any Instrument evidencing an Immaterial
Investment).
(o) Corporate Structure. The corporate structure of the Loan
Parties shall be satisfactory to the Lenders and the Agent shall have received a
corporate structure chart with respect to the Borrower and all of its
Subsidiaries (certified by an Authorized Officer of the Borrower).
(p) Second A&R Closing Compliance Certificate. The Agent shall
have received a certificate of the chief financial officer of the Borrower
setting forth the calculations required to establish the Leverage Ratio
calculated as of the end of the fiscal quarter of the Borrower ending November
2, 1998 (the "Second A&R Closing Compliance Certificate").
(q) Funded Debt and Capitalization. The Total Revolving Loan
Commitment minus the aggregate principal amount of the Revolving Loans
outstanding on the Second A&R Closing Date minus the amount of any L/C
Obligations then outstanding including any Letters of Credit to be issued on the
Second A&R Closing Date shall equal at least $100,000,000. The Agent shall have
received evidence satisfactory to it that the Borrower shall have received cash
proceeds from the issuance of the New Subordinated Notes, net of all brokerage
commissions, underwriting fees, discounts and Transaction Costs related to the
issuance of the New Subordinated Notes, in an aggregate amount not less than
$95,000,000 (the "Initial Debt Issuance"), and that such net cash proceeds have
been applied to the payment of outstanding obligations under the Original Credit
Agreement.
(r) Existing Indebtedness. The Agent shall have received evidence
satisfactory to the Agent and the Lenders that, after giving effect to the
consummation of the Transactions, (i) the Borrower and its Subsidiaries shall
not be liable for or have outstanding any Indebtedness which is of the type of
Indebtedness which would appear as a liability on (or would be required to
appear as a liability on) the consolidated balance sheet of the Borrower (and
not of the type required solely to be included in the footnotes thereto) and
which Indebtedness shall include, without limitation, Indebtedness for borrowed
money and Capitalized Lease Obligations, other than (A) the Loans outstanding
hereunder as contemplated by Section 4.2(q) and (B) Indebtedness permitted under
Section 7.2 (but excluding Indebtedness described in Section 7.2(a))
(collectively, the "Surviving Debt"), the aggregate outstanding principal amount
of which shall not exceed $490,000,000 as of the Second A&R Closing Date, and
(ii) the Borrower and each of its Subsidiaries shall have paid in full all other
Indebtedness of the Borrower and each of its Subsidiaries existing prior to the
making of the initial Loans hereunder (all of the foregoing Indebtedness
described in the foregoing clause (i) and (ii) referred to collectively as
"Existing Debt"). The Agent shall be satisfied that the execution and delivery
of, and the performance by each of the Borrower and its Subsidiaries of its
respective obligations under, each Transaction Document to which it is a party
and consummation of the Transactions does not violate, conflict with or cause a
default under any document or instrument evidencing Existing Debt. The Agent
56
62
shall have received (i) payoff and lien termination and release agreements, in
form and substance satisfactory to the Agent, from each creditor of the Borrower
and its Subsidiaries with respect to Existing Debt other than Surviving Debt,
and (ii) such Form UCC-3 (or its equivalent), intellectual property lien
releases in recordable form in all applicable jurisdictions, and other lien and
mortgage release and termination agreements, evidence of release of federal and
state tax liens, all in form and substance satisfactory to the Agent, as the
Agent shall request, duly executed by the appropriate Person in favor of which
such Liens were granted.
(s) Environmental Matters. The Agent shall (i) be satisfied that
neither the Borrower nor any of its Subsidiaries nor any other Loan Party is
subject to any present or contingent liability deemed material by the Agent in
its reasonable judgment in connection with any past or present treatment,
storage, recycling, disposal or release or threatened release, at any property
location regardless of whether owned or operated by the Borrower or any of its
Subsidiaries or any other Loan Party, of any Materials of Environmental Concern
or in connection with any Environmental Law or other health or safety laws or
regulations, and that their operations taken as a whole comply in all material
respects (in the Agent's reasonable judgment) with all Environmental Laws or
other health or safety laws or regulations, (ii) be satisfied that neither the
Borrower nor any of its Subsidiaries, nor any other Loan Party nor any property
owned or operated by any such Person is the subject of any federal or state
investigation evaluating whether any remedial action, involving a material
expenditure (in the opinion of the Agent) is needed to respond to any release or
other presence of Materials of Environmental Concern and (iii) have received a
list of all of the properties operated, owned or leased by the Borrower and each
of its Subsidiaries as to which Phase I environmental audit reports have been
completed within ten (10) years prior to the Second A&R Closing Date and have
received copies of those Phase I audit reports which identify, or which
recommend a subsequent Phase II investigation as to, any material environmental
health or safety violations, hazards or potential liabilities relating to the
properties and business of the Borrower and each of its Subsidiaries, the other
Loan Parties (if applicable) and each of their Environmental Affiliates of which
the Borrower or any of its Subsidiaries have knowledge.
(t) Funds Flow Instructions. The Agent and the Lenders shall have
received detailed instructions satisfactory to them describing the funds flow in
connection with the Transactions on the Second A&R Closing Date.
(u) Fees and Expenses. The Agent shall have received, for its
account and for the account of each Lender, as applicable, all Fees and other
fees and expenses due and payable hereunder and under the other Loan Documents
on or before the date hereof, including, without limitation, the reasonable fees
and expenses accrued through the date hereof, of Skadden, Arps, Slate, Meagher &
Flom (Illinois) and any other counsel retained by the Agent.
(v) Consents, Licenses, Approvals; Compliance with Laws. All
consents, licenses, orders, permits, authorizations, validations, certificates,
filings and approvals
57
63
(collectively, "Consents"), if any, required in connection with the execution,
delivery and performance by the Borrower or any of its Subsidiaries, and the
validity and enforceability of the Transaction Documents, or in connection with
any of the Transactions, including, without limitation, all shareholder Consents
and all Consents required by any federal, state, local regulatory or
governmental authority including, without limitation, all Consents required
pursuant to the Hart-Scott-Rodino Act, shall have been obtained or made and
shall be in full force and effect and copies thereof shall in each case have
been delivered to the Agent. The Borrower shall have delivered to the Agent such
evidence as the Agent shall have requested, evidencing compliance by the
Borrower, its Subsidiaries and the other Loan Parties with all applicable laws,
rules and regulations before and after giving effect to the Transactions
(including, without limitation, all applicable corporate and securities laws and
all ERISA, environmental and health and safety laws, rules and regulations).
(w) Management Contracts. The Borrower shall deliver to the Agent
and each Lender copies of each written agreement that it or any of its
Subsidiaries has or contemplates entering into with its officers or other
members of management as requested by the Agent certified by an officer of the
Borrower, and each such contract shall be satisfactory in form and substance to
the Agent.
(x) Franchise Agreements. The Borrower shall deliver to the Agent
copies of representative forms of Franchise Agreements, which represent the
various forms of all Franchise Agreements to which the Borrower or any of its
Subsidiaries as of the Second A&R Closing Date is the franchisor or licensor in
each case certified by the general counsel of the Borrower.
(y) No Material Adverse Change. No event, act or condition shall
have occurred after January 31, 1999, that has had a Material Adverse Effect.
(z) Litigation. The Agent shall have received a list of all
material actions, suits, governmental investigations, arbitrations and
proceedings pending against the Borrower or any of its Subsidiaries as of the
Second A&R Closing Date and the loss analyses with respect thereto.
(aa) Additional Matters. The Agent shall have received such other
certificates, opinions, documents and instruments relating to the Transactions
as may have been reasonably requested by the Agent or any Lender, and all
corporate and other proceedings and all other documents (including, without
limitation, all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Transactions shall be
satisfactory in form and substance to the Lenders.
Section 4.3 Conditions Precedent to All Loans. The obligation of each
Lender to make any Loan at any time on or after the date hereof and of the
Issuing Bank to issue
58
64
any Letter of Credit is subject to the satisfaction on the date such Loan is
made or such Letter of Credit is Issued of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein and in the other Loan Documents (other than
representations and warranties which expressly speak only as of a different
date) shall be true and correct in all material respects on such date both
before and after giving effect to the making of such Loans or the Issuance of
such Letter of Credit.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date either before or
after giving effect to the making of such Loans or the Issuance of such Letter
of Credit.
(c) No Injunction. No law or regulation shall have been adopted,
no order, judgment or decree of any governmental authority shall have been
issued, and no litigation shall be pending or threatened, which in the
reasonable judgment of the Lenders would enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condition upon, the making
or repayment of the Loans, the Issuance of such Letter of Credit or the
reimbursement of any amounts with respect thereto or the consummation of the
Transactions.
(d) No Material Adverse Change. No event, act or condition shall
have occurred after January 31, 1999 which, in the judgment of the Required
Lenders, has had or could have a Material Adverse Effect.
(e) Notice of Borrowing or Issuance. The Agent or the Issuing
Bank shall have received a fully executed Notice of Borrowing or L/C
Application, as appropriate, in respect of the Loans to be made or Letters of
Credit to be Issued, respectively, on such date.
The acceptance of the proceeds of each Loan and of the Issuance of each
Letter of Credit shall constitute a representation and warranty by the Borrower
to the Agent and each of the Lenders that all of the conditions required to be
satisfied under this Section 4 in connection with the making of such Loan or the
Issuance of such Letter of Credit have been satisfied.
All of the Notes, certificates, agreements, legal opinions and other
documents and papers referred to in this Section 4, unless otherwise specified,
shall be delivered to the Agent for the account of each of the Lenders and,
except for the Notes, in sufficient counterparts for each of the Lenders, and
shall be satisfactory in form and substance to the Agent and each Lender in its
sole discretion.
59
65
SECTION 5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make
the Loans and to induce the Issuing Bank to issue Letters of Credit, the
Borrower makes the following representations and warranties, which shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and the Issuance of the Letters of Credit:
Section 5.1 Corporate Status. Each Loan Party (i) is duly organized and
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate or other requisite power and authority to
own its property and assets and to transact the business in which it is engaged
or presently proposes to engage and (iii) has duly qualified and is authorized
to do business and is in good standing as a foreign corporation in every
jurisdiction in which it owns or leases real property or in which the nature of
its business requires it to be so qualified, except in the case of clause (iii),
where the failure to so qualify, individually or in the aggregate, could not
have a Material Adverse Effect.
Section 5.2 Corporate Power and Authority. Each Loan Party has the
corporate or other requisite power and authority to execute, deliver and carry
out the terms and provisions of each of the Transaction Documents to which it is
a party and has taken all necessary corporate or other requisite action to
authorize the execution, delivery and performance by it of such Transaction
Documents. Each Loan Party has duly executed and delivered each such Transaction
Document, and each such Transaction Document constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms.
Section 5.3 No Violation. Neither the execution, delivery or
performance by any Loan Party of the Transaction Documents to which it is a
party, nor compliance by it with the terms and provisions thereof nor the
consummation of the Transactions, (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality or (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents) upon any of the property or assets of any Loan Party
pursuant to the terms of any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Loan Party is a party or by which it
or any of its property or assets is bound or to which it may be subject, or
(iii) will violate any provision of the Certificate of Incorporation or By-Laws
(or other relevant formation documents) of any Loan Party.
Section 5.4 Litigation. There are no actions, suits, governmental
investigations, arbitrations or proceedings pending or threatened (i) with
respect to any of the Transactions or the Transaction Documents or (ii) that
could, individually or in the aggregate, result in a Material Adverse Effect.
Section 5.5 Financial Statements; Financial Condition; etc. Each of the
financial statements delivered pursuant to Sections 4.2(l) and 4.2(p) were
prepared in accordance with
60
66
GAAP consistently applied and fairly present the financial condition and the
results of operations of the entities covered thereby on the dates and for the
periods covered thereby, except as disclosed in the notes thereto and, with
respect to interim financial statements, subject to normally recurring year-end
adjustments. No Loan Party has any material liability (contingent or otherwise)
not reflected in such financial statements or in the notes thereto.
Section 5.6 Solvency. On the Second A&R Closing Date and at all times
after the Second A&R Closing Date, after giving effect to the Transactions, each
Loan Party is and will be Solvent.
Section 5.7 Projections. The projections set forth on Schedule 5.7 have
been prepared on the basis of the assumptions accompanying them, and such
projections and assumptions, as of the date of preparation thereof and as of the
Second A&R Closing Date, are reasonable and represent the Borrower's good faith
estimate of its future financial performance, it being understood that nothing
contained in this Section shall constitute a representation or warranty that
such future financial performance or results of operations will in fact be
achieved.
Section 5.8 Material Adverse Change. Since January 31, 1999, there has
occurred no event, act, condition or liability which has had, or could have, a
Material Adverse Effect.
Section 5.9 Use of Proceeds; Margin Regulations. All proceeds of each
Loan, and each Letter of Credit, will be used by the Borrower only in accordance
with the provisions of Section 2.20. No part of the proceeds of any Loan, or any
Letter of Credit, will be used by the Borrower to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock. Neither the making of any Loan, nor the Issuance of any Letter
of Credit, nor the use of the proceeds thereof will violate or be inconsistent
with the provisions of Regulations T, U or X of the Federal Reserve Board.
Following the application of the proceeds of each Loan, less than 25% of the
value (as determined by any reasonable method) of the assets of the Borrower and
its Subsidiaries (on a consolidated and an unconsolidated basis) have been and
will continue to be, represented by Margin Stock.
Section 5.10 Governmental and Other Approvals. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, or any other Person, is required to
authorize, or is required in connection with (i) the execution, delivery and
performance of any Transaction Document or the consummation of any of the
Transactions or (ii) the legality, validity, binding effect or enforceability of
any Transaction Document or the exercise by the Agent or any Lender of any of
its rights under any Loan Document, except those listed on Schedule 5.10 that
have already been duly made or obtained and remain in full force and effect and
except for the filing of financing statements pursuant to the Security
Documents. All applicable waiting periods including, without limitation, those
under the Hart-Scott-Rodino Act
61
67
in connection with each Permitted Acquisition and the other transactions
contemplated thereby have expired without any action having been taken by any
competent authority restraining, preventing or imposing materially adverse
conditions upon the rights of the Loan Parties or their Subsidiaries freely to
transfer or otherwise dispose of, or to create any Lien on, any properties now
owned or hereafter acquired by any of them.
Section 5.11 Security Interests and Liens. The Security Documents
create, as security for the Obligations, valid and enforceable security
interests in and Liens on all of the Collateral, in favor of the Agent for the
ratable benefit of the Lenders, and subject to no other Liens (other than Liens
expressly permitted by Section 7.3 hereof). Upon the satisfaction of the
conditions precedent described in Sections 4.2(k) and 4.2(n), such security
interests in and Liens on the Collateral shall be superior to and prior to the
rights of all third parties (except as disclosed on Schedule 5.11), and no
further recordings or filings are or will be required in connection with the
creation, perfection or enforcement of such security interests and Liens, other
than the filing of continuation statements in accordance with applicable law.
Section 5.12 Tax Returns and Payments. Each Loan Party has filed all
tax returns required to be filed by it and has paid all taxes and assessments
payable by it which have become due, other than (i) those not yet delinquent or
those that are reserved against in accordance with GAAP which are being
diligently contested in good faith by appropriate proceedings or (ii) where the
failure to so pay has not resulted and could not reasonably be expected to
result in liability in excess of $1,000,000 in the aggregate for all of the Loan
Parties.
Section 5.13 ERISA. Neither the Borrower nor any of its Subsidiaries
have any Plans other than those listed on Schedule 5.13. No accumulated funding
deficiency (as defined in Section 412 of the Code or Section 302 of ERISA) or
Reportable Event has occurred with respect to any Plan. There are no Unfunded
Benefit Liabilities under any Plan. The Borrower and each member of its ERISA
Controlled Group have complied with the requirements of Section 515 of ERISA
with respect to each Multiemployer Plan and is not in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.
The aggregate potential total withdrawal liability, and the aggregate potential
annual withdrawal liability payments of the Borrower and the members of its
ERISA Controlled Group as determined in accordance with Title IV of ERISA as if
the Borrower and the members of its ERISA Controlled Group had completely
withdrawn from all Multiemployer Plans is not greater than $2,000,000. To the
best knowledge of the Borrower and each member of its ERISA Controlled Group, no
Multiemployer Plan is or is likely to be in reorganization (as defined in
Section 4241 of ERISA or Section 418 of the Code) or is insolvent (as defined in
Section 4245 of ERISA). No material liability to the PBGC (other than required
premium payments), the Internal Revenue Service, any Plan or any trust
established under Title IV of ERISA has been, or is expected by the Borrower or
any member of its ERISA Controlled Group to be, incurred by the Borrower or any
member of its ERISA Controlled Group. Neither the Borrower nor any member of its
ERISA Controlled Group has any contingent liability with respect to any
post-retirement benefit
62
68
under any "welfare plan" (as defined in Section 3(1) of ERISA), other than
liability for continuation coverage under Part 6 of Title I of ERISA and other
than contingent liabilities under Hardee's Retiree Medical Insurance Plan, and
the aggregate present value of all post-retirement benefit liabilities of the
Borrower and its Subsidiaries under Hardee's Retiree Medical Insurance Plan as
of the Second A&R Closing Date does not exceed $4,800,000. No lien under Section
412(n) of the Code or 302(f) of ERISA or requirement to provide security under
Section 401(a)(29) of the Code or Section 307 of ERISA has been or is reasonably
expected by the Borrower or any member of its ERISA Controlled Group to be
imposed on the assets of the Borrower or any member of its ERISA Controlled
Group.
Section 5.14 Investment Company Act; Public Utility Holding Company
Act. No Loan Party is (x) an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended, (y) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (z) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
Section 5.15 Second A&R Closing Date Transactions. On the Second A&R
Closing Date and immediately prior to the making of the initial Loans hereunder,
the Transactions (other than the making of the Loans) intended to be consummated
on the Second A&R Closing Date will have been consummated in accordance with the
terms of the relevant Transaction Documents and in accordance with all
applicable laws. All consents and approvals of, and filings and registrations
with, and all other actions by, any Person required in order to make or
consummate such Transactions have been obtained, given, filed or taken and are
or will be in full force and effect.
Section 5.16 Representations and Warranties in Transaction Documents.
All representations and warranties made by any Loan Party in the Transaction
Documents (other than the Loan Documents), and, to the best of the Borrower's
knowledge, all representations made by each other Person in such Transaction
Documents, are true and correct in all material respects. None of such
representations and warranties is inconsistent in any material respect with the
representations and warranties of any Loan Party made herein or in any other
Loan Document.
Section 5.17 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of any Loan Party in writing to the
Agent or any Lender on or prior to the Second A&R Closing Date, for purposes of
or in connection with this Agreement or any of the Transactions is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any Loan Party in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or furnished and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time. As of the Second A&R Closing
63
69
Date, there are no facts, events or conditions known to any Loan Party which,
individually or in the aggregate, have or could be expected to have a Material
Adverse Effect.
Section 5.18 Corporate Structure; Capitalization. Schedule 5.18 hereto
sets forth as of the Second A&R Closing Date, the jurisdiction of incorporation
or organization of the Borrower, each of its Subsidiaries, each other Loan Party
and each Subsidiary of such Loan Party, the number of authorized and issued
shares of capital stock or other outstanding equity interests of the Borrower
and each of its Subsidiaries and of each other Loan Party and each Subsidiary of
such Loan Party, the par value thereof and (other than with respect to the
Borrower) the registered owner(s) thereof. All of such stock has been duly and
validly issued and is fully paid and non-assessable and (except for the stock of
the Borrower) is, together with all such other equity interests, owned by such
Loan Party free and clear of all Liens. Except for the Convertible Subordinated
Notes or as disclosed in Schedule 5.18, neither any Loan Party nor any such
Subsidiary has outstanding any securities convertible into or exchangeable for
its capital stock nor does any Loan Party or any such Subsidiary have
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, warrants or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock.
Section 5.19 Environmental Matters. (a) (i) Each of the Loan Parties
and their Environmental Affiliates are in compliance with all applicable
Environmental Laws except where noncompliance, individually or in the aggregate,
could not have a Material Adverse Effect, (ii) each of the Loan Parties and
their Environmental Affiliates have all Environmental Approvals required to
operate their businesses as presently conducted or as reasonably anticipated to
be conducted except where the failure to obtain any such Environmental Approval,
individually or in the aggregate, could not have a Material Adverse Effect,
(iii) none of the Loan Parties nor any of their Environmental Affiliates has
received any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that such Loan
Party or Environmental Affiliate is not in full compliance with all
Environmental Laws and where such noncompliance, individually or in the
aggregate, could have a Material Adverse Effect, and (iv) to the Borrower's best
knowledge after due inquiry, there are no circumstances that may prevent or
interfere with such full compliance in the future except where such
noncompliance, individually or in the aggregate, could not have a Material
Adverse Effect.
(b) There is no Environmental Claim pending or threatened against
any Loan Party or its Environmental Affiliate, which, individually or in the
aggregate, could have a Material Adverse Effect.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Material of Environmental
Concern, that could form the basis of any Environ-
64
70
mental Claims against any of the Loan Parties or any of their Environmental
Affiliates, which Environmental Claims, individually or in the aggregate, could
have a Material Adverse Effect.
(d) Schedule 5.19 sets forth a list of all of the properties
operated, owned or leased by the Borrower and each of its Subsidiaries as to
which Phase I environmental audit reports have been completed as of the Second
A&R Closing Date and the Borrower has delivered copies of those Phase I audit
reports which identify, or which recommend a subsequent Phase II investigation
as to, any material environmental, health or safety violations, hazards or
potential liabilities relating to the properties and business of the Borrower,
each of its Subsidiaries, the other Loan Parties (if applicable) and each of
their Environmental Affiliates of which the Borrower or any of its Subsidiaries
have knowledge.
(e) The Borrower has caused to be completed Phase I audit reports
with respect to each property owned, operated or leased by the Borrower or any
of its Subsidiaries, upon which a business or operation other than a Restaurant
has been conducted at any time during the six (6) years immediately preceding
the Second A&R Closing Date and with respect to which a Phase I audit report had
not been completed in the eleven (11) year period immediately preceding the
Second A&R Closing Date. The Borrower has delivered all such Phase I audit
reports to the Agent which were obtained pursuant to the preceding sentence
which identified, or which recommended a subsequent Phase II investigation as
to, any material environmental, health or safety violations, hazards or
potential liabilities relating to the properties and business of any Loan Party
or any of their Environmental Affiliates.
Section 5.20 Intellectual Property. Each of the Loan Parties owns or
has the valid right to use all patents, trademarks, service marks, trade names,
copyrights, trade secrets and other intangible rights, free and clear of all
Liens, which are used in or necessary for the operation of its business, and
Schedule V to the Borrower Security Agreement and Schedule V to the Subsidiary
Security Agreement together set forth a complete and accurate list thereof with
respect to each Loan Party as of the Second A&R Closing Date, including all
applications and registrations thereof and all license agreements to or from
third parties relating thereto (the "Intellectual Property"). Each Loan Party is
the record owner of all registrations and applications which it owns and all
registrations for Intellectual Property are valid and enforceable. To the best
of each Loan Party's knowledge, no service, product, process, method, substance,
part or other material presently offered, sold or employed by any Loan Party
infringes upon or dilutes any patent, trademark, service mark, trade name,
copyright, license or other right of any other Person, and no such claims have
been made by any other Person against any Loan Party. There is no pending or, to
the best of each Loan Party's knowledge, threatened claim or litigation against
or affecting any Loan Party contesting its rights to own or use any Intellectual
Property or the validity or enforceability thereof.
Section 5.21 Ownership of Property; Restaurants. Schedule 5.21 sets
forth all the real property owned or leased by the Loan Parties as of the Second
A&R Closing Date and
65
71
identifies the street address, the current owner (and current record owner, if
different) and whether such property is leased or owned. The Loan Parties have
good and marketable fee simple title to or valid leasehold interests in all of
such real property and good title to all of their personal property subject to
no Lien of any kind except Liens permitted hereby. Schedule 5.21 also sets forth
a list of each Restaurant and the street address thereof which is owned or
operated as of the Second A&R Closing Date by any Loan Party or any of its
Subsidiaries. The Loan Parties enjoy peaceful and undisturbed possession under
all of their respective leases.
Section 5.22 No Default. No Loan Party is in default under or with
respect to any Transaction Document or any other agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound in any respect which could result in a Material Adverse Effect. No Default
or Event of Default exists.
Section 5.23 Licenses, etc. The Loan Parties have obtained and hold in
full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted.
Section 5.24 Compliance with Law. Each Loan Party is in compliance with
all laws, rules, regulations, orders, judgments, writs and decrees except where
such non-compliance, individually or in the aggregate, could not have a Material
Adverse Effect.
Section 5.25 No Burdensome Restrictions. No Loan Party is a party to
any agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could have a Material Adverse Effect.
Section 5.26 Brokers' Fees. Except as set forth on Schedule 5.26, none
of the Loan Parties has any obligation to any Person in respect of any finder's,
brokers, investment banking or other similar fee in connection with any of the
Transactions.
Section 5.27 Labor Matters. Except as set forth on Schedule 5.27, there
are no collective bargaining agreements or Multiemployer Plans covering the
employees of the Borrower, any of its Subsidiaries or any of the other Loan
Parties, and none of such Persons has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years. No
proceedings are pending against the Borrower or any of its Subsidiaries before
the INS which could reasonably be expected to have a Material Adverse Effect.
Section 5.28 Indebtedness of the Borrower and Its Subsidiaries. Set
forth on Schedule 5.28 hereto is a complete and accurate list of all
Indebtedness of the Borrower and each of its Subsidiaries existing as of the
Second A&R Closing Date (other than Surviving Debt), showing the principal
amount outstanding thereunder as of the Second A&R Closing Date. As of the
Second A&R Closing Date, the Borrower and its Subsidiaries have redeemed or
repur-
66
72
chased Convertible Subordinated Notes for an aggregate purchase price of
$31,179,980, and the par value of all Convertible Subordinated Notes so redeemed
or repurchased is $38,000,000 as of the Second A&R Closing Date.
Section 5.29 Other Agreements. Schedule 5.29 sets forth a complete and
accurate list as of the Second A&R Closing Date of (i) all joint venture and
partnership agreements to which the Borrower or any of its Subsidiaries is a
party, and (ii) all covenants not to compete restricting the Borrower or any of
its Subsidiaries to which the Borrower or any of its Subsidiaries is a party or
by which the Borrower or any of its Subsidiaries is bound.
Section 5.30 Immaterial Subsidiaries. The Subsidiaries of the Borrower
designated as Immaterial Subsidiaries on the Second A&R Closing Date are set
forth on Schedule 5.30. The assets of each Subsidiary of the Borrower designated
as an Immaterial Subsidiary by the Borrower do not exceed $1,500,000 and the
assets of all of the Subsidiaries of the Borrower designated as Immaterial
Subsidiaries by the Borrower do not in the aggregate exceed $10,000,000, in each
case as determined in accordance with GAAP.
Section 5.31 Franchise Agreements and Franchisees. None of the
Franchise Agreements to which the Borrower or any of its Subsidiaries is a party
as a franchisor or a licensor prohibit or restrict in any manner the assignment
of such Franchise Agreement to the Agent for the benefit of the Secured Parties
or require any consent of any Person in connection with any such assignment.
Schedule 5.31 sets forth a complete and accurate list of each Person who is a
franchisee or licensee of the Borrower or any of its Subsidiaries as of the
Second A&R Closing Date.
SECTION 6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that until all of the Commitments of
each of the Lenders have terminated, each of the Letters of Credit has expired
or been terminated, and the Obligations are paid in full:
Section 6.1 Information Covenants. The Borrower will furnish to the
Agent, with sufficient copies for each Lender:
(a) Quarterly Financial Statements. Within 45 days after the
close of each of the first three (3) quarterly accounting periods in each fiscal
year of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarterly period and the related consolidated
statements of income and cash flow for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly period, and
in each case setting forth comparative figures for the related periods in the
prior fiscal year.
67
73
(b) Annual Financial Statements. Within 90 days after the close
of each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and cash flow for such fiscal year, setting
forth comparative figures for the preceding fiscal year and, with respect to
such consolidated financial statements, certified without qualification by KPMG
LLP or other independent certified public accountants of recognized national
standing reasonably acceptable to the Agent and the Required Lenders and
indicating that its audit of the consolidated financial statements of the
Borrower was conducted in accordance with generally accepted auditing standards.
(c) Management Letters. Promptly after the Borrower's receipt
thereof, a copy of any "management letter" or other material report received by
the Borrower from its certified public accountants.
(d) Budgets. Within 60 days after the first day of each fiscal
year of the Borrower, a budget and financial forecast of results of operations
and sources and uses of cash (in form reasonably satisfactory to the Agent)
prepared by the Borrower for such fiscal year, accompanied by a written
statement of the assumptions used in connection therewith, together with a
certificate of the chief financial officer of the Borrower to the effect that
such budget and financial forecast and, to the best of his knowledge,
assumptions, are reasonable and represent the Borrower's good faith estimate of
its future financial requirements and performance. The financial statements
required to be delivered pursuant to clauses (a) and (b) above shall be
accompanied by a comparison of the actual financial results set forth in such
financial statements to those contained in the forecasts delivered pursuant to
this clause (d) together with an explanation of any material variations from the
results anticipated in such forecasts.
(e) Officer's Certificates. At the time of the delivery of the
financial statements under clauses (a) and (b) above, a certificate of the chief
financial officer of the Borrower which certifies (x) that such financial
statements fairly present the financial condition and the results of operations
of the Borrower and its Subsidiaries on the dates and for the periods indicated,
subject, in the case of interim financial statements, to normally recurring
year-end adjustments, and that such financial statements were prepared in
accordance with GAAP and (y) that such officer has reviewed the terms of the
Loan Documents and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the business and condition of the Borrower and
its Subsidiaries during the accounting period covered by such financial
statements, and that as a result of such review such officer has concluded that
no Default or Event of Default has occurred during the period commencing at the
beginning of the accounting period covered by the financial statements
accompanied by such certificate and ending on the date of such certificate or,
if any Default or Event of Default has occurred, specifying the nature and
extent thereof and, if continuing, the action the Borrower proposes to take in
respect thereof (the "Compliance Certificate"). Such certificate shall set forth
the calculations required to establish whether the Borrower was in compliance
with the provisions of Sections 6.11, 6.12,
68
74
7.1, 7.2, 7.3, 7.7, 7.8 and 7.18 during and as at the end of the accounting
period covered by the financial statements accompanied by such certificate.
(f) Notice of Default. Promptly and in any event within one
Business Day after any Loan Party obtains knowledge thereof, notice (i) of the
occurrence of any Default or Event of Default together with a certificate of an
Authorized Officer of the Borrower specifying the nature and period of existence
thereof and the Borrower's proposed response thereto, (ii) that any holder of
Indebtedness of the Borrower or any Subsidiary of the Borrower having an
outstanding principal balance exceeding $5,000,000 has given any written notice
to the Borrower or any Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 8.1(d) specifying (A) the nature and period of existence of any such
claimed default, condition or event, (B) the notice given or action taken by
such Person in connection therewith, and (C) the Borrower's proposed response
thereto and (iii) of the occurrence of any default or event of default under any
Subordinated Debt Document specifying (A) the nature and period of existence of
any such default, condition or event, (B) any notice given or action taken by
any holder or trustee thereunder in connection therewith, and (C) the Borrower's
proposed response thereto.
(g) Notice of Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of, or any material development in, any
action, suit, litigation, proceeding, investigation or arbitration, before any
court or arbitrator or any governmental or administrative body, agency or
official, against the Borrower, any of its Subsidiaries or any material property
of any thereof which, individually or in the aggregate, could have a Material
Adverse Effect, or (ii) actual knowledge thereof, notice of the threat of any
such action, suit, proceeding, investigation or arbitration.
(h) ERISA.
(i) As soon as possible and in any event within 10 days after
the Borrower or any member of its ERISA Controlled Group knows, or has
reason to know, that:
(A) any Termination Event with respect to a Plan has
occurred or will occur, or
(B) any condition exists with respect to a Plan which
presents a material risk of termination of the Plan or imposition of an
excise tax or other liability on the Borrower or any member of its
ERISA Controlled Group, or
(C) the Borrower or any member of its ERISA Controlled
Group has applied for a waiver of the mini-
69
75
mum funding standard under Section 412 of the Code or Section 302 of
ERISA, or
(D) the Borrower or any member of its ERISA Controlled
Group has engaged in a "prohibited transaction," as defined in Section
4975 of the Code or as described in Section 406 of ERISA, that is not
exempt under Section 4975 of the Code and Section 408 of ERISA, or
(E) the aggregate present value of the Unfunded Benefit
Liabilities under all Plans has in any year increased by $500,000 or to
an amount in excess of $2,000,000, or
(F) any condition exists with respect to a Multiemployer
Plan which presents a material risk of a partial or complete withdrawal
(as described in Section 4203 or 4205 of ERISA) by the Borrower or any
member of its ERISA Controlled Group from a Multiemployer Plan, or
(G) the Borrower or any member of its ERISA Controlled
Group is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan, or
(H) a Multiemployer Plan is in "reorganization" (as
defined in Section 418 of the Code or Section 4241 of ERISA) or is
"insolvent" (as defined in Section 4245 of ERISA), or
(I) the potential withdrawal liability (as determined in
accordance with Title IV of ERISA) of the Borrower and the members of
its ERISA Controlled Group with respect to all Multiemployer Plans has
in any year increased by $500,000 or to an amount in excess of
$2,000,000, or
(J) there is an action brought against the Borrower or
any member of its ERISA Controlled Group under Section 502 of ERISA
with respect to its failure to comply with Section 515 of ERISA,
a certificate of the president or chief financial officer of the Borrower
setting forth the details of each of the events described in clauses (A) through
(J) above as applicable and the action which
70
76
the Borrower or the applicable member of its ERISA Controlled Group proposes to
take with respect thereto, together with a copy of any notice or filing from the
PBGC or which may be required by the PBGC or other agency of the United States
government with respect to each of the events described in clauses (A) through
(J) above, as applicable.
(ii) As soon as possible and in any event within two Business
Days after the receipt by the Borrower or any member of its ERISA
Controlled Group of a demand letter from the PBGC notifying the
Borrower or such member of its ERISA Controlled Group of its final
decision finding liability and the date by which such liability must be
paid, a copy of such letter, together with a certificate of the
president or chief financial officer of the Borrower setting forth the
action which the Borrower or such member of its ERISA Controlled Group
proposes to take with respect thereto.
(i) SEC Filings. Promptly upon transmission thereof, copies of
all regular and periodic financial information, proxy materials and other
information, regular, periodic and special reports and registration statements,
if any, which any Loan Party shall file with the Securities and Exchange
Commission or any governmental agencies substituted therefore or which any Loan
Party shall send to its stockholders.
(j) Environmental. Promptly and in any event within two Business
Days after the existence of any of the following conditions, a certificate of an
Authorized Officer of the Borrower specifying in detail the nature of such
condition and the applicable Loan Party's or Environmental Affiliate's proposed
response thereto: (i) the receipt by any Loan Party or any of its Environmental
Affiliates of any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that such Loan
Party or Environmental Affiliate is not in compliance with applicable
Environmental Laws and such noncompliance, individually or in the aggregate,
could have a Material Adverse Effect, (ii) any Loan Party or any of its
Environmental Affiliates shall obtain actual knowledge that there exists any
Environmental Claim pending or threatened against such Loan Party or such
Environmental Affiliate, which, individually or in the aggregate, could have a
Material Adverse Effect, or (iii) any release, emission, discharge or disposal
of any Material of Environmental Concern that could form the basis of any
Environmental Claim against any Loan Party or any of their Environmental
Affiliates, which Environmental Claim, individually or in the aggregate could
have a Material Adverse Effect.
(k) Creditor Reports. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries pursuant to the terms
of any indenture, loan or credit or similar agreement and
71
77
not otherwise required to be furnished to the Lenders pursuant to any other
clause of this Section 6.1.
(l) Other Information. From time to time, such other information
or documents (financial or otherwise) as any Lender may reasonably request.
Section 6.2 Books, Records and Inspections. The Borrower shall, and
shall cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in relation
to its business and activities. The Borrower shall, and shall cause each of its
Subsidiaries to, permit officers and designated representatives of any Lender to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, and to examine the books of record and account of the Borrower or
any of its Subsidiaries, and discuss the affairs, finances and accounts of the
Borrower or any of its Subsidiaries with, and be advised as to the same by, its
and their officers and independent accountants, all upon reasonable notice and
at such reasonable times as such Lender may desire; provided that no such prior
notice shall be required if an Event of Default has occurred and is continuing.
Section 6.3 Maintenance of Insurance. The Borrower shall, and shall
cause each of its Subsidiaries to, (a) maintain with financially sound and
reputable insurance companies insurance on itself and its properties in at least
such amounts and against at least such risks as are customarily insured against
in the same general area by companies engaged in the same or a similar business
similarly situated, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the Second A&R Closing
Date and (b) furnish to each Lender from time to time, upon written request, the
policies under which such insurance is issued, certificates of insurance and
such other information relating to such insurance as such Lender may request.
Section 6.4 Taxes. (a) The Borrower shall pay or cause to be paid, and
shall cause each of its Subsidiaries to pay or cause to be paid, when due, all
taxes, charges and assessments and all other lawful claims required to be paid
by the Borrower or such Subsidiaries, except as contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves have been
established with respect thereto in accordance with GAAP.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated tax return
with any Person (other than the Borrower and its Subsidiaries).
Section 6.5 Corporate Franchises. Except as permitted by Section 7.4
below, the Borrower shall, and shall cause each of its Subsidiaries to, do or
cause to be done, all things necessary to preserve and keep in full force and
effect its existence and its patents, trademarks, servicemarks, tradenames,
copyrights, franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals
72
78
except where the failure to so preserve any of the foregoing (other than
existence) could not, individually or in the aggregate, result in a Material
Adverse Effect.
Section 6.6 Compliance with Law. The Borrower shall, and shall cause
each of its Subsidiaries to, comply in all material respects with all applicable
laws, rules, statutes, regulations, decrees and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of their business and the ownership of their property,
including, without limitation, ERISA and all Environmental Laws.
Section 6.7 Performance of Obligations. The Borrower shall, and shall
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement, debt instrument, lease,
undertaking and contract by which it or any of its properties is bound or to
which it is a party, except where the failure to perform such obligations
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
Section 6.8 Maintenance of Properties. The Borrower shall, and shall
cause each of its Subsidiaries to, ensure that its respective properties useful
in its respective business are kept in good repair, working order and condition,
normal wear and tear excepted.
Section 6.9 Compliance with Terms of Leaseholds. The Borrower shall and
shall cause each of its Subsidiaries to (a) make all payments and otherwise
perform all obligations in respect of all leases of the Borrower and each of its
Subsidiaries of real property, (b) keep all such leases that are useful or
material in the conduct of the business of the Borrower and its Subsidiaries
(such useful or material leases are hereinafter referred to as the "Material
Leases") in full force and effect, (c) not allow such Material Leases to lapse
or be terminated or any rights to renew such leases to be forfeited or
cancelled, and (d) notify the Agent of any default by any party with respect to
such Material Leases and cooperate with the Agent in all respects to cure any
such default.
Section 6.10 Compliance with Environmental Laws. The Borrower shall,
and shall cause each of its Subsidiaries and all lessees and other Persons
occupying its properties to (a) comply in all material respects, with all
Environmental Laws and Environmental Approvals applicable to its respective
operations and properties; (b) obtain and renew all Environmental Approvals
necessary for its respective operations and properties; and (c) conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Materials of
Environmental Concern from any of its respective properties, in accordance with
the requirements of all Environmental Laws; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances, unless the
Borrower or any of its Subsidiaries is subject to an
73
79
order issued by any governmental authority requiring the Borrower or such
Subsidiary to undertake any such cleanup, removal, remedial or other action, in
which case this proviso shall not apply.
Section 6.11 Subsidiary Guarantors. The Borrower shall cause each of
its Subsidiaries now or hereafter existing, formed or acquired (other than any
Immaterial Subsidiaries) to at all times be and remain a party to the Guaranty,
the Subsidiary Security Agreement and, if any such Subsidiary owns any Equity
Interests in any Person (other than in Boston West, L.L.C. and other than in an
Immaterial Subsidiary), a Subsidiary Pledge Agreement. The Borrower shall cause
each of its Immaterial Subsidiaries which is a Subordinated Guarantor to at all
times be and remain a party to the Guaranty so long as each such Immaterial
Subsidiary is a Subordinated Guarantor. The Borrower shall cause to be delivered
to the Agent a legal opinion in form and substance reasonably satisfactory to
the Agent with respect to any Subsidiary entering into the Guaranty after the
Second A&R Closing Date.
Section 6.12 Immaterial Subsidiaries. If (i) the assets of any
Subsidiary of the Borrower then designated as an Immaterial Subsidiary shall at
any time exceed $1,500,000, then the Borrower shall immediately provide notice
to the Agent thereof, and such Subsidiary shall immediately be deemed
automatically to no longer be an Immaterial Subsidiary or (ii) the aggregate
amount of assets of all Subsidiaries of the Borrower so designated as Immaterial
Subsidiaries shall at any time exceed $10,000,000, then the Borrower shall
immediately provide notice to the Agent thereof and notice of which of such
previously designated Immaterial Subsidiaries shall no longer be deemed to be
Immaterial Subsidiaries so that the aggregate amount of assets of all such
Subsidiaries so designated as Immaterial Subsidiaries does not exceed
$10,000,000; provided that the Borrower may from time to time designate
additional Subsidiaries of the Borrower as Immaterial Subsidiaries so long as
the assets of any such Subsidiary do not exceed $1,500,000 and so long as the
aggregate amount of assets of all such Subsidiaries so designated as Immaterial
Subsidiaries does not exceed $10,000,000 (in each case as determined in
accordance with GAAP). At such time as any Subsidiary that was an Immaterial
Subsidiary is no longer an Immaterial Subsidiary, the Borrower shall thereafter
comply with the terms of this Agreement with respect to such Subsidiary relating
to or affecting Subsidiaries that are not Immaterial Subsidiaries (in addition
to those terms relating to or affecting the Borrower's Subsidiaries generally),
including, without limitation, the requirements of Section 6.11 and Section
2.21.
Section 6.13 [Intentionally Omitted].
Section 6.14 Year 2000. The Borrower will use its reasonable best
efforts to insure that any computer systems and/or software used in the
operation of the Borrower's or any of its Subsidiaries' businesses is modified
or replaced to the extent necessary to prevent or avoid any Material Adverse
Effect as a result of the commencement of the year "2000."
74
80
SECTION 7. NEGATIVE COVENANTS.
The Borrower covenants and agrees that until all of the Commitments of
each Lender have terminated, each of the Letters of Credit has expired or been
terminated, and the Obligations are paid in full:
Section 7.1 Financial Covenants.
(a) Leverage Ratio. The Borrower shall not permit the Leverage
Ratio at any time during each of the fiscal quarters of the Borrower ending
during each of the periods listed below to exceed the ratio set forth opposite
such period:
Period Ratio
------ -----
Second A&R Closing Date through Jan. 31, 2000 3.60 to 1.00
February 1, 2000 through May 22, 2000 3.55 to 1.00
May 23, 2000 through August 14, 2000 3.25 to 1.00
August 15, 2000 through January 29, 2001 2.75 to 1.00
Each fiscal quarter of the Borrower thereafter 2.50 to 1.00
(b) Interest Coverage Ratio. The Borrower shall not permit the
ratio of Adjusted Consolidated EBITDA of the Borrower to the sum of (i)
Consolidated Interest Expense of the Borrower plus (ii) one-third (_) multiplied
by the aggregate rent expense of the Borrower and its Subsidiaries attributable
to Sale and Leaseback Transactions determined in accordance with GAAP on a
consolidated basis for each period of four consecutive fiscal quarters of the
Borrower (taken as one accounting period) as determined on the last day of each
fiscal quarter of the Borrower ending during each period set forth below, to be
less than the ratio set forth opposite such period:
Period Ratio
------ -----
Second A&R Closing Date through May 22, 2000 3.00 to 1.00
May 23, 2000 through August 14, 2000 3.20 to 1.00
August 15, 2000 through November 6, 2000 3.50 to 1.00
November 7, 2000 through January 29, 2001 3.75 to 1.00
Each fiscal quarter of the Borrower thereafter 5.00 to 1.00
(c) Fixed Charge Coverage Ratio. The Borrower shall not permit
the ratio of (i) Adjusted Consolidated EBITDA of the Borrower plus, to the
extent deducted in the calculation of Consolidated Net Income of the Borrower
and its Subsidiaries for such period, all rent expense determined in accordance
with GAAP for such period attributable to Sale and Leaseback Transactions, all
determined on a consolidated basis for the Borrower and its
75
81
Subsidiaries for such period, to (ii) Fixed Charges of the Borrower for the
period of four consecutive fiscal quarters of the Borrower (taken as one
accounting period) as determined on the last day of each fiscal quarter of the
Borrower to be less than 1.75 to 1.00.
(d) Minimum Consolidated EBITDA. The Borrower shall not permit
Adjusted Consolidated EBITDA of the Borrower for the period of four consecutive
fiscal quarters of the Borrower (taken as one accounting period) as determined
on the last day of each fiscal quarter of the Borrower ending during each period
set forth below, minus the amount of any EBITDA Adjustments as of the date of
determination, to be less than the amount set forth opposite such period:
Period Amount
------ ------
Second A&R Closing Date through August 14, 2000 $200,000,000
August 15, 2000 through November 6, 2000 $220,000,000
November 7, 2000 through January 29, 2001 $230,000,000
Each fiscal quarter of the Borrower thereafter $260,000,000
provided, however, that the amount set forth opposite such period shall be
reduced by the EBITDA Adjustments as of the date of determination attributable
to those Restaurant(s) sold pursuant to which the Net Sale Proceeds from such
sales have been applied to permanently reduce the Commitments of the Lenders on
or before the 45th calendar day following the end of the fiscal quarter in which
such Restaurant(s) were sold.
(e) Adjusted Leverage Ratio. The Borrower shall not permit the
Adjusted Leverage Ratio to exceed at any time during each fiscal quarter of the
Borrower ending during any period listed below, the ratio set forth opposite
such period:
Period Ratio
------ -----
Second A&R Closing Date through Jan. 31, 2000 5.00 to 1.00
Feb. 1, 2000 through May 22, 2000 4.80 to 1.00
May 23, 2000 through August 14, 2000 4.65 to 1.00
August 15, 2000 through January 29, 2001 4.00 to 1.00
Each fiscal year of the Borrower thereafter 3.75 to 1.00
(f) Capital Expenditures. The Borrower shall not make or incur
and shall not permit any of its Subsidiaries to make or incur any Capital
Expenditures, except Capital Expenditures of the Borrower and its Subsidiaries
in an aggregate amount not in excess of $325,000,000 in each fiscal year of the
Borrower; provided that in the event that the Leverage Ratio exceeds 2.75 to
1.00 at any time during such fiscal year then (A) if the aggregate amount of
Capital Expenditures made or incurred by the Borrower and its Subsidiaries
exceeds
76
82
$150,000,000 with respect to such fiscal year as of the first date the Leverage
Ratio exceeds 2.75 to 1.00 during such fiscal year, the Borrower shall not make,
incur or commit to be made or incurred, or permit any of its Subsidiaries to
make, incur or commit to be made or incurred any additional Capital Expenditures
during the remainder of such fiscal year (other than additional Capital
Expenditures made or incurred pursuant to contractual commitments to make or
incur such Capital Expenditures in such fiscal year entered into by the Borrower
or any of its Subsidiaries prior to the first date that the Leverage Ratio
exceeds 2.75 to 1.00); and (B) if the aggregate amount of Capital Expenditures
made or incurred by the Borrower and its Subsidiaries does not exceed
$150,000,000 as of the first date the Leverage Ratio exceeds 2.75 to 1.00 during
such fiscal year, the Borrower shall not make, incur or commit to be made or
incurred and shall not permit any of its Subsidiaries to make, incur or commit
to be made or incurred any Capital Expenditures with respect to such fiscal year
in an aggregate amount in excess of $150,000,000 in such fiscal year (other than
additional Capital Expenditures made or incurred pursuant to contractual
commitments to make or incur such Capital Expenditures in such fiscal year
entered into by the Borrower or any of its Subsidiaries prior to the first date
that the Leverage Ratio exceeds 2.75 to 1.00); and provided further that if the
aggregate amount of Capital Expenditures made or incurred during such fiscal
year of the Borrower is less than the amount (as reduced, if applicable)
permitted to be made or incurred pursuant to this clause (f), then the maximum
amount for the following fiscal year of the Borrower (but not any subsequent
fiscal year of the Borrower) shall be increased by the amount of such
difference.
(g) Consolidated Tangible Net Worth. The Borrower shall not
permit its Consolidated Tangible Net Worth at any time to be less than the sum
of (i) $250,000,000, plus (ii) 50% of cumulative Consolidated Net Income of the
Borrower and its Subsidiaries for all fiscal quarters of the Borrower ended
after January 31, 1999 in which Consolidated Net Income is positive (and without
any deduction for any fiscal quarter in which Consolidated Net Income is
negative), plus (iii) 100% of the Net Equity Proceeds of any equity offering by
the Borrower.
Section 7.2 Indebtedness. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, suffer to exist or otherwise
become or remain directly or indirectly liable with respect to, any Indebtedness
other than the following provided that none of the creation, incurrence,
assumption or existence of any of the following result in or cause a violation
or breach of, or default under, any Subordinated Debt Document:
(a) Indebtedness hereunder and under the other Loan Documents;
(b) Indebtedness outstanding on the Second A&R Closing Date and
set forth on Schedule 7.2 hereto (without duplication of any other Indebtedness
permitted by the other provisions of this Section 7.2);
(c) Indebtedness permitted under Sections 7.6(a), 7.6(b), 7.6(d)
and 7.6(e);
77
83
(d) Indebtedness of the Borrower of the type described in clause
(vii) of the definition of Indebtedness to the extent permitted under Section
7.14;
(e) Indebtedness with respect to (i) purchase money Indebtedness
incurred solely to finance Capital Expenditures permitted under Section 7.1(f)
and any extensions, renewals, refundings or refinancings thereof, not in excess
of $5,000,000 in the aggregate at any one time outstanding for all such purchase
money Indebtedness and all extensions, renewals, refundings and refinancings
thereof and (ii) Capitalized Leases permitted under Section 7.13 and any
extensions, renewals, refundings or refinancings thereof so long as the terms of
any such Indebtedness with respect to Capitalized Leases is permitted under
Section 7.13; provided that (A) any such Indebtedness incurred pursuant to this
clause (e) and any such extensions, renewals, refundings or refinancings thereof
shall not exceed 85% of the lesser of the purchase price or the fair market
value of the asset so financed, (B) at the time of such incurrence, no Default
or Event of Default has occurred and is continuing or would result from such
incurrence, and (C) such Indebtedness has a scheduled maturity and is not due on
demand;
(f) any extensions, renewals, refundings and refinancings of the
Indebtedness described in clause (b) above, so long as the terms of any such
extension, renewal, refunding or refinancing Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are otherwise
permitted by the Loan Documents; provided further that the principal amount of
such Indebtedness shall not be increased above the principal amount thereof
outstanding immediately prior to such extension, renewal, refunding or
refinancing, and the direct and contingent obligors therefor shall not be
changed, as a result of or in connection with such extension, renewal, refunding
or refinancing;
(g) Indebtedness of any Domestic Subsidiary of the Borrower owed
to the Borrower or to any Domestic Subsidiary of the Borrower;
(h) (i) unsecured Permitted Subordinated Debt provided that the
aggregate principal amount of such Indebtedness shall not exceed $25,000,000
minus the amount of any Indebtedness incurred by the Borrower or any of its
Subsidiaries pursuant to Section 7.2(h)(ii) at any one time outstanding and (ii)
other Permitted Subordinated Debt in an aggregate principal amount not to exceed
$5,000,000 at any one time outstanding incurred in connection with a Permitted
Acquisition with respect to which all of the conditions set forth in Section
7.8(f) have been satisfied and incurred to pay all or part of the purchase price
thereof which Permitted Subordinated Debt, if secured, is secured only by Liens
permitted pursuant to Section 7.3(i);
(i) Indebtedness of the Borrower incurred pursuant to (i) the
Convertible Subordinated Notes in an aggregate principal amount not to exceed
$159,225,000 and (ii) the New Subordinated Notes in an aggregate original
principal amount not to exceed $287,500,000
78
84
at any time outstanding; in each case less all repayments, redemptions,
prepayments, purchases, defeasances or acquisitions for value with respect
thereto after the Second A&R Closing Date;
(j) unsecured Indebtedness of the Borrower or any of its
Subsidiaries consisting of guarantees of Indebtedness of a franchisee incurred
to finance a remodeling, construction or purchase of a retail unit of such
franchisee or capital expenditures of such franchisee ("Franchisee Construction
Debt"); provided that (i) the amount of the obligations of the Borrower and its
Subsidiaries under or with respect to such guarantees shall not exceed
$40,000,000 in the aggregate outstanding at any time; (ii) the amount of the
obligations of the Borrower and its Subsidiaries under or with respect to
guarantees of more than 20% of the principal amount of the Franchisee
Construction Debt of a franchisee shall not exceed $5,000,000 in the aggregate
outstanding at any time; and (iii) except for the guarantees described in the
foregoing clause (ii), the amount of the obligations of the Borrower and its
Subsidiaries under or with respect to guarantees of Franchisee Construction Debt
of any franchisee shall not exceed 20% of the Franchisee Construction Debt of
such franchisee;
(k) unsecured Indebtedness of the Borrower or any of its
Subsidiaries owing to former franchisees and representing the deferred purchase
price (or a deferred portion of such purchase price) payable by the Borrower or
such Subsidiary to such former franchisee in connection with the purchase by the
Borrower or such Subsidiary of one or more retail outlets from such former
franchisee in an aggregate principal amount for all such Indebtedness not to
exceed $5,000,000 at any one time outstanding;
(l) Indebtedness of any entity acquired pursuant to a Permitted
Acquisition with respect to which all of the conditions set forth in Section
7.8(f) have been satisfied, which Indebtedness (i) is existing prior to such
Permitted Acquisition, (ii) is assumed by the Borrower or any Subsidiary of the
Borrower in connection with any such Permitted Acquisition and (iii) is not
incurred in contemplation of such Permitted Acquisition; provided that the
aggregate principal amount of all such Indebtedness shall not exceed $20,000,000
at any time outstanding; and
(m) Indebtedness with respect to Sale and Leaseback Transactions
permitted under Section 7.13(a).
Section 7.3 Liens. The Borrower shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist, directly or
indirectly, any Lien on any of its property now owned or hereafter acquired,
other than the following provided that none of the creation, incurrence,
assumption or existence of any of the following result in the creation or
imposition of a Lien under any Subordinated Debt Document:
(a) Liens existing on the Second A&R Closing Date and set forth
on Schedule 7.3 hereto;
79
85
(b) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves are being maintained in accordance with GAAP;
(c) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by Law (other than
any Lien imposed by ERISA or pursuant to any Environmental Law) created in the
ordinary course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate bonds have been posted;
(d) Liens (other than any Lien imposed by ERISA or pursuant to
any Environmental Law) 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 and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(e) Easements, rights-of-way, zoning and similar restrictions and
other similar charges or encumbrances not interfering with the ordinary conduct
of the business of the Borrower or any of its Subsidiaries and which do not
detract materially from the value of the property to which they attach or impair
materially the use thereof by the Borrower or any of its Subsidiaries or
materially adversely affect the security interests of the Agent or the Lenders
therein;
(f) Liens granted to the Agent for the benefit of the Lenders
pursuant to the Security Documents securing the Obligations;
(g) Liens created pursuant to Capitalized Leases and to secure
other purchase-money Indebtedness permitted pursuant to Section 7.2(e), provided
that such Liens are only in respect of the property or assets subject to, and
secure only, the respective Capitalized Lease or other purchase-money
Indebtedness;
(h) Liens arising out of the replacement, extension or renewal of
any Lien permitted by clause (a) above upon or in the same property theretofore
subject thereto in connection with the refunding, refinancing, extension or
renewal (without increase in the amount or change in any direct or contingent
obligor) of the Indebtedness secured thereby permitted pursuant to Section
7.2(f);
(i) Liens securing Permitted Subordinated Debt permitted pursuant
to Section 7.2(h)(ii) provided that (i) such Liens are only in respect of the
assets acquired in the applicable Permitted Acquisition, (ii) the Obligations
are secured by valid first priority perfected Liens on such assets and the Liens
permitted pursuant to this Section 7.3(i) are second in priority
80
86
to the Liens on such assets securing the Obligations and (iii) the rights and
remedies of any holder of such Liens are subordinated to the rights and remedies
of the Agent and the Lenders on terms approved in writing by the Agent;
(j) Liens securing Indebtedness (other than Permitted
Subordinated Debt) of the Borrower and its Subsidiaries in an aggregate
principal amount not to exceed $25,000,000; and
(k) Liens of a lessor covering only specific property leased by
the Borrower or any of its Subsidiaries subject to operating leases entered into
by the Borrower or any of its Subsidiaries as a lessee in the ordinary course of
business; and
(l) Liens of a lessor covering only specific property leased by
the Borrower or any of its Subsidiaries subject to a Sale and Leaseback
Transaction permitted by Section 7.13(a) entered into by the Borrower or any of
its Subsidiaries as a lessee.
Section 7.4 Restriction on Fundamental Changes.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any merger or consolidation, or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution), discontinue its business
or convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or any substantial part of its business or property,
whether now or hereafter acquired, except (i) as otherwise permitted under
Section 7.5, (ii) any wholly-owned Subsidiary of the Borrower may merge into or
convey, sell, lease or transfer all or substantially all of its assets to, the
Borrower or any other Domestic Subsidiary of the Borrower, provided, that in any
such merger involving the Borrower, the Borrower shall be the surviving
corporation and any such Subsidiary merging into the Borrower or any such
Domestic Subsidiary shall be Solvent, (iii) any Solvent Person acquired by the
Borrower or a Subsidiary of the Borrower in a Permitted Acquisition permitted
hereunder may merge with the Borrower or any wholly-owned Subsidiary of the
Borrower, provided, that in any such merger, the Borrower or such wholly-owned
Subsidiary shall be the surviving corporation, provided, that in each case, (A)
any such wholly-owned Subsidiary of the Borrower which is the surviving
corporation of any such merger or to which any business or property is so
transferred shall be a party to the Guaranty and the Subsidiary Security
Agreement and if required by Section 2.21, a Subsidiary Pledge Agreement, (B)
the Borrower shall give the Agent at least ten (10) days prior written notice of
any such sale, merger or other transfer, (C) the Agent and Lenders shall not be
deemed to have released their security interest in any assets so transferred or
in any Subsidiary or the assets of any Subsidiary so merged and (D) no Default
or Event of Default shall have occurred or be continuing or would occur after
giving effect thereto or as a result thereof.
81
87
(b) Borrower shall not and shall not permit any of its
Subsidiaries to, amend its certificate of incorporation or by-laws (or other
relevant formation document) in any manner adverse to the interests of the Agent
or the Lenders.
Section 7.5 Sale of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make, consummate or effect any Asset
Disposition (or agree to do so at any future time) with respect to all or any
part of its property or assets, except:
(a) the sale of any asset by the Borrower or any of its
Subsidiaries (other than a bulk sale of inventory and a sale of receivables
(other than delinquent accounts for collection purposes only) and other than a
sale of any capital stock of Carl Karcher Enterprises, Inc., Hardee's or FEI) so
long as (i) the purchase price paid to the Borrower or such Subsidiary for such
asset shall be no less than the fair market value of such asset at the time of
such sale, (ii) the purchase price for such asset shall be paid to the Borrower
or such Subsidiary solely in cash (except for non-cash consideration in the form
of promissory notes maturing not later than 3 years after the date of issuance
and in an aggregate principal amount for all such promissory notes not to exceed
$10,000,000 at any one time outstanding) and Cash Equivalents, (iii) the
aggregate fair market value of such asset and all other assets sold by the
Borrower and its Subsidiaries during the same fiscal year of the Borrower
pursuant to this clause (a) shall not exceed 10% of the total assets of the
Borrower and its Subsidiaries determined on a consolidated basis in accordance
with GAAP provided that both (A) Excluded Resales and (B) Sale and Leaseback
Transactions entered into by the Borrower or any of its Subsidiaries pursuant to
Section 7.13(a), shall not be included in the calculation of such percentage,
(iv) the Borrower shall prepay the Loans pursuant to, and in accordance with,
Section 2.12 in an aggregate principal amount equal to the Net Sale Proceeds
received by the Borrower or such Subsidiary from the sale, transfer or other
disposition of such asset and (v) no Default or Event of Default has occurred
and is continuing or would result from such asset sale; and
(b) so long as no Default or Event of Default shall occur and be
continuing, the grant of any option or other right to purchase any asset in a
transaction which would be permitted under the provisions of the preceding
clause (a); and
(c) [Intentionally Omitted]; and
(d) sale of the capital stock or assets of Boston Pacific, Inc.
and Boston West, L.L.C. so long as (i) the purchase price paid in connection
therewith shall be at least the fair market value thereof at the time of such
sale and (ii) any and all consideration received by the Borrower in connection
therewith that constitutes Collateral is pledged to the Agent for the benefit of
the Lenders pursuant to a validly executed Security Document.
82
88
Section 7.6 Contingent Obligations. The Borrower shall not, and shall
not permit any of its Subsidiaries to, create or become or be liable with
respect to any Contingent Obligation, except:
(a) pursuant to the Guaranty or the Security Documents;
(b) Contingent Obligations which are in existence on the Second
A&R Closing Date and which are set forth on Schedule 7.6;
(c) Contingent Obligations permitted pursuant to Section 7.2(j);
(d) pursuant to the FEI Guaranties; and
(e) guarantees by Subsidiaries of the Borrower pursuant to the
New Subordinated Note Indenture of obligations of the Borrower under the New
Subordinated Notes, provided that such guarantees shall at all times be
subordinated in respect of the Obligations on subordination terms contained in
the New Subordinated Note Indenture.
Section 7.7 Dividends. The Borrower shall not, and shall not permit any
of its Subsidiaries to, declare or pay any dividends, or return any capital to,
its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase, defease or otherwise acquire, directly or indirectly, any shares of
any class of its Capital Stock now or hereafter outstanding (or any options,
rights or warrants issued with respect to its Capital Stock), or set aside any
funds for any of the foregoing purposes (all the foregoing "Dividends"), except
that:
(a) Dividends may be made to the Borrower or any of its
wholly-owned Subsidiaries by any of its wholly-owned Subsidiaries; and
(b) So long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, the Borrower may:
(i) declare and deliver dividends and distributions payable
only in common stock of the Borrower; and
(ii) declare and pay cash dividends to its stockholders and
purchase, redeem, retire or otherwise acquire shares of its own
outstanding capital stock for cash during any fiscal year of the
Borrower if after giving effect thereto the aggregate amount of such
dividends, purchases, redemptions, retirements and acquisitions paid or
made during such fiscal year would be less than the amount of (A) 30%
of Consolidated Net Income of the Borrower for each fiscal year of the
Borrower (commencing with the fiscal year ending January 26, 1998) up
to
83
89
and including the fiscal year immediately preceding the year in which
such dividend, purchase, redemption, retirement or acquisition is paid
or made, less (B) the aggregate amount of any sinking fund payments,
payments, prepayments, redemptions, defeasances, and purchases or
acquisitions for value paid pursuant to Section 7.10(d) during such
fiscal year (excluding, however, the aggregate amount of payments made
in connection with Permitted Redemptions), less (C) the aggregate
amount of all such dividends, purchases, redemptions, retirements and
acquisitions paid and made by the Borrower after January 26, 1998
through and including the end of such immediately preceding fiscal
year, less (D) the aggregate outstanding principal balance of all
Employee Stock Loans then outstanding; and
(c) So long as no Default or Event of Default shall have occurred
and be continuing, any Subsidiary of the Borrower that is not a wholly-owned
Subsidiary of the Borrower may declare and pay cash dividends to the extent, and
only to the extent, of any cumulative positive net income (after deducting any
negative net income) of such Subsidiary arising after the date such Subsidiary
became a Subsidiary of the Borrower so long as such dividends are payable to all
of its equity holders on a ratable basis.
Section 7.8 Advances, Investments and Loans. The Borrower shall not,
and shall not permit any of its Subsidiaries to, make or suffer to exist,
directly or indirectly any Investments (including, without limitation, loans and
advances to the Borrower or any of its Subsidiaries, and other Investments in
Subsidiaries of the Borrower), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint venture,
or make any Acquisition of any interest in any Person, except that the following
shall be permitted provided that none of the making, existence or creation of or
becoming or remaining a partner in, any of the following will not result in or
cause a violation or breach of, or default under, any Subordinated Debt
Document:
(a) Investments set forth on Schedule 7.8;
(b) Investments by the Borrower and its Subsidiaries in
Subsidiaries of the Borrower outstanding on the Second A&R Closing Date,
additional Investments (other than loans and advances) by the Borrower or any
Subsidiary of the Borrower in any Domestic Subsidiary of the Borrower which
Subsidiary is Solvent and is a party to the Guaranty, and additional Investments
by the Borrower or any wholly-owned Subsidiary of the Borrower consisting of
loans and advances to wholly-owned Domestic Subsidiaries of the Borrower to the
extent permitted by Section 7.2(g);
(c) loans and advances by the Borrower and its Subsidiaries to
their employees in the ordinary course of its business (other than Employee
Stock Loans) not exceeding $2,000,000 in the aggregate at any one time
outstanding;
84
90
(d) the Borrower and its Subsidiaries may acquire and hold Cash
Equivalents;
(e) Investments consisting of promissory notes permitted to be
received as consideration in connection with Asset Dispositions permitted under
Section 7.5(a);
(f) Permitted Acquisitions, provided that, in the case of each
Permitted Acquisition, the conditions referred to in clauses (i) through (ix)
below are satisfied on or prior to the date of such Permitted Acquisition (it
being understood that, for purposes of clause (ii) below, the phrase "the
Borrower and its Subsidiaries" and the phrase "Consolidated" shall be deemed to
include the Person (and its Subsidiaries, if any, to be acquired) or assets to
be acquired as though such Person (and its Subsidiaries, if any, to be acquired)
or assets were a Subsidiary of the Borrower):
(i) the Person or assets to be acquired satisfy the criteria
set forth in either the definition of "Permitted Acquisition" or the
definition of "Permitted Restaurant Acquisitions" contained in Section
1;
(ii) in the case of Permitted Acquisitions other than
Permitted Restaurant Acquisitions, the Borrower shall have delivered to
the Agent a certificate of the chief financial officer of the Borrower,
in form and substance satisfactory to the Agent, demonstrating:
(1) compliance by the Borrower and its Subsidiaries with
the covenants set forth in Section 7.1, on a pro forma basis after
giving effect to such Acquisition, for a period of four consecutive
fiscal quarters after the date of such Acquisition, and
(2) on a pro forma basis after giving effect to such
Acquisition, as at the last day of the fiscal quarter ended immediately
preceding the date of consummation of such Acquisition for which
financial statements have been delivered to the Lenders pursuant to
Section 6.1(a), for the period of four consecutive fiscal quarters of
the Borrower (taken as one accounting period) then ended, that:
(A) the Leverage Ratio shall be less than 2.5 to 1.0,
(B) the Adjusted Leverage Ratio shall be less than
3.75 to 1.0, and
85
91
(C) the Consolidated EBITDA of the Person and any of
its Subsidiaries, if any, to be acquired, for the twelve-month
period most recently ended shall be a positive number;
(iii) in the case of Permitted Acquisitions that are Permitted
Restaurant Acquisitions, the Borrower shall have delivered to the Agent
a certificate of the chief financial officer of the Borrower, in form
and substance satisfactory to the Agent, demonstrating:
(1) compliance by the Borrower and its Subsidiaries with
the covenants set forth in Section 7.1, on a pro forma basis after
giving effect to such Acquisition, for a period of four consecutive
fiscal quarters after the date of such Acquisition, and
(2) on a pro forma basis after giving effect to such
Acquisition, as at the last day of the fiscal quarter ended immediately
preceding the date of consummation of such Acquisition for which
financial statements have been delivered to the Lenders pursuant to
Section 6.1(a), for the period of four consecutive fiscal quarters of
the Borrower (taken as one accounting period) then ended, that:
(A) if the aggregate amount of cash consideration
paid and Indebtedness incurred or assumed in connection with
all Permitted Restaurant Acquisitions occurring after April 1,
1998 after giving effect to such Acquisition is less than or
equal to $75,000,000, the Leverage Ratio shall be less than
2.75 to 1.00,
(B) if the aggregate amount of cash consideration
paid and Indebtedness incurred or assumed in connection with
all Permitted Restaurant Acquisitions occurring after April 1,
1998 after giving effect to such Acquisition is greater than
$75,000,000, the Leverage Ratio shall be less than 2.5 to 1.0,
(C) if the aggregate amount of cash consideration
paid and Indebtedness incurred or assumed in connection with
all Permitted Restaurant Acquisitions occurring after April 1,
1998 after giving effect to such Acquisition is less than or
equal to $75,000,000, the Adjusted Leverage Ratio shall be
less than 4.25 to 1.0,
86
92
(D) if the aggregate amount of cash consideration
paid and Indebtedness incurred or assumed in connection with
all Permitted Restaurant Acquisitions occurring after April 1,
1998 after giving effect to such Acquisition is greater than
$75,000,000, the Adjusted Leverage Ratio shall be less than
3.75 to 1.0, and
(E) the Consolidated EBITDA of the Person and any of
its Subsidiaries, if any, to be acquired, for the twelve-month
period most recently ended shall be a positive number;
(iv) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of the date of
such Acquisition, after giving effect to such Acquisition, as though
made on and as of such date, other than any such representations and
warranties that by their terms are specifically made as of a date other
than such date;
(v) no event has occurred and is continuing on the date of
such Acquisition, or would result from such Acquisition, that
constitutes a Default or an Event of Default;
(vi) the Total Revolving Loan Commitment minus the aggregate
principal amount of the Revolving Loans outstanding on the date of such
Permitted Acquisition, minus the amount of any L/C Obligations
outstanding on the date of such Permitted Acquisition shall equal at
least $25,000,000;
(vii) all Consents and waiting periods described in clause
(viii)(3)(D) below shall have been obtained or expired; and
(viii) the Borrower or such Subsidiary of the Borrower making
such Acquisition shall furnish or cause to be furnished to the Agent
and the Lenders the following:
(1) Certified copies of the resolutions of the Board of
Directors of the Borrower and, if any Subsidiary of the Borrower will
participate in the applicable Acquisition, of such Subsidiary (in each
case, to the extent resolutions of the Board of Directors of the
Borrower or such Subsidiary are required or advisable pursuant to
applicable law or the Borrower's or such Subsidiary's charter
documents) and of all documents evidencing other necessary corporate
action or other Consents, if any, with respect to such Acquisition;
87
93
(2) Such other financial, business and other information
regarding the Person or assets to be acquired, as the case may be, as
the Agent or the Required Lenders through the Agent shall have
reasonably requested, including, without limitation, actual and pro
forma financial statements and projections relating to such Person or
assets;
(3) In the case of each Permitted Acquisition, to the
extent that such Acquisition consists of the acquisition by the
Borrower or any of its Subsidiaries of stock, partnership or other
Equity Interests of any Person (or assets in the case of clause (A)
below):
(A) All documents required to be delivered pursuant
to Section 2.21 and Section 6.11;
(B) A copy of the charter or other organizational
document of such Person and each amendment thereto, if any,
certified by the Secretary of State of its jurisdiction of
organization, as of a date reasonably near the date of such
Borrowing, as being a true and correct copy thereof;
(C) An officer's certificate signed on behalf of such
Person by an appropriate officer of such Person, certifying as
to (i) the absence of any amendment to the charter or other
organizational document of such Person since the date of the
Secretary of State's certificate referred to in clause (B)
above, (ii) a true and correct copy of the by-laws or similar
organizational document of such Person, (iii) a true and
correct copy of the resolutions adopted by the Board of
Directors or equivalent body of such Person approving the
documents or instruments to be delivered under this Section
7.8(f) to which such Person is a party and the matters
contemplated thereby, (iv) the incumbency and specimen
signatures of the officers of such Person executing the
documents and instruments to be delivered under this Section
7.8(f) to which such Person is a party, and (v) the due
organization and good standing of such Person as a Person
organized under the laws of its jurisdiction of organization;
(D) Evidence satisfactory to the Agent and the
Lenders that the Borrower, its Subsidiaries and the Person
being acquired has made and obtained all necessary
governmental and other Consents required in order to
consummate such Acquisition and that all applicable waiting
periods with respect to
88
94
such Acquisition including, without limitation, those under
the Hart-Scott-Rodino Act have expired without any action
having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the
rights of the Loan Parties or their Subsidiaries freely to
transfer or otherwise dispose of, or to create any Lien on,
any properties now owned or hereafter acquired by any of them;
and
(ix) the total consideration, contingent or otherwise, for the
Acquisition of the Person being acquired does not exceed, in the
aggregate, $200,000,000 in value (including, without limitation,
securities, instruments, or promissory notes tendered or executed in
connection with such acquisition), of which no more than $100,000,000
shall consist of cash and/or Indebtedness incurred or assumed;
(g) Investments in Related Businesses other than joint ventures,
provided that the amount of such Investments made after the Second A&R Closing
Date shall not exceed $100,000,000 in the aggregate less the aggregate amount of
any Investments made pursuant to clause (j) of this Section 7.8; provided that
the Borrower or any of its Subsidiaries may reinvest the proceeds received from
the liquidation of any such Investments in Investments in Related Businesses
permitted to be made pursuant to this clause (g) in an amount equal to the
lesser of (i) the amount of the proceeds received from the Borrower or such
Subsidiary from the liquidation of such Investment and (ii) the original amount
paid by the Borrower or such Subsidiary for such Investment; provided, further,
that the Borrower and its Subsidiaries shall promptly deliver to the Agent all
Capital Stock and Instruments evidencing such Investments in Related Businesses
that are required to be delivered to the Agent pursuant to the Security
Documents;
(h) Investments received as consideration in connection with
Asset Dispositions permitted under paragraphs (c) and (d) of Section 7.5;
(i) Investments in Capital Stock of Checkers Drive-In
Restaurants, Inc., in an aggregate amount not to exceed $11,000,000, which
Capital Stock was acquired through the exercise of warrants, options and similar
rights owned by the Borrower;
(j) Investments by the Borrower or a Subsidiary of the Borrower
in a joint venture which is a Person organized under the laws of a state of the
United States of America for whose Indebtedness neither the Borrower nor any
Subsidiary of the Borrower is liable, in which the Borrower or such Subsidiary
holds 50% of the outstanding equity interests with another operator of retail
facilities for the purpose of developing, acquiring or constructing properties
which include restaurant operations; provided that the aggregate amount of the
such Investments made after the Second A&R Closing Date does not exceed
$50,000,000; provided further that the Borrower or any of its Subsidiaries may
reinvest the proceeds received from the liquidation of
89
95
any such Investments in Investments in joint ventures permitted to be made
pursuant to this clause (j) in an amount equal to the lesser of (i) the amount
of the proceeds received from the Borrower or such Subsidiary from the
liquidation of such Investment and (ii) the original amount paid by the Borrower
or such Subsidiary for such Investment; and provided, further, that (i) the
consent of the Borrower or such Subsidiary must be required for such joint
venture to effect any material transactions, including the acquisition and sale
of assets, incurrence of Indebtedness and significant capital commitments; and
(ii) such joint venture will not create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction which would
unreasonably restrict the ability of the joint venture to distribute to its
owners the net cash flow of the joint venture; and
(k) Employee Stock Loans not exceeding $10,000,000 in the
aggregate at any one time outstanding.
Section 7.9 Transactions with Affiliates. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate, other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable at the
time in a comparable arm's-length transaction with a Person other than an
Affiliate; provided, however, that Employee Stock Loans otherwise permitted by
the terms hereof shall not be considered to be transactions with Affiliates for
purposes of this Section 7.9.
Section 7.10 Limitation on Voluntary Payments and Modifications of
Certain Documents. The Borrower shall not, and shall not permit any of its
Subsidiaries to:
(a) make any sinking fund payment or voluntary or optional
payment or prepayment on or redemption, defeasance, purchase or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due) or exchange of any Indebtedness (other than Indebtedness permitted to
be incurred pursuant to Section 7.2(i)) other than (i) the Indebtedness
hereunder and under the other Loan Documents and (ii) regularly scheduled or
required repayments of Indebtedness permitted pursuant to Section 7.2; provided
that the Borrower may, and may permit any of its Subsidiaries to, prepay,
redeem, defease, purchase or acquire or exchange any (collectively, a
"Prepayment") Surviving Debt (other than Indebtedness permitted to be incurred
pursuant to Section 7.2(i)) or Indebtedness assumed in connection with a
Permitted Acquisition which Indebtedness is permitted pursuant to Section
7.2(l)) in each case only if on the date of such Prepayment (x) no event or
condition has occurred and is continuing, or would result from such Prepayment,
that constitutes a Default or an Event of Default, and (y) after giving effect
to such Prepayment, the Total Revolving Loan Commitment minus the aggregate
principal amount of the Revolving Loans outstanding on the date of such
Prepayment minus the amount of any L/C Obligations outstanding on the date of
such Prepayment shall equal at least $10,000,000; or
90
96
(b) amend, modify or waive, or permit the amendment, modification
or waiver of (i) any material provision of any Transaction Document (other than
the Loan Documents and other than the Subordinated Debt Documents), or (ii) any
term or provision of (A) the Surviving Debt (other than Indebtedness permitted
to be incurred pursuant to Section 7.2(h) or Section 7.2(i)) in any way that
would be materially adverse to the Lenders or (B) the Permitted Subordinated
Debt or the Subordinated Debt Documents; or
(c) make any payment in violation of any subordination terms of
any Indebtedness of the Borrower or any of its Subsidiaries; or
(d) make or offer to make any sinking fund payment, payment,
prepayment, redemption, defeasance, purchase or acquisition for value
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying when
due) or otherwise segregate funds with respect to the Subordinated Notes (other
than (i) in connection with Permitted Redemptions, (ii) regularly scheduled
semi-annual interest payments required to be made in cash and (iii) conversions
of the Convertible Subordinated Notes into common stock of the Borrower) to the
extent that the aggregate amount of all such sinking fund payments, payments,
prepayments, redemptions, defeasances, and purchases or acquisitions for value
would exceed the sum of (A) 30% of the Consolidated Net Income of the Borrower
for each fiscal year of the Borrower (commencing with the fiscal year ending
January 26, 1998 up to and including the fiscal year immediately preceding the
year in which sinking fund payment, payment, prepayments redemption,
defeasances, purchase or acquisition is made, less (B), together with the
aggregate amount of all dividends, purchases, redemptions, retirements and
acquisitions paid or made pursuant to Section 7.7(b)(ii), less (C) the aggregate
amount of all such sinking fund payments, payments, prepayments, redemptions,
defeasances, and purchases or acquisitions for value paid and made by the
Borrower after January 26, 1998 through and including the end of such
immediately preceding fiscal year, less (D) the aggregate outstanding principal
balance of all Employee Stock Loans then outstanding.
Section 7.11 Changes in Business. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by the Borrower or such Loan Party,
as the case may be, on the Second A&R Closing Date after giving effect to the
Transactions.
Section 7.12 Certain Restrictions. The Borrower shall not, and shall
not permit any of its Subsidiaries to, enter into or permit to exist any
agreement, instrument or other document which directly or indirectly restricts
the ability of the Borrower or any of its Subsidiaries to (a) enter into
amendments, modifications or waivers of the Loan Documents, (b) sell, transfer
or otherwise dispose of its assets, (c) create, incur, assume or suffer to exist
any Lien upon any of its property, (d) create, incur, assume, suffer to exist or
otherwise become liable with respect to any Indebtedness, (e) make loans or
advances to the Borrower, or (f) pay any Dividend or repay any Indebtedness owed
to the Borrower or any of its Subsidiaries; provided that
91
97
Capitalized Leases or agreements governing purchase money Indebtedness which
contain restrictions of the types referred to in clauses (b) or (c) with respect
to the property covered thereby shall be permitted; provided further that the
foregoing shall not apply to restrictions in effect on the Second A&R Closing
Date contained in agreements governing Surviving Debt (other than Indebtedness
arising under the Subordinated Notes) and, if such Indebtedness is renewed,
extended or refinanced, restrictions in the agreements governing the renewed,
extended or refinanced Indebtedness (as successive renewals, extensions and
refinancings thereof) if such restrictions are no more restrictive in any
material respect than those contained in the agreements governing the
Indebtedness being renewed, extended or refinanced and if such renewals,
extensions and refinancings are permitted pursuant to Section 7.2(f).
Section 7.13 Lease Obligations. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
obligations as lessee (a) for the rental or hire of real or personal property in
connection with any sale and leaseback transaction, except
(i) the Borrower and its Subsidiaries may sell real property or
equipment owned by the Borrower or any of its Subsidiaries on the Second A&R
Closing Date and simultaneously with such sale become liable with respect to any
operating lease involving such property (each, an "Existing Property Sale and
Leaseback Transaction"), and (ii) the Borrower and its Subsidiaries may sell
real property which the Borrower or any of its Subsidiaries acquires after the
Second A&R Closing Date for the purpose of building a Restaurant which the
Borrower or such Subsidiary intends to own and operate, and simultaneously with
such sale become liable with respect to any operating lease involving such
property if such sale and leaseback occurs on or before the date which is twelve
(12) months after the date of acquisition by the Borrower or one of its
Subsidiaries of such real property (each, a "New Property Sale and Leaseback
Transaction"), provided that:
(1) with respect to Existing Property Sale and Leaseback
Transactions, the greater of (A) the aggregate proceeds of all such
Existing Property Sale and Leaseback Transactions and (B) the aggregate
fair market value of all such property sold and leased back pursuant to
such Existing Property Sale and Leaseback Transactions by the Borrower
and its Subsidiaries, does not exceed $205,000,000 on a consolidated
basis;
(2) with respect to New Property Sale and Leaseback
Transactions, the greater of (A) the aggregate proceeds of all such New
Property Sale and Leaseback Transactions by the Borrower and it
Subsidiaries and (B) the aggregate fair market value of all such
property sold and leased back pursuant to such New Property Sale and
Leaseback Transactions by the Borrower and its Subsidiaries does not
exceed $15,000,000 in the aggregate in any fiscal year of the Borrower;
92
98
(3) an Affiliate of the Borrower or any of its Subsidiaries is
not a party to any Sale and Leaseback Transaction (except to the extent
that the Borrower or any of its Subsidiaries is the lessee);
(4) the Agent is provided with fully executed documentation of
each such Existing Property Sale and Leaseback Transaction on or prior
to the closing date of such transaction;
(5) no Default or Event of Default exists on the closing date
of any such Existing Property Sale and Leaseback Transaction or would
result therefrom and the Borrower shall deliver to the Agent prior to
the closing date of such transaction an officer's certificate of the
chief financial officer of the Borrower certifying thereto; and
(6) the term of each such operating lease shall not be less
than fifteen (15) years; or
(b) for the rental or hire of other real or personal property of
any kind under leases or agreements to lease including Capitalized Leases except
for leases (including Capitalized Leases) entered into for fair market value in
the ordinary course of business of the Borrower and its Subsidiaries.
Section 7.14 Hedging Agreements. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into or remain liable under any Hedging
Agreement, except (a) Interest Rate Agreements with one or more of the Lenders
pursuant to which the Borrower and its Subsidiaries have hedged their reasonably
estimated interest rate exposure and (b) Hedging Agreements relating to
commodities pursuant to which the Borrower and its Subsidiaries have hedged
their reasonably estimated commodity price exposure.
Section 7.15 Plans. The Borrower shall not, nor shall it permit any
member of its ERISA Controlled Group to, take any action which would increase
the aggregate present value of the Unfunded Benefit Liabilities under all Plans
to an amount in excess of $2,000,000.
Section 7.16 Fiscal Year; Fiscal Quarter. The Borrower shall not, and
shall not permit any of its Subsidiaries to, change its fiscal year or any of
its fiscal quarters.
Section 7.17 Partnerships. The Borrower shall not, and shall not permit
any of its Subsidiaries to, become or remain a general partner in any general or
limited partnership, or permit any of its Subsidiaries to do so, except for any
Subsidiary which is a corporation and the sole assets of which consist of its
interest in such partnership and except with respect to the partnerships
described on Schedule 7.17.
Section 7.18 Excluded Resales. The Borrower shall not, and shall not
permit any of its Subsidiaries to, acquire, purchase, hold or own any
Restaurants which the Borrower or any
93
99
such Subsidiaries acquire from a franchisee with the intent of reselling to the
extent the aggregate amount of Restaurants owned or held by the Borrower and its
Subsidiaries would exceed $20,000,000 at any one time outstanding, such amount
to be measured by the purchase price paid by the Borrower or any such
Subsidiaries for such Restaurants.
Section 7.19 Designated Senior Indebtedness. The Borrower shall not
designate, create or permit to exist any (a) Designated Senior Indebtedness (as
defined in the Convertible Subordinated Note Indenture) and (b) Designated
Senior Indebtedness (as defined in the New Subordinated Note Indenture), in each
case other than obligations arising under the Loan Documents.
Section 7.20 Instruments. The Borrower shall not permit any of its
Subsidiaries to own or hold, directly or beneficially, any Instrument if such
Subsidiary is not a party to a legal, valid and binding Subsidiary Pledge
Agreement.
SECTION 8. EVENTS OF DEFAULT
Section 8.1 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. The Borrower shall (i) default in
the payment when due of any principal of the Loans or (ii) default, and such
default shall continue unremedied for two (2) or more Business Days, in the
payment when due of any interest on the Loans or in the payment when due of any
Fees or any other amounts owing hereunder.
(b) Breach of Representation or Warranty. Any representation or
warranty made by any Loan Party herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made.
(c) Breach of Covenants.
(i) The Borrower shall fail to perform or observe any
agreement, covenant or obligation arising under Section 6.1(f) or
Section 7.
(ii) The Borrower shall fail to perform or observe any
agreement, covenant or obligation arising under this Agreement (except
those described in subsections (a), (b) and (c)(i) above), and such
failure shall continue for thirty (30) days.
94
100
(iii) Any Loan Party shall fail to perform or observe any
agreement, covenant or obligation arising under any provision of the
Loan Documents other than this Agreement, which failure shall continue
after the end of the applicable grace period, if any, provided therein.
(d) Default Under Other Agreements. Any Loan Party or any of its
Subsidiaries shall default in the payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) of any amount
owing in respect of any Indebtedness of such Loan Party or any of its
Subsidiaries (other than the Obligations) in the aggregate principal amount of
$5,000,000 or more; or any Loan Party or any of its Subsidiaries shall default
in the performance or observance of any obligation or condition with respect to
any such Indebtedness or any other event shall occur or condition shall exist,
if the effect of such default, event or condition is to accelerate the maturity
or cause a mandatory redemption of any such Indebtedness or to permit the holder
or holders thereof, or any trustee or agent for such holders, to accelerate the
maturity or require a redemption or other repurchase thereof of any such
Indebtedness, or any such Indebtedness shall become or be declared to be due and
payable prior to its stated maturity other than as a result of a regularly
scheduled payment; or any such Indebtedness shall be declared to be due and
payable, or shall be required to be prepaid, redeemed, purchased or defeased, or
an offer to prepay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case prior to its stated maturity other than as a
result of a regularly scheduled payment.
(e) Bankruptcy, etc. (i) Any Loan Party or any of its
Subsidiaries shall commence a voluntary case concerning itself under the
Bankruptcy Code; or (ii) an involuntary case is commenced against any Loan Party
or any of its Subsidiaries and the petition is not controverted within 10 days,
or is not dismissed within 60 days, after commencement of the case; or (iii) a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Loan Party or any of its
Subsidiaries or any Loan Party or any of its Subsidiaries commences any other
proceedings under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Loan Party or
any of its Subsidiaries or there is commenced against any Loan Party or any of
its Subsidiaries any such proceeding which remains undismissed for a period of
60 days; or (iv) any order of relief or other order approving any such case or
proceeding is entered; or (v) any Loan Party or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or (vi) any Loan Party or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or (vii) any Loan Party or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or (viii) any Loan Party or any
of its Subsidiaries shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due; or (ix) any
Loan Party or any of its Subsidiaries shall call a meeting of its creditors with
a view to arranging a composition or adjustment of its debts; or (x) any Loan
Party or any of its Subsidiaries shall by any act or failure to act consent to,
approve of
95
101
or acquiesce in any of the foregoing; or (xi) any corporate action is taken by
any Loan Party or any of its Subsidiaries for the purpose of effecting any of
the foregoing.
(f) ERISA. (i) Any Termination Event shall occur, or (ii) any
Plan shall incur an "accumulated funding deficiency" (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived, or (iii) the
Borrower or a member of its ERISA Controlled Group shall have engaged in a
transaction which is prohibited under Section 4975 of the Code or Section 406 of
ERISA which could result in the imposition of liability in excess of $2,000,000
on the Borrower or any member of its ERISA Controlled Group, or (iv) the
Borrower or any member of its ERISA Controlled Group shall fail to pay when due
an amount which it shall have become liable to pay to the PBGC, any Plan or a
trust established under Title IV of ERISA, or (v) a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
an ERISA Plan must be terminated or have a trustee appointed to administer any
ERISA Plan, or (vi) the Borrower or a member of its ERISA Controlled Group
suffers a partial or complete withdrawal from a Multiemployer Plan or is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan, or (vii) a proceeding shall be instituted against the
Borrower or any member of its ERISA Controlled Group to enforce Section 515 of
ERISA and such proceeding shall remain undismissed for 180 days, or (viii) any
other event or condition shall occur or exist with respect to any Plan which
could subject the Borrower or any member of its ERISA Controlled Group to any
tax, penalty or other liability in excess of $2,000,000 or (ix) the aggregate
present value of all post-retirement benefit liabilities of the Borrower and its
Subsidiaries under any "welfare plan" (as defined in Section 3(1) of ERISA),
including, without limitation, Hardee's Retiree Medical Insurance Plan, exceeds
$20,000,000.
(g) Security Documents. Any of the Security Documents shall for
any reason cease to be in full force and effect, or shall cease to give the
Agent for the benefit of the Lenders the Liens, rights, powers and privileges
purported to be created thereby including, without limitation, a perfected first
priority security interest in, and Lien on, any material part of the Collateral
in accordance with the terms thereof or the Borrower or any of the Borrower's
Subsidiaries party to any Security Document seeks to repudiate its respective
obligations thereunder and the Liens created thereby are rendered, or the
Borrower or any such Subsidiary of the Borrower seeks to render such Liens,
invalid and unperfected.
(h) Guaranty. The Guaranty or any provision thereof shall cease
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of a Guarantor shall deny or disaffirm all or any portion of such
Guarantor's obligations under such Guaranty.
(i) Change of Control. (i) Any Person or two or more Persons
acting in concert other than the Controlling Stockholders shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934), directly or
indirectly, of Voting Stock of the Borrower (or other
96
102
securities convertible into such Voting Stock) representing 20% or more of the
combined voting power of all Voting Stock of the Borrower; or (ii) during any
period of up to 24 consecutive months, commencing after the Second A&R Closing
Date, individuals who at the beginning of such 24-month period were directors of
the Borrower shall cease for any reason to constitute a majority of the board of
directors of the Borrower; or (iii) any Person or two or more Persons acting in
concert other than the Controlling Stockholders shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, the power to exercise
control over Voting Stock of the Borrower (or other securities convertible into
such securities representing 20% or more of the combined voting power of all
Voting Stock of the Borrower); or (iv) at any time from and after July 15, 1997,
until July 15, 1999, the Required Holders shall fail to own and control at least
1,000,000 shares of Voting Stock (as adjusted for stock splits, dividends or
reclassifications); provided that the number of shares of Voting Stock of the
Borrower deemed owned and controlled by William P. Foley II ("Mr. Foley") shall,
for purposes of the preceding clause (iv), include (A) the number of shares of
Voting Stock (as adjusted for stock splits, dividends or reclassifications)
owned and controlled by Cannae Limited Partnership, a Nevada Limited
Partnership, but only to the extent of Mr. Foley's pro rata interest (based on
Mr. Foley's interest in such partnership) in such Voting Stock owned and
controlled by such partnership and (B) the number of shares of Voting Stock of
the Borrower issuable upon the exercise of options then owned and controlled and
exercisable by Mr. Foley; or (v) a Change in Control as defined in the New
Subordinated Note Indenture shall have occurred.
(j) Judgments. One or more judgments or decrees or awards in an
aggregate amount of $5,000,000 or more shall be entered by a court or courts of
competent jurisdiction or in any arbitration proceeding against any Loan Party
or any of its Subsidiaries and (i) any such judgments or decrees or awards shall
not be stayed, discharged, paid, bonded or vacated within 30 days or (ii)
enforcement proceedings shall be commenced by any creditor on any such judgment
or decree or award.
(k) Environmental Matters. (i) Any Environmental Claim shall have
been asserted against any Loan Party or any Environmental Affiliate thereof
which, if determined adversely, could have a Material Adverse Effect, (ii) any
release, emission, discharge or disposal of any Material of Environmental
Concern shall have occurred, and such event could form the basis of an
Environmental Claim against any Loan Party or any Environmental Affiliate
thereof which, if determined adversely, could have a Material Adverse Effect, or
(iii) any Loan Party or its Environmental Affiliate shall have failed to obtain
any Environmental Approval necessary for the management, use, control,
ownership, or operation of its business, property or assets or any such
Environmental Approval shall be revoked, terminated, or otherwise cease to be in
full force and effect, in each case, if the existence of such condition could
have a Material Adverse Effect.
(l) Ownership of Certain Assets. The Borrower and/or its
Subsidiaries shall sell, convey or otherwise transfer or dispose of any material
intellectual property or license
97
103
agreement owned by or licensed to the Borrower or any of its Subsidiaries or any
material license agreement to which the Borrower or any of its Subsidiaries is a
party other than (A) a sale, conveyance or other transfer (other than a Lien) to
a Domestic Subsidiary, (B) licenses pursuant to Franchise Agreements pledged to
the Agent pursuant to the Security Documents and (C) any Asset Disposition
permitted by the terms of any of the Loan Documents.
Section 8.2 Rights and Remedies. Upon the occurrence of any Event of
Default described in Section 8.1(e), the Commitments shall automatically and
immediately terminate and the unpaid principal amount of and any and all accrued
interest on the Loans and any and all accrued Fees and other Obligations shall
automatically become immediately due and payable, with all additional interest
from time to time accrued thereon and without presentation, demand, or protest
or other requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower, and the obligation of each Lender to make any Loan hereunder shall
thereupon terminate; and upon the occurrence and during the continuance of any
other Event of Default, the Agent shall at the request, or may with the consent,
of the Required Lenders, by written notice to Borrower, (i) declare that the
Commitments are terminated, whereupon the Commitments and the obligation of each
Lender to make any Loan hereunder shall immediately terminate, (ii) require the
Borrower to Cash Collateralize the L/C Obligations in an amount equal to the
maximum aggregate amount that is, or at any time thereafter may become,
available for drawing under any outstanding Letters of Credit (whether or not
any beneficiary shall have presented, or shall be entitled at such time to
present, the drafts or other documents required to draw under such Letters of
Credit), and (iii) declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Loans and any and all accrued Fees and other
Obligations to be, and the same shall thereupon be, immediately due and payable
with all additional interest from time to time accrued thereon and without
presentation, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and notice of acceleration), all of which are
hereby expressly waived by Borrower.
SECTION 9. THE AGENT
Section 9.1 Appointment. Each Lender hereby irrevocably designates and
appoints Paribas as the Agent of such Lender under this Agreement and each other
Loan Document, and each such Lender irrevocably authorizes Paribas as the Agent
for such Lender, to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and each other Loan Document, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of the Agent
98
104
shall be read into this Agreement or otherwise exist against the Agent. The
provisions of this Section 9 are solely for the benefit of the Agent and the
Lenders and no Loan Party shall have any rights as a third party beneficiary or
otherwise under any of the provisions hereof. In performing its functions and
duties hereunder and under the other Loan Documents, the Agent shall act solely
as the agent of the Lenders and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for any Loan
Party or any of their respective successors and assigns.
Section 9.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 9.3 Exculpatory Provisions. The Agent shall not be (i) liable
for any action lawfully taken or omitted to be taken by it or any Person
described in Section 9.2 under or in connection with this Agreement or any other
Loan Document (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, or any other Loan Document or for any failure of any Loan
Party to perform their obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party. This Section is intended solely to govern
the relationship between the Agent, on the one hand, and the Lenders, on the
other.
Section 9.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to any Loan Party), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless the Agent shall have
received an executed Assignment Agreement in respect thereof. The Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by
99
105
it by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Notes.
Section 9.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders. Subject to
the provisions of Section 10.5, the Agent shall take such action with respect to
such Default or Event of Default as shall be directed by the Required Lenders;
provided that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as the
Agent shall deem advisable and in the best interests of the Lenders.
Section 9.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Loan
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Lender represents and warrants to the Agent that it has,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Loan
Parties and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, prospects, financial and
other condition and creditworthiness of the Loan Parties. Except for notices,
reports and other documents expressly required under the Loan Documents to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, prospects, financial and other
condition or creditworthiness of the Loan Parties which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
Section 9.7 Indemnification. The Lenders agree to indemnify the Agent
and its officers, directors, employees, representatives and agents (to the
extent not reimbursed by the Loan Parties and without limiting the obligation of
the Loan Parties to do so), ratably according
100
106
to their Pro Rata Shares, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
the fees and disbursements of counsel for the Agent or such Person in connection
with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not the Agent or such Person shall be designated a party
thereto) that may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against the Agent or such Person as a result of, or arising out of, or in any
way related to or by reason of, any of the Transactions or the execution,
delivery or performance of any Loan Document or any other Transaction Document
(but excluding any such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the gross negligence or willful misconduct of the Agent or such Person as
finally determined by a court of competent jurisdiction); provided that to the
extent indemnification payments made by the Lenders pursuant to this Section 9.7
are subsequently recovered from or for the account of the Borrower, the Agent
shall promptly refund such previously paid indemnification payments to the
Lenders.
Section 9.8 Agent in its Individual Capacity. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Loan Parties as though the Agent were not the Agent
hereunder. With respect to Loans made or renewed by it and any Note issued to
it, the Agent shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
Section 9.9 Successor Agent. The Agent may resign as Agent upon 30
days' notice to the Borrower and the Lenders. If the Agent shall resign as Agent
under this Agreement, then the Required Lenders during such 30-day period shall
appoint from among the Lenders a successor agent, whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent and the term "Agent"
shall mean such successor agent, effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. Notwithstanding anything
herein to the contrary, so long as no Event of Default has occurred and is
continuing, each such successor agent shall be subject to approval by the
Borrower, which approval shall not be unreasonably withheld or delayed. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Section 9 and Section 10.1 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
101
107
SECTION 10. MISCELLANEOUS
Section 10.1 Payment of Expenses, Indemnity, etc. The Borrower shall:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the Agent in
connection with the negotiation, preparation, execution and delivery of the Loan
Documents, the commitment letter related thereto and the Fee Letters, the
syndication of the Loans and the closing of the Transactions and the documents
and instruments referred to therein, in connection therewith, the creation,
perfection or protection of the Agent's Liens in the Collateral (including,
without limitation, fees and expenses for lien searches and filing and recording
fees and, including, without limitation, fees and expenses incurred in
connection with the transactions contemplated by Section 2.21), and any
amendment, waiver or consent relating to any of the Loan Documents (including,
without limitation, as to each of the foregoing, the reasonable fees and
disbursements of Skadden, Arps, Slate, Meagher & Flom (Illinois), special
counsel to the Agent and any other attorneys and legal assistants retained by
the Agent and allocated costs of internal counsel and legal assistants) and of
the Agent and each Lender in connection with the preservation of rights under,
and enforcement of, the Loan Documents and the documents and instruments
referred to therein or in connection with any restructuring or rescheduling of
the Obligations (including, without limitation, the reasonable fees and
disbursements of counsel for the Agent and for each of the Lenders);
(b) pay, and hold the Agent and each of the Lenders harmless from
and against, any and all present and future stamp, excise and other similar
taxes with respect to the foregoing matters and hold the Agent and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and
(c) indemnify the Agent and each Lender, and each of their
Affiliates and their officers, directors, employees, representatives, attorneys
and agents (each an "Indemnitee") from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages, expenses, obligations,
penalties, actions, judgments, suits, costs or disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitee) that may at any time (including,
without limitation, at any time following the payment of the Obligations) be
imposed on, asserted against or incurred by any Indemnitee as a result of, or
arising out of, or in any way related to or by reason of, or in connection with
the preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) any of the Transactions or
the execution, delivery or performance of any Loan Document or any other
Transaction Document (including, without limitation, any actual or proposed use
by the Borrower or any Subsidiary of the Borrower of the proceeds of any Loan or
Letter of Credit), (ii) any violation by any Loan Party or its Environmental
Affiliate of any applicable Environmental Law, (iii) any Environmental Claim
arising out of the management, use, control, ownership or operation of property
or assets by any of the Loan Parties or any of their Environmental Affiliates,
including, without limitation, all on-site and off-site activities involving
Materials of Environmental Concern, (iv) the breach of any environmental
representation or warranty set forth in Section 5.19, (v) the grant to the Agent
102
108
and the Lenders of any Lien in any property or assets of any of the Loan Parties
or any stock or other equity interest in any of the Loan Parties, and (vi) the
exercise by the Agent and the Lenders of their rights and remedies (including,
without limitation, foreclosure) under any agreements creating any such Lien
(but excluding, as to any Indemnitee, any such losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements incurred solely by reason of the gross negligence or willful
misconduct of such Indemnitee as finally determined by a court of competent
jurisdiction). The Borrower's obligations under this Section shall survive the
termination of this Agreement and the payment of the Obligations.
Section 10.2 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to any
Loan Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at any
time held or owing by such Lender (including, without limitation, by branches
and agencies of such Lender wherever located) to or for the credit or the
account of any Loan Party against and on account of the Obligations of the Loan
Parties to such Lender under this Agreement or under any of the other Loan
Documents, including, without limitation, all interests in Obligations purchased
by such Lender pursuant to Section 9.7, and all other claims of any nature or
description arising out of or connected with this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
Section 10.3 Notices. Except as otherwise expressly provided herein,
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy, telex, or cable
communication), and shall be deemed to have been duly given or made when
delivered by hand, or five days after being deposited in the United States mail,
postage prepaid, or, in the case of telex notice, when sent, answerback
received, or, in the case of telecopy notice, when sent, or, in the case of a
nationally recognized overnight courier service, one Business Day after delivery
to such courier service, addressed, in the case of each party hereto, at its
address specified opposite its signature below or on the appropriate Assignment
Agreement, or to such other address as may be designated by any party in a
written notice to the other parties hereto, provided that notices and
communications to the Agent shall not be effective until received by the Agent.
Section 10.4 Successors and Assigns; Participation; Assignments.
(a) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Lenders, the Agent, all future
holders of the Notes and
103
109
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender. No Lender may participate, assign or sell
any of its Credit Exposure (as defined in clause (b) below) except as required
by operation of law, in connection with the merger, consolidation or dissolution
of any Lender or as provided in this Section 10.4.
(b) Participation. Any Lender may at any time sell to one or more
Persons (each a "Participant") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender and or any
other interest of such Lender hereunder (in respect of any such Lender, its
"Credit Exposure"). Notwithstanding any such sale by a Lender of participating
interests to a Participant, such Lender's rights and obligations under this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement (except as expressly provided below),
and the Borrower and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. The Borrower agrees that if any Obligations are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence and during the continuance of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any Note to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement or any Note, provided that such right of setoff
shall be subject to the obligations of such Participant to share with the
Lenders, and the Lenders agree to share with such Participant, as provided in
Section 10.7. The Borrower also agrees that each Participant shall be entitled
to the benefits of Sections 2.16, 2.17 and 2.18, provided that no Participant
shall be entitled to receive any greater amount pursuant to such sections than
the transferor Lender would have been entitled to receive in respect of the
amount of the participating interest transferred by such transferor Lender to
such Participant had no such transfer occurred. Each Lender agrees that any
agreement between such Lender and any such Participant in respect of such
participating interest shall not restrict such Lender's right to agree to any
amendment, supplement, waiver or modification to this Agreement or any other
Loan Document, except where the result of any of the foregoing would be to
extend the final maturity of any Obligation or any regularly scheduled
installment thereof or reduce the rate or extend the time of payment of interest
thereon or reduce the principal amount thereof or release all or substantially
all of the Collateral (except as expressly provided in the Loan Documents).
(c) Assignments. Any Lender may, in accordance with applicable
law, at any time assign to any Lender or any affiliate thereof or, with the
consent of the Agent, which consent shall not be unreasonably withheld, to any
other Person (each an "Assignee") all or any part of its Credit Exposure;
provided, that in the case of any such assignment to a Person that is not
another Lender or an affiliate of the assigning Lender, each such assignment
shall be (i) for a Credit Exposure not less than $5,000,000 and (ii) to an
Assignee approved in writing by the Agent, which approval shall not be
unreasonably withheld. Such consent of the Agent shall be
104
110
substantially in the form attached as Schedule II to Exhibit I hereto. The
Borrower, the Agent and the Lenders agree that to the extent of any assignment
the Assignee shall be deemed to have the same rights and benefits under the Loan
Documents and the same rights of setoff and obligation to share pursuant to
Section 10.7 as it would have had if it were a Lender hereunder; provided that
the Borrower and the Agent shall be entitled to continue to deal solely and
directly with the assignor Lender in connection with the interests so assigned
to the Assignee unless and until such Assignee becomes a Purchasing Lender
pursuant to clause (d) below.
(d) Assignments to Purchasing Lenders. Any Lender may at any time
and from time to time assign to one or more Persons ("Purchasing Lenders") all
or any part of its Credit Exposure pursuant to a supplement to this Agreement,
substantially in the form of Exhibit I hereto (an "Assignment Agreement"),
executed by such Purchasing Lender, such transferor Lender and the Agent. Upon
(i) such execution of such Assignment Agreement, (ii) delivery to the Agent of a
notice of assignment substantially in the form of Schedule I to Exhibit I hereto
(a "Notice of Assignment") with a copy to the Borrower, together with any
consent required pursuant to Section 10.4(c) above, (iii) payment by such
Purchasing Lender to such transferor Lender of an amount equal to the purchase
price agreed between such transferor Lender and such Purchasing Lender and (iv)
payment of a $4,000 fee to the Agent for processing of such assignment, such
assignment shall become effective on the effective date specified in such
Assignment Agreement, which effective date shall be at least five (5) Business
Days after delivery of such Notice of Assignment to the Agent, such transferor
Lender shall be released from its obligations hereunder to the extent of such
assignment and such Purchasing Lender shall for all purposes be a Lender party
to this Agreement and shall have all the rights and obligations of a Lender
under this Agreement to the same extent as if it were an original party hereto,
and no further consent or action by the Borrower, the Lenders or the Agent shall
be required. Such Assignment Agreement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender as a Lender and the resulting adjustment of the Commitments,
if any, arising from the purchase by such Purchasing Lender of all or a portion
of the Credit Exposure of such transferor Lender.
(e) Disclosure of Information. The Borrower authorizes each
Lender to disclose to any Participant, Assignee or Purchasing Lender (each, a
"Transferee") and any prospective Transferee any and all financial and other
information in such Lender's possession concerning the Borrower which has been
delivered to such Lender by the Borrower pursuant to this Agreement or which has
been delivered to such Lender by the Borrower in connection with such Lender's
credit evaluation of the Borrower prior to entering into this Agreement.
(f) Regulation A. Notwithstanding any other provision set forth
in this Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
105
111
(g) Transfer and Exchange of Notes. Promptly after the
consummation of any transfer to a Purchasing Lender pursuant hereto, the
transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that any Notes held by such transferor Lender shall be
surrendered to the Borrower for cancellation, one or more replacement Notes in
exchange therefor shall be issued to such transferor Lender, and one or more new
Notes shall be issued to such Purchasing Lender, in each case in notional
amounts reflecting such transfer. Each such new Revolving Note and each new Term
Note shall be payable to the Purchasing Lender and shall be substantially in the
form of Exhibits A and B, respectively.
Section 10.5 Amendments and Waivers.
(a) Neither this Agreement, any Note, any other Loan Document to
which the Borrower or any other Loan Party is a party nor any terms hereof or
thereof may be amended, supplemented, modified or waived except in accordance
with the provisions of this Section. The Required Lenders and the Borrower (or
such other Loan Party, as the case may be) may, from time to time, enter into
written amendments, supplements, modifications or waivers for the purpose of
adding, deleting, changing or waiving any provisions to this Agreement, the
Notes, or the other Loan Documents to which the Borrower or such other Loan
Party is a party, provided, that no such amendment, supplement, modification or
waiver shall (i) extend the Revolving Loan Maturity Date or the Term Loan
Maturity Date or extend the time for payment of any installment, fee or required
prepayment of any Obligations or reduce the rate or extend the time of payment
of interest on any Obligations, or reduce the principal amount of any
Obligations or reduce any fee payable to the Lenders hereunder, or release all
or substantially all of the Collateral (except as expressly contemplated by the
Loan Documents) or change the amount of any Commitment of any Lender, or amend,
modify or waive any provision of this Section 10.5 or the definition of Required
Lenders, or consent to or permit the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement or any other Loan
Document, or modify any provision hereof providing for the pro rata sharing of
payments, in each case without the written consent of all the Lenders, (ii)
release (A) Carl Karcher Enterprises, Inc., FEI or any Subsidiary of FEI,
Hardee's or any Subsidiary of Hardee's (other than any such Subsidiary which is
an Immaterial Subsidiary), from the Guaranty and the other applicable Security
Documents (including the release of such Loan Party's stock certificates from
the Borrower Pledge Agreement or the Subsidiary Pledge Agreement, as
applicable), in each case without the written consent of all of the Lenders or
(B) any other Subsidiary of the Borrower from the Guaranty and the other
applicable Security Documents (including the release of such Loan Party's stock
certificates from the Borrower Pledge Agreement or the Subsidiary Pledge
Agreement, as applicable) in each case without the written consent of those
Lenders whose Pro Rata Shares, in the aggregate, are greater than 66-2/3%;
provided that the release from the Guaranty and the other applicable Security
Documents (including the release of such Loan Party's stock certificates from
the Borrower Pledge Agreement or the Subsidiary Pledge
106
112
Agreement, as applicable) of (1) Boston Pacific Inc. and CBI Restaurants, Inc.
and each Subsidiary of CBI Restaurants, Inc. in existence on or after July 15,
1997, and (2) any Subsidiary of the Borrower (other than a Subsidiary of
Hardee's or of FEI) with assets of less than $10,000,000 (as determined in
accordance with GAAP) shall not require the consent of any of the Lenders in any
of the foregoing circumstances if (x) such Subsidiary (a "Sold Guarantor") is
being released from the Guaranty because all or a portion of the assets of such
Sold Guarantor are being sold or otherwise disposed of in an Asset Disposition
or the Equity Interests of such Sold Guarantor are being sold or otherwise
disposed of or an issuance of Equity Interests of such Sold Guarantor is
commenced, and immediately after giving effect to such sale, other disposition
or issuance of Equity Interests and as a result of such sale, other disposition
or issuance of Equity Interests, such Sold Guarantor is no longer a Subsidiary
of the Borrower and (y) any such Asset Disposition or sale, other disposition or
issuance of Equity Interests is otherwise permitted and commenced in accordance
with the terms of this Agreement (and the Agent is hereby authorized by the
Lenders to execute and deliver to the Borrower all such documents evidencing any
such release) or (iii) amend, modify or waive any provision of Section 9 or any
other provision of any Loan Document if the effect thereof is to affect the
rights or duties of the Agent, without the written consent of the then Agent.
Any such amendment, supplement, modification or waiver shall apply to each of
the Lenders equally and shall be binding upon the Borrower, the Lenders, the
Agent and all future holders of the Notes. In the case of any waiver, the
Borrower, the Lenders and the Agent shall be restored to their former position
and rights hereunder and under the outstanding Notes, and any Default or Event
of Default waived shall be deemed to be cured and not continuing, but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
(b) Each of the Lenders agrees that in the event that such Lender
is requested to consent to any amendment, supplement, modification or waiver of
any term or condition of or with respect to this Agreement or any other Loan
Document, the effectiveness of which requires the consent of all of the Lenders
pursuant to the first proviso of Section 10.5(a) hereof, and such Lender shall
fail or refuse to give such consent, such Lender (the "Affected Lender") shall
be obliged, at the request of the Borrower and with the consent of the Agent, to
assign all of its rights and obligations hereunder to (i) another Lender or (ii)
another qualified financial institution nominated by the Agent and reasonably
acceptable to the Borrower (the "Replacement Lender"), and willing to
participate in this Agreement through the Final Maturity Date in the place of
such Affected Lender; provided that the Affected Lender receives payment in
full, pursuant to an Assignment Agreement, of an amount equal to such Lender's
Pro Rata Share of all unpaid principal and interest owing to the Lenders and all
accrued but unpaid fees and other costs and expenses payable with respect to its
Pro Rata Share. The Agent shall give written notice to the Borrower of any such
assignment.
Section 10.6 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Agent or any Lender or any holder of a Note in exercising any right,
power or privilege hereunder or under any other Loan Document and no course of
dealing between any Loan Party
107
113
and the Agent or any Lender or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Loan Document preclude any other or
further exercise thereof of the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent or any
Lender or the holder of any Note would otherwise have. No notice to or demand on
any Loan Party in any case shall entitle any Loan Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Agent, the Lenders or the holder of any Note to any other or
further action in any circumstances without notice or demand.
Section 10.7 Sharing of Payments. Each of the Lenders agrees that if it
should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise) which is applicable to the payment of any
Obligations, of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in such Obligations owing to such
Lenders in such amount as shall result in a proportional participation by all of
the Lenders in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 10.8 Application of Collateral Proceeds. The Agent shall,
unless otherwise specified at the direction of the Required Lenders which
direction shall be consistent with the last sentence of this Section 10.8, apply
all proceeds of Collateral in the following order:
(A) first, to pay Obligations in respect of any fees,
expense reimbursements or indemnities then due to the Agent;
(B) second, to pay Obligations in respect of any fees,
expenses, reimbursements or indemnities then due to the Lenders and the
Issuer;
(C) third, to pay interest due in respect of the Loans
and L/C Obligations;
(D) fourth, to the ratable payment of principal
outstanding on the Loans, Obligations for unreimbursed drawings under
all Letters of Credit and net termination amounts
108
114
payable in respect of Rate Hedging Obligations (with the order of
application to the installments of any particular Loan, Obligation for
any unreimbursed drawing under any Letter of Credit or net termination
amount payable in respect of Rate Hedging Obligation to be determined
by the Agent in its sole discretion);
(E) fifth, to provide required cash collateral if any
pursuant to Section 8.2; and
(F) sixth, to the ratable payment of all other
Obligations.
The order of priority set forth in this Section 10.8 and the related provisions
of this Agreement are set forth solely to determine the rights and priorities of
the Agent and the Lenders as among themselves. The order of priority set forth
in clauses (B) through (F) of this Section 10.8 may at any time and from time to
time be changed with the consent of 100% of the Lenders without necessity of
notice to or consent of or approval by the Borrower, or any other Person. The
order of priority set forth in clause (A) of this Section 10.8 may be changed
only with the prior written consent of the Agent.
Section 10.9 Governing Law; Submission to Jurisdiction. (a) THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this Agreement
or any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of Illinois or of the
United States of America for the Northern District of Illinois, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts. The Borrower
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, the Borrower at its address set
forth opposite its signature below. The Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Loan Document brought in the courts referred to above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum. Nothing herein shall affect the right of the
Agent, any Lender or any holder of a Note to serve process in any other manner
permitted by
109
115
law or to commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.
Section 10.10 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 10.11 [Intentionally Omitted].
Section 10.12 Amendment and Restatement. This Agreement amends and
restates in its entirety the Original Credit Agreement. Upon the effectiveness
of this Agreement, the terms and provisions of the Original Credit Agreement
shall, subject to this Section 10.12, be superseded hereby. Notwithstanding the
amendment and restatement of the Original Credit Agreement by this Agreement,
the Borrower shall continue to be liable to the Lenders party to the Original
Credit Agreement and the Agent with respect to agreements on the part of the
Borrower under the Original Credit Agreement to indemnify any of such Lenders or
the Agent in connection with events or conditions arising or existing prior to
the date hereof, including, but not limited to, those events and conditions set
forth in Section 10 thereof. This Agreement is given in substitution for the
Original Credit Agreement. Upon the effectiveness of this Agreement, each
reference to the Original Credit Agreement in any other document, instrument or
agreement executed and/or delivered in connection therewith shall mean and be a
reference to this Agreement. This Agreement amends, restates and supersedes only
the Original Credit Agreement. This Agreement is not a novation. Nothing
contained herein or in any of the other Loan Documents, unless expressly herein
or therein stated to the contrary, is intended to amend, modify or otherwise
affect any other instrument, document or agreement executed and/or delivered in
connection with the Original Credit Agreement. The principal amounts of Loans
outstanding under the Original Credit Agreement immediately prior to giving
effect to this Agreement to each Lender that is a party thereto shall be deemed
to be Loans made by that Lender hereunder. Each Letter of Credit issued under
the Original Credit Agreement and outstanding immediately prior to giving effect
to this Agreement shall be deemed to be a Letter of Credit hereunder.
Section 10.13 [Intentionally Omitted].
Section 10.14 Headings Descriptive. The headings of the several
Sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
Section 10.15 Marshalling; Recapture. Neither the Agent nor any Lender
shall be under any obligation to marshall 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 any Lender receives any payment by or on behalf of any Loan Party,
which payment or any part thereof is subsequently
110
116
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to such Loan Party or its estate, trustee, receiver, custodian or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included within
the liabilities of such Loan Party to such Lender as of the date such initial
payment, reduction or satisfaction occurred.
Section 10.16 Severability. In case any provision in or obligation
under this Agreement or the Notes or the other Loan Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 10.17 Independence of Covenants. All covenants hereunder shall
be given 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 Event of Default if such action is
taken or condition exists.
Section 10.18 Survival. All indemnities set forth herein including,
without limitation, in Sections 2.16, 2.17, 2.18, 2.19, 9.7 and 10.1 shall
survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans hereunder.
Section 10.19 Domicile of Loans. Each Lender may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Lender.
Section 10.20 Limitation of Liability. No claim may be made by any Loan
Party or any other Person against the Agent or any Lender or the Affiliates,
directors, officers, employees, attorneys or agent of any of them for any
special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or related to
the transactions contemplated by this Agreement or any other Transactions, or
any act, omission or event occurring in connection therewith; and each Loan
Party hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
Section 10.21 Calculations; Computations. The financial statements to
be furnished to the Agent and the Lenders pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved and consistent with GAAP as used in the preparation of the financial
statements referred to in Section 5.5, and, except as otherwise specifically
provided herein, all computations determining compliance with Section 7.1 hereof
shall utilize GAAP.
111
117
Section 10.22 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
Section 10.23 References. Unless otherwise expressly specified herein,
all references to "Article," "Section,""Schedule," or "Exhibit" shall mean
articles and sections of, and schedules and exhibits to, this Agreement.
112
118
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
CKE RESTAURANTS, INC.
By:
---------------------------------------
Print Name: Carl A. Strunk
Title: Executive Vice President, Chief
Financial Officer
Address: 401 W. Carl Karcher Way
Anaheim, CA 92801
Attn: General Counsel
Telephone: (714) 774-5796
Telecopy: (714) 520-4485
113
119
PARIBAS, as Agent and as a Lender
By:
---------------------------------------
Print Name: Clark C. King III
Title: Managing Director
By:
---------------------------------------
Print Name: Michael C. Colias
Title: Assistant Vice President
Address: 227 W. Monroe Street
Suite 3300
Chicago, IL 60606
Attn: Clark C. King III
Telephone: (312) 853-6000
Telecopy: (312) 853-6020
with a copy to:
Maureen B. Keating
Paribas
787 Seventh Avenue
New York, NY 10019-6016
Telephone: (212) 841-2286
Telecopy: (212) 841-2275
114
120
ARAB BANKING CORPORATION (B.S.C.)
By:
---------------------------------------
Print Name: Richard B. Whelan
Title: Chief Representative
Address: 555 South Flower Street
32nd floor
Los Angeles, CA 90071
Attn: Richard Whelan
Telephone: (213) 689-0121
Telecopy: (213) 689-1048
115
121
BANK AUSTRIA
CREDITANSTALT CORPORATE FINANCE, INC.
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
Address: 4 Embarcadero Center
Suite 630
San Francisco, CA 94111
Attn: James F. McCann
Telephone: (415) 788-1371 x227
Telecopy: (415) 781-0622
116
122
BANK LEUMI USA
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
Address: 8383 Wilshire Blvd.
Suite 400
Beverly Hills, CA 90211
Attn: Jacques Delvoye
Telephone: (323) 966-4727
Telecopy: (323) 655-3573
117
123
BANQUE NATIONALE DE PARIS
By:
---------------------------------------
Print Name: David W. Low
Title: Vice President & Manager
By:
---------------------------------------
Print Name: Jeffrey S. Kajisa
Title: Vice President
Address: 180 Montgomery Street, 3rd floor
San Francisco, CA 94104
Attn: David Low
Telephone: (415) 772-1300
Telecopy: (415) 296-8954
118
124
BANK UNITED
By:
---------------------------------------
Print Name: Phil Green
Title: Director Commercial Syndications
Address: 3200 Southwest Freeway
Suite 1900
Houston, TX 77027
Attn: Phil Green
Telephone: (713) 543-6949
Telecopy: (713) 543-6651
119
125
BANKBOSTON, N.A.
By:
---------------------------------------
Print Name: J. Nicholas Cole
Title: Director
Address: 100 Federal Street
01-09-05
Boston, MA 02110
Attn: J. Nicholas Cole
Telephone: (617) 434-2174
Telecopy: (617) 434-0630
120
126
CALIFORNIA BANK & TRUST
(f/k/a Sumitomo Bank of California)
By:
---------------------------------------
Print Name: Sajeda Simjee
Title: Vice President
Address: 20100 Magnolia Street
P.O. Box 5820
Huntington Beach, CA 92646
Attn: Sajeda Simjee
Telephone: (714) 965-5524
Telecopy: (714) 968-4959
121
127
CENTURA BANK
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
Address: 131 N. Church Street
P.O. Box 1220
Rocky Mount, NC 27802
Attn: Lowry D. Perry
Telephone: (252) 454-4433
Telecopy: (252) 454-4040
122
128
CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By:
---------------------------------------
Print Name: Wan-Tu Yeh
Title: Vice President and General Manager
Address: One World Trade Center
Suite 3211
New York, NY 10048
Attn: Kevin Lee
Telephone: (212) 390-7040 ext. 24
Telecopy: (212) 390-0120
123
129
FIRST AMERICAN NATIONAL BANK
By:
---------------------------------------
Print Name: Seth Butler
Title: Corporate Bank Officer
Address: 4th and Union Street, 3rd floor
Nashville, TN 37237-0314
Attn: Seth Butler
Telephone: (615) 770-4053
Telecopy: (615) 748-2485
124
130
FIRST BANK & TRUST
By:
---------------------------------------
Print Name: K. P. "Bala" Balkrishna
Title: Executive Vice President
Address: 4301 MacArthur Blvd.
Newport Beach, CA 92660
Attn: Bala Balkrishna
Telephone: (949) 475-6318
Telecopy: (949) 851-8747
125
131
FIRST UNION NATIONAL BANK
By:
---------------------------------------
Print Name: Eric C. Tan
Title: Vice President
Address: 1 First Union Center
301 South College Street
Charlotte, NC 28288
Attn: Eric Tan
Telephone: (704) 383-5332
Telecopy: (704) 383-5151
126
132
MANUFACTURERS BANK
By:
---------------------------------------
Print Name: Gregory J. Hall
Title: Vice President
Address: 515 South Figueroa Street
Los Angeles, CA 90071
Attn: Gregory J. Hall
Telephone: (213) 489-6291
Telecopy: (213) 489-6252
127
133
NATIONAL BANK OF KUWAIT
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
Address: 299 Park Avenue
New York, NY 10171-0023
Attn: Jeffrey J. Ganter
Telephone: (212) 303-9868
Telecopy: (212) 319-8269
128
134
THE SANWA BANK, LIMITED
By:
---------------------------------------
Print Name:
-------------------------------
Title:
------------------------------------
Address: 601 S. Figueroa Street, W5-4
Los Angeles, CA 90017
Attn: Toshiko Boyd
Telephone: (213) 896-7176
Telecopy: (213) 623-4912
129
135
SUNTRUST BANK, NASHVILLE, N.A.
By:
---------------------------------------
Print Name: Allen K. Oakley
Title: Managing Director
Address: 201 4th Avenue, N.
Nashville, TN 37219
Attn: Vipul Patel
Telephone: (615) 748-4322
Telecopy: (615) 748-5269
130
136
UMB BANK, N.A.
By:
---------------------------------------
Print Name: David A. Proffitt
Title: Senior Vice President
Address: 1010 Grand Blvd.
Kansas City, MO 64106
Attn: David Proffitt
Telephone: (816) 860-7935
Telecopy: (816) 860-7143
131
137
U.S. BANK NATIONAL ASSOCIATION
By:
---------------------------------------
Print Name: Joyce P. Dorsett
Title: Assistant Vice President
Address: 555 S.W. Oak Street, PL-4
Portland, OR 97204
Attn: Janet E. Jordan
Telephone: (503) 275-5871
Telecopy: (503) 275-5428
132
138
WELLS FARGO BANK
By:
---------------------------------------
Print Name: Sandra D. Martin
Title: Vice President
Address: 2030 Main Street
Suite 900
Irvine, CA 92614
Attn: Sandra Martin
Telephone: (949) 251-4156
Telecopy: (949) 261-1830
133