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EXHIBIT 10.1
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CREDIT AGREEMENT
among
DAVE & BUSTER'S, INC.
as Borrower,
[TEXAS COMMERCE BANK LOGO]
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as Agent,
and
the banks named herein
21 May 1997
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TABLE OF CONTENTS
ARTICLE 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.4 Time of Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 2 - Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.1 Revolving Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.2 Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.3 Repayment of Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.5 Revolving Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Reduction, Termination and Extension of Revolving Commitments . . . . . . . . . . . . . . . 12
Section 2.7 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Commitment to Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Letter of Credit Request Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Funding of Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Reimbursement Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Issuer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3 - Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2 Determinations of Margins and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.3 Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.4 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.5 Conversions and Continuations of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.6 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4 - Administrative Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.1 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.4 Optional Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.6 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.7 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.8 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.9 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.10 Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.11 Participation Obligations Absolute; Failure to Fund Participation. . . . . . . . . . . . 21
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ARTICLE 5 - Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.2 Limitation on Eurodollar Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.4 Treatment of Affected Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.6 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.7 Replacement/Payoff of Affected Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6 - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.1 Initial Revolving Loan and Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Incumbency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Bylaws; Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(e) Governmental Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(f) Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) Collateral Documents and Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(h) Termination of Prior Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(j) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(k) Attorneys' Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2 All Revolving Loans and Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . 26
(a) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Additional Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.3 Corporate Action; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.4 Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.5 Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.6 Rights in Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.7 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.8 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.9 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.11 Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.15 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.18 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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Section 7.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.21 Benefit Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.22 Principal Place of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.23 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 8 - Positive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.1 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Quarterly Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Annual Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(e) Management Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(g) Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(h) ERISA Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(i) Reports to Other Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(j) Notice of Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(k) Proxy Statements, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(l) General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.2 Maintenance of Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.4 Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.6 Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.7 Keeping Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.9 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.10 Further Assurances and Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Pledge of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(d) Equipment Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 9 - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.1 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.2 Limitation on Liens and Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . 37
Section 9.3 Mergers, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.4 Restrictions on Dividends and other Distributions . . . . . . . . . . . . . . . . . . . . . 38
Section 9.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.6 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.7 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.8 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.9 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.10 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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Section 9.11 New Business Locations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 10 - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.1 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.2 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.3 Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.4 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 11 - Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(a) Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(b) Termination of Revolving Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(c) Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(d) Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(e) Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(f) Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.3 Performance by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 12 - The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 12.1 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 12.2 Rights of Agent as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 12.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 12.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 12.5 Independent Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.6 Several Revolving Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.8 Agent Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 13 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 13.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 13.3 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 13.4 No Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 13.5 No Fiduciary Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.6 Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.7 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(a) Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(b) Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(c) Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(d) Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(e) Pledge to Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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Section 13.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.12 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.17 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.18 Non-Application of Chapter 15 of Texas Credit Code . . . . . . . . . . . . . . . . . . . . 55
Section 13.19 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.20 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.21 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.22 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Subsidiary Guaranty
"C" Borrower Pledge Agreement
"D" Assignment and Acceptance
"E" Compliance Certificate
"F" Subsidiary Pledge Agreement
"G" Advance Request Form
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
7.14 List of Subsidiaries
9.5 Existing Investments
v
7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of May 21, 1997, is
among DAVE & BUSTER'S, INC., a corporation duly organized and validly existing
under the laws of the State of Missouri (the "Borrower"), each of the banks or
other lending institutions which is or which may from time to time become a
signatory hereto or any successor or assignee thereof (individually, a "Bank"
and, collectively, the "Banks") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
individually as a Bank and as agent for itself and the other Banks (in its
capacity as agent, together with its successors in such capacity, the "Agent").
R E C I T A L S:
The Borrower has requested that the Banks extend credit to the
Borrower in the form of a revolving credit facility. The Banks are willing to
extend such credit to the Borrower upon the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Account" means either a Base Rate Account or a Eurodollar Account.
"Additional Costs" has the meaning specified in Section 5.1.
"Adjusted Eurodollar Rate" means, for any Eurodollar Account for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Agent to be equal to the Eurodollar
Rate for such Eurodollar Account for such Interest Period divided by 1 minus
the Reserve Requirement for such Eurodollar Account for such Interest Period.
"Adjustment Date" has the meaning specified in Section 3.2.
"Advance Request Form" means an Advance Request Form in substantially
the form of Exhibit "G", properly completed and executed by an authorized
officer of Borrower.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c) five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Person in question. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise;
CREDIT AGREEMENT - PAGE 1
8
provided, however, in no event shall the Agent or any Bank be deemed an
Affiliate of the Borrower or any Subsidiaries.
"Agent" has the meaning set forth in the introductory paragraph of
this Agreement.
"Agreement" has the meaning set forth in the introductory paragraph of
this Agreement.
"Applicable Lending Office" means for each Bank and each Type of
Account, the lending office of such Bank (or of an Affiliate of such Bank)
designated for such Account below its name on the signature pages hereof or
such other office of such Bank (or of an Affiliate of such Bank) as such Bank
may from time to time specify to the Borrower and the Agent as the office by
which its Revolving Loans subject to Accounts of such Type are to be made and
maintained.
"Applicable Rate" has the meaning set forth in Section 3.1.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and its assignee and accepted by the Agent pursuant to Section
13.8, in substantially the form of Exhibit "D" hereto.
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Margin" has the meaning specified in Section 3.2.
"Base Rate" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/100 of 1%) equal to the greater of (a) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate
in effect on such day. For purposes hereof, "Prime Rate" shall mean the rate
of interest per annum then most recently publicly announced from time to time
by Texas Commerce as its prime rate in effect at its Principal Office; each
change in the Prime Rate shall be effective on the date such change is publicly
announced as effective. "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers,
as released on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so released for any day which is a Business
Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as
determined by the Agent, of the quotations for the day of such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by it. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of the Agent to obtain sufficient quotations in accordance with the
terms thereof, the Base Rate shall be determined without regard to clause (a)
of the first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively. The Base Rate may not be any Bank's best or favored rate
and the Banks may make other Revolving Loans to other Persons at rates lower
than the Base Rate.
"Base Rate Account" means a portion of a Revolving Loan that bears
interest at a rate based upon the Base Rate.
CREDIT AGREEMENT - PAGE 2
9
"Borrower" has the meaning set forth in the introductory paragraph of
this Agreement.
"Borrower Pledge Agreement" means the pledge agreement between the
Borrower and the Agent for the benefit of itself and the Banks, in
substantially the form of Exhibit "C", as the same may be amended or otherwise
modified.
"Business Day" means (a) any day excluding Saturday, Sunday, and any
day which either is a legal holiday under the laws of the State of Texas or is
a day on which banking institutions located in the State of Texas are closed,
and (b), with respect to all borrowings, payments, Conversions, Continuations,
Interest Periods, and notices in connection with Revolving Loans subject to
Eurodollar Accounts, any day which is a Business Day described in clause (a)
above and which is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.
"Calculation Period" has the meaning specified in Section 3.2.
"Capital Expenditures" means, for any period, all expenditures of the
Borrower and its Subsidiaries which are classified as capital expenditures in
accordance with GAAP including all such expenditures associated with Capital
Lease Obligations.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal property, which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP. For purposes of this Agreement,
the amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Closing Date" means May 29, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means the property in which Liens have been granted
pursuant to the Pledge Agreements whether such Liens are now existing or
hereafter arise.
"Commitment Fee Rate" means the per annum rate determined in
accordance with Section 3.2.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of a fraction the numerator of which is the amount of the Revolving
Commitment of such Bank and the denominator of which is the aggregate amount of
the Revolving Commitments of all of the Banks.
"Compliance Certificate" means a certificate in substantially the form
of Exhibit "E" properly completed and executed by the chief financial officer
of the Borrower.
"Consolidated Net Worth" has the meaning specified in Section 10.1.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 3.5 of a Eurodollar Account as a Eurodollar
Account from one Interest Period to the next Interest Period.
CREDIT AGREEMENT - PAGE 3
10
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 3.5 or Article 5 of one Type of Account into the other Type
of Account.
"Debt" means as to any Person at any time (without duplication): (a)
all obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property
or services, except trade accounts payable of such Person arising in the
ordinary course of business that are not past due by more than ninety (90) days
or that are past due by more than ninety (90) days but are being contested in
good faith by appropriate proceedings diligently pursued; (d) all Capital Lease
Obligations of such Person; (e) all Debt or other obligations of others
Guaranteed by such Person; (f) all obligations secured by a Lien existing on
property owned by such Person, whether or not the obligations secured thereby
have been assumed by such Person or are non-recourse to the credit of such
Person; (g) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds, and similar instruments; (h) all liabilities of such Person in
respect of unfunded vested benefits under any Plan; and (i) all obligations of
such Person arising in connection with interest rate swap, cap, collar or
similar agreements or foreign exchange, currency hedging or other types of
hedging or futures transactions.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Revolving
Loan, any Reimbursement Obligation or any other amount payable by the Borrower
under any Loan Document which is not paid when due (whether at stated maturity,
by acceleration, or otherwise), a rate per annum during the period commencing
on the due date until such amount is paid in full equal to the sum of two
percent (2%) plus the Base Rate as in effect from time to time (provided, that
if such amount in default is principal of a Revolving Loan subject to a
Eurodollar Account and the due date is a day other than the last day of an
Interest Period therefor, the "Default Rate" for such principal shall be, for
the period from and including the due date and to but excluding the last day of
the Interest Period therefor, two percent (2%) plus the interest rate for such
Revolving Loan for such Interest Period as provided in Section 3.1 hereof, and,
thereafter, the rate provided for above in this definition).
"Dollars" and "$" mean lawful money of the United States of America.
"Eligible Assignee" means one or more commercial bank, savings and
loan association, savings bank, finance company, insurance company, pension
fund, mutual fund, or other financial institution (whether a corporation,
partnership, or other entity) which has a combined capital and surplus of at
least One Hundred Million Dollars ($100,000,000) and which, at any time prior
to the termination of the Revolving Commitments, is qualified to make Revolving
Loans and participate in Letters of Credit hereunder.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs, and expenses,
(including, without limitation, all reasonable fees, disbursements and expenses
of
CREDIT AGREEMENT - PAGE 4
11
counsel, expert and consulting fees and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of any
claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order, or agreement with any Governmental Authority
or other Person, arising from environmental, health, or safety conditions or
the Release or threatened Release of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower.
"Equipment Partnership" means a corporation, partnership, business
trust, association, company, joint venture or other entity (other than a
Subsidiary) whose purpose is to own and operate equipment to be located in a
retail location owned or leased by Borrower or a Subsidiary.
"Eurodollar Account" means a portion of a Revolving Loan that bears
interest at a rate based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Account for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) offered to Texas Commerce or one of its Affiliates at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) two
Business Days prior to the first day of such Interest Period by leading banks
in the Eurodollar interbank market of Dollar deposits in immediately available
funds having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the Eurodollar Account applicable to
Texas Commerce to which such Interest Period relates. If Texas Commerce is not
participating in a Eurodollar Account during any Interest Period therefor
(pursuant to Section 5.4 or for any other reason), the Adjusted Eurodollar Rate
for such Account for such Interest Period shall be determined by reference to
the amount of the Account which Texas Commerce would have been allocated if it
had been participating in such Account.
"Eurodollar Rate Margin" has the meaning specified in Section 3.2.
"Event of Default" has the meaning specified in Section 11.1.
"Federal Funds Effective Rate" has the meaning set forth in the
definition of Base Rate.
"Fiscal Quarters" means the four (4) periods falling in each Fiscal
Year, each such period being thirteen (13) or fourteen (14) weeks in duration,
as applicable, with the first such period in any Fiscal Year beginning on the
first day of such Fiscal Year and the last such period in any Fiscal Year
ending on the Sunday after the last Saturday closest to January 31.
"Fiscal Year" means the fifty-two (52) or fifty-three (53) week
period, as the case may be, beginning on the date which is one day after the
date of the end of the similar preceding period and ending on the Sunday after
the Saturday closest to January 31.
CREDIT AGREEMENT - PAGE 5
12
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment
thereof or to protect the obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law.
"Interest Period" means with respect to any Eurodollar Accounts, each
period commencing on the date such Account is established or Converted from a
Base Rate Account or, with respect to a Continuation, the last day of the next
preceding Interest Period with respect to such Eurodollar Account, and ending
on the numerically corresponding day in the first, second, third or sixth
calendar month thereafter, as the Borrower may select as provided in Section
3.5 or 4.1, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b) any
Interest Period in existence under a Revolving Loan which would otherwise
extend beyond the Termination Date applicable to such Revolving Loan shall end
on the Termination Date applicable to such Revolving Loan; (c) no more than six
(6) Interest Periods shall be in effect at the same time; and (d) no Interest
Period for any Eurodollar Account shall have a duration of less than one (1)
month and, if the Interest Period would otherwise be a shorter period, the
related Eurodollar Account shall not be available hereunder.
"Letter of Credit Liabilities" means, at any time, the aggregate face
amounts of all outstanding Letters of Credit and all unreimbursed drawings
under Letters of Credit.
"Letters of Credit" has the meaning specified in Section 2.7(a).
CREDIT AGREEMENT - PAGE 6
13
"Leverage Ratio" means the ratio of Adjusted Debt to Adjusted EBITDA
as determined and calculated in accordance with Section 10.2.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority, or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law, or otherwise.
"Loan Documents" means this Agreement, the Revolving Notes, the Pledge
Agreements, each Subsidiary Guaranty, each Letter of Credit, each application
or request for Letter of Credit and all other documentation executed and
delivered pursuant to or in connection with this Agreement, as such
documentation may be amended or otherwise modified.
"Material Adverse Effect" means (a) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower and the Subsidiaries taken as a whole or (b) a
material adverse effect on the validity, perfection, priority, or ability of
the Agent to enforce the Agent's Lien on any material part of the Collateral or
of the ability of the Agent or any Bank to enforce a material provision of the
Loan Documents, in each case other than as a result of the negligence of the
Agent or the release thereof in accordance with the terms of the Loan
Documents. In determining whether any individual event could reasonably be
expected to result in a Material Adverse Effect, notwithstanding that such
event does not itself have such effect, a Material Adverse Effect shall be
deemed to have occurred if the cumulative effect of such event and all other
then existing events could reasonably be expected to result in a Material
Adverse Effect.
"Maximum Rate" means, at any time and with respect to any Bank, the
maximum rate of nonusurious interest under applicable law that such Bank may
charge the Borrower. The Maximum Rate shall be calculated in a manner that
takes into account any and all fees, payments, and other charges contracted
for, charged, or received in connection with the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to the Borrower at the time of such change in
the Maximum Rate. For purposes of determining the Maximum Rate under Texas
law, the applicable rate ceiling shall be the indicated rate ceiling described
in, and computed in accordance with, Article 5069-1.04, Vernon's Texas Civil
Statutes.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"Obligated Party" means any Person (exclusive of the Borrower) who is
or becomes party to any agreement that guarantees or secures payment and
performance of the Obligations or any part thereof.
"Obligation" means all obligations, indebtedness, and liabilities of
the Borrower to the Agent and the Banks, or any of them, arising pursuant to
any of the Loan Documents, pursuant to any interest rate swap, interest rate
caps, interest rate collars, or other similar agreements entered into by Agent
or any Bank with the Borrower or any Subsidiary enabling Borrower or a
Subsidiary to fix or limit its interest expense or pursuant to any foreign
exchange, currency hedging, commodity hedging, or other
CREDIT AGREEMENT - PAGE 7
14
agreement entered into by Agent or any Bank with the Borrower or any Subsidiary
enabling Borrower or a Subsidiary to limit the market risk of holding currency
in either the cash or futures markets, whether now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, including,
without limitation, the obligation of the Borrower to repay the Revolving
Loans, the Reimbursement Obligations, interest on the Revolving Loans and
Reimbursement Obligations, and all fees, costs, and expenses (including
attorneys' fees and expenses) provided for in the Loan Documents or such
agreements enabling the Borrower to fix or limit its interest expense or limit
its market risk of holding currency.
"Outstanding Revolving Credit" means, at any time of determination,
the sum of (a) the aggregate amount of Revolving Loans then outstanding plus
(b) the aggregate amount of Letter of Credit Liabilities (or when calculated
with respect to a Bank, including the Agent as a Bank, such Bank's
participation or other interest in such Letter of Credit Liabilities).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental Authority, or
other entity.
"Plan" means any employee benefit plan established or maintained by
the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Pledge Agreements" means the Borrower Pledge Agreement and the
Subsidiary Pledge Agreements.
"Principal Office" means the principal office of the Agent, located at
1111 Fannin, Houston, Texas.
"Prohibited Transaction" means any transaction set forth in Section
406 or 407 of ERISA or Section 4975(c)(1) of the Code for which there does not
exist a statutory or administrative exemption.
"Quarterly Payment Date" means the last day of each Fiscal Quarter,
the first of which shall be the first such day after the Closing Date.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives, or requests applying to a class of banks
including such Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Agent for any demand for payment or drawing under a Letter of
Credit.
CREDIT AGREEMENT - PAGE 8
15
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, disbursement, leaching, or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water,
ground water, or property in violation of Environmental Laws.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Required Banks" means Banks having (a) sixty-six and two-thirds
percent (66 2/3%) or more of the Revolving Commitments or (b) if the Revolving
Commitments have been terminated, sixty-six and two-thirds percent (66 2/3%) or
more of the outstanding principal amount of the Revolving Loans and
participations or other interests in the Letter of Credit Liabilities.
"Reserve Requirement" means, for any Eurodollar Account for any
Interest Period therefor, the average maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of
the Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency Liabilities" as such term is used in Regulation
D. Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks by
reason of any Regulatory Change against any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined or any category of extensions of credit or other assets which
include Eurodollar Accounts.
"Revolving Commitment" means, as to each Bank, the obligation of such
Bank to make advances of funds and purchase participation interests in (or with
respect to the Agent as a Bank, hold other interests in) Letters of Credit in
an aggregate principal amount at any one time outstanding up to but not
exceeding the amount set forth opposite the name of such Bank on the signature
pages hereto under the heading "Revolving Commitment", or, if applicable, the
amount determined in accordance with the Assignment and Acceptance executed by
the Bank, as the same may be reduced or terminated pursuant to Section 2.6 or
11.2. The aggregate amount of the Revolving Commitments of all Banks equals
Fifty Million Dollars ($50,000,000).
"Revolving Loans" means, as to any Bank, the advances made by such
Bank pursuant to Section 2.1.
"Revolving Notes" means the promissory notes provided for by Section
2.2 and all amendments or other modifications thereof.
"Revolving Termination Date" means May 29, 2000, or such earlier or
later date on which the Revolving Commitments terminate as provided in this
Agreement.
CREDIT AGREEMENT - PAGE 9
16
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) or control the management and policies of such entity (irrespective of
whether or not at the time stock (or other ownership interests) of any other
class or classes of such corporation (or other entity) shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by the Borrower or one or more of
the Subsidiaries or by the Borrower and one or more of the Subsidiaries.
"Subsidiary Guaranty" means the guaranty of a Subsidiary in favor of
the Agent and the Banks, in substantially the form of Exhibit "B" hereto, as
the same may be amended or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means a pledge agreement between a
Subsidiary and Agent for the benefit of itself and the Banks, in substantially
the form of Exhibit "F" as the same may be amended or otherwise modified.
"Texas Commerce" means Texas Commerce Bank National Association in its
individual capacity and not as Agent.
"Type" means either type of Account (i.e., either a Base Rate Account
or Eurodollar Account).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
Section 1.2 Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof", "herein", and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. Unless
otherwise specified, all Article and Section references pertain to this
Agreement. Terms used herein that are defined in the UCC, unless otherwise
defined herein, shall have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations. Except as
provided in this Section 1.3 or as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, all calculations made for
the purposes of determining compliance with the provisions of this Agreement
shall be made, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Agent and the Banks hereunder
shall be prepared in accordance with GAAP, on a basis consistent with those
used in the preparation of the financial statements referred to in Section 7.2
hereof. Without limiting the forgoing, to enable the ready and consistent
determination of compliance by the Borrower with its obligations under this
Agreement, the Borrower will not change the manner in which either the last day
of its Fiscal Year or the last days of the first three Fiscal Quarters of its
Fiscal Year is calculated or the manner in which it accounts for pre-opening
costs attributable to establishing new retail business locations from the
manner it accounts for those costs as of the Closing Date, except for such
changes in the forgoing required by GAAP or recommended by the Borrower's
certified public accountants. In the event any changes in accounting
principles required by GAAP or recommended by the Borrower's certified public
accountants and implemented by the Borrower occur and such changes result in a
change in the matters referred to in the preceding sentence or otherwise result
in a change in the method of the calculation of financial covenants, standards,
or terms under this Agreement, then the Borrower, the Agent, and the Banks
agree to enter
CREDIT AGREEMENT - PAGE 10
17
into negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such changes with the desired result that the criteria for
evaluating such covenants, standards, or terms shall be the same after such
changes as if such changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Agent, the Borrower,
and the Banks, all financial covenants, standards, and terms in this Agreement
shall continue to be calculated or construed as if such changes had not
occurred.
Section 1.4 Time of Day. Unless otherwise indicated, all
references in this Agreement to times of day shall be references to Texas time.
ARTICLE 2
Revolving Credit Facility
Section 2.1 Revolving Commitments. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make one or more
advances to the Borrower from time to time from and including the Closing Date
to but excluding the Revolving Termination Date in an aggregate principal
amount at any time outstanding up to but not exceeding the amount of such
Bank's Revolving Commitment as then in effect; provided, however, (a) the
Outstanding Revolving Credit applicable to a Bank (including the Agent as a
Bank) shall not at any time exceed such Bank's Revolving Commitment and (b) the
Outstanding Revolving Credit shall not at any time exceed the aggregate
Revolving Commitments. Subject to the foregoing limitations, and the other
terms and provisions of this Agreement, the Borrower may borrow, prepay, and
reborrow hereunder the amount of the Revolving Commitments and may establish
Base Rate Accounts and Eurodollar Accounts thereunder and, until the Revolving
Termination Date, the Borrower may Continue Eurodollar Accounts or Convert
Accounts of one Type into Accounts of the other Type. Accounts of each Type
made by each Bank shall be established and maintained at such Bank's Applicable
Lending Office for Revolving Loans of such Type.
Section 2.2 Revolving Notes. The Revolving Loans made by a Bank
shall be evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit "A" hereto, payable to the order of such Bank in a
principal amount equal to its Revolving Commitment as originally in effect and
otherwise duly completed.
Section 2.3 Repayment of Revolving Loans. The Borrower shall pay
to the Agent for the account of the Banks the outstanding principal amount of
all of the Revolving Loans on the Revolving Termination Date.
Section 2.4 Use of Proceeds. The proceeds of the Revolving Loans
shall be used by the Borrower (a) to finance the working capital needs of the
Borrower and the Subsidiaries in the ordinary course of business, including
without limitation, financing the payment of Reimbursement Obligations in
accordance with subsection 2.7(b), (b) to finance the development of new retail
business locations of Borrower and the Subsidiaries, (c) to repay existing Debt
of Borrower and the Subsidiaries, (d) to finance the construction of Borrower's
headquarters property in Dallas, Texas, and (e) for other general corporate
purposes of the Borrower and the Subsidiaries.
Section 2.5 Revolving Commitment Fee. The Borrower agrees to pay
to the Agent for the account of each Bank a commitment fee on the daily average
unused amount of such Bank's Revolving
CREDIT AGREEMENT - PAGE 11
18
Commitment for the period from and including the Closing Date to and including
the Revolving Termination Date, at a rate equal to the Commitment Fee Rate as
determined in accordance with subsection 3.2(b). For the purpose of
calculating the commitment fee hereunder and determining usage for purposes of
Section 2.6, the Revolving Commitments shall be deemed utilized by all
Outstanding Revolving Credit. Accrued commitment fees under this Section 2.5
shall be payable in arrears on each Quarterly Payment Date and on the Revolving
Termination Date.
Section 2.6 Reduction, Termination and Extension of Revolving
Commitments. The Borrower shall have the right to terminate or reduce in part
the unused portion of the Revolving Commitments (as determined under Section
2.5) at any time and from time to time, provided that: (a) the Borrower shall
give notice of each such termination or reduction as provided in Section 4.3;
and (b) each partial reduction shall be in an aggregate amount at least equal
to Five Million Dollars ($5,000,000) or an integral multiple thereof. The
Revolving Commitments may not be reinstated after they have been terminated or
reduced. The Banks shall have no obligation or commitment to extend the
Revolving Termination Date but during January of each year that the Revolving
Commitments are outstanding, at the request of Borrower, the Banks will conduct
a review of Borrower and the Subsidiaries to determine whether to extend the
Revolving Termination Date to a date one year from the then current Revolving
Termination Date. The Banks' determination as to the extension of the
Revolving Termination Date shall be made by all the Banks in their sole,
independent discretion and shall be effective only after an amendment to the
definition of Revolving Termination Date is executed by Borrower, Agent and all
the Banks.
Section 2.7 Letters of Credit.
(a) Commitment to Issue. The Borrower may utilize the
Revolving Commitments by requesting that the Agent issue, and the
Agent, subject to the terms and conditions of this Agreement, shall
issue, letters of credit for Borrower's or one of the Subsidiaries'
account (such letters of credit being hereinafter referred to as the
"Letters of Credit"); provided, however, (i) the aggregate amount of
outstanding Letter of Credit Liabilities shall not at any time exceed
Five Million Dollars ($5,000,000); (ii) the Outstanding Revolving
Credit shall not at any time exceed the aggregate Revolving
Commitments; and (iii) the Outstanding Revolving Credit applicable to
a Bank (including the Agent as a Bank) shall not at any time exceed
such Bank's Revolving Commitment. Upon the date of issue of a Letter
of Credit, the Agent shall be deemed, without further action by any
party hereto, to have sold to each other Bank, and each other Bank
shall be deemed, without further action by any party hereto, to have
purchased from the Agent a participation to the extent of such Bank's
Commitment Percentage in such Letter of Credit and the related Letter
of Credit Liabilities.
(b) Letter of Credit Request Procedure. Except for
Letters of Credit issued on the Closing Date, the Borrower shall give
the Agent at least five (5) Business Days prior notice specifying the
date of each Letter of Credit and the nature of the transactions to be
supported thereby. Any such notice received by the Agent after 10:00
a.m. on a Business Day shall be deemed to be received and shall be
effective on the next Business Day. Upon receipt of such notice the
Agent shall promptly notify each other Bank of the contents thereof
and of such Bank's Commitment Percentage of the amount of the proposed
Letter of Credit by no later than the next Business Day. Each Letter
of Credit shall have an expiration date that does not extend beyond a
date which is thirty (30) days prior to the Revolving Termination
Date, shall be payable in Dollars, must support a transaction entered
into in the ordinary course of the
CREDIT AGREEMENT - PAGE 12
19
Borrower's business or which is otherwise satisfactory to the Agent,
must be satisfactory in form and substance to the Agent, and shall be
issued pursuant to such documentation as the Agent may require,
including, without limitation, the Agent's standard form letter of
credit request and reimbursement agreement; provided, that, in the
event of any conflict between the terms of such agreement and the
other Loan Documents, the terms of the other Loan Documents shall
control.
(c) Letter of Credit Fees. The Borrower will pay to the
Agent for the account of each Bank a letter of credit fee on such
Bank's Commitment Percentage of the amount available for drawings
under each Letter of Credit from day to day, such letter of credit fee
to be paid in arrears as it accrues on each Quarterly Payment Date
commencing the first such date after the issuance of the Letter of
Credit and continuing thereafter until the first Quarterly Payment
Date after the date of expiration or termination thereof, with the
letter of credit fee calculated for the period from and including the
date of issuance of the Letter of Credit to and excluding the date of
its expiration or termination at a rate per annum equal to the
Eurodollar Rate Margin in effect on the date of payment (as determined
in accordance with Section 3.2). After receiving any payment of any
letter of credit fees under this clause (c), the Agent will promptly
pay to each Bank the letter of credit fees then due such Bank. With
respect to each Letter of Credit, the Borrower will also pay to the
Agent for its account only and on the date of the issuance of the
Letter of Credit an issuance fee equal to one eighth of one percent
(0.125%) of the maximum amount available to be drawn under the Letter
of Credit plus the Agent's reasonable expenses incurred in issuing the
Letter of Credit.
(d) Funding of Drawings. Upon receipt from the
beneficiary of any Letter of Credit of any demand for payment or other
drawing under such Letter of Credit, the Agent shall promptly notify
the Borrower and each Bank as to the amount to be paid as a result of
such demand or drawing and the respective payment date. Not later
than 11:00 a.m. on the applicable payment date, each Bank will make
available to the Agent, at the Principal Office, in immediately
available funds, an amount equal to such Bank's Commitment Percentage
of the amount to be paid as a result of such demand or drawing even if
the conditions to a Revolving Loan under Article 6 have not been
satisfied
(e) Reimbursements. The Borrower shall be irrevocably and
unconditionally obligated to immediately reimburse the Agent for any
amounts paid by the Agent upon any demand for payment or drawing under
any Letter of Credit, without presentment, demand, protest, or other
formalities of any kind. All payments on the Reimbursement
Obligations shall be made to the Agent at the Principal Office for the
account of the Agent in Dollars and in immediately available funds,
without setoff, deduction or counterclaim not later than 3:00 pm. on
the date of the corresponding payment under the Letter of Credit by
the Agent. Subject to the other terms and conditions of this
Agreement, such reimbursement may be made by Borrower requesting a
Revolving Loan in accordance with Section 4.1 the proceeds of which
shall be credited against the Borrower's Reimbursement Obligations.
The Agent will pay to each Bank such Bank's Commitment Percentage of
all amounts received from the Borrower for application in payment, in
whole or in part, to the Reimbursement Obligation in respect of any
Letter of Credit, but only to the extent such Bank has made payment to
the Agent in respect of such Letter of Credit pursuant to clause (d)
of this Section 2.7.
CREDIT AGREEMENT - PAGE 13
20
(f) Reimbursement Obligations Absolute. The
Reimbursement Obligations of the Borrower under this Agreement shall
be absolute, unconditional, and irrevocable, and shall be performed
strictly in accordance with the terms of the Loan Documents under all
circumstances whatsoever and the Borrower hereby waives any defense to
the payment of the Reimbursement Obligations based on any circumstance
whatsoever, including without limitation, in either case, the
following circumstances: (i) any lack of validity or enforceability of
any Letter of Credit or any other Loan Document; (ii) any amendment
or waiver of or any consent to departure from any Loan Document; (iii)
the existence of any claim, set-off, counterclaim, defense or other
rights which the Borrower, any Obligated Party, or any other Person
may have at any time against any beneficiary of any Letter of Credit,
the Agent, any Bank, or any other Person, whether in connection with
any Loan Document or any unrelated transaction; (iv) any statement,
draft, or other documentation presented under any 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; (v) payment by the Agent under any Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; or (vi) any other
circumstance whatsoever, whether or not similar to any of the
foregoing; provided that Reimbursement Obligations with respect to a
Letter of Credit may be subject to avoidance by the Borrower if the
Borrower proves in a final nonappealable judgment that it was damaged
and that such damage arose directly from the Agent's willful
misconduct or gross negligence in determining whether the
documentation presented under the Letter of Credit in question
complied with the terms thereof.
(g) Issuer Responsibility. The Borrower assumes all
risks of the acts or omissions of any beneficiary of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the
Agent, any Bank nor any of their respective officers or directors
shall have any responsibility or liability to the Borrower or any
other Person for: (a) the failure of any draft to bear any reference
or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any
Person to surrender or to take up any Letter of Credit or to send
documents apart from drafts as required by the terms of any Letter of
Credit, or the failure of any Person to note the amount of any
instrument on any Letter of Credit, each of which requirements, if
contained in any Letter of Credit itself, it is agreed may be waived
by the Agent; (b) errors, omissions, interruptions, or delays in
transmission or delivery of any messages; (c) the validity,
sufficiency, or genuineness of any draft or other document, or any
endorsement(s) thereon, even if any such draft, document or
endorsement should in fact prove to be in any and all respects
invalid, insufficient, fraudulent, or forged or any statement therein
is untrue or inaccurate in any respect; (d) the payment by the Agent
to the beneficiary of any Letter of Credit against presentation of any
draft or other document that does not comply with the terms of the
Letter of Credit; or (e) any other circumstance whatsoever in making
or failing to make any payment under a Letter of Credit. The Borrower
shall have a claim against the Agent, and the Agent shall be liable to
the Borrower, to the extent of any direct, but not indirect,
consequential or punitive, damages suffered by the Borrower which the
Borrower proves in a final nonappealable judgment were caused by (i)
the Agent's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit complied with
the terms thereof or (ii) the Agent's willful failure to pay under any
Letter of Credit after presentation to it of documentation strictly
complying with the terms and conditions of such Letter of Credit. The
Agent may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any
notice or information to the contrary.
CREDIT AGREEMENT - PAGE 14
21
ARTICLE 3
Interest and Fees
Section 3.1 Interest Rate. Subject to Section 13.12, the
Borrower shall pay to the Agent for the account of each Bank interest on the
unpaid principal amount of each Revolving Loan made by such Bank for the period
commencing on the date of such Revolving Loan to but excluding the date such
Revolving Loan is due at a fluctuating rate per annum equal to the Applicable
Rate. The term "Applicable Rate" means (i) during the period that a Revolving
Loan or portions thereof is subject to a Base Rate Account, the Base Rate plus
the Base Margin and (ii) during the period that a Revolving Loan or portions
thereof is subject to a Eurodollar Account, the Adjusted Eurodollar Rate plus
the Eurodollar Rate Margin.
Section 3.2 Determinations of Margins and Fees. Upon delivery of
the Compliance Certificate pursuant to subsection 8.1(c) in connection with the
financial statements of the Borrower and the Subsidiaries required to be
delivered pursuant to Section 8.1(b) at the end of each Fiscal Quarter
commencing with such Compliance Certificate delivered at the end of the Fiscal
Quarter ending May 4, 1997, the Base Margin, the Eurodollar Rate Margin, and
the Commitment Fee Rate shall automatically be adjusted in accordance with the
Leverage Ratio set forth therein and the table set forth below in this Section
3.2, such automatic adjustment to take effect as of the first Business Day
after the receipt by the Agent of the related Compliance Certificate pursuant
to Section 8.1(c) (each such Business Day when such margins or fees change
pursuant to this sentence or the last sentence of this Section 3.2, herein an
"Adjustment Date"). The margins identified in Section 3.1 and this Section 3.2
and the fees payable under Section 2.5 shall be defined as follows:
(a) "Base Margin" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date, one quarter of one percent (0.25%) per annum
and (ii) during each period, from and including one Adjustment Date to
but excluding the next Adjustment Date (herein a "Calculation
Period"), the percent per annum set forth in the table below in this
Section 3.2 under the heading "Base Margin" opposite the Leverage
Ratio which corresponds to the Leverage Ratio set forth in, and as
calculated in accordance with, the applicable Compliance Certificate.
(b) "Commitment Fee Rate" shall mean (i) during the
period commencing on the Closing Date and ending on but not including
the first Adjustment Date, one quarter of one percent (0.25%) per
annum and (ii) during each Calculation Period, the percent per annum
set forth in the table below under the heading "Commitment Fee"
opposite the Leverage Ratio which corresponds to the Leverage Ratio
set forth in, and as calculated in accordance with, the applicable
Compliance Certificate.
(c) "Eurodollar Rate Margin" shall mean (i) during the
period commencing on the Closing Date and ending on but not including
the first Adjustment Date, one and three quarters of one percent
(1.75%) per annum and (ii) during each Calculation Period, the percent
per annum set forth in the table below under the heading Eurodollar
Margin opposite the Leverage Ratio which corresponds to the Leverage
Ratio set forth in, and as calculated in accordance with, the
applicable Compliance Certificate.
CREDIT AGREEMENT - PAGE 15
22
Debt to EBITDA Base Margin Commitment Fee Eurodollar Margin
-------------- ----------- -------------- -----------------
Greater than or equal to 2.00 0.50% 0.375% 2.00%
Greater than or equal to 1.50 but less 0.25% 0.25% 1.75%
than 2.00
Less than 1.50 0.00% 0.25% 1.50%
If the Borrower fails to deliver such Compliance Certificate which sets forth
the Leverage Ratio within the period of time required by subsection 8.1(c): (i)
the Base Margin shall automatically be adjusted to one-half of one percent
(0.50%) per annum; (ii) the Eurodollar Rate Margin (for Interest Periods
commencing after the applicable Adjustment Date) shall automatically be
adjusted to two percent (2.00%) per annum; and (iii) the Commitment Fee Rate
shall automatically be adjusted to three eighths of one percent (0.375%); such
automatic adjustments to take effect as of the first Business Day after the
last day on which the Borrower was required to deliver the applicable
Compliance Certificate in accordance with Section 8.1(c) and to remain in
effect until subsequently adjusted in accordance herewith upon the delivery of
a Compliance Certificate.
Section 3.3 Payment Dates. Accrued interest on the Revolving
Loans shall be due and payable as follows: (i) in the case of Revolving Loans
subject to Base Rate Accounts, on each Quarterly Payment Date and on the
Revolving Termination Date; (ii) in the case of Revolving Loans subject to
Eurodollar Accounts and with respect to each such Account, on the last day of
the Interest Period with respect thereto and on the Revolving Termination Date,
and, in the case of an Interest Period that is six (6) months long, on the date
three months after the first day of such Interest Period.
Section 3.4 Default Interest. Notwithstanding the foregoing, the
Borrower will pay to the Agent for the account of each Bank interest at the
applicable Default Rate on any principal of any Revolving Loan made by such
Bank, any Reimbursement Obligation, and (to the fullest extent permitted by
law) any other amount payable by the Borrower under any Loan Document to or for
the account of the Agent or such Bank, that is not paid in full after its due
date (whether at stated maturity, by acceleration, or otherwise) and the
expiration of any applicable grace period under Section 11.1, for the period
from and including the due date thereof (or if applicable, the date of the
expiration of the grace period) to but excluding the date the same is paid in
full. Interest payable at the Default Rate shall be payable from time to time
on demand.
Section 3.5 Conversions and Continuations of Accounts. Subject
to Section 4.2, the Borrower shall have the right from time to time to Convert
all or part of any Base Rate Account into a Eurodollar Account or to Continue
Eurodollar Accounts as Eurodollar Accounts provided that: (a) the Borrower
shall give the Agent notice of each such Conversion or Continuation as provided
in Section 4.3; (b) a Eurodollar Account may only be Converted on the last day
of the Interest Period therefore; and (c) except for Conversions into Base Rate
Accounts, no Conversions or Continuations shall be made while a Default has
occurred and is continuing.
Section 3.6 Computations. Interest and fees payable by the
Borrower hereunder and under the other Loan Documents shall be computed as
follows: (i) with respect to Eurodollar Accounts on the basis of a year of 360
days and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which payable unless such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be; (ii)
with respect to Base Rate Accounts (A) if based on the Prime Rate, on the basis
of a year of 365/366 days and the actual number of days elapsed (including the
first day but excluding
CREDIT AGREEMENT - PAGE 16
23
the last day) occurring in the period for which payable or (B) if based on the
Federal Funds Effective Rate on the basis of a year of 360 days and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which payable unless such calculation would result
in a usurious rate, in which case interest shall be calculated on the basis of
a year of 365 or 366 days, as the case may be; and (iii) with respect to the
letter of credit and commitment fees payable hereunder, on the basis of a year
of 360 days and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which payable unless such
calculation would result in a usurious rate, in which case such fees shall be
calculated on the basis of a year of 365 or 366 days, as the case may be.
ARTICLE 4
Administrative Matters
Section 4.1 Borrowing Procedure. The Borrower shall give the
Agent by means of an Advance Request Form, and the Agent will give the Banks,
notice of each borrowing under the Revolving Commitments in accordance with
Section 4.3. Not later than 1:00 p.m. on the date specified for each borrowing
under the Revolving Commitments each Bank will make available to the Agent the
amount of the Revolving Loan to be made by it on such date, at the Principal
Office, in immediately available funds, for the account of the Borrower. The
amount so received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by (a) depositing the same,
in immediately available funds, in an account of the Borrower (designated by
the Borrower) maintained with the Agent at the Principal Office or (b) wire
transferring such funds to a Person or Persons designated by the Borrower in
writing.
Section 4.2 Minimum Amounts. Except for repayments pursuant to
Article 5, each borrowing under a Revolving Loan and each repayment of
principal of a Revolving Loan shall be in an amount at least equal to Five
Hundred Thousand Dollars ($500,000.00) or any larger amounts in increments of
One Hundred Thousand Dollars ($100,000.00). Except for Conversions pursuant to
Article 5, each Eurodollar Account shall be in a minimum principal amount of
One Million Dollars ($1,000,000.00) or any larger amount in increments of Five
Hundred Thousand Dollars ($500,000.00).
Section 4.3 Certain Notices. Notices by the Borrower to the
Agent of terminations or reductions of the Revolving Commitments, of borrowings
and prepayments of Revolving Loans, and of Conversions and Continuations of
Accounts shall be in writing, irrevocable and shall be effective only if
received by the Agent not later than 10:00 a.m. (a) on the Business Day of the
borrowing, prepayment or repayment of Revolving Loans subject to Base Rate
Accounts or of the Conversion into Base Rate Accounts and (b) with respect to
any other repayments, terminations, reductions, borrowings, Conversions,
Continuations, or prepayments, on the Business Day which is the number of
Business Days prior to the day of the relevant action specified below:
Action Number of Business Days Prior
to Action
Termination or reduction of Revolving Commitments 5
Borrowing of Revolving Loans, prepayment of Revolving Loans (other than 3
on the last day of an Interest Period), or repayment of Revolving Loans,
in each case subject to Eurodollar Accounts, Conversions into or
Continuations as Eurodollar Accounts
CREDIT AGREEMENT - PAGE 17
24
Any notices of the type described in this Section 4.3 which are received by the
Agent after 10:00 a.m. on a Business Day shall be deemed to be received and
shall be effective on the next Business Day. Each such notice of termination
or reduction shall specify the applicable Revolving Commitments to be affected
and the amount of the Revolving Commitments to be terminated or reduced. Each
such notice of borrowing, Conversion, Continuation, or prepayment shall: (a)
specify the Accounts to be Converted or Continued, if applicable; (b) the
amount (subject to Section 4.2 hereof) to be borrowed, Converted, Continued, or
prepaid; (c) in the case of a Conversion, the Type of Account to result from
such Conversion; (d) in the case of a borrowing the Type of Account or Accounts
to be applicable to such borrowing and the amounts thereof; (e) in the event a
Eurodollar Account is selected, the duration of the Interest Period therefor;
and (f) the date of borrowing, Conversion, Continuation, or prepayment (which
shall be a Business Day). The Agent shall notify the Banks of the contents of
each such notice on the date of its receipt of the same or, if received on or
after 10:00 a.m. on a Business Day, on the next Business Day. In the event
the Borrower fails to select the Type of Account applicable to a Revolving
Loan, or the duration of any Interest Period for any Eurodollar Account, within
the time period and otherwise as provided in this Section 4.3, such Account (if
outstanding as a Eurodollar Account) will be automatically Converted into a
Base Rate Account on the last day of the preceding Interest Period for such
Account or (if outstanding as a Base Rate Account) will remain as, or (if not
then outstanding) will be made as, a Base Rate Account. The Borrower may not
borrow any Revolving Loans subject to a Eurodollar Account, Convert any Base
Rate Accounts into Eurodollar Accounts, or Continue any Eurodollar Account as a
Eurodollar Account if the Applicable Rate for such Eurodollar Accounts would
exceed the Maximum Rate.
Section 4.4 Optional Repayments. Subject to Section 4.2, the
Borrower may, at any time and from time to time without premium or penalty upon
prior notice to the Agent as specified in Section 4.3, repay any Revolving Loan
in full or in part. Revolving Loans subject to a Eurodollar Account may be
repaid only on the last day of the Interest Period applicable thereto unless
(i) the Borrower pays to the Agent for the account of the applicable Banks any
amounts due under Section 5.5 as a result of such repayment or (ii) after
giving effect to such repayment the aggregate principal amount of the
Eurodollar Accounts applicable to the Revolving Loan being repaid having
Interest Periods that end after such payment date shall be equal to or less
than the principal amount of such Revolving Loan after such repayment.
Section 4.5 Method of Payment. Except as otherwise expressly
provided herein, all payments of principal, interest, and other amounts to be
made by the Borrower or any Obligated Party under the Loan Documents shall be
made to the Agent at the Principal Office for the account of each Bank's
Applicable Lending Office in Dollars and in immediately available funds,
without setoff, deduction, or counterclaim, not later than 1:00 p.m. on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). The Borrower and each Obligated Party shall, at the time of
making each such payment, specify to the Agent the sums payable under the Loan
Documents to which such payment is to be applied (and in the event that the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Agent may apply such payment and any proceeds of any Collateral
to the Obligations in such order and manner as it may elect in its sole
discretion, subject to Section 4.6 hereof). Each payment received by the Agent
under any Loan Document for the account of a Bank shall be paid to such Bank by
3:00 p.m. on the date the payment is deemed made to the Agent in immediately
available funds, for the account of such Bank's Applicable Lending Office.
Whenever any payment under any Loan Document shall be stated to be due on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension
CREDIT AGREEMENT - PAGE 18
25
of time shall in such case be included in the computation of the payment of
interest and commitment fee, as the case may be.
Section 4.6 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Revolving Loan shall be made by the Banks, each
payment of commitment fees under Section 2.5 and letter of credit fees under
subsection 2.7 (c) shall be made for the account of the Banks, and each
termination or reduction of the Revolving Commitments shall be applied to the
Revolving Commitments of the Banks, pro rata according to their respective
Commitment Percentages; (b) the making, Conversion, and Continuation of
Accounts of a particular Type (other than Conversions provided for by Section
5.4) shall be made pro rata among the Banks holding Accounts of such Type
according to their respective Commitment Percentages; (c) each payment and
prepayment of principal of or interest on Revolving Loans or Reimbursement
Obligations by the Borrower shall be made to the Agent for the account of the
Banks holding such Revolving Loans or Reimbursement Obligations (or
participation interests therein) pro rata in accordance with the respective
unpaid principal amounts of such Revolving Loans or Reimbursement Obligations
(or participation interests therein); (d) proceeds of Collateral shall be
shared by the Agent and the Banks pro rata in accordance with the respective
unpaid principal amounts of and interest on the Obligations then due the Agent
and the Banks; and (e) the Banks (other than the Agent) shall purchase from the
Agent participations in the Letters of Credit to the extent of their respective
Commitment Percentages. If at any time payment, in whole or in part, of any
amount distributed by the Agent hereunder is rescinded or must otherwise be
restored or returned by Agent as a preference, fraudulent conveyance, or
otherwise under any bankruptcy, insolvency, or similar law, then each Person
receiving any portion of such amount agrees, upon demand, to return the portion
of such amount it has received to the Agent.
Section 4.7 Sharing of Payments. If a Bank shall obtain payment
of any principal of or interest on any of the Obligations due to such Bank
hereunder directly (and not through the Agent) through the exercise of any
right of set-off, banker's lien, counterclaim, or similar right, or otherwise,
it shall promptly purchase from the other Banks participations in the
Obligations held by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share the benefit of such payment pro rata in accordance with the
unpaid principal of and interest on the Obligations then due to each of them.
To such end, all of the Banks shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if all or any
portion of such excess payment is thereafter rescinded or must otherwise be
restored. The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any Bank so purchasing a participation in the
Obligations held by the other Banks may exercise all rights of set-off,
banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Obligations in
the amount of such participation. Nothing contained herein shall require any
Bank to exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Borrower.
Section 4.8 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Borrower (the "Payor") prior to the
date on which such Bank is to make payment to the Agent hereunder or the
Borrower is to make a payment to the Agent for the account of one or more of
the Banks, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does
not intend to make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
CREDIT AGREEMENT - PAGE 19
26
intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Agent, (a) the recipient of such payment shall, on
demand, pay to the Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to the Federal Funds Effective Rate for such period and (b) the
Agent shall be entitled to offset against any and all sums to be paid to such
recipient, the amount calculated in accordance with the foregoing clause (a).
Section 4.9 Withholding Taxes. All payments by the Borrower of
amounts payable under any Loan Document shall be payable without deduction for
or on account of any present or future taxes, duties, or other charges levied
or imposed by the United States of America or by the government of any
jurisdiction outside the United States of America or by any political
subdivision or taxing authority of or in any of the foregoing through
withholding or deduction with respect to any such payments (but excluding any
tax imposed on or measured by the net income or profit of a Bank pursuant to
the laws of the jurisdiction in which it is organized or in which the principal
office or Applicable Lending Office of such Bank is located or any subdivision
thereof or therein). If any such taxes, duties, or other charges are so levied
or imposed, the Borrower will make additional payments in such amounts so that
every net payment of amounts payable by it under any Loan Document, after
withholding or deduction for or on account of any such present or future taxes,
duties, or other charges, will not be less than the amount provided for herein
or therein, provided that the Borrower may withhold to the extent required by
law and shall have no obligation to pay such additional amounts to any Bank to
the extent that such taxes, duties, or other charges are levied or imposed by
reason of the failure or inability of such Bank to comply with the provisions
of Section 4.10. The Borrower shall furnish promptly to the Agent for
distribution to each affected Bank, as the case may be, official receipts
evidencing any such withholding or reduction.
Section 4.10 Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224 (or a
successor form), certifying in either case that such Bank is entitled to
receive payments from the Borrower under any Loan Document without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to the Borrower and
the Agent two (2) additional copies of such form (or a successor form) on or
before the date such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Bank
is entitled to receive payments from the Borrower under any Loan Document
without deduction or withholding of any United States federal income taxes,
unless 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 Bank from duly completing and delivering any such form with
respect to it and such Bank advises the Borrower and the Agent that it is not
capable of receiving such payments without any deduction or withholding of
United States federal income tax.
Section 4.11 Participation Obligations Absolute; Failure to Fund
Participation. The obligations of a Bank to fund its participation in the
Letters of Credit in accordance with the terms hereof shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance
with the terms of the Loan Documents under all circumstances whatsoever,
including without
CREDIT AGREEMENT - PAGE 20
27
limitation, the following circumstances: (a) any lack of validity of any Loan
Document; (b) the occurrence of any Default; (c) the existence of any claim,
set-off, counterclaim, defenses or other rights which such Bank, the Borrower,
any Obligated Party, or any other Person may have; (d) the occurrence of any
event that has or could reasonably be expected to have a Material Adverse
Effect; (e) the failure of any condition to a Revolving Loan under Article 6 to
be satisfied; or (f) any other circumstance whatsoever, whether or not similar
to any of the foregoing; provided that, the obligations of a Bank to fund its
participation in a Letter of Credit may be subject to avoidance by a Bank if
such Bank proves in a final nonappealable judgment that it was damaged and that
such damage arose directly from the Agent's willful misconduct or gross
negligence in determining whether the documentation presented under the Letter
of Credit in question complied with the terms thereof.
ARTICLE 5
Yield Protection and Illegality
Section 5.1 Additional Costs.
(a) The Borrower shall pay directly to each Bank from
time to time such amounts as such Bank may determine to be necessary
to compensate it for any reasonable costs incurred by such Bank which
such Bank determines are attributable to its making or maintaining of
any Eurodollar Accounts hereunder, its obligation to make any such
Revolving Loans hereunder or its obligation to issue or participate in
any Letter of Credit or any reduction in any amount receivable by such
Bank hereunder in respect of any such Revolving Loans, Letters of
Credit or such obligations (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting
from any Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Revolving
Notes in respect of any of such Revolving Loans or Letters of
Credit (other than franchise taxes and taxes imposed on the
overall net income of such Bank or its Applicable Lending
Office for any of such Revolving Loans or Letters of Credit by
the United States of America or the jurisdiction in which such
Bank has its Principal Office or such Applicable Lending
Office);
(ii) imposes or modifies any reserve, special
deposit, minimum capital, capital ratio, or similar
requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, such Bank (including any of such Revolving
Loans, Letters of Credit or any deposits referred to in the
definition of "Eurodollar Rate" in Section 1.1 hereof but
excluding any changes in the Reserves Requirement already
taken into consideration in the definition of Adjusted
Eurodollar Rate); or
(iii) imposes any other condition affecting this
Agreement, the Revolving Notes, the Letters of Credit or any
of such extensions of credit or liabilities or commitments.
Each Bank will notify the Borrower (with a copy to the Agent) of any
event occurring after the date of this Agreement which will entitle
such Bank to compensation pursuant to this
CREDIT AGREEMENT - PAGE 21
28
subsection 5.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation, and
will designate a different Applicable Lending Office for the Revolving
Loans or Letters of Credit affected by such event if such designation
will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Bank, violate any law, rule,
or regulation or be in any way disadvantageous to such Bank. A Bank
will furnish the Borrower with a certificate setting forth the basis
and the amount of each request of such Bank for compensation under
this subsection 5.1(a). If any Bank requests compensation from the
Borrower under this subsection 5.1(a), the Borrower may, by notice to
such Bank (with a copy to the Agent) suspend the obligation of such
Bank to issue or participate in Letters of Credit or to make Revolving
Loans subject to Eurodollar Accounts or Continue Eurodollar Accounts
as Eurodollar Accounts or Convert Base Rate Accounts into Eurodollar
Accounts until the Regulatory Change giving rise to such request
ceases to be in effect (in which case the provisions of Section 5.4
hereof shall be applicable with respect to such Eurodollar Accounts).
A Bank may only request compensation under this subsection 5.1(a) for
Additional Cost incurred at any time after the date which is six (6)
months prior to the date the Bank requests such compensation and at
any time after it has notified the Borrower it will request
compensation under this subsection 5.1(a).
(b) Without limiting the effect of the foregoing
provisions of this Section 5.1, in the event that, by reason of any
Regulatory Change, any Bank either (i) incurs Additional Costs based
on or measured by the excess above a specified level of the amount of
a category of deposits or other liabilities of such Bank which
includes deposits by reference to which the interest rate on the
Revolving Loans subject to Eurodollar Accounts is determined as
provided in this Agreement or a category of extensions of credit or
other assets of such Bank which includes Revolving Loans subject to
Eurodollar Accounts or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets which it may hold,
then, if such Bank so elects by notice to the Borrower (with a copy to
the Agent), the obligation of such Bank to make Revolving Loans
subject to Eurodollar Accounts or Continue Eurodollar Accounts as
Eurodollar Accounts or Convert Base Rate Accounts into Eurodollar
Accounts hereunder shall be suspended until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the
provisions of Section 5.4 hereof shall be applicable).
(c) Determinations and allocations by any Bank for
purposes of this Section 5.1 of the effect of any Regulatory Change on
its costs of maintaining its obligation to make Revolving Loans
subject to Eurodollar Accounts or issue or participate in Letters of
Credit or of making or maintaining Revolving Loans subject to
Eurodollar Accounts or on amounts receivable by it in respect of such
Revolving Loans or Letters of Credit, and of the additional amounts
required to compensate such Bank in respect of any Additional Costs,
shall, absent manifest error, be conclusive, provided that such
determinations and allocations are made on a reasonable basis.
Section 5.2 Limitation on Eurodollar Accounts. Anything herein
to the contrary notwithstanding, if with respect to any Eurodollar Accounts for
any Interest Period therefor:
(a) The Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" in Section
1.1 hereof are not being provided in the relative amounts or for the
relative maturities
CREDIT AGREEMENT - PAGE 22
29
for purposes of determining the rate of interest for the Revolving
Loans subject to such Eurodollar Accounts as provided in this
Agreement; or
(b) Required Banks determine (which determination shall
be conclusive) and notify the Agent that the relevant rates of
interest referred to in the definition of "Adjusted Eurodollar Rate"
in Section 1.1 hereof on the basis of which the rate of interest for
such Revolving Loans for such Interest Period is to be determined do
not accurately reflect the cost to the Banks of making or maintaining
such Revolving Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Eurodollar Account and the relevant amounts or periods, and so long as
such condition remains in effect, the Banks shall be under no obligation to
make additional Revolving Loans subject to a Eurodollar Account or to Convert
Base Rate Accounts into Eurodollar Accounts and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Eurodollar
Accounts, either prepay the Revolving Loans subject to such Eurodollar Accounts
or Convert such Eurodollar Accounts into Base Rate Accounts in accordance with
the terms of this Agreement. Determinations made under this Section 5.2 shall
be made on a reasonable basis.
Section 5.3 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to (a) honor its obligation to make Revolving Loans
subject to a Eurodollar Account hereunder or (b) maintain Revolving Loans
subject to a Eurodollar Account hereunder, then such Bank shall promptly notify
the Borrower (with a copy to the Agent) thereof and such Bank's obligation to
make or maintain Revolving Loans subject to a Eurodollar Account and to Convert
Base Rate Accounts into Eurodollar Accounts hereunder shall be suspended until
such time as such Bank may again make and maintain Revolving Loans subject to a
Eurodollar Account (in which case the provisions of Section 5.4 hereof shall be
applicable).
Section 5.4 Treatment of Affected Revolving Loans. If the
Eurodollar Accounts of any Bank (hereinafter called "Affected Accounts") are to
be Converted pursuant to Section 5.1 or 5.3 hereof, the Bank's Affected
Accounts shall be automatically Converted into Base Rate Accounts on the last
day(s) of the then current Interest Period(s) (or, in the case of a Conversion
required by subsection 5.1(b) or Section 5.3 hereof, on such earlier date as
such Bank may specify to the Borrower with a copy to the Agent) and, unless and
until such Bank gives notice as provided below that the circumstances specified
in Section 5.1 or 5.3 hereof which gave rise to such Conversion no longer
exist: (a) to the extent that such Bank's Affected Accounts have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Accounts shall be applied instead to its Base
Rate Accounts; and (b) all Accounts which would otherwise be established or
Continued by such Bank as Eurodollar Accounts shall be made as or Converted
into Base Rate Accounts and all Accounts of such Bank which would otherwise be
Converted into Eurodollar Accounts shall be Converted instead into (or shall
remain as) Base Rate Accounts. If such Bank gives notice to the Borrower (with
a copy to the Agent) that the circumstances specified in Section 5.1 or 5.3
hereof which gave rise to the Conversion of such Bank's Affected Accounts
pursuant to this Section 5.4 no longer exist (which such Bank agrees to do
promptly upon such circumstances ceasing to exist) at a time when Eurodollar
Accounts are outstanding, such Bank's Base Rate Accounts shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Accounts to the extent necessary so that, after
giving effect thereto, all Accounts held by the Banks holding Eurodollar
Accounts and by such Bank are held pro
CREDIT AGREEMENT - PAGE 23
30
rata (as to principal amounts, Types, and Interest Periods) in accordance with
their respective Commitment Percentages.
Section 5.5 Compensation. The Borrower shall pay to the Agent
for the account of each Bank, upon the request of such Bank, such amount or
amounts as shall be sufficient (in the reasonable opinion of such Bank) to
compensate it for any loss, cost, or expense incurred by it as a result of:
(a) Any payment or prepayment of a Revolving Loan subject
to a Eurodollar Account or Conversion of a Eurodollar Account for any
reason (including, without limitation, the acceleration of the
outstanding Revolving Loans pursuant to subsection 11.2(a)) on a date
other than the last day of an Interest Period for the applicable
Eurodollar Account; or
(b) Any failure by the Borrower for any reason
(including, without limitation, the failure of any conditions
precedent specified in Article 6 to be satisfied) to borrow or prepay
a Revolving Loan subject to a Eurodollar Account, or Convert a Base
Rate Account to a Eurodollar Account on the date for such borrowing,
Conversion, or prepayment specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Account (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Account which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Account
provided for herein over (ii) the interest component of the amount such Bank
would have bid in the eurodollar interbank market for Dollar deposits of
leading banks and amounts comparable to such principal amount and with
maturities comparable to such period.
Section 5.6 Capital Adequacy. If after the date hereof, any Bank
shall have determined that any Regulatory Change has or would have the effect
of reducing the rate of return on such Bank's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which such Bank (or its parent) could have
achieved but for such adoption, implementation, change, or compliance (taking
into consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within ten
(10) Business Days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank (or its parent) for such reduction. A certificate of such
Bank claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive, provided that
the determination thereof is made on a reasonable basis. In determining such
amount or amounts, such Bank may use any reasonable averaging and attribution
methods. With respect to each demand by a Bank under this Section 5.6, no Bank
shall have the right to demand compensation for amounts attributable to any
reduction in such Bank's rate of return occurring at any time before the date
which is six (6) months prior to the date the Bank gives such demand for
compensation to Borrower.
Section 5.7 Replacement/Payoff of Affected Bank. Within fifteen
(15) days after receipt by Borrower of written notice and demand from any Bank
for any payment under the terms of Sections 5.1,5.5 or 5.6, Borrower may, at
its option notify Agent and such Bank (the "Affected Bank") of its intention to
either (d) obtain, at Borrower's expense, a replacement Bank ("Replacement
Bank") to
CREDIT AGREEMENT - PAGE 24
31
purchase the Affected Bank's Revolving Loans and its obligations under the Loan
Documents or (e) prepay in full all outstanding Obligations owed to such
Affected Bank and terminate such Affected Bank's Revolving Commitment, in which
case the Revolving Commitments will be reduced by the amount of the Affected
Bank's Revolving Commitment. Borrower shall, within thirty (30) days following
the delivery of such notice from Borrower either (a) cause the Replacement Bank
to purchase the Revolving Loans of the Affected Bank and assume the Affected
Bank's obligations hereunder in accordance with the terms of an Assignment and
Acceptance in immediately available funds in an aggregate amount equal to the
aggregate unpaid principal of the Revolving Loans held by such Bank, all unpaid
interest and commitment and letter of credit fees accrued thereon, and all
other Obligations owed to such Bank including amounts owed under Sections
5.1,5.5 and 5.6 or (b) prepay in full all outstanding Obligations owed to such
Affected Bank (including amounts owed under Sections 5.1, 5.5 and 5.6) and
terminate such Affected Bank's obligations under the Loan Documents.
Notwithstanding the foregoing, (i) the Borrower shall continue to be obligated
to pay to the Affected Bank in full all amounts then demanded and due under
Sections 5.1, 5.5 and 5.6 in accordance with the terms thereof, (ii) neither
the Agent nor any Bank shall have any obligation to find a Replacement Bank,
(iii) the Replacement Bank must be reasonably acceptable to the Agent and (iv)
Texas Commerce cannot be replaced or paid off under this Section 5.7 without
its consent.
ARTICLE 6
Conditions Precedent
Section 6.1 Initial Revolving Loan and Letter of Credit. The
obligation of each Bank to make its initial Revolving Loan and the obligation
of the Agent to issue the initial Letter of Credit are each subject to the
condition precedent that the Agent shall have received on or before the day of
any such Revolving Loan or Letter of Credit all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance
satisfactory to the Agent:
(a) Resolutions. Resolutions of the Board of Directors
(or other similar authorizing documents) of the Borrower and each
Obligated Party certified by its Secretary, an Assistant Secretary, or
another authorized Person which authorize its execution, delivery, and
performance of the Loan Documents to which it is or is to be a party.
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of the Borrower
and each Obligated Party certifying the names of its representatives
(i) who are authorized to sign the Loan Documents to which it is or is
to be a party (including the certificates contemplated herein)
together with specimen signatures of each such officers and (ii) who
will, until replaced by other officers duly authorized for that
purpose, act as its representative for the purposes of signing
documentation and giving notices and other communications in
connection with the Loan Documents.
(c) Articles of Incorporation. The articles of
incorporation or certificate of limited partnership (or similar
governing document) of the Borrower and each Obligated Party certified
by the Secretary of State of the state of its incorporation or
organization (or the other appropriate governmental officials of its
jurisdiction of organization) and dated a current date.
CREDIT AGREEMENT - PAGE 25
32
(d) Bylaws; Partnership Agreement. The bylaws,
partnership agreement or similar governing document of the Borrower
and each Obligated Party certified by its Secretary, an Assistant
Secretary or its partners, as applicable.
(e) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation (or the
other appropriate governmental officials of its jurisdiction of
organization) of the Borrower and each Obligated Party as to its
existence and good standing and certificates of the appropriate
government officials of each jurisdiction in which the Borrower and
each Obligated Party is required to qualify to do business and where
failure to so qualify could reasonably be expected to have a Material
Adverse Effect, as to the Borrower's and each Obligated Party's
qualification to do business and good standing in such jurisdiction,
all dated a current date.
(f) Revolving Notes. The Revolving Notes executed by the
Borrower.
(g) Collateral Documents and Collateral. The Borrower
Pledge Agreement executed by Borrower and the Subsidiary Guaranties
and Subsidiary Pledge Agreements executed by each existing
Subsidiary; certificates representing the capital stock or other
equity interest of the Subsidiaries pledged pursuant to the Pledge
Agreements together with undated stock powers duly executed in blank,
UCC, tax and judgment Lien search reports listing all documentation on
file against the Borrower and the Subsidiaries in each jurisdiction in
which the Borrower or any Subsidiary is located; and such executed
documentation as the Agent may deem necessary to perfect or protect
its Liens, including, without limitation, financing statements under
the UCC and other applicable documentation under the laws of any
jurisdiction with respect to the perfection of Liens.
(h) Termination of Prior Liens. Duly executed UCC-3
termination statements, mortgage releases, and such other
documentation as shall be necessary to terminate or release all Liens
other than those permitted by Section 9.2.
(i) Opinion of Counsel. Favorable opinions of legal
counsel to the Borrower and the Subsidiaries, as to such matters as
the Agent may reasonably request.
(j) Fees. The fees due on the Closing Date as described
in the letters dated April 2, 1997 from Chase Securities Inc. and
Texas Commerce to the Borrower.
(k) Attorneys' Fees and Expenses. Evidence that the
costs and expenses (including attorneys' fees) referred to in Section
13.1, to the extent incurred, shall have been paid in full by the
Borrower.
Section 6.2 All Revolving Loans and Letters of Credit. The
obligation of each Bank to make any Revolving Loan (including the initial
Revolving Loan)and the obligation of the Agent to issue any Letter of Credit
(including the initial Letter of Credit) are subject to the following
additional conditions precedent:
(a) No Default. No Default shall have occurred and be
continuing, or would result from such Revolving Loan or Letter of
Credit;
CREDIT AGREEMENT - PAGE 26
33
(b) Representations and Warranties. All of the
representations and warranties contained in Article 7 hereof and in
the other Loan Documents shall be true and correct on and as of the
date of such Revolving Loan or the issuance of such Letter of Credit
with the same force and effect as if such representations and
warranties had been made on and as of such date except to the extent
that such representations and warranties relate specifically to
another date; and
(c) Additional Documentation. The Agent shall have
received such additional approvals, opinions, or documentation as the
Agent may reasonably request.
Each notice of borrowing or request for the issuance of a Letter of Credit by
the Borrower hereunder shall constitute a representation and warranty by the
Borrower that the conditions precedent set forth in subsections 6.2(a) and (b)
have been satisfied (both as of the date of such notice and, unless the
Borrower otherwise notifies the Agent prior to the date of such borrowing or
such issuance, as of the date of such borrowing or such issuance).
ARTICLE 7
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
Section 7.1 Existence. The Borrower and each Subsidiary (a) is a
corporation or other entity (as reflected on Schedule 7.14) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation or organization, (b) has all requisite power and authority to
own its assets and carry on its business as now being or as proposed to be
conducted, and (c) is qualified to do business in all jurisdictions in which
the nature of its business makes such qualification necessary and where failure
to so qualify would have a Material Adverse Effect. The Borrower and each
Subsidiary has the power and authority to execute, deliver, and perform their
respective obligations under the Loan Documents to which it is or may become a
party.
Section 7.2 Financial Statements. The Borrower has delivered to
the Agent and the Banks audited consolidated financial statements of the
Borrower and the Subsidiaries as at and for the Fiscal Year ended in 1997.
Such financial statements, have been prepared in accordance with GAAP, and
present fairly, on a consolidated basis, the financial condition of the
Borrower and the Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein.
Neither the Borrower nor any of the Subsidiaries has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments,
or unrealized or anticipated losses from any unfavorable commitments applicable
to or arising from the periods covered by such financial statements except as
referred to or reflected in such financial statements. There has been no
material adverse change in the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower and the Subsidiaries taken
as a whole since the effective date of the most recent financial statements
referred to in this Section or delivered under Section 8.1.
Section 7.3 Corporate Action; No Breach. The execution,
delivery, and performance by the Borrower and each Subsidiary of the Loan
Documents to which each is or may become a party and compliance with the terms
and provisions hereof and thereof have been duly authorized by all requisite
CREDIT AGREEMENT - PAGE 27
34
action on the part of the Borrower and each Subsidiary and do not and will not
(a) violate or conflict with, or result in a breach of, or require any consent
under (i) the articles of incorporation, bylaws or other governing documents of
the Borrower or any of the Subsidiaries, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator or (iii) any material agreement or instrument to which
the Borrower or any Subsidiary is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
(except as provided herein) upon any of the revenues or assets of the Borrower
or any Subsidiary.
Section 7.4 Operation of Business. The Borrower and each of the
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted except those that the failure to so possess could not
reasonably be expected to have a Material Adverse Effect, and the Borrower and
each of its Subsidiaries are not in violation of any valid rights of others
with respect to any of the foregoing except violations that could not
reasonably be expected to have a Material Adverse Effect.
Section 7.5 Litigation and Judgments. There is no action, suit,
investigation, or proceeding before or by any Governmental Authority or
arbitrator pending, or to the knowledge of the Borrower, threatened against or
affecting the Borrower or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect. There are no outstanding judgments against the
Borrower or any Subsidiary. With respect to the matters described in the draft
Disclosure Statement prepared in connection with the Chapter 11 bankruptcy
proceedings of Edison Brothers Stores, Inc. et al. relating to the transaction
in which Edison Brothers Stores, Inc., dividended to its shareholders stock of
the Borrower:
(a) Since 1989 D&B Realty Holding, Inc. has been owned, and is now
owned indirectly, 100% by Borrower and has never been owned
directly by Edison Brothers Stores, Inc. or any of its
subsidiaries other than Borrower when it was a subsidiary of
Edison Brothers, Inc.;
(b) No Subsidiary other than D&B Realty Holding, Inc. owns any fee
interest in any real property;
(c) Other than the real property located in Addison, Illinois and
the real property on which Borrower's headquarters will be
constructed in Dallas, Texas, Borrower does not own any fee
interest in any real property;
(d) D&B Realty Holding, Inc. acquired the real property it owns
from third Persons not affiliated with Edison Brothers Stores,
Inc.;
(e) Borrower acquired the real property it owns from third Persons
not affiliated with Edison Brothers Stores, Inc.;
(f) D&B Realty Holding, Inc. was formerly known as EBE Realty,
Inc.; and
(g) No equity interest in D&B Realty Holding, Inc. nor any real
property owned by D&B Realty Holding, Inc. or Borrower was
transferred in connection with the spinoff
CREDIT AGREEMENT - PAGE 28
35
transaction described in the disclosure statement prepared in
connection with the pending Chapter 11 bankruptcy proceeding
of Edison Brothers Stores, Inc.
Section 7.6 Rights in Properties; Liens. The Borrower and each
Subsidiary have good title to or valid leasehold interests in their respective
properties and assets, real and personal, including the properties, assets, and
leasehold interests reflected in the financial statements described in Section
7.2, and none of the properties, assets, or leasehold interests of the Borrower
or any Subsidiary is subject to any Lien, except as permitted by Section 9.2.
Section 7.7 Enforceability. The Loan Documents to which the
Borrower or any Subsidiary is a party, when delivered, shall constitute the
legal, valid, and binding obligations of the Borrower or the Subsidiary, as
applicable, enforceable against the Borrower or the applicable Subsidiary in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
Section 7.8 Approvals. All authorizations, approvals, and
consents of, and all filings or registrations with, any Governmental Authority
or third party necessary for the execution, delivery, or performance by the
Borrower or any Subsidiary of the Loan Documents to which each is or may become
a party or for the validity or enforceability thereof have been obtained or
made.
Section 7.9 Debt. The Borrower and the Subsidiaries have no
Debt, except as permitted by Section 9.1.
Section 7.10 Taxes. The Borrower and each Subsidiary have filed
all material tax returns (federal, state, and local) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable other than
those being contested in good faith by appropriate proceedings diligently
pursued for which adequate reserves have been established. As of the Closing
Date, the Borrower knows of no pending investigation of the Borrower or any
Subsidiary by any taxing authority or of any pending but unassessed tax
liability of the Borrower or any Subsidiary. As of any date after the Closing
Date when this representation and warranty is made by Borrower, the Borrower
knows of no pending investigation of the Borrower or any Subsidiary by any
taxing authority or of any pending but unassessed tax liability of the Borrower
or any Subsidiary that, in each case, could reasonably be expected to have a
Material Adverse Effect.
Section 7.11 Margin Securities. Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Revolving Loan will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
Section 7.12 ERISA. The Borrower and each Subsidiary are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. No notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither the Borrower nor any ERISA
CREDIT AGREEMENT - PAGE 29
36
Affiliate has completely or partially withdrawn from a Multiemployer Plan. The
Borrower and each ERISA Affiliate have met their minimum funding requirements
under ERISA with respect to all of their Plans. The present value of all
vested benefits under each Plan do not exceed the fair market value of all Plan
assets allocable to such benefits, as determined on the most recent valuation
date of the Plan and in accordance with ERISA. Neither the Borrower nor any
ERISA Affiliate has incurred any liability to the PBGC under ERISA.
Section 7.13 Disclosure. No statement, information, report,
representation, or warranty made by the Borrower or any Obligated Party in any
Loan Document or furnished to the Agent or any Bank in connection with any
transaction contemplated by the Loan Documents contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Borrower which has a Material Adverse Effect, or which could reasonably be
expected to have a Material Adverse Effect.
Section 7.14 Subsidiaries. As of the Closing Date, the Borrower
has no Subsidiaries other than those listed on Schedule 7.14 hereto. Schedule
7.14 sets forth the type of each Subsidiary listed thereon, the jurisdiction of
incorporation or organization of each such Subsidiary, the percentage of the
Borrower's ownership of the outstanding voting stock (or other ownership
interests) of each such Subsidiary and the authorized, issued, and outstanding
capital stock (or other equity interest) of each such Subsidiary. All of the
outstanding capital stock (or other equity interest) of each Subsidiary listed
on Schedule 7.14 has been validly issued, is fully paid, and is nonassessable.
There are no outstanding subscriptions, options, warrants, calls, or rights
(including preemptive rights) to acquire, and no outstanding securities or
instruments convertible into, capital stock (or other equity interest) of any
Subsidiary listed on Schedule 7.14.
Section 7.15 Agreements. Neither the Borrower nor any Subsidiary
is a party to any indenture, loan, or credit agreement, or to any lease or
other agreement or instrument, or subject to any charter or corporate
restriction that could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary is in default in any respect
in the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument to which it
is a party other than defaults which will not have a Material Adverse Effect.
Section 7.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation of any law, rule, regulation, order, or decree of
any Governmental Authority or arbitrator other than violations which will not
have a Material Adverse Effect.
Section 7.17 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.18 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 7.19 Environmental Matters. Except for those matters
which will not have a Material Adverse Effect:
CREDIT AGREEMENT - PAGE 30
37
(a) The Borrower, each Subsidiary, and all of their
respective properties, assets, and operations are in full compliance
with all Environmental Laws. The Borrower is not aware of, nor has
the Borrower received written notice of, any past, present, or future
conditions, events, activities, practices, or incidents which may
interfere with or prevent the compliance or continued compliance of
the Borrower and the Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in good
standing and the Borrower and its Subsidiaries are in compliance with
all of the terms and conditions of such permits;
(c) No Hazardous Materials have been used, generated,
stored, transported, disposed of on, or Released from any of the
properties or assets of the Borrower or any Subsidiary, and to the
knowledge of Borrower, no Hazardous Materials are present at such
properties, except in compliance with Environmental Laws. The use
which the Borrower and the Subsidiaries make and intend to make of
their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or
Release of any Hazardous Material on, in, or from any of their
properties or assets except in compliance with Environmental Laws;
(d) Neither the Borrower nor any of the Subsidiaries nor
any of their respective currently or previously owned or leased
properties or operations is subject to any outstanding or, to the best
of its knowledge, threatened order from or agreement with any
Governmental Authority or other Person or subject to any judicial or
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;
(e) Neither the Borrower nor any of the Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., regulations thereunder or any comparable provision of state law.
The Borrower and the Subsidiaries are in compliance with all
applicable financial responsibility requirements of all Environmental
Laws;
(f) Neither the Borrower nor any of the Subsidiaries has
filed or failed to file any notice required under applicable
Environmental Law reporting a Release; and
(g) No Lien arising under any Environmental Law has
attached to any property or revenues of the Borrower or the
Subsidiaries.
Section 7.20 Solvency. Borrower and each Subsidiary, both
individually and on a consolidated basis: (a) owns and will own assets the fair
saleable value of which are (i) greater than the total amount of its
liabilities (including contingent liabilities) and (ii) greater than the amount
that will be required to pay probable liabilities of then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to it; (b) has capital that is not
unreasonably small in relation to its business as presently conducted; and (c)
does not intend to incur and does not believe that it will incur debts beyond
its ability to pay such debts as they become due.
CREDIT AGREEMENT - PAGE 31
38
Section 7.21 Benefit Received. Borrower and the Subsidiaries will
receive reasonably equivalent value in exchange for the obligations incurred
under the Loan Documents to which each is a party.
Section 7.22 Principal Place of Business. The principal place of
business and chief executive office of Borrower, and the office where Borrower
keeps its books and records, is located at the address of Borrower shown on the
Borrower's signature page to this Agreement or at such other address disclosed
to the Agent pursuant to Section 2.8 of the Borrower Pledge Agreement. The
principal place of business and chief executive office of each Subsidiary and
the office where each Subsidiary keeps its books and records is located at the
address of such Subsidiary shown on Schedule 7.14 opposite such Subsidiary's
name, at such other address disclosed to the Agent pursuant to Section 2.8 of
the Subsidiary Pledge Agreement to which the Subsidiary is a party, if
applicable, or at such other address otherwise disclosed to the Agent.
Section 7.23 Name. Except as disclosed to the Agent pursuant to
Section 2.8 of a Pledge Agreement or as otherwise disclosed to the Agent, the
exact name of Borrower and each Subsidiary as it appears in its certificate of
incorporation or similar document creating the applicable Person is as set
forth with respect to Borrower, in the introduction of this Agreement and, with
respect to each Subsidiary on Schedule 7.14 and neither Borrower nor any
Subsidiary has done business in any location under any other name within the
last five (5) years.
ARTICLE 8
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Revolving Commitment
hereunder, the Borrower will perform and observe the following positive
covenants:
Section 8.1 Reporting Requirements. The Borrower will furnish to
the Agent and each Bank:
(a) Annual Financial Statements. As soon as available,
and in any event within ninety (90) days after the end of each Fiscal
Year of the Borrower, beginning with the Fiscal Year ending February
1997, a copy of the annual audit report of the Borrower and the
Subsidiaries for such Fiscal Year containing, on a consolidated basis,
balance sheets and statements of income, retained earnings, and cash
flow as at the end of such Fiscal Year and for the Fiscal Year then
ended, in each case setting forth in comparative form the figures for
the preceding Fiscal Year, all in reasonable detail and audited and
certified by independent certified public accountants of recognized
standing acceptable to the Agent, to the effect that such report has
been prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as
available, and in any event within forty-five (45) days after the end
of each Fiscal Quarter, a copy of an unaudited financial report of the
Borrower and the Subsidiaries as of the end of such period and for the
Fiscal Quarter then ended containing, on a consolidated basis, a
balance sheet and statements of income, retained earnings, and cash
flow, in each case setting forth in comparative form the figures for
the corresponding Fiscal Quarter of the preceding Fiscal Year, all in
reasonable detail certified
CREDIT AGREEMENT - PAGE 32
39
by the chief financial officer of the Borrower to have been prepared
in accordance with GAAP and to fairly present (subject to year-end
audit adjustments) the financial condition and results of operations
of the Borrower and the Subsidiaries, on a consolidated basis, at the
date and for the periods indicated therein;
(c) Compliance Certificate. Within forty-five (45) days
after the end of each Fiscal Quarter of each Fiscal Year, or with
respect to the last Fiscal Quarter of each Fiscal Year, within ninety
(90) days of the end of such Fiscal Quarter, a Compliance Certificate;
(d) Annual Projections. As soon as available and in any
event within forty-five (45) days after the beginning of each Fiscal
Year of the Borrower beginning with the fiscal year ending February
1997, the Borrower will deliver its forecasted, consolidated profit
and loss statements prepared on a consistent basis with Borrower's
historical financial statements, (together with appropriate supporting
details and a statement of underlying assumptions) on a Fiscal Quarter
by Fiscal Quarter basis for the current Fiscal Year and a proforma
projection of the Borrower's compliance with the financial covenants
in this Agreement for the same period;
(e) Management Letters. Promptly upon receipt thereof, a
copy of any management letter or written report submitted to the
Borrower or any Subsidiary by independent certified public accountants
with respect to the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any
Subsidiary;
(f) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, investigations and
proceedings by or before any Governmental Authority or arbitrator
affecting the Borrower or any Subsidiary which, if determined
adversely to the Borrower or such Subsidiary, could reasonably be
expected to have a Material Adverse Effect;
(g) Notice of Default. As soon as possible and in any
event when an officer of the Borrower has knowledge of the occurrence
of a Default, a written notice setting forth the details of such
Default and the action that the Borrower has taken and proposes to
take with respect thereto;
(h) ERISA Reports. If requested by the Agent, promptly
after the filing or receipt thereof, copies of all reports, including
annual reports, and notices which the Borrower or any Subsidiary files
with or receives from the PBGC or the U.S. Department of Labor under
ERISA; and as soon as possible and in any event within five (5)
Business Days after the Borrower or any Subsidiary knows or has reason
to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or
any Subsidiary has instituted or will institute proceedings under
Title IV of ERISA to terminate any Plan, a certificate of the chief
financial officer of the Borrower setting forth the details as to such
Reportable Event or Prohibited Transaction or Plan termination and the
action that the Borrower proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the
furnishing thereof, copies of any statement or report furnished to
any other party pursuant to the terms of any indenture, Revolving
Loan, or credit or similar agreement and not otherwise required to be
furnished to the Agent and the Banks pursuant to any other clause of
this Section;
CREDIT AGREEMENT - PAGE 33
40
(j) Notice of Material Adverse Effect. As soon as
possible and in any event when an officer of the Borrower has
knowledge of the occurrence thereof, written notice of any matter that
could reasonably be expected to have a Material Adverse Effect;
(k) Proxy Statements, Etc. As soon as available, one
copy of each financial statement, report, notice or proxy statement
sent by the Borrower or any Subsidiary to its stockholders generally
and one copy of each regular, periodic, or special report,
registration statement, or prospectus filed by the Borrower or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency; and
(l) General Information. Promptly, such other
information concerning the Borrower or any Subsidiary as the Agent or
any Bank may from time to time reasonably request.
Section 8.2 Maintenance of Existence; Conduct of Business. The
Borrower will, and will cause each Subsidiary to, preserve and maintain (i) its
corporate existence (except as permitted by Section 9.3) and (ii) all of its
leases, privileges, licenses, permits, franchises, qualifications, and rights
that are necessary or desirable in the ordinary conduct of its business.
Section 8.3 Maintenance of Properties. The Borrower will, and
will cause each Subsidiary to, maintain, keep, and preserve all of its material
properties necessary in the conduct of its business in good working order and
condition (exclusive of ordinary wear and tear).
Section 8.4 Taxes and Claims. The Borrower will, and will cause
each Subsidiary to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all valid and
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither the Borrower
nor any Subsidiary shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves
have been established.
Section 8.5 Insurance. The Borrower will, and will cause each
Subsidiary to, maintain insurance with financially sound and reputable
insurance companies in such amounts, with such deductibles, and covering such
risks as are usually carried by corporations engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower and
the Subsidiaries operate, provided that in any event the Borrower will maintain
and cause each Subsidiary to maintain workmen's compensation insurance (or
alternate comparable coverage as required by law), property insurance,
comprehensive general liability insurance, business interruption insurance and
products liability insurance reasonably satisfactory to the Agent.
Section 8.6 Inspection Rights. At any reasonable time and from
time to time during normal business hours, the Borrower will, and will cause
each Subsidiary to, permit representatives of the Agent and each Bank to
examine, copy, and make extracts from its books and records, to visit and
inspect its properties, and to discuss its business, operations, and financial
condition with its officers, employees, and independent certified public
accountants. The Agent agrees to give Borrower two (2) days prior notice of
any (A) examination, visit or inspection under this Section 8.6 unless a
Default has occurred, in which event no prior notice is required or (B)
discussions with employees (other than
CREDIT AGREEMENT - PAGE 34
41
executive or financial officers of the Borrower) and independent certified
public accountants of the Borrower under this Section 8.6.
Section 8.7 Keeping Books and Records. The Borrower will, and
will cause each Subsidiary to, maintain proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 8.8 Compliance with Laws. The Borrower will, and will
cause each Subsidiary to, comply in all respects with all applicable laws
(including, without limitation, all Environmental Laws), rules, regulations,
orders, and decrees of any Governmental Authority or arbitrator except to the
extent any such noncompliance could not reasonably be expected to have a
Material Adverse Effect.
Section 8.9 Compliance with Agreements. The Borrower will, and
will cause each Subsidiary to, comply in all respects with all agreements,
contracts, and instruments binding on it or affecting its properties or
business except to the extent any such noncompliance could not reasonably be
expected to have a Material Adverse Effect.
Section 8.10 Further Assurances and Collateral Matters.
(a) Further Assurance. The Borrower will, and will cause each
Subsidiary to, execute and deliver such further documentation and take such
further action as may be requested by the Agent to carry out the provisions and
purposes of the Loan Documents and to create, preserve, and perfect the Liens
of the Agent for the benefit of itself and the Banks in the Collateral.
(b) Subsidiary Guaranty. Upon the creation or acquisition of any
Subsidiary, the Borrower shall cause such Subsidiary to execute and deliver a
Subsidiary Guaranty, and such other documentation as the Agent may request to
evidence the power and authority of such Subsidiary to guaranty the repayment
of the Obligations as contemplated by a Subsidiary Guaranty.
(c) Pledge of Subsidiaries. If any Subsidiary is created or
acquired after the Closing Date or Borrower or any Subsidiary makes an
investment in a Subsidiary, the Borrower or applicable Subsidiary shall execute
and deliver to the Agent an amendment to its Pledge Agreement describing as
collateral thereunder the stock of or other ownership interests in the new
Subsidiary and shall deliver the certificates representing such stock or other
interests to the Agent together with undated stock or other powers duly
executed in blank.
(d) Equipment Partnerships. If as of the end of any Fiscal
Quarter the total gross revenue received by Borrower and the Subsidiaries from
all Equipment Partnerships during the four (4) Fiscal Quarter period then ended
equals or exceeds fifteen percent (15%) of the total gross revenue of Borrower
and the Subsidiaries for the same period, both as determined in accordance with
GAAP on a consolidated basis, then the Borrower and the Subsidiaries shall
(within thirty (30) days after the Agent's request) execute and deliver to the
Agent such documentation as the Agent may request (including without
limitation, amendments to Pledge Agreements or new Pledge Agreements, and UCC-1
financing statements) to pledge to the Agent to secure the Obligations all
ownership or other interest that the Borrower and each Subsidiary hold in each
Equipment Partnership in which any of them have an investment or capital
contribution or in which any of them may thereafter make an investment or
capital contribution.
CREDIT AGREEMENT - PAGE 35
42
Section 8.11 ERISA. The Borrower will, and will cause each
Subsidiary to, comply with all minimum funding requirements and all other
requirements of ERISA, if applicable, so as not to give rise to any material
liability thereunder.
ARTICLE 9
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Revolving Commitment
hereunder, the Borrower will perform and observe the following negative
covenants:
Section 9.1 Debt. The Borrower will not, and will not permit any
Subsidiary to, incur, create, assume, or permit to exist any Debt, except:
(a) Debt to the Agent and Banks pursuant to the Loan
Documents;
(b) Debt owed to Bank One, Texas, N.A. provided that such
Debt will not be permitted after the initial Revolving Loan is made or
the initial Letter of Credit is issued;
(c) Intercompany Debt owed by a Subsidiary to Borrower or
owed by a Subsidiary to its parent; provided that (i) the obligations
of each obligor of such Debt must be subordinated in right of payment
to any liability such obligor may have for the Obligations from and
after such time as any portion of the Obligations shall become due and
payable (whether at stated maturity, by acceleration or otherwise) and
(ii) such Debt must be incurred in the ordinary course of business and
otherwise in accordance with Section 9.5(f);
(d) Debt (including Capital Lease Obligations) not to
exceed Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate at any time outstanding secured by purchase money Liens
permitted by Section 9.2;
(e) Debt arising in connection with interest rate swap,
cap, collar or similar agreements entered into in the ordinary course
of business to fix or limit Borrower's or any Subsidiaries' actual
interest expense;
(f) Guaranties incurred in the ordinary course of
business with respect to surety and appeal bonds, performance and
return-of-money bonds, and the similar obligations required to be
issued in the ordinary course of Borrower's or a Subsidiary's
business;
(g) Debt arising in connection with foreign exchange or
currency hedging transactions entered into the ordinary course of
business to enable Borrower or a Subsidiary to limit its actual market
risk of holding
currency in either the cash or futures market;
(h) Guaranties by Borrower or by a Subsidiary of Debt or
other obligations owed by a Subsidiary which is permitted hereunder;
(i) Borrower's obligations to reimburse and indemnify
Edison Brothers Stores, Inc. (i) under the terms of that certain Lease
Guarantee Agreement dated June 10, 1995 by and
CREDIT AGREEMENT - PAGE 36
43
between Borrower and Edison Brothers Stores, Inc. as it exists on the
date hereof (a true and complete copy of which has been provided to
the Agent) and (ii) for amounts paid by Edison Brothers Stores, Inc.
on behalf of Borrower as a result of Edison Brothers Stores, Inc.'s
guaranty of Borrower's obligations under the real property lease of
Borrower's Gold Coast Galleria retail location in Chicago, Illinois as
it exists on the date hereof (a true and complete copy of which has
been provided to the Agent); provided that such obligations of
Borrower to Edison Brothers Stores, Inc. are not secured by any Lien;
and
(j) Debts, other than the Debts specifically described in
clauses (a) through (i) of this Section 9.1, which in the aggregate do
not exceed Two Hundred Fifty Thousand Dollars ($250,000) at any time
outstanding.
Section 9.2 Limitation on Liens and Restrictions on Subsidiaries.
The Borrower will not, and will not permit any Subsidiary to, incur, create,
assume, or permit to exist any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except the following, none
of which shall encumber the Collateral other than those Liens described in
clause (b) and (h):
(a) Liens in favor of Bank One, Texas, N.A. and Edison
Brothers Stores, Inc. provided that such Liens will not be permitted
after the initial Revolving Loan is made or the initial Letter of
Credit is issued;
(b) Liens in favor of the Agent for the benefit of itself
and the Banks pursuant to the Loan Documents;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that
do not (individually or in the aggregate) materially affect the value
of the assets encumbered thereby or materially impair the ability of
the Borrower or the Subsidiaries to use such assets in their
respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(d) Liens (other than Liens relating to Environmental
Liabilities or ERISA) for taxes, assessments, or other governmental
charges that are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen,
carriers, landlords, or other similar statutory Liens securing
obligations that are not yet due and are incurred in the ordinary
course of business or which are being contested in good faith and for
which adequate reserves have been established;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs
or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, and contracts (other than for payment of
Debt);
(g) Liens for purchase money obligations and Capital
Lease Obligations; provided that: (i) the Debt secured by any such
Lien is permitted under Section 9.1; and (ii) any such Lien encumbers
only the asset so purchased;
CREDIT AGREEMENT - PAGE 37
44
(h) Liens related to any attachment or judgment not
constituting an Event of Default; and
(i) Liens arising from filing UCC financing statements
regarding leases permitted by this Agreement.
Neither the Borrower nor any Subsidiary shall enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired; provided that, in connection with the creation of purchase
money Liens, the Borrower or the Subsidiary may agree that it will not permit
any other Liens to encumber the asset subject to such purchase money Lien and
Borrower and the Subsidiaries may enter into leases and other agreements in the
ordinary course of business which contain provisions prohibiting the assignment
of the Borrower's or the applicable Subsidiary's rights thereunder. Except as
provided herein, the Borrower will not and will not permit any Subsidiaries
directly or indirectly to create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary to: (1) pay dividends or make any other distribution
on any of such Subsidiary's equity interests owned by the Borrower or any
Subsidiary; (2) subject to subordination provisions, pay any Debt owed to the
Borrower or any other Subsidiary; (3) make loans or advances to the Borrower or
any other Subsidiary; or (4) transfer any of its property or assets to the
Borrower or any other Subsidiary.
Section 9.3 Mergers, Etc. The Borrower will not, and will not
permit any Subsidiary to, become a party to a merger or consolidation, or
purchase or otherwise acquire all or a substantial part of the business or
assets of any Person or any shares or other evidence of beneficial ownership of
any Person, or wind-up, dissolve, or liquidate itself; provided that, (i) the
Borrower and the Subsidiaries may acquire assets or shares or other evidence of
beneficial ownership of a Person in accordance with the restrictions set forth
in subsection 9.5; (ii) any Subsidiary may merge into or consolidate with
Borrower or any other Subsidiary if Borrower provides prior written notice to
the Agent and the surviving Person assumes the obligations of the applicable
Subsidiary under the Loan Documents and is solvent as contemplated under
Section 7.20 hereunder after giving effect to such merger or consolidation; and
(iii) the Borrower or any Subsidiary (the "Acquiring Company") may acquire all
or substantially all of the assets of any Subsidiary (a "Transferring
Subsidiary") if Borrower provides prior written notice to the Agent, the
Acquiring Company assumes all the Transferring Subsidiary's liabilities,
including without limitation, all liabilities of the Transferring Subsidiary
under the Loan Documents to which it is a party and all of the capital stock or
other equity interest of the Transferring Subsidiary is owned directly or
indirectly by the Acquiring Company and is pledged to the Agent in accordance
with Section 8.10 (and, following such assignment and assumption, such
Transferring Subsidiary may wind up, dissolve and liquidate).
Section 9.4 Restrictions on Dividends and other Distributions.
The Borrower will not directly or indirectly declare, order, pay, make or set
apart any sum for any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock or other equity interest of the
Borrower now or hereafter outstanding. The Borrower will not and will not
permit any Subsidiary to directly or indirectly declare, order, pay, make or
set apart any sum for (a) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of stock or other equity
interest of the Borrower or any Subsidiary now or hereafter outstanding; or (b)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options, or other rights to acquire shares of any
CREDIT AGREEMENT - PAGE 38
45
class of stock or other equity interest of the Borrower or any of its
Subsidiaries now or hereafter outstanding.
Section 9.5 Investments. The Borrower will not, and will not
permit any Subsidiary to, make or permit to remain outstanding any advance,
loan, other extension of credit, or capital contribution to or investment in
any Person, or purchase or own any stock, bonds, notes, debentures, or other
securities of any Person, or be or become a joint venturer with or partner of
any Person, except:
(a) readily marketable direct obligations of the United
States of America or any agency thereof with maturities of one year or
less from the date of acquisition and any other securities issued or
guaranteed as to timely payment by any governmental agency of the
United States of America;
(b) fully insured certificates of deposit with maturities
of one year or less from the date of acquisition issued by any
commercial bank operating in the United States of America having
capital and surplus in excess of Fifty Million Dollars ($50,000,000);
(c) commercial paper or bonds of a domestic issuer if at
the time of purchase such paper or bonds are rated in one of the two
highest rating categories of Standard and Poor's Corporation or
Moody's Investors Service, Inc.;
(d) loans and advances to employees for business expenses
incurred in the ordinary course of business; provided that the
aggregate outstanding amount of such loans and advances do not exceed
Five Hundred Thousand Dollars ($500,000) at any time;
(e) existing investments described on Schedule 9.5
hereto;
(f) loans, advances or other extensions of credit made by
Borrower to, or capital contributions or investments by Borrower in,
wholly owned direct Subsidiaries organized under the laws of the
United States of America or a State thereof; provided that, (i) at the
time any such loan, advance, other extension of credit, capital
contribution, or investment is made, no Default exists or would result
therefrom, (ii) any loan, advance or other extension of credit must be
made in accordance with the restrictions set forth in Section 9.1(c),
(iii) any such loan, advance, other extension of credit, capital
contribution or investment is made pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business, and (iv)
Borrower complies with its obligations under Section 8.10 hereof with
respect to any such capital contribution or investment;
(g) capital contributions and investments by Borrower or
a Subsidiary in Equipment Partnerships as long as at the time such
capital contribution or investment is made, (i) no Default exists or
would result therefrom; (ii) Borrower complies with its obligations
under Section 8.10 hereof, to the extent applicable, (iii) Borrower or
the applicable Subsidiary obtains at least fifty percent (50%) of the
ownership interests of such Equipment Partnership having by the terms
thereof ordinary voting power to elect the board of directors or
similar governing body of such Equipment Partnership or to direct the
management and policies of such Equipment Partnership, and (iv) the
only assets contributed or invested in any one such Equipment
Partnership by Borrower or a Subsidiary are (A) the right to use the
space in a retail
CREDIT AGREEMENT - PAGE 39
46
location of Borrower or a Subsidiary on which the equipment in
question will be located and operated and (B) a cash amount of not
more than One Hundred Dollars ($100.00);
(h) Guarantees permitted by Section 9.1;
(i) advances, loans, other extensions of credit or
capital contributions to and investments in any Person, other than
those described in clause (a) through (h) of this Section 9.5, if the
aggregate outstanding book value of all such advances, loans,
extensions of credit, capital contributions and investment does not
exceed Two Hundred Fifty Thousand Dollars ($250,000) at any time.
Section 9.6 Limitation on Issuance of Capital Stock. Except as
permitted by Section 9.4 and except for issuances, sales, assignments or other
disposition to Borrower, or to a Subsidiary which is the parent of the issuer
(if the security or other ownership interest so acquired is pledged to the
Agent in accordance with Section 8.10), the Borrower will not permit any
Subsidiary to, at any time issue, sell, assign, or otherwise dispose of (a) any
of its capital stock or other equity interest, (b) any securities exchangeable
for or convertible into or carrying any rights to acquire any of its capital
stock or other equity interest, or (c) any option, warrant, or other right to
acquire any of its capital stock or other equity interest.
Section 9.7 Transactions With Affiliates. The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the
rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be obtained in a comparable arms-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary; provided that the Borrower and
the Subsidiaries may make loans, advances and other extensions of credit to the
Subsidiaries in accordance with Section 9.5 (f) on such terms as they may deem
appropriate in accordance with Section 9.5 (f).
Section 9.8 Disposition of Assets. The Borrower will not, and
will not permit any Subsidiary to, sell, lease, assign, transfer, or otherwise
dispose of any of its assets, except (a) dispositions of inventory in the
ordinary course of business; (b) dispositions of unnecessary, obsolete or worn
out equipment; (c) the disposition by one Subsidiary of assets to Borrower or
to any other Subsidiary that is a wholly owned, direct Subsidiary of Borrower
in a transaction permitted by Section 9.3(iii); and (d) other dispositions of
assets if the aggregate book value of the assets disposed of does not exceed
Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate during any
period of four (4) consecutive Fiscal Quarters.
Section 9.9 Lines of Business. The Borrower will not, and will
not permit any Subsidiary to, engage in any line or lines of business activity
other than the businesses in which they are engaged on the date hereof and any
businesses which are similar or related to those currently engaged in by the
Borrower and the Subsidiaries.
Section 9.10 Sale and Leaseback. The Borrower will not, and will
not permit any Subsidiary to, enter into any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sole or transferred, directly or indirectly, by it to such
Person.
CREDIT AGREEMENT - PAGE 40
47
Section 9.11 New Business Locations. No more than four (4) new
retail business locations shall be under development or opened by Borrower and
the Subsidiaries in any four (4) Fiscal Quarter period.
ARTICLE 10
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Revolving Commitment
hereunder, the Borrower will perform and observe the following financial
covenants:
Section 10.1 Consolidated Tangible Net Worth. The Borrower will
at all times maintain Consolidated Tangible Net Worth (as defined below) in an
amount not less than the sum of (a) Sixty-Six Million Dollars ($66,000,000.00);
plus (b) fifty percent (50%) of the positive consolidated net income of
Borrower and the Subsidiaries determined in accordance with GAAP for each
Fiscal Quarter to have completely elapsed since February 2, 1997; plus (c) one
hundred hundred percent (100%) of the net cash proceeds of any sale of equity
securities or other contributions to the capital of the Borrower received by
Borrower since February 4, 1997. The phrase "Consolidated Tangible Net Worth"
means, at any particular time, all amounts which, in conformity with GAAP,
would be included as stockholders' equity on a consolidated balance sheet of
the Borrower and the Subsidiaries; provided, however, there shall be excluded
therefrom: (a) any amount at which shares of capital stock of the Borrower
appear as an asset on the Borrower's balance sheet, (b) goodwill, including any
amounts, however designated, that represent the excess of the purchase price
paid for assets or stock over the value assigned thereto, (c) patents,
trademarks, trade names, and copyrights, (d) long term deferred expenses, (e)
loans and advances to any stockholder, director, officer, or employee of the
Borrower or any Affiliate of the Borrower, and (f) all other assets which are
property classified as intangible assets.
Section 10.2 Leverage Ratio. As of the end of each Fiscal Quarter
the Borrower shall not permit the ratio of Adjusted Debt to Adjusted EBITDA to
exceed 2.50 to 1.00. As used herein the following terms have the following
meanings:
"Adjusted Debt" means, as of any Fiscal Quarter end, the sum
of (a) all Debt of Borrower and the Subsidiaries of the type described
in clauses (a), (b), (c) and (d) of the definition of Debt determined
on a consolidated basis which is outstanding as of such Fiscal Quarter
end plus (b) the product of (i) the Operating Lease Expenses for the
four (4) Fiscal Quarters ending on the date of determination
multiplied by (ii) eight (8).
"Adjusted EBITDA" means, as of the end of any Fiscal Quarter,
the sum of (a) the EBITDA calculated for the four (4) Fiscal Quarters
ending on the date of determination plus (b) the Operating Lease
Expenses for the four (4) Fiscal Quarters ending on the date of
determination.
"Adjusted Net Income" means, for any period, the sum of the
following calculated for Borrower and the Subsidiaries without
duplication on a consolidated basis for such period: (a) consolidated
net income (or loss) determined in conformity with GAAP, minus (b) the
income of any other Person (other than the Subsidiaries) in which
Borrower or any of the Subsidiaries
CREDIT AGREEMENT - PAGE 41
48
has an ownership interest, unless received by Borrower or the
Subsidiary in a cash distribution; minus (c) any after-tax
extraordinary, non-cash, nonrecurring or nonoperating income or gains.
"EBITDA" means, for any period, the sum of the following each
calculated for Borrower and the Subsidiaries without duplication on a
consolidated basis for such period: (a) Adjusted Net Income; plus (b)
any provision for (or less any benefit from) income or franchise taxes
included in determining consolidated net income; plus (c) Interest
Expense deducted in determining consolidated net income; plus (d)
amortization and depreciation expenses deducted in determining
consolidated net income.
"Interest Expense" means, for any period, the aggregate of all
interest paid or accrued by Borrower and the Subsidiaries, including
all interest, fees and costs payable with respect to the Obligations
or other Debt and the interest portion of Capital Leases Obligations,
all as determined in accordance with GAAP on a consolidated basis.
"Operating Lease Expenses" means, for any period, the
aggregate of all expenditures paid or accrued by Borrower and the
Subsidiaries under leases which are not required to be classified and
accounted for as capital leases, as determined in accordance with GAAP
on a consolidated basis.
Section 10.3 Fixed Charge Coverage. The Borrower shall not
permit the ratio of Cash Flow to Fixed Charges as of the last day of any Fiscal
Quarter to be less 2.25 to 1.00 computed on the basis of the Cash Flow and
Fixed Charges for the four (4) Fiscal Quarters then ended. The phrase "Cash
Flow" means, for any period, the total of the following for the Borrower and
the Subsidiaries calculated on a consolidated basis without duplication for
such period: (a) EBITDA; minus (b) amortization and depreciation expenses
deducted in determining consolidated net income; plus (c) Operating Lease
Expenses. The phrase "Fixed Charges" means, for any period, the total of the
following: (a) all interest paid in cash by Borrower and the Subsidiaries,
including all interest which is expensed or capitalized; plus (b) Operating
Lease Expenses.
Section 10.4 Capital Expenditures. The Borrower will not permit
the Capital Expenditures incurred in connection with the establishment of any
new retail business location of Borrower or a Subsidiary to exceed Fifteen
Million Dollars ($15,000,000) per location.
ARTICLE 11
Default
Section 11.1 Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) The Borrower shall fail to pay (i) when due any
principal payable under any Loan Document or any part thereof; (ii)
within two (2) Business Days of the date due any interest or fees
payable under the Loan Documents or any part thereof; and (iii) within
three (3) Business Days of the date due any other Obligation or any
part thereof.
(b) Any representation, warranty, or certification made
or deemed made by the Borrower or any Obligated Party (or any of their
respective officers) in any Loan Document
CREDIT AGREEMENT - PAGE 42
49
or in any certificate, report, notice, or financial statement
furnished at any time in connection with any Loan Document shall be
false, misleading, or erroneous in any material respect when made or
deemed to have been made.
(c) The Borrower shall fail to perform, observe, or
comply with any covenant, agreement, or term contained in clause (i)
of Section 8.2, Sections 8.5 or 8.6, Article 9 or Article 10 of this
Agreement. Borrower or any Subsidiary shall fail to perform, observe,
or comply with the covenants, agreements or terms contained in Article
2 of any Pledge Agreement to which it is a party.
(d) The Borrower or any Obligated Party shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in any Loan Document (other than covenants to pay the
Obligations and the covenants described in subsection 11.1(c)) and
such failure shall continue for a period of fifteen (15) Business Days
after the earlier of (i) the date the Agent or any Bank provides the
Borrower with notice thereof or (ii) the date the Borrower should have
notified the Agent thereof in accordance with subsection 8.1(g).
(e) The Borrower or any Obligated Party shall (i) apply
for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee, examiner, liquidator, or the like of
itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect, the "Bankruptcy Code"), (iv) institute any
proceeding or file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under
the Bankruptcy Code, (vi) admit in writing its inability to, or be
generally unable to pay its debts as such debts become due, or (vii)
take any corporate action for the purpose of effecting any of the
foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval, or consent of the Borrower or any Obligated
Party, in any court of competent jurisdiction, seeking (i) its
reorganization, liquidation, dissolution, arrangement, or winding-up,
or the composition or readjustment of its debts, (ii) the appointment
of a receiver, custodian, trustee, examiner, liquidator, or the like
of the Borrower or such Subsidiary or Obligated Party or of all or any
substantial part of its property, or (iii) similar relief in respect
of the Borrower or such Subsidiary or Obligated Party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of sixty (60) or more days, or an order
for relief against the Borrower or any Obligated Party shall be
entered in an involuntary case under the Bankruptcy Code.
(g) The Borrower or any Obligated Party shall fail to
discharge within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, forfeiture, or similar
proceeding or proceedings involving an aggregate amount in excess of
One Million Dollars ($1,000,000) against any of its assets or
properties.
CREDIT AGREEMENT - PAGE 43
50
(h) A final judgment or judgments for the payment of
money in excess of One Million Dollars ($1,000,000) in the aggregate
shall be rendered by a court or courts against the Borrower or any
Obligated Party and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within thirty (30) days from the date of entry
thereof, and the Borrower or the relevant Subsidiary or Obligated
Party shall not, within said period of thirty (30) days, or such
longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
(i) The Borrower or any Obligated Party shall fail to pay
when due any principal of or interest on any Debt if the aggregate
principal amount of the affected Debt equals or exceeds One Million
Dollars ($1,000,000) (other than the Obligations), or the maturity of
any such Debt shall have been accelerated, or any such Debt shall have
been required to be prepaid prior to the stated maturity thereof or
any event shall have occurred with respect to any Debt in the
aggregate principal amount equal to or in excess of One Million
Dollars ($1,000,000) that permits any holder or holders of such Debt
or any Person acting on behalf of such holder or holders to accelerate
the maturity thereof or require any such prepayment.
(j) Any material provision of any Loan Document shall
cease to be in full force and effect or shall be declared null and
void or the validity or enforceability thereof shall be contested or
challenged by the Borrower or any Obligated Party shall deny that it
has any further liability or obligation under any of the Loan
Documents, or any lien or security interest created by the Loan
Documents shall for any reason (other than the negligence of the Agent
or the release thereof in accordance with the Loan Documents) cease to
be a valid, first priority perfected security interest in and lien
upon any of the Collateral purported to be covered thereby.
(k) Any of the following events shall occur or exist with
respect to the Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required
Banks subject the Borrower to any tax, penalty, or other liability to
a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably
be expected to exceed One Million Dollars ($1,000,000).
(l) Any Person or group (as defined in Section 13(d)(3)
or 14(d)(2) of the Exchange Act) other than David Corriveau and Buster
Corley shall become the direct or indirect beneficial owner as defined
in Rule 13d-3 under the Exchange Act) of more than 30% of the total
voting power of all classes of capital stock then outstanding of the
Borrower entitled (without regard to the occurrence of any
contingency) to vote in elections of directors of the Borrower.
CREDIT AGREEMENT - PAGE 44
51
(m) David Corriveau and James Corley shall fail to be
active in the management of Borrower.
(n) The independent certified public accountants retained
by Borrower resign and Borrower fails to engage a firm of certified
public accounts of nationally recognized standing as the Borrower's
accountants within thirty (30) days of such resignation.
Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by Required Banks, shall) do any one
or more of the following:
(a) Acceleration. By notice to the Borrower, declare all
outstanding principal of and accrued and unpaid interest on the
Revolving Notes and all other amounts payable by the Borrower under
the Loan Documents immediately due and payable, and the same shall
thereupon become immediately due and payable, without further notice,
demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, protest, or other formalities of any
kind, all of which are hereby expressly waived by the Borrower.
(b) Termination of Revolving Commitments. Terminate the
Revolving Commitments including, without limitation, the obligation of
the Agent to issue Letters of Credit, without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Agent for the benefit of itself and the Banks to secure
payment and performance of the Obligations in accordance with the
terms of the Loan Documents.
(e) Cash Collateral. If required by the Agent or the
Required Banks, require that Borrower (and the Borrower hereby agrees
upon Agent's request to) pledge to the Agent as security for the
Obligations an amount in immediately available funds equal to the then
outstanding Letter of Credit Liabilities, such funds to be held in a
cash collateral account at the Agent without any right of withdrawal
by the Borrower.
(f) Rights. Exercise any and all rights and remedies
afforded by the laws of the State of Texas or any other jurisdiction,
by any of the Loan Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Section 11.1(e) or (f), the Revolving Commitments of all of the Banks
(including, without limitation, the obligation of the Agent to issue Letters of
Credit) shall automatically terminate, and the outstanding principal of and
accrued and unpaid interest on the Revolving Notes and all other amounts
payable by the Borrower under the Loan Documents shall thereupon become
immediately due and payable without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, protest, or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
Section 11.3 Performance by the Agent. If the Borrower shall fail
to perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of the
CREDIT AGREEMENT - PAGE 45
52
Borrower. In such event, the Borrower shall, at the request of the Agent,
promptly pay any amount expended by the Agent or the Banks in connection with
such performance or attempted performance to the Agent at the Principal Office,
together with interest thereon at the applicable Default Rate from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that neither the Agent nor any Bank shall have any liability or
responsibility for the performance of any obligation of the Borrower under any
Loan Document.
Section 11.4 Setoff. If an Event of Default shall have occurred
and be continuing, each Bank is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being hereby expressly
waived by the Borrower), to set off and apply any and all deposits (general,
time, demand, provisional, or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit or the account of the Borrower
against any and all of the Obligations, irrespective of whether or not the
Agent or such Bank shall have made any demand under such Loan Documents and
although such Obligations may be unmatured. Each Bank agrees promptly to
notify the Borrower (with a copy to the Agent) after any such setoff and
application; provided, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights and remedies of each
Bank hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Bank may have.
ARTICLE 12
The Agent
Section 12.1 Appointment, Powers and Immunities. Each Bank hereby
appoints and authorizes Texas Commerce to act as its agent hereunder and under
the other Loan Documents with such powers as are specifically delegated to the
Agent by the terms of the Loan Documents, together with such other powers as
are reasonably incidental thereto. Neither the Agent nor any of its
Affiliates, officers, directors, employees, attorneys, or agents shall be
liable for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with any Loan Document or any of the other Loan
Documents except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the preceding sentence, the Agent (i) may
treat the payee of any Revolving Note as the holder thereof until it receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to the Agent; (ii) shall have no duties or
responsibilities except those expressly set forth in the Loan Documents, and
shall not by reason of any Loan Document be a trustee or fiduciary for any
Bank; (iii) shall not be required to initiate any litigation or collection
proceedings under any Loan Document except to the extent requested by Required
Banks; (iv) shall not be responsible to the Banks for any recitals, statements,
representations, or warranties contained in any Loan Document, or any
certificate or other documentation referred to or provided for in, or received
by any of them under, any Loan Document, or for the value, validity,
effectiveness, enforceability, or sufficiency of any Loan Document or any other
documentation referred to or provided for therein or for any failure by any
Person to perform any of its obligations thereunder; (v) may consult with legal
counsel (including counsel for the Borrower), independent public accountants,
and other experts selected by it and shall not be liable for any action taken
or omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants, or experts; and (vi) shall incur no liability under
or in respect of any Loan Document by acting upon any notice, consent,
certificate, or other instrument or writing believed by it to be genuine and
signed or sent by the proper party or parties. As to any matters not expressly
provided for by any Loan Document, the Agent shall
CREDIT AGREEMENT - PAGE 46
53
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by Required Banks, and such
instructions of Required Banks and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks; provided, however, that the Agent
shall not be required to take any action which exposes it to personal liability
or which is contrary to any Loan Document or applicable law.
Section 12.2 Rights of Agent as a Bank. With respect to its
Revolving Commitment, the Revolving Loans made by it, the Revolving Note issued
to it and the Letters of Credit issued hereunder, Texas Commerce (and any
successor acting as the Agent) in its capacity as a Bank hereunder shall have
the same rights and powers hereunder as any other Bank and may exercise the
same as though it were not acting as the Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, and
generally engage in any kind of banking, trust, or other business with the
Borrower, any of its Subsidiaries, any Obligated Party, and any other Person
who may do business with or own securities of the Borrower or any Obligated
Party, all as if it were not acting as the Agent and without any duty to
account therefor to the Banks.
Section 12.3 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on the Revolving Loans or of commitment fees)
unless the Agent has received notice from a Bank or the Borrower specifying
such Default and stating that such notice is a "Notice of Default." In the
event that the Agent receives such a notice of the occurrence of a Default, the
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall (subject to Section
12.1) take such action with respect to such Default as shall be directed by
Required Banks, 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 as it
shall deem advisable and in the best interest of the Banks.
Section 12.4 Indemnification. THE BANKS HEREBY AGREE TO INDEMNIFY
THE AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT
REIMBURSED UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS
OF THE BORROWER UNDER SECTIONS 13.1 AND 13.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN
RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, THAT NO BANK SHALL BE LIABLE
FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS
THE EXPRESS INTENTION OF THE BANKS THAT THE AGENT SHALL BE INDEMNIFIED
HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES), AND DISBURSEMENTS OF ANY
KIND OR NATURE DIRECTLY OR
CREDIT AGREEMENT - PAGE 47
54
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF THE AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK
AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE
(CALCULATED ON THE BASIS OF THE COMMITMENT PERCENTAGES) OF ANY AND ALL
REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND
EXPENSES) INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION,
DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER
THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN
RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT
THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 12.5 Independent Credit Decisions. Each Bank agrees that
it has independently and without reliance on the Agent or any other Bank, and
based on such documentation and information as it has deemed appropriate, made
its own credit analysis of the Borrower and decision to enter into any Loan
Document and that it will, independently and without reliance upon the Agent or
any other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under any Loan Document. Except as otherwise
specifically set forth herein, the Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower or any Obligated
Party of any Loan Document or to inspect the properties or books of the
Borrower or any Obligated Party. Except for notices, reports, and other
documents and information expressly required to be furnished to the Banks by
the Agent hereunder or under the other Loan Documents, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
financial information concerning the affairs, financial condition, or business
of the Borrower or any Obligated Party (or any of their Affiliates) which may
come into the possession of the Agent or any of its Affiliates.
Section 12.6 Several Revolving Commitments. The Revolving
Commitments and other obligations of the Banks under any Loan Document are
several. The default by any Bank in making a Revolving Loan or funding its
participation or other interest in a Letter of Credit in accordance with its
Revolving Commitment shall not relieve the other Banks of their obligations
under any Loan Document. In the event of any default by any Bank in making any
Revolving Loan or funding its participation or other interest in a Letter of
Credit, each nondefaulting bank shall be obligated to make its Revolving Loan
or funding its participation or other interest in a Letter of Credit but shall
not be obligated to advance the amount which the defaulting Bank was required
to advance hereunder. No Bank shall be responsible for any act or omission of
any other Bank.
Section 12.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower, and the Agent may
be removed at any time by Required Banks if it has breached its obligations
under the Loan Documents. Upon any such resignation or removal, Required Banks
will have the right to appoint a successor Agent with the Borrower's consent,
which shall not be unreasonably withheld. If no successor Agent shall have
been so appointed by Required Banks and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or any State thereof and having combined capital and surplus of
CREDIT AGREEMENT - PAGE 48
55
at least One Hundred Million Dollars ($100,000,000). Upon the acceptance of
its appointment as successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges, immunities,
contractual obligations, and duties of the resigning or removed Agent and the
resigning or removed Agent shall be discharged from its duties and obligations
under the Loan Documents including all obligations under any Letters of Credit.
After any Agent's resignation or removal as Agent, the provisions of this
Article 12 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was the Agent.
Section 12.8 Agent Fee. The Borrower agrees to pay to the Agent,
on the Closing Date and on each anniversary of the Closing Date, the
administrative fee set forth in the letter dated April 2, 1997 from Chase
Securities Inc. and Texas Commerce to the Borrower.
ARTICLE 13
Miscellaneous
Section 13.1 Expenses. The Borrower hereby agrees to pay on
demand: (a) all reasonable costs and expenses of the Agent arising in
connection with the preparation, negotiation, execution, and delivery of the
Loan Documents executed and delivered on the Closing Date, including, without
limitation, the fees and expenses of legal counsel for the Agent; (b) all
reasonable costs and expenses of the Agent arising in connection with (i) the
preparation, negotiation, execution, and delivery of any of the Loan Documents
executed and delivered after the Closing Date and any and all amendments or
other modifications to the Loan Documents and (ii) the syndication of the
Revolving Loans, including in all instances, without limitation, the reasonable
fees and expenses of legal counsel for the Agent; (c) all reasonable costs and
expenses of the Agent and the Banks in connection with any Default and the
enforcement of any Loan Document, including, without limitation, the reasonable
fees and expenses of legal counsel for the Agent and the Banks; (d) all
transfer, stamp, documentary, or other similar taxes, assessments, or charges
levied by any Governmental Authority in respect of any Loan Document; (e) all
costs, expenses, assessments, and other charges incurred in connection with any
filing, registration, recording, or perfection of any security interest or Lien
contemplated by any Loan Document; and (f) all reasonable and customary fees,
costs and expenses of the Agent arising in connection with the issuance,
amendment, transfer or drawing on any Letter of Credit.
Section 13.2 Indemnification. THE BORROWER SHALL INDEMNIFY THE
AGENT AND EACH BANK AND EACH AFFILIATE (INCLUDING WITHOUT LIMITATION, CHASE
SECURITIES INC.) THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES) TO WHICH ANY OF
THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO
(A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY
OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED
RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON,
ABOUT, WITHIN, OR AFFECTING ANY OF THE
CREDIT AGREEMENT - PAGE 49
56
PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, (E) THE USE OR PROPOSED
USE OF ANY LETTER OF CREDIT OR ANY PAYMENT OR FAILURE TO PAY WITH RESPECT TO
ANY LETTER OF CREDIT, (F) ANY AND ALL TAXES, LEVIES, DEDUCTIONS, AND CHARGES
IMPOSED ON THE AGENT OR ANY BANK IN RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY
OF THE FOREGOING; PROVIDED THAT (i) THE PERSON ENTITLED TO BE INDEMNIFIED UNDER
THIS SECTION SHALL NOT BE INDEMNIFIED FROM OR HELD HARMLESS AGAINST ANY LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, OR
EXPENSES TO THE EXTENT THEY ARE DETERMINED BY A FINAL, NON-APPLICABLE JUDGMENT
OF A COURT OF COMPETENT JURISDICTION TO HAVE ARISEN OUT OF OR TO HAVE RESULTED
FROM ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AND (ii) BORROWER SHALL NOT BE
OBLIGATED TO PAY FOR THE FEES AND EXPENSES OF MORE THAN ONE LAW FIRM TO
REPRESENT ALL THE PERSONS ENTITLED TO BE INDEMNIFIED UNDER THIS SECTION WITH
RESPECT TO THE DEFENSE OF ANY LITIGATION OR OTHER PROCEEDINGS OF THE TYPE
REFERRED TO ABOVE IN CLAUSE (G) UNLESS OTHER LAW FIRMS ARE NECESSARY AS A
RESULT OF CONFLICTS OF INTERESTS AMONG THE PERSONS ENTITLED TO BE INDEMNIFIED.
WITHOUT LIMITING ANY PROVISION OF ANY LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR RESULTING
FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 13.3 Limitation of Liability. None of the Agent, any
Bank, or any Affiliate, officer, director, employee, attorney, or agent thereof
shall have any liability with respect to, and the Borrower and, by the
execution of the Loan Documents to which it is a party each Obligated Party,
hereby waives, releases, and agrees not to sue any of them upon, any claim for
any special, indirect, incidental, consequential, or punitive damages suffered
or incurred by the Borrower or any Obligated Party in connection with, arising
out of, or in any way related to any of the Loan Documents, or any of the
transactions contemplated by any of the Loan Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Agent or any Bank
shall have the right to act exclusively in the interest of the Agent and the
Banks and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Borrower or
any of the Borrower's shareholders or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between
the Borrower and the Obligated Parties on the one hand and the Agent and each
Bank on the other is solely that of debtor and creditor, and neither the Agent
nor any Bank has any fiduciary or other special relationship with the Borrower
or any Obligated Parties, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between the Borrower and the
Obligated Parties on the one hand and the Agent and each Bank on the other and
any Bank to be other than that of debtor and creditor.
CREDIT AGREEMENT - PAGE 50
57
Section 13.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower or any Obligated Party fails to pay, perform, observe, or
discharge any or all of the obligations under the Loan Documents, any remedy at
law may prove to be inadequate relief to the Agent and the Banks. The Borrower
therefore agrees that the Agent and the Banks, if the Agent or the Required
Banks so request, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under any
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or privilege under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege. The rights and remedies provided for in the Loan
Documents are cumulative and not exclusive of any rights and remedies provided
by law.
Section 13.8 Successors and Assigns.
(a) Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. The Borrower may not assign or transfer any
of its rights or obligations hereunder without the prior written
consent of the Agent and all of the Banks.
(b) Participations. Any Bank may sell participations to
one or more banks or other institutions in or to all or a portion of
its rights and obligations under the Loan Documents (including,
without limitation, all or a portion of its Revolving Commitments and
the Revolving Loans owing to it and the Letter of Credit Liabilities
which it has made or in which it has a participating interest);
provided, however, that (i) such Bank's obligations under the Loan
Documents (including, without limitation, its Revolving Commitments)
shall remain unchanged, (ii) such Bank shall remain solely responsible
to the Borrower for the performance of such obligations, (iii) such
Bank shall remain the holder of its Revolving Notes and owner of its
participation or other interests in Letter of Credit Liabilities for
all purposes of any Loan Document, (iv) the Borrower shall continue to
deal solely and directly with such Bank in connection with such Bank's
rights and obligations under the Loan Documents, and (v) such Bank
shall not sell a participation that conveys to the participant the
right to vote or give or withhold consents under any Loan Document,
other than the right to vote upon or consent to (1) any increase of
such Bank's Revolving Commitments, (2) any reduction of the principal
amount of, or interest to be paid on, the Revolving Loans or other
Obligations of such Bank, (3) any reduction of any commitment fee,
letter of credit fee or other amount payable to such Bank under any
Loan Document, (4) any postponement of any date for the payment of any
amount payable in respect of the Revolving Loans or other Obligations
of such Bank, or (5) the release of Borrower, any Obligated Party or
any Collateral.
(c) Assignments. The Borrower and each of the Banks
agree that any Bank (the "Assigning Bank") may at any time assign to
an Eligible Assignee all, or a proportionate part of all, of its
rights and obligations under the Loan Documents (including, without
limitation, its Revolving Commitments, Revolving Loans and
participation interests) (each an "Assignee"); provided, however, that
(i) except in the case of an assignment of all of a Bank's rights and
obligations under the Loan Documents, the amount of the Revolving
Commitments of the
CREDIT AGREEMENT - PAGE 51
58
assigning Bank being assigned or if any Revolving Commitment has
terminated, the outstanding principal amount of the related Revolving
Loans, pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than Five Million Dollars ($5,000,000), (ii) the parties
to each such assignment shall execute and deliver to the Agent for its
acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Revolving Notes subject
to such assignment, and a processing and recordation fee of Three
Thousand Dollars ($3,000.00) payable by the assignor or assignee (and
not the Borrower); provided that such fee shall not be payable to
Agent if the Assigning Bank is making an assignment to one of its
Affiliates; and (iii) the Borrower and the Agent must consent to such
assignment, which consent shall not be unreasonably withheld, with
such consents to be evidenced by the Borrower's and the Agent's
execution of the Assignment and Acceptance; provided that Borrower's
consent will not be necessary if (a) the Assigning Bank is making an
assignment to one of its Affiliates or (b) an Event of Default exists
at the time of the assignment. Upon such execution, delivery,
acceptance, and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, or, if so
specified in such Assignment and Acceptance, the date of acceptance
thereof by the Agent, (x) the assignee thereunder shall be a party
hereto as a "Bank" and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Bank hereunder and
under the Loan Documents, and (y) the Bank that is an assignor
thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the
Loan Documents (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of a Bank's rights and
obligations under the Loan Documents, such Bank shall cease to be a
party thereto). The Agent shall maintain at its Principal Office a
copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the
Banks and the Revolving Commitments of, and principal amount of the
Revolving Loans owing to and Letter of Credit Liabilities participated
in by, each Bank from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent, and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder
for all purposes under the Loan Documents. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice. Upon its
receipt of an Assignment and Acceptance executed by an Assigning Bank
and Assignee representing that it is an Eligible Assignee, together
with any Revolving Notes subject to such assignment, the Agent shall,
if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "D" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five (5) Business Days after its receipt of
such notice the Borrower, at its expense, shall execute and deliver to
the Agent in exchange for the surrendered Revolving Note a new
Revolving Note to the order of such Eligible Assignee in an amount
equal to the Revolving Commitment or Revolving Loans assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained a Revolving Commitment or Revolving Loans, a Revolving
Note to the order of the assigning Bank in an amount equal to the
Revolving Commitment and Revolving Loans retained by it hereunder
(each such promissory note shall constitute a "Revolving Note" for
purposes of the Loan Documents). Such new Revolving Notes shall be in
an aggregate principal amount of the surrendered Revolving Note, shall
be dated the
CREDIT AGREEMENT - PAGE 52
59
effective date of such Assignment and Acceptance, and shall otherwise
be in substantially the form of the Exhibit "A" hereto.
(d) Information. Any Bank may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrower or its Subsidiaries furnished to such Bank by or on behalf of
the Borrower or its Subsidiaries.
(e) Pledge to Federal Reserve. Notwithstanding anything
in this Section 13.8 to the contrary, any Bank may, in the ordinary
course of its business, pledge its Revolving Note to any United States
Federal Reserve Bank to secure advances made by such Federal Reserve
Bank to such Bank.
Section 13.9 Survival. All representations and warranties made in
any Loan Document or in any document, statement, or certificate furnished in
connection with any Loan Document shall survive the execution and delivery of
the Loan Documents and no investigation by the Agent or any Bank or any closing
shall affect the representations and warranties or the right of the Agent or
any Bank to rely upon them. Without prejudice to the survival of any other
obligation of the Borrower hereunder, the obligations of the Borrower under
Article 5 and Sections 13.1 and 13.2 shall survive repayment of the Revolving
Notes and termination of the Revolving Commitments and the Letters of Credit.
Section 13.10 Entire Agreement. THIS AGREEMENT, THE REVOLVING
NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES HERETO.
Section 13.11 Amendments. No amendment or waiver of any
provision of any Loan Document to which the Borrower is a party, nor any
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be agreed or consented to by Required Banks and
the Borrower, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, that
no amendment, waiver, or consent shall, unless in writing and signed by all of
the Banks and the Borrower, do any of the following: (a) increase Revolving
Commitments of the Banks; (b) reduce the principal of, or interest on, the
Revolving Notes, the Reimbursement Obligations, or any fees or other amounts
payable hereunder; (c) postpone any date fixed for any payment of principal of,
or interest on, the Revolving Notes, the Reimbursement Obligations, or any fees
or other amounts payable hereunder; (d) waive or amend any of the conditions
specified in Article 6; (e) change the percentage of the Revolving Commitments
or of the aggregate unpaid principal amount of the Revolving Notes or the
Letter of Credit Liabilities or the number of Banks which shall be required for
the Banks or any of them to take any action under any Loan Document; (f) change
any provision contained in this Section 13.11; or (g) release any Collateral or
release the Borrower or any Obligated Party from liability. Notwithstanding
anything to the contrary
CREDIT AGREEMENT - PAGE 53
60
contained in this Section, no amendment waiver, or consent shall be made with
respect to Article 12 hereof without the prior written consent of the Agent.
Section 13.12 Maximum Interest Rate.
(a) No interest rate specified in any Loan Document
shall at any time exceed the Maximum Rate. If at any time the
interest rate (the "Contract Rate") for any Obligation shall exceed
the Maximum Rate, thereby causing the interest accruing on such
Obligation to be limited to the Maximum Rate, then any subsequent
reduction in the Contract Rate for such Obligation shall not reduce
the rate of interest on such Obligation below the Maximum Rate until
the aggregate amount of interest accrued on such Obligation equals the
aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times
been in effect.
(b) No provision of any Loan Document shall require the
payment or the collection of interest in excess of the maximum amount
permitted by applicable law. If any excess of interest in such
respect is hereby provided for, or shall be adjudicated to be so
provided, in any Loan Document or otherwise in connection with this
Revolving Loan transaction, the provisions of this Section shall
govern and prevail and neither the Borrower nor the sureties,
guarantors, successors, or assigns of the Borrower shall be obligated
to pay the excess amount of such interest or any other excess sum paid
for the use, forbearance, or detention of sums loaned pursuant hereto.
In the event any Bank ever receives, collects, or applies as interest
any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and
reduction of the principal of the Obligations, and, if the principal
of the Obligations has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the
interest paid or payable exceeds the Maximum Rate, the Borrower and
each Bank shall, to the extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee, or premium
rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations so that interest for the
entire term does not exceed the Maximum Rate.
Section 13.13 Notices. All notices and other communications
provided for in any Loan Document to which the Borrower or any Obligated Party
is a party shall be given or made in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof and, if to an Obligated Party, at the address for notices for the
Borrower, or, as to any party, at such other address as shall be designated by
such party in a notice to each other party given in accordance with this
Section. Except as otherwise provided in any Loan Document, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, three (3) Business Days after
being duly deposited in the mails, in each case given or addressed as
aforesaid; provided, however, notices to the Agent pursuant to Section 4.3
shall not be effective until received by the Agent.
Section 13.14 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas and the
applicable laws of the United States of America.
CREDIT AGREEMENT - PAGE 54
61
Section 13.15 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 13.16 Severability. Any provision of any Loan Document
held by a court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of any Loan Document and the effect
thereof shall be confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.18 Non-Application of Chapter 15 of Texas Credit Code.
The provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to any Loan Documents or to the transactions contemplated
thereby.
Section 13.19 Construction. The Borrower, each Obligated Party
(by its execution of the Loan Documents to which its is a party), the Agent,
and each Bank acknowledges that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to review the
Loan Documents with its legal counsel and that the Loan Documents shall be
construed as if jointly drafted by the parties thereto.
Section 13.20 Independence of Covenants. All covenants under the
Loan Documents 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 if such action is
taken or such condition exists.
Section 13.21 Waiver of Jury Trial. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF
OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
Section 13.22 Confidentiality. Agent and each Bank (each a
"Lending Party") agree to keep any Designated Information (as defined below)
delivered or made available by the Borrower to it confidential from anyone
other than Persons employed or retained by such Lending Party who are, or are
expected to be, engaged in evaluating, approving, structuring or administering
the credit facility provided herein; provided that nothing herein shall prevent
any Lending Party from disclosing such Designated Information (a) to any other
Lending Party, (b) to any other Person if reasonably incidental
CREDIT AGREEMENT - PAGE 55
62
to the administration of the credit facility provided herein, (c) upon the
order of any court or administrative agency, (d) upon the request or demand of
any regulatory agency or authority, (e) which had been publicly disclosed
other than as a result of a disclosure by any Lending Party prohibited by this
Agreement, (f) in connection with any litigation to which such Lending Party or
any of its Affiliates may be a party, (g) to the extent necessary in connection
with the exercise of any remedy hereunder, (h) to such Lending Party's legal
counsel and independent auditors, (i) to any Affiliate of such Lending Party,
solely in connection with this Agreement, and (j) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee of any of its rights and obligations under the
Loan Documents in accordance with the terms hereof. The term "Designated
Information" means the annual projections delivered under Section 8.1 (d) and
any information which has been designated by the Borrower in writing as
confidential.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
--------
DAVE & BUSTER'S, INC.
By: /s/ CHARLES MICHEL
--------------------------------
Charles Michel
Treasurer
Address for Notices:
2751 Electronic Lane
Dallas, Texas 75220
Fax No.: 214-357-1536
Telephone No.: 214-357-9588
Attention: Mr. Chas Michel
CREDIT AGREEMENT - PAGE 56
63
AGENT:
Revolving Commitment: TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
-------------------- individually as a Bank and as the Agent
$15,000,000
By: /s/ JORGE L. CALDERON
---------------------------------------
Jorge L. Calderon
Vice President
Address for Notices:
-------------------
1111 Fannin, 9th Floor, MS46
Houston, Texas 77002
Fax No.: 713 750-3810
Telephone No.: 713 750-2784
Attention: Revolving Loan Syndication
Services
re: Dave & Buster's
With a copy to:
P.O. Box 660197
Dallas, Texas 75266-0197
Fax No.: 972-888-7837
Telephone No.: 972-888-7829
Attention:
Lending Office for Base Rate
Accounts and Eurodollar Accounts:
--------------------------------
1111 Fannin
Houston, Texas 77002
CREDIT AGREEMENT - PAGE 57
64
OTHER BANKS:
COMERICA BANK-TEXAS
Commitment: By: /s/ WILLIAM J. ROLLEY
- ---------- -----------------------------------
William J. Rolley
$15,000,000 Vice President
Address for Notices:
4100 Spring Valley Road
Suite 900
Dallas, Texas 75244
Re: Dave & Busters
Fax No.: 214-818-2127
Telephone No.: 214-818-2113
Attention: William J. Rolley
Lending Office for Base Rate
Accounts and Eurodollar Accounts
------------------------------------
4100 Spring Valley Road
Suite 900
Dallas, Texas 75244
CREDIT AGREEMENT - PAGE 58
65
GUARANTY FEDERAL BANK, F.S.B.
Commitment: By: /s/ ROBERT S. HAYES
- ---------- --------------------------------
Name: Robert S. Hayes
----------------------
$10,000,000 Title: Vice President
---------------------
Address for Notices:
8333 Douglas Avenue
Dallas, Texas 75225
Fax No.: 214-360-2760
Telephone No.: 214-360-2821
Attention: Robert S. Hays
Lending Office for Base Rate
Accounts and Eurodollar Accounts
-----------------------------------
8333 Douglas Avenue
Dallas, Texas 75225
CREDIT AGREEMENT - PAGE 59
66
BANKBOSTON, N.A.
Commitment: By: /s/ CHRISTOPHER M. HOLTZ
- ---------- -------------------------
Christopher M. Holtz
$10,000,000 Vice President
Address for Notices:
100 Federal Street
Mail Code 01-09-05
Boston, MA 02106-2016
Fax No.: 617-434-4588
Telephone No.: 617-434-6685
Attention: Rodney L. Guinn
Lending Office for Base
Rate Accounts and Eurodollar
Accounts
---------------------------
100 Federal Street
Mail Code 01-09-05
Boston, MA 02106-2016
CREDIT AGREEMENT - PAGE 60
67
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
"A" Revolving Note
"B" Subsidiary Guaranty
"C" Borrower Pledge Agreement
"D" Assignment and Acceptance
"E" Compliance Certificate
"F" Subsidiary Pledge Agreement
"G" Advance Request Form
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
7.14 List of Subsidiaries
9.5 Existing Investments
CREDIT AGREEMENT - PAGE 61
68
EXHIBIT "A"
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Revolving Note
CREDIT AGREEMENT - PAGE 62
69
REVOLVING NOTE
$__________ Dallas, Texas May 21, 1997
FOR VALUE RECEIVED, the undersigned, DAVE & BUSTER'S, INC., a Missouri
corporation (the "Borrower"), hereby promises to pay to the order of
_________________ (the "Bank"), at the Principal Office of the Agent, in lawful
money of the United States of America and in immediately available funds, the
principal amount of _____________________ ($_________) or such lesser amount as
shall equal the aggregate unpaid principal amount of the Revolving Loans made
by the Bank to the Borrower under the Credit Agreement referred to below, on
the dates and in the principal amounts provided in the Credit Agreement, and to
pay interest on the unpaid principal amount of each such Revolving Loan, at
such office, in like money and funds, for the period commencing on the date of
such Revolving Loan until such Revolving Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
The Borrower hereby authorizes the Bank to record in its records the
amount of each Revolving Loan and Type of Accounts established under each
Revolving Loan and all Continuations, Conversions and payments of principal in
respect thereof, which records shall, in the absence of manifest error, be
conclusive; provided, however, that the failure to make such notation with
respect to any such Revolving Loan or payment shall not limit or otherwise
affect the obligations of the Borrower under the Credit Agreement or this
Revolving Note.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement dated as of May 21, 1997, among the Borrower, the Bank, the
other banks named therein and Texas Commerce Bank National Association, as
agent for such banks ("Agent") (such Credit Agreement, as the same may be
amended or otherwise modified from time to time, being referred to herein as
the "Credit Agreement"), and evidences Revolving Loans made by the Bank
thereunder. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity of this Revolving Note upon the happening of
certain stated events and for prepayments of Revolving Loans prior to the
maturity of this Revolving Note upon the terms and conditions specified in the
Credit Agreement. Capitalized terms used in this Revolving Note have the
respective meanings assigned to them in the Credit Agreement.
This Revolving Note shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United
States of America.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Revolving Note jointly
and severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, diligence in collecting, grace and
all other formalities of any kind, and consent to all extensions without notice
for any period or periods of time and partial payments, before or after
maturity, and any impairment of any collateral securing this Revolving Note,
all without prejudice to the holder. The holder shall similarly have the right
to deal in any way, at any time, with one or more of the foregoing parties
without notice to any other party,
REVOLVING NOTE - Page 1
70
and to grant any such party any extensions of time for payment of any of said
indebtedness, or to release any such party or to release or substitute part or
all of the collateral securing this Revolving Note, or to grant any other
indulgences or forbearances whatsoever, without notice to any other party and
without in any way affecting the personal liability of any party hereunder.
DAVE & BUSTER'S, INC.
By:
--------------------------------
Charles Michel
Treasurer
REVOLVING NOTE - Page 2
71
EXHIBIT "B"
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Guaranty Agreement
72
GUARANTY AGREEMENT
(__________________________)
WHEREAS, DAVE & BUSTER'S, INC., a Missouri corporation ("Borrower")
has entered into that certain Credit Agreement of even date herewith, among
Borrower, the banks named therein and Texas Commerce Bank National Association,
as agent for such banks ("Agent") (such Credit Agreement, as it may hereafter
be amended or otherwise modified from time to time, being hereinafter referred
to as the "Credit Agreement" and capitalized terms not otherwise defined herein
shall have the same meaning as set forth in the Credit Agreement);
WHEREAS, the execution of this Guaranty Agreement is a condition to
each Bank's obligations under the Credit Agreement;
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the undersigned, __________________________,
a ____________ (the "Guarantor"), hereby irrevocably and unconditionally
guarantees to the Agent and the Banks the full and prompt payment and
performance of the Guaranteed Indebtedness (hereinafter defined), this Guaranty
Agreement being upon the following terms:
1. The term "Guaranteed Indebtedness", as used herein means all
of the "Obligations", as defined in the Credit Agreement and shall include any
and all post-petition interest and expenses (including attorneys' fees) whether
or not allowed under any bankruptcy, insolvency, or other similar law; provided
that the Guaranteed Indebtedness shall be limited as provided in Section 1.1 of
the Subsidiary Pledge Agreement to which Guarantor is a party.
2. Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Credit Agreement (the "Related Guaranties")
which contain a contribution provision similar to that set forth in this
paragraph 2, together desire to allocate among themselves (collectively, the
"Contributing Guarantors"), in a fair and equitable manner, their obligations
arising under this Guaranty and the Related Guaranties. Accordingly, in the
event any payment or distribution is made by Guarantor under this Guaranty or a
guarantor under a Related Guaranty (a "Funding Guarantor") that exceeds its
Fair Share (as defined below), that Funding Guarantor shall be entitled to a
contribution from each of the other Contributing Guarantors in the amount of
such other contributing Guarantor's Fair Share Shortfall (as defined below),
with the result that all such contributions will cause each Contributing
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share.
"Fair Share" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Contributing Guarantor to (y)
the aggregate of the Adjusted Maximum Amounts with respect to all Contributing
Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or
before such date by all Funding Guarantors under this Guaranty and the Related
Guaranties in respect of the obligations guarantied. "Fair Share Shortfall"
means, with respect to a Contributing Guarantor as of any date of
determination, the excess, if any, of the Fair Share of such Contributing
Guarantor over the Aggregate Payments of such Contributing Guarantor.
"Adjusted Maximum Amount" means, with respect to a Contributing Guarantor as of
any date of determination, the maximum aggregate amount of the obligations of
such Contributing Guarantor under this Guaranty and the Related
GUARANTY AGREEMENT (________________) - Page 1
73
Guaranties, in each case determined in accordance with the provisions hereof
and thereof; provided that, solely for purposes of calculating the "Adjusted
Maximum Amount" with respect to any Contributing Guarantor for purposes of this
paragraph 2, the assets or liabilities arising by virtue of any rights to or
obligation of contribution hereunder or under any similar provision contained
in a Related Guaranty shall not be considered as assets or liabilities of such
Contributing Guarantor. "Aggregate Payments" means, with respect to a
Contributing Guarantor as of any date of determination, the aggregate amount of
all payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty and the Related Guaranties (including,
without limitation, in respect of this paragraph 2 or any similar provision
contained in a Related Guaranty). The amounts payable as contributions
hereunder and under similar provisions in the Related Guaranties shall be
determined as of the date on which the related payment or distribution is made
by the applicable Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this paragraph 2 or any similar
provision contained in a Related Guaranty shall not be construed in any way to
limit the liability to the Agent and the Banks of any Contributing Guarantor
hereunder or under a Related Guaranty. Each Contributing Guarantor under a
Related Guaranty is a third party beneficiary to the contribution agreement set
forth in this paragraph 2.
3. This instrument shall be an absolute, continuing, irrevocable
and unconditional guaranty of payment and performance, and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which Borrower may have against Agent, any
Bank or any other party, or which Guarantor may have against Borrower, Agent,
any Bank or any other party, shall be available to, or shall be asserted by,
Guarantor against Agent, any Bank or any subsequent holder of the Guaranteed
Indebtedness or any part thereof or against payment of the Guaranteed
Indebtedness or any part thereof.
4. If Guarantor becomes liable for any indebtedness owing by
Borrower to Agent or any Bank by endorsement or otherwise, other than under
this Guaranty Agreement, such liability shall not be in any manner impaired or
affected hereby, and the rights of Agent and Banks hereunder shall be
cumulative of any and all other rights that Agent and Banks may ever have
against Guarantor. The exercise by Agent and Banks of any right or remedy
hereunder or under any other instrument, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
5. In the event of default by Borrower in payment or performance
of the Guaranteed Indebtedness, or any part thereof, when such Guaranteed
Indebtedness becomes due, whether by its terms, by acceleration, or otherwise,
Guarantor shall promptly pay the amount due thereon to Agent and Banks without
notice or demand in lawful currency of the United States of America and it
shall not be necessary for Agent and Banks, in order to enforce such payment by
Guarantor, first to institute suit or exhaust its remedies against Borrower or
others liable on such Guaranteed Indebtedness, or to enforce any rights against
any collateral which shall ever have been given to secure such Guaranteed
Indebtedness. In the event such payment is made by Guarantor, then Guarantor
shall be subrogated to the rights then held by Agent and any Bank with respect
to the Guaranteed Indebtedness to the extent to which the Guaranteed
Indebtedness was discharged by
GUARANTY AGREEMENT (________________) - Page 2
74
Guarantor and, in addition, upon payment by Guarantor of any sums to Agent and
any Bank hereunder, all rights of Guarantor against Borrower or any Collateral
arising as a result therefrom by way of right of subrogation, reimbursement, or
otherwise shall in all respects be subordinate and junior in right of payment
to the prior indefeasible payment in full of the Guaranteed Indebtedness.
6. If acceleration of the time for payment of any amount payable
by Borrower under the Guaranteed Indebtedness is stayed upon the insolvency,
bankruptcy, or reorganization of Borrower, all such amounts otherwise subject
to acceleration under the terms of the Guaranteed Indebtedness shall
nonetheless be payable by Guarantor hereunder forthwith on demand by Agent or
any Bank.
7. Guarantor hereby agrees that its obligations under this
Guaranty Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including, without limitation, one or more of the following events, whether or
not with notice to or the consent of Guarantor: (a) the taking or accepting of
collateral as security for any or all of the Guaranteed Indebtedness or the
release, surrender, exchange, or subordination of any collateral now or
hereafter securing any or all of the Guaranteed Indebtedness; (b) any partial
release of the liability of Guarantor hereunder, or the full or partial release
of any other guarantor from liability for any or all of the Guaranteed
Indebtedness; (c) any disability of Borrower, or the dissolution, insolvency,
or bankruptcy of Borrower, Guarantor, or any other party at any time liable for
the payment of any or all of the Guaranteed Indebtedness; (d) any renewal,
extension, modification, waiver, amendment, or rearrangement of any or all of
the Guaranteed Indebtedness or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or
compromise that may be granted or given by Agent or any Bank to Borrower,
Guarantor, or any other party ever liable for any or all of the Guaranteed
Indebtedness; (f) any neglect, delay, omission, failure, or refusal of Agent or
any Bank to take or prosecute any action for the collection of any of the
Guaranteed Indebtedness or to foreclose or take or prosecute any action in
connection with any instrument, document, or agreement evidencing, securing, or
otherwise relating to any or all of the Guaranteed Indebtedness; (g) the
unenforceability or invalidity of any or all of the Guaranteed Indebtedness or
of any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Guaranteed Indebtedness; (h) any payment by
Borrower or any other party to Agent or any Bank is held to constitute a
preference under applicable bankruptcy or insolvency law or if for any other
reason Agent or any Bank is required to refund any payment or pay the amount
thereof to someone else; (i) the settlement or compromise of any of the
Guaranteed Indebtedness; (j) the non-perfection of any security interest or
lien securing any or all of the Guaranteed Indebtedness; (k) any impairment of
any collateral securing any or all of the Guaranteed Indebtedness; (l) the
failure of Agent or any Bank to sell any collateral securing any or all of the
Guaranteed Indebtedness in a commercially reasonable manner or as otherwise
required by law; (m) any change in the corporate existence, structure, or
ownership of Borrower; or (n) any other circumstance which might otherwise
constitute a defense available to, or discharge of, Borrower or Guarantor.
8. Guarantor represents and warrants to Agent and Banks as
follows:
(a) All representations and warranties in the Credit
Agreement relating to Guarantor are true and correct.
GUARANTY AGREEMENT (________________) - Page 3
75
(b) The value of the consideration received and to be
received by Guarantor as a result of Borrower, Agent and Banks
entering into the Credit Agreement and Guarantor executing and
delivering this Guaranty Agreement and the other Loan Documents to
which it is a party is reasonably worth at least as much as the
liability and obligation of Guarantor hereunder and thereunder, and
the Credit Agreement and the liability and obligation of Guarantor in
connection therewith have benefitted and may reasonably be expected to
benefit Guarantor directly or indirectly.
(c) Guarantor has, independently and without reliance
upon Agent or any Bank and based upon such documents and information
as Guarantor has deemed appropriate, made its own analysis and
decision to enter into the Loan Documents to which it is a party.
(d) Guarantor has adequate means to obtain from Borrower
on a continuing basis information concerning the financial condition
and assets of Borrower and Guarantor is not relying upon Agent or the
Banks to provide (and neither the Agent nor any Bank shall have any
duty to provide) any such information to Guarantor either now or in
the future.
9. Guarantor covenants and agrees that, as long as the Guaranteed
Indebtedness or any part thereof is outstanding or any Bank has any commitment
under the Credit Agreement, Guarantor will comply with all covenants set forth
in the Credit Agreement specifically applicable to Guarantor.
10. When an Event of Default exists, Agent and Banks shall have
the right to set-off and apply against this Guaranty Agreement or the
Guaranteed Indebtedness or both, at any time and without notice to Guarantor,
any and all deposits (general or special, time or demand, provisional or final)
or other sums at any time credited by or owing from Agent and Banks to
Guarantor whether or not the Guaranteed Indebtedness is then due and
irrespective of whether or not Agent or any Bank shall have made any demand
under this Guaranty Agreement. The rights and remedies of Agent and the Banks
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Agent or any Bank may have.
11. (a) Guarantor hereby agrees that the Subordinated
Indebtedness (as defined below) shall be subordinate and junior in right of
payment to the prior payment in full of all Guaranteed Indebtedness as herein
provided. The Subordinated Indebtedness shall not be payable, and no payment
of principal, interest or other amounts on account thereof, and no property or
guarantee of any nature to secure or pay the Subordinated Indebtedness shall be
made or given, directly or indirectly by or on behalf of any Debtor (hereafter
defined) or received, accepted, retained or applied by Guarantor unless and
until the Guaranteed Indebtedness shall have been paid in full in cash; except
that so long as an Event of Default does not exist, Guarantor shall have the
right to receive payments and repayments of principal and interest on any
Subordinated Indebtedness. Upon demand of Agent made during the continuation
of an Event of Default, no payments of principal or interest on any
Subordinated Indebtedness may be made or given, directly or indirectly, by or
on behalf of any Debtor or received, accepted, retained or applied by Guarantor
unless and until the Guaranteed Indebtedness shall have been paid in full in
cash. If any sums shall be paid to Guarantor by any Debtor or any other Person
on account of the Subordinated Indebtedness when such payment is not permitted
hereunder, such sums shall be held in trust by Guarantor for the benefit of
Agent and the Banks and shall
GUARANTY AGREEMENT (________________) - Page 4
76
forthwith be paid to Agent without affecting the liability of Guarantor under
this Guaranty Agreement and may be applied by Agent against the Guaranteed
Indebtedness in accordance with the Credit Agreement. Upon the request of
Agent, Guarantor shall execute, deliver, and endorse to Agent such
documentation as Agent may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty Agreement, the term "Subordinated
Indebtedness" means all indebtedness, liabilities, and obligations of Borrower
or any Obligated Party other than Guarantor (Borrower and such Obligated
Parties herein the "Debtors") to Guarantor, whether such indebtedness,
liabilities, and obligations now exist or are hereafter incurred or arise, or
are direct, indirect, contingent, primary, secondary, several, joint and
several, or otherwise, and irrespective of whether such indebtedness,
liabilities, or obligations are evidenced by a note, contract, open account, or
otherwise, and irrespective of the Person or Persons in whose favor such
indebtedness, obligations, or liabilities may, at their inception, have been,
or may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Guarantor.
(b) Guarantor agrees that any and all Liens of Guarantor
(including any judgment liens), upon any Debtor's assets securing payment of
any Subordinated Indebtedness shall be and remain inferior and subordinate to
any and all Liens upon any Debtor's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such Liens in favor of
Guarantor, Agent or any Bank presently exist or are hereafter created or
attached. Without the prior written consent of Agent, Guarantor shall not (i)
file suit against any Debtor or exercise or enforce any other creditor's right
it may have against any Debtor, or (ii) foreclose, repossess, sequester, or
otherwise take steps or institute any action or proceedings (judicial or
otherwise, including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any obligations of any Debtor to Guarantor or any Liens
held by Guarantor on assets of any Debtor.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving any Debtor as debtor, Agent shall have the right to prove and vote
any claim under the Subordinated Indebtedness and to receive directly from the
receiver, trustee or other court custodian all dividends, distributions, and
payments made in respect of the Subordinated Indebtedness until the Guaranteed
Indebtedness has been paid in full in cash. Agent may apply any such
dividends, distributions, and payments against the Guaranteed Indebtedness in
accordance with the Credit Agreement.
12. No amendment or waiver of any provision of this Guaranty
Agreement or consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by Agent and
Required Banks except as otherwise provided in the Credit Agreement. No
failure on the part of Agent or any Bank to exercise, and no delay in
exercising, any right, power, or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
13. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by Borrower or others (including
Guarantor), with respect to any of the
GUARANTY AGREEMENT (________________) - Page 5
77
Guaranteed Indebtedness shall, if the statute of limitations in favor of
Guarantor against Agent or any Bank shall have commenced to run, toll the
running of such statute of limitations and, if the period of such statute of
limitations shall have expired, prevent the operation of such statute of
limitations.
14. This Guaranty Agreement is for the benefit of Agent and the
Banks and their successors and assigns, and in the event of an assignment of
the Guaranteed Indebtedness, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty Agreement is binding not
only on Guarantor, but on Guarantor's successors and assigns.
15. Guarantor recognizes that Agent and the Banks are relying upon
this Guaranty Agreement and the undertakings of Guarantor hereunder and under
the other Loan Documents to which it is a party in making extensions of credit
to Borrower under the Credit Agreement and further recognizes that the
execution and delivery of this Guaranty Agreement and the other Loan Documents
to which it is a party is a material inducement to Agent and the Banks in
entering into the Credit Agreement and continuing to extend credit thereunder.
Guarantor hereby acknowledges that there are no conditions to the full
effectiveness of this Guaranty Agreement or any other Loan Document to which it
is a party.
16. Any notice or demand to Guarantor under or in connection with
this Guaranty Agreement or any other Loan Document to which it is a party shall
be deemed effective if given to Guarantor, in care of Borrower at its address
in accordance with the notice provisions in the Credit Agreement.
17. Guarantor shall pay on demand all reasonable attorneys' fees
and all other costs and expenses incurred by Agent and Banks in connection with
the administration, enforcement, or collection of this Guaranty Agreement.
18. Guarantor hereby waives promptness, diligence, notice of any
default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice
of dishonor, notice of the incurring by Borrower of additional indebtedness,
and all other notices and demands with respect to the Guaranteed Indebtedness
and this Guaranty Agreement.
19. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
Guarantor agrees that Agent and the Banks may exercise any and all rights
granted to any of them under the Credit Agreement and the other Loan Documents
without affecting the validity or enforceability of this Guaranty Agreement.
20. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT
OF GUARANTOR, AGENT AND BANKS WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT IS INTENDED BY
GUARANTOR, AGENT AND BANKS AS A
GUARANTY AGREEMENT (________________) - Page 6
78
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY AGREEMENT, AND NO
COURSE OF DEALING AMONG GUARANTOR, AGENT AND BANKS, NO COURSE OF PERFORMANCE,
NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL
BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS AMONG GUARANTOR, AGENT AND BANKS.
EXECUTED as of the 21st day of May 1997.
GUARANTOR:
---------
---------------------------------
By:
------------------------------
Name:
-----------------------------
Title:
-----------------------------
GUARANTY AGREEMENT (________________) - Page 7
79
EXHIBIT "C"
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Borrower Pledge Agreement
80
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "Agreement") dated as of May 21, 1997 is by
and between DAVE & BUSTER'S, INC., a Missouri corporation ("Pledgor") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as agent for itself and the other Banks
(the "Secured Party").
RECITALS:
A. Pledgor, the certain lenders ("Banks") and Secured Party have
entered into that certain Credit Agreement of even date herewith (such Credit
Agreement, as the same may be amended or otherwise modified from time to time,
being hereinafter referred to as the "Credit Agreement"; terms defined in the
Credit Agreement and not otherwise defined herein being used as defined
therein).
B. Secured Party and the Banks have conditioned their obligations
under the Credit Agreement upon the execution and delivery of this Agreement by
Pledgor.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Security Interest and Pledge
Section 1.1 Security Interest and Pledge. As collateral security
for the prompt payment in full when due of the Obligations (whether at stated
maturity, by acceleration, or otherwise), Pledgor hereby pledges and grants to
Secured Party a first priority security interest in all of Pledgor's right,
title and interest in and to the following property (such property being
hereinafter sometimes called the "Collateral"):
(a) all the capital stock, partnership interests,
membership interests and other securities issued by, and all other
ownership interest in, the Persons described on Schedule 1 hereof and
all Subsidiaries hereafter created or acquired and owned by Pledgor,
whether any of the foregoing are now owned or hereafter acquired,
including without limitation, the capital stock or other ownership
interests described on Schedule 1; and
(b) all products, proceeds, revenues,
distributions, dividends, stock dividends, securities and other
property, rights, interests and other general intangibles that Pledgor
receives or is at any time entitled to receive on account of the
property described in clause (a) preceding.
PLEDGE AGREEMENT - Page 1
81
ARTICLE 2
Affirmative and Negative Covenants
Pledgor covenants and agrees with Secured Party that:
Section 2.1 Delivery. Prior to or concurrently with the execution
and delivery of this Agreement, Pledgor shall deliver to Secured Party all
certificate(s) identified on Schedule 1 hereof, accompanied by undated stock
powers or assignments, as applicable, duly executed in blank. Each time
Schedule 1 hereto is amended in accordance with Section 2.6 hereof or
otherwise, Pledgor shall deliver to Secured Party all new certificate(s)
identified thereon, accompanied by undated stock powers or assignments, as
applicable, duly executed in blank.
Section 2.2 Encumbrances. Pledgor shall not create, permit, or
suffer to exist, and shall defend the Collateral against, any Lien, security
interest, or other encumbrance on the Collateral except the pledge and security
interest of Secured Party hereunder, and Pledgor shall defend Pledgor's rights
in the Collateral and Secured Party's security interest in the Collateral
against the claims of all Persons.
Section 2.3 Sale of Collateral. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of the Banks.
Section 2.4 Distributions. If Pledgor shall become entitled to
receive or shall receive: (i) any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase, or reduction of capital or
issued in connection with any reorganization), option or rights, whether as an
addition to, in substitution of, or in exchange for any Collateral; or (ii)
subject to the right of Pledgor to receive cash dividends or other
distributions under Section 3.3 hereof, (a) any sums paid in respect of the
Collateral upon the liquidation or dissolution of the issuer thereof; (b) any
other distribution of capital made on or in respect of the Collateral or any
other property distributed upon or in respect of the Collateral pursuant to any
recapitalization or reclassification of the capital of the issuer thereof or
pursuant to any reorganization of the issuer thereof; or (c) any other
Collateral the possession of which is necessary to perfect the security
interest of Secured Party therein, then Pledgor agrees to accept the same as
Secured Party's agent and to hold the same in trust for Secured Party, and to
deliver the same forthwith to Secured Party in the exact form received, with
the appropriate endorsement of Pledgor when necessary and/or appropriate
undated stock powers or assignments duly executed in blank, to be held by
Secured Party as additional Collateral for the Obligations, subject to the
terms hereof. All sums of money and property so paid or distributed in respect
of the Collateral that are received by Pledgor shall, until paid or delivered
to Secured Party, be held by Pledgor in trust as additional security for the
Obligations.
Section 2.5 Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital stock or
any additional ownership interest of the issuer of any Collateral, or any
securities convertible into, or exchangeable for, any such shares or ownership
interest or any warrants, options, rights, or other commitments entitling any
Person to purchase or otherwise acquire any such shares or any additional
ownership interest (any of the
PLEDGE AGREEMENT - Page 2
82
foregoing herein an "Equity Right"); provided however, Pledgor may consent to
or approve the issuance of any Equity Right if such Equity Right is granted to
Pledgor and is delivered to Secured Party as additional Collateral in
accordance with the terms hereof to secure the Obligations.
Section 2.6 Additional Pledged Collateral. Pledgor shall pledge
hereunder, immediately upon its acquisition thereof, any and all additional
shares of stock, other certificates or other instruments evidencing Collateral,
including any and all shares of stock or other ownership interests of any
Person whose capital stock or other ownership interests are required to be
pledged as a result of Section 8.10 of the Credit Agreement. Pledgor agrees
that it will, upon obtaining any additional shares of stock, other certificates
or other instruments required to be pledged hereunder as provided in this
Section 2.6 or Sections 2.5 or 2.4 promptly (and in any event within fifteen
Business Days) deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule 2 annexed hereto (a "Pledge
Amendment"), in respect of the additional property to be pledged pursuant to
this Agreement. Pledgor hereby authorize Secured Party to attach each Pledge
Amendment to this Agreement and agrees that all property listed on any Pledge
Amendment delivered to Secured Party shall for all purposes hereunder be
considered Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional property pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
Section 2.7 Further Assurances. At any time and from time to time,
upon the reasonable request of Secured Party, and at the sole expense of
Pledgor, Pledgor shall promptly execute and deliver all such further
documentation and take such further action as Secured Party may deem necessary
or desirable to preserve and perfect its security interest in the Collateral
and carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statement as Secured
Party may require.
Section 2.8 Corporate Changes. Pledgor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
Pledgor shall have given Secured Party thirty (30) days prior written notice
thereof and shall have taken all action deemed necessary or desirable by
Secured Party to make each financing statement not seriously misleading.
Pledgor shall not change its principal place of business, chief executive
office, or the place where it keeps its books and records unless it shall have
given Secured Party thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by Secured Party to cause
its security interest in the Collateral to be protected and perfected with the
priority required by this Agreement.
ARTICLE 3
Rights of Secured Party and Pledgor
Section 3.1 Power of Attorney. PLEDGOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS SECURED PARTY AND ANY OFFICER OR AGENT THEREOF, WITH
FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL
IRREVOCABLE POWER AND AUTHORITY IN THE PLACE AND STEAD AND
PLEDGE AGREEMENT - Page 3
83
IN THE NAME OF PLEDGOR OR IN ITS OWN NAME, IN SECURED PARTY'S DISCRETION, TO
TAKE, AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT,
ANY AND ALL ACTION AND TO EXECUTE ANY AND ALL DOCUMENTS AND INSTRUMENTS WHICH
MAY BE NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HEREBY GIVES SECURED PARTY
THE POWER AND RIGHT ON BEHALF OF PLEDGOR AND IN ITS OWN NAME TO DO, AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY OF THE
FOLLOWING WITHOUT NOTICE TO OR THE CONSENT OF PLEDGOR:
(a) to demand, sue for, collect, or receive in
the name of Pledgor or in its own name, any money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral and, in connection therewith, endorse checks, notes,
drafts, acceptances, money orders, or any other instruments for the
payment of money under the Collateral;
(b) to pay or discharge taxes, Liens, security
interests, or other encumbrances levied or placed on or threatened
against the Collateral;
(c) (i) to direct account debtors and any other
parties liable for any payment under any of the Collateral to make
payment of any and all monies due and to become due thereunder
directly to Secured Party or as Secured Party shall direct; (ii) to
receive payment of and receipt for any and all monies, claims, and
other amounts due and to become due at any time in respect of or
arising out of any Collateral; (iii) to sign and endorse any drafts,
assignments, proxies, stock powers, verifications, notices, and other
documents relating to the Collateral; (iv) to commence and prosecute
any suit, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (v) to
participate in the defense of, or if Pledgor fails to defend, to
defend any suit, action, or proceeding brought against Pledgor with
respect to any Collateral; (vi) to settle, compromise, or adjust any
suit, action, or proceeding described in clauses (iv) or (v) above,
if, in the case of clauses (v), Secured Party is conducting the
applicable defense and, in connection therewith, to give such
discharges or releases as Secured Party may deem appropriate; (vii) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar,
or other designated agency upon such terms as Secured Party may
determine; and (viii) to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though Secured Party were the absolute owner thereof
for all purposes, and to do, at Secured Party's option and Pledgor's
expense, at any time, or from time to time, all acts and things which
Secured Party deems necessary to protect, preserve, or realize upon
the Collateral and Secured Party's security interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL
BE IRREVOCABLE. Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to Secured
PLEDGE AGREEMENT - Page 4
84
Party in this Agreement, and Secured Party shall not be liable for any failure
to do so or any delay in doing so. Secured Party shall not be liable for any
act or omission or for any error of judgment or any mistake of fact or law in
its individual capacity or in its capacity as attorney-in-fact except acts or
omissions resulting from its willful misconduct. This power of attorney is
conferred on Secured Party solely to protect, preserve and realize upon its
security interest in the Collateral.
Section 3.2 Voting Rights. Unless and until an Event of Default
shall have occurred and is continuing, Pledgor shall be entitled to exercise
any and all voting rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement. Secured Party shall execute and deliver to the Pledgor all such
proxies and other instruments as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting rights which it is entitled to
exercise pursuant to this Section.
Section 3.3 Dividends and Distributions. Unless and until an Event
of Default shall have occurred and be continuing, Pledgor shall be entitled to
receive and retain any sums paid upon the liquidation or dissolution of the
issuer of the Collateral or any dividends or other distributions on the
Collateral paid in cash or property to the extent and only to the extent that
such liquidation, dissolution, dividends or other distributions are permitted
by the Credit Agreement and applicable law.
Section 3.4 Secured Party's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation
or duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.
ARTICLE 4
Default
Section 4.1 Rights and Remedies. If any Event of Default shall occur
and be continuing, Secured Party shall have the following rights and remedies:
(a) In addition to all other rights and remedies
granted to Secured Party in this Agreement and in any other instrument
or agreement securing, evidencing, or relating to the Obligations,
Secured Party shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code as adopted by the State of
Texas or of a creditor with a lien or charge on the Collateral under
the laws of the jurisdiction of the organization of the issuer of any
of the Collateral. Without limiting the generality of the foregoing,
Secured Party may
PLEDGE AGREEMENT - Page 5
85
(i) without demand or notice to Pledgor, collect, receive, or take
possession of the Collateral or any part thereof, (ii) sell or
otherwise dispose of the Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at Secured Party's
offices or elsewhere, for cash, on credit, or for future delivery
and/or (iii) bid and become a purchaser at any public (or private, to
the extent permitted by applicable law) sale free of any right or
equity of redemption in Pledgor, which right or equity is hereby
expressly waived and released by Pledgor. Upon the request of Secured
Party, Pledgor shall assemble the Collateral and make it available to
Secured Party at any place designated by Secured Party that is
reasonably convenient to Pledgor and Secured Party. Pledgor agrees
that Secured Party shall not be obligated to give more than ten (10)
days prior written notice of the time and place of any public sale or
of the time after which any private sale may take place and that such
notice shall constitute reasonable notice of such matters; provided,
however, if any of the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured
Party may sell or otherwise dispose of the Collateral without
notification of any kind. Secured Party shall not be obligated to
make any sale of the Collateral regardless of notice of sale having
been given. Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place
to which it was so adjourned. Pledgor shall be liable for all
reasonable expenses of retaking, holding, preparing for sale, or the
like, and all reasonable attorneys' fees and other expenses incurred
by Secured Party in connection with the collection of the Obligations
and the enforcement of Secured Party's rights under this Agreement,
all of which expenses and fees shall constitute additional Obligations
secured by this Agreement. Secured Party may apply the Collateral
against the Obligations in such order and manner as Secured Party may
determine in its discretion. Pledgor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay the Obligations. Pledgor waives
all rights of marshaling in respect of the Collateral.
(b) Secured Party may cause any or all of the
Collateral held by it to be transferred into the name of Secured Party
or the name or names of Secured Party's nominee or nominees.
(c) Secured Party may collect or receive all
money or property at any time payable or receivable on account of or
in exchange for any of the Collateral, but shall be under no
obligation to do so.
(d) Secured Party shall have the right, but shall
not be obligated to, exercise or cause to be exercised all voting,
consensual and other powers of ownership pertaining to the Collateral,
and Pledgor shall deliver to Secured Party, if requested by Secured
Party, irrevocable proxies with respect to the Collateral in form
satisfactory to Secured Party.
(e) Pledgor hereby acknowledges and confirms that
Secured Party may be unable to effect a public sale of any or all of
the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state or foreign
securities laws and may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire any shares of the
Collateral for their own respective accounts for investment and not
with a view to distribution
PLEDGE AGREEMENT - Page 6
86
or resale thereof. Pledgor further acknowledges and confirms that any
such private sale may result in prices or other terms less favorable
to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner,
and Secured Party shall be under no obligation to take any steps in
order to permit the Collateral to be sold at a public sale. Secured
Party shall be under no obligation to delay a sale of any of the
Collateral for any period of time necessary to permit any issuer
thereof to register such Collateral for public sale under the
Securities Act of 1933, as amended, or under applicable state or
foreign securities laws.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Pledgor and Secured Party and their respective
successors and assigns, except that Pledgor may not assign any of its rights or
obligations under this Agreement without the prior written consent of the
Banks.
Section 5.2 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 5.3 Notices. All notices and other communications provided
for in this Agreement shall be given or made in accordance with the Credit
Agreement.
Section 5.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
Section 5.5 Headings. The headings, captions and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 5.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 5.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and
PLEDGE AGREEMENT - Page 7
87
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 5.8 Consent to Pledge. Pledgor consents to the grant to
Secured Party by Dave & Buster's of California, Inc. ("D&B") of a security
interest in all of D&B's partnership interest in Dave & Buster's I, L.P.
pursuant to the terms of the Subsidiary Pledge Agreement to which D&B is a
party and the exercise of all of Secured Party's rights thereunder, such
consent granted for all purposes, including without limitation, the consent to
D&B's departure from any restriction on transfer or pledge set out in Dave &
Buster's I, L.P.'s Agreement of Limited Partnership.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
PLEDGOR:
-------
DAVE & BUSTER'S, INC.
By:
--------------------------------
Charles Michel
Treasurer
SECURED PARTY:
-------------
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:
--------------------------------
Jorge Calderon
Vice President
PLEDGE AGREEMENT - Page 8
88
Schedule 1
to
Dave & Buster's, Inc.
Pledge Agreement
Person Ownership Number of Certificate Par Value
and Interest Shares Number
Type of Entity Units or %
Interest
1. DANB Texas, Inc. 100 % of common 10,000 01 $.01
(corporation) stock
2. Dave & Buster's of Pennsylvania, Inc. 100% of common 1,000 2 no
(corporation) stock
3. Dave & Buster's of Illinois, Inc. 100% of common 1,000 1 no
(corporation) stock
4. Dave & Buster's of California, Inc. 100% of common 1,000 1 no
(corporation) stock
5. Dave & Buster's of Colorado, Inc. 100% of common 1,000 001 no
(corporation) stock
6. Dave & Busters of Florida, Inc. 100% of common 100 1 $1.00
(corporation) stock
7. Dave & Buster's of Georgia, Inc. 100% of common 1,000 1 no
(corporation) stock
8. Dave & Buster's of Maryland, Inc. 100% of common 1,000 1 $.01
(corporation) stock
9. Dave & Busters of New York 100% of common 100 1 no
(corporation) stock
10. Dave & Buster's I, L.P. General partner 1% N/A N/A
(limited partnership) interest
Schedule 1 - Solo Page
89
Schedule 2
to
Dave & Buster's, Inc.
Pledge Agreement
Pledge Amendment
This Pledge Amendment, dated _____________, 19__, is delivered
pursuant to Section 2.6 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated May 21, 1997 between the undersigned and Texas Commerce
Bank National Association, as agent, as Secured Party (the "Pledge Agreement",
capitalized terms defined therein being used herein as therein defined),
Schedule 1 to the Pledge Agreement is hereby amended to add the property
described below and the property listed on this Pledge Amendment shall be part
of the Collateral and shall secure all Obligations.
DAVE & BUSTER'S, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Person Ownership Number of Certificate Par
Interest Shares, Number Value
Units or %
Interest
Schedule 2 - Solo Page
90
EXHIBIT "D"
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Assignment and Acceptance
91
ASSIGNMENT AND ACCEPTANCE
Dated _______________, 19__
Reference is made to the Credit Agreement dated as of May 21, 1997 (as
the same may be amended and in effect from time to time, the "Credit
Agreement"), among Dave & Buster's, Inc., a Missouri corporation (the
"Borrower"), the banks named therein (the "Banks") and Texas Commerce Bank
National Association, as agent for the Banks (the "Agent"). Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to such
terms in the Credit Agreement. This Assignment and Acceptance is being
executed pursuant to Section 13.8 the Credit Agreement.
____________________________________ (the "Assignor") and
_________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse, representation or warranty except
as specifically set forth herein, and the Assignee
hereby purchases and assumes from the Assignor, a
___________% interest in and to all the Assignor's
rights and obligations under the Revolving Credit
Agreement and the other Loan Documents as of the
Effective Date (as defined below) (including, without
limitation, such percentage interest in the Revolving
Commitments of the Assignor on the Effective Date and
such percentage interest in the Loans owing to the
Assignor outstanding on the Effective Date together
with such percentage interest in all unpaid interest
and fees accrued from the Effective Date).
2. The Assignor (i) represents that as of the date
hereof, its Revolving Commitment is $_____________,
the outstanding principal balance of its Revolving
Loans is $_____________ and its participations in
Letter of Credit Liabilities is $________ (all as
unreduced by any assignments which have not yet
become effective); (ii) makes no representation or
warranty and assumes no responsibility with respect
to any statements, warranties or representations made
in or in connection with the Credit Agreement or any
other Loan Document or the execution, legality,
validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other Loan
Document, other than that it is the legal and
beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of
any adverse claim; (iii) makes no representation or
warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any
Obligated Party or the performance or observance by
the Borrower or any Obligated Party of any of their
obligations under the Agreement or any other Loan
Document; and (iv) attaches the Revolving Note held
by Assignor and requests that the Agent exchange such
Revolving Note for new Revolving Notes payable to the
order of (A) Assignee in amounts equal to the
ASSIGNMENT AND ACCEPTANCE - Page 1
92
Revolving Commitments assumed by the Assignee
pursuant hereto and the outstanding principal amount
of the Revolving Loans assigned to Assignee pursuant
hereto, as applicable, and (B) the Assignor in
amounts equal to the Revolving Commitments and
Revolving Loans retained by the Assignor under the
Credit Agreement, as specified above.
3. The Assignee (i) represents and warrants that it is
legally authorized to enter in this Assignment and
Acceptance; (ii) confirms that it has received a copy
of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant
to Section 8.1 thereof, and such other documents and
information as it has deemed appropriate to make its
own credit analysis and decision to enter into this
Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Agent,
the Assignor, or any other Bank and based on such
documents and information as it shall deem
appropriate at the time, continue to make its own
credit decisions in taking or not taking action under
the Credit Agreement and the other Loan Documents;
(iv) confirms that it is eligible to be an Assignee;
(v) appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers
under the Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers
as are reasonably incidental thereto; (vi) agrees
that it will perform in accordance with their terms
all obligations which by the terms of the Credit
Agreement and the other Loan Documents are required
to be performed by it as a Bank; [and (vii) attaches
the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's
exemption from United States withholding taxes with
respect to all payments to be made to the Assignee
under the Credit Agreement or such other documents as
are necessary to indicate that all such payments are
subject to such tax at a rate reduced by an
applicable tax treaty]1
4. The effective date for this Assignment and Acceptance
shall be _______________, 19__ (the "Effective
Date").2 Following the execution of this Assignment
and Acceptance, it will be delivered to the Agent for
acceptance and recording by the Agent.
5. Upon such acceptance and recording, from and after
the Effective Date, (i) the Assignee shall be a party
to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, shall have the
rights and obligations of a Bank thereunder and under
the other Loan Documents and (ii) the Assignor shall,
to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released
from its obligations under the Credit Agreement and
the other Loan Documents.
6. Upon such acceptance and recording, from and after
the Effective Date, the Agent shall make all payments
in respect of the interest assigned hereby (including
payments
__________________________________
(1) If the Assignee is organized under the laws of a jurisdiction
outside the United States.
(2) Such date shall be at least Five (5) Business Days after the
execution of this Assignment and Acceptance and delivery thereof to the Agent.
ASSIGNMENT AND ACCEPTANCE - Page 2
93
of principal, interest, fees, and other amounts) to
the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the
Credit Agreement and the Revolving Note for periods
prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the
State of Texas and applicable laws of the United
States of America.
[NAME OF ASSIGNOR]
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
[NAME OF ASSIGNEE]
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
ACCEPTED BY:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
DAVE & BUSTER'S, INC.
By:
---------------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
ASSIGNMENT AND ACCEPTANCE - Page 3
94
EXHIBIT "E"
to
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Compliance Certificate
95
COMPLIANCE CERTIFICATE
for the
quarter ending ________ __, ____
NOTE: THIS COMPLIANCE CERTIFICATE
REQUIRES A CHANGE IN THE MARGIN AND FEES AS
SET OUT IN SECTION 11
[ ] YES [ ] NO
To: Texas Commerce Bank
National Association, as agent
1111 Fannin, 9th Floor MS46
Houston, Texas 77002
with a copy to
12875 Josey Lane
Dallas, Texas 75234
and each Bank
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being delivered
pursuant to Section 8.1(c) of that certain Credit Agreement (as amended, the
"Agreement") dated as of May 21, 1997 among DAVE & BUSTER'S, INC. (the
"Borrower"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as agent, and the Banks
named therein. All capitalized terms, unless otherwise defined herein, shall
have the same meanings as in the Agreement. All the calculations set forth
below shall be made pursuant to the terms of the Agreement.
The undersigned, an authorized financial officer of the Borrower in
his capacity as such financial officer and not in his individual capacity, does
hereby certify to the Agent and the Banks that:
1. DEFAULT.
No Default has occurred and is continuing or, if a Default has
occurred and is continuing, I have described on the attached Exhibit
"A" the nature thereof and the steps taken or proposed to remedy
such Default.
Compliance
2. SECTION 8.1 - FINANCIAL STATEMENTS AND RECORDS
----------------------------------------------
(a) Annual audited financial statements of Borrower on a Yes No N/A
consolidated basis within 90 days after the end of
each Fiscal Year end (together with Compliance
Certificate).
COMPLIANCE CERTIFICATE - Page 1
96
(b) Quarterly unaudited financial statements of Borrower Yes No N/A
on a consolidated basis within 45 days after each
Fiscal Quarter end (together with Compliance
Certificate).
3. SECTION 9.1 - DEBT
-------------------
No Additional Debt except:
(a) Purchase money not to exceed: $750,000
Actual Outstanding: $________ Yes No
(d) Other Debt not to exceed: $250,000
Actual Outstanding: $________ Yes No
4. SECTION 9.5 - INVESTMENTS
-------------------------
(a) Basket of other permitted investments, loans, etc. $250,000
not to exceed:
(b) Actual book value: $_______ Yes No
5. SECTION 9.8 - ASSET DISPOSITIONS
--------------------------------
(a) Asset dispositions (other than dispositions of
obsolete, worn-out etc., assets) not to exceed
$250,000 in any
four (4) consecutive Fiscal Quarters (based on the
book value of $________ Yes No
the assets sold).
(b) Actual book value of assets disposed of in the
last four (4) Fiscal Quarters.
6. SECTION 9.11 - NEW BUSINESS LOCATIONS
-------------------------------------
(a) No more than 4 new retail locations opened or under
development in any four (4) Fiscal Quarters.
(b) Current retail locations under development or opened Yes No
within past 4 Fiscal Quarters:
1. __________________
2. __________________
3. __________________
4. __________________
7. SECTION 10.1 - CONSOLIDATED NET WORTH
--------------------------------------
(a) Consolidated Tangible Net Worth as of $________
---------------
(b) Positive consolidated net income for current Fiscal $________
Quarter (if positive)
(c) Aggregate positive consolidated net income (for
each) Fiscal Quarter since February 2, 1997 $________
(excluding current Fiscal Quarter)
COMPLIANCE CERTIFICATE - Page 2
97
$_________
(d) 7(b) + 7(c) = $_________
(e) 50% of 7(d) =
(f) Net proceeds of the sale of all capital stock $_________
of Borrower received since February 4, 1997
(g) Required Consolidated Tangible Net Worth: 7(a) + $_________
7(e)
+ 7(f) = $_________
(h) Actual Consolidated Net Worth $_________
(i) Consolidated stockholders equity $_________
(ii) Stock of Borrower on Balance Sheet $_________
(iii) Goodwill $_________
(iv) Intellectual Property $_________
(v) Deferred expenses $_________
(vi) Loans and advances to stockholders, officers, $_________
etc.
(vii) Other intangible assets $_________ Yes No
(viii) sum of (ii) through (vii) =
(ix) Consolidated Tangible Net Worth:
(h)(i) minus (h)(viii) =
8. SECTION 10.2 -LEVERAGE RATIO
----------------------------
(a) Total Debt as of Fiscal Quarter end
(i) borrowed money $_________
(ii) evidenced by notes, etc. $_________
(iii) deferred purchase price $_________
(iv) Capital Lease Obligations $_________
(v) total $_________
(b) Operating Lease Expense for previous 4 Fiscal $_________
Quarters $_________
(c) 8(b) x 8 = $_________
(d) 8(a)(v) + 8(c) =
(e) Consolidated net income as of Fiscal Quarter end for $_________
last 4 Fiscal Quarters $_________
(i) Net Income
(ii) Income of Person not received in a cash $_________
distribution
(iii) Extraordinary, non-cash, nonrecurring $_________
or nonoperating increase or gains $_________
(iv) Sum of (ii) and (iii) $_________
(v) Total (i) minus (iv) $_________
(f) provisions for tax $_________
(g) benefit from tax $_________
(h) Interest Expense $_________
(i) amortization $_________
(j) depreciation $_________
(k) EBITDA: 8(e)(v) + 8(f) - 8(g) + 8(h) + 8(i) + 8(j) $_________
(l) Adjusted EBITDA: 8(k) + 8(b) = ____ : 1.00
(m) Adjusted Debt to Adjusted EBITDA ratio (8(d) / 8(l)) 2.50 : 1.00 Yes No
(n) Maximum Adjusted Debt to Adjusted EBITDA ratio
COMPLIANCE CERTIFICATE - Page 3
98
9. SECTION 10.3 - FIXED CHARGE COVERAGE
------------------------------------
(a) Cash Flow for last 4 Fiscal Quarters
(i) EBITDA (from 8(k)) $_________
(ii) 8(i) + 8(j) $_________
(iii) Operating Lease Expenses for the last 4
Fiscal Quarters $_________
(iv) Cash Flow: (9(a)(i) - 9(a)(ii) + 9(a)(iii)) = $_________
(b) Fixed Charges for last 4 Fiscal Quarters
(i) Interest Expense paid in cash $__________
(ii) Operating Lease Expense (9(a)(iii)) $__________
(iii) Total 9(b)(i) + 9(b)(ii) $__________
(c) Actual Fixed Charge Coverage: 9(a)(iv) / 9(b)(iii)= :1.00
--------------
(d) Minimum Fixed Charge Coverage 2.25:1.00 Yes No
10. SECTION 10.4 - CAPITAL EXPENDITURES
-----------------------------------
(a) Per location Capital Expenditure Limit $15,000,000
(b) Current new retail locations under development:
Location Capital Expenditures
-------- --------------------
(i)_____________ $________________ Yes No
(ii)____________ $________________ Yes No
(iii)___________ $________________ Yes No
(iv)___________ $________________ Yes No
11. DETERMINATION OF MARGIN AND FEES
--------------------------------
(a) Adjusted Debt to Adjusted EBITDA Ratio (from 8(m)) :1.00
--------------
(b) Adjustment to margin and fees required by Section Yes No
3.2?
(c) If adjustment required, set forth below new margins
and fees in accordance with Section 3.2: _______%
(i) Base Margin _______%
(ii) Commitment Fee Rate _______%
(iii) Libor Rate Margin
12. SECTION 8.10(D) - PLEDGE OF EQUIPMENT PARTNERSHIPS
--------------------------------------------------
(a) Gross revenue from Equipment Partnerships for
trailing 4 quarters $_________
(b) Borrower gross revenue for trailing 4 quarters $_________
(c) 12(a) / 12(b) = ._______
(d) Pledge required (?) (i.e., if greater than .15) Yes No
13. ATTACHED SCHEDULES
------------------
Attached hereto as schedules are the calculations supporting the computation set forth above in this
Certificate. All information contained herein and on the attached schedules is true and correct.
COMPLIANCE CERTIFICATE - Page 4
99
14. FINANCIAL STATEMENTS
The financial statements attached hereto were prepared in accordance
with GAAP (or the generally accepted accounting principles of the
jurisdiction of organization of the applicable Person) and fairly
present (subject to year end audit adjustments) the financial
conditions and the results of the operations of the Persons reflected
thereon, at the date and for the periods indicated therein.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective this _______ day of ____________, 199__.
DAVE & BUSTER'S, INC.
BY:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
COMPLIANCE CERTIFICATE - Page 5
100
EXHIBIT "F"
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Subsidiary Pledge Agreement
101
PLEDGE AGREEMENT
(___________)
THIS PLEDGE AGREEMENT (the "Agreement") dated as of May 21, 1997 is by
and between ______________ ("Pledgor") and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as agent for itself and the other Banks (the "Secured Party").
RECITALS:
A. Dave & Buster's, Inc. (the "Borrower"), the certain lenders
("Banks") and Secured Party have entered into that certain Credit Agreement of
even date herewith (such Credit Agreement, as the same may be amended or
otherwise modified from time to time, being hereinafter referred to as the
"Credit Agreement"; terms defined in the Credit Agreement and not otherwise
defined herein being used as defined therein).
B. Secured Party and the Banks have conditioned their obligations
under the Credit Agreement upon the execution and delivery of this Agreement by
Pledgor.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Security Interest and Pledge
Section 1.1 Security Interest and Pledge. As collateral security for
the prompt payment in full when due of all present and future obligations of
Pledgor under this Agreement and the Subsidiary Guaranty to which Pledgor is a
party (collectively, the "Secured Obligations"), Pledgor hereby pledges and
grants to Secured Party a first priority security interest in all of Pledgor's
right, title and interest in and to the following property (such property being
hereinafter sometimes called the "Collateral"):
(a) all the capital stock, partnership interests,
membership interests and other securities issued by, and all other
ownership interest in, the Persons described on Schedule 1 hereof and
all Subsidiaries hereafter created or acquired and owned by Pledgor,
whether any of the foregoing are now owned or hereafter acquired,
including without limitation, the capital stock or other ownership
interests described on Schedule 1; and
(b) all products, proceeds, revenues,
distributions, dividends, stock dividends, securities and other
property, rights, interests and other general intangibles that Pledgor
receives or is at any time entitled to receive on account of the
property described in clause (a) preceding.
PLEDGE AGREEMENT (_____________)- Page 1
102
Anything contained in this Agreement or in any other Loan Document to
the contrary notwithstanding, the obligations of Pledgor hereunder and under
the other Loan Documents to which it is a party shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its
obligations hereunder and under the other Loan Documents subject to avoidance
as a fraudulent transfer or fraudulent conveyance under Section 548 of Title 11
of the United States Code or any applicable provision of comparable state law
(collectively, the "Fraudulent Transfer Laws") in each case after giving effect
to all liabilities of the Pledgor, contingent or otherwise, that are relevant
under Fraudulent Transfer Laws.
ARTICLE 2
Affirmative and Negative Covenants
Pledgor covenants and agrees with Secured Party that:
Section 2.1 Delivery. Prior to or concurrently with the execution
and delivery of this Agreement, Pledgor shall deliver to Secured Party all
certificate(s) identified on Schedule 1 hereof, accompanied by undated stock
powers or assignments, as applicable, duly executed in blank. Each time
Schedule 1 hereto is amended in accordance with Section 2.6 hereof or
otherwise, Pledgor shall deliver to Secured Party all new certificate(s)
identified thereon, accompanied by undated stock powers or assignments, as
applicable, duly executed in blank.
Section 2.2 Encumbrances. Pledgor shall not create, permit, or
suffer to exist, and shall defend the Collateral against, any Lien, security
interest, or other encumbrance on the Collateral except the pledge and security
interest of Secured Party hereunder, and Pledgor shall defend Pledgor's rights
in the Collateral and Secured Party's security interest in the Collateral
against the claims of all Persons.
Section 2.3 Sale of Collateral. Pledgor shall not sell, assign, or
otherwise dispose of the Collateral or any part thereof without the prior
written consent of the Banks.
Section 2.4 Distributions. If Pledgor shall become entitled to
receive or shall receive: (i) any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase, or reduction of capital or
issued in connection with any reorganization), option or rights, whether as an
addition to, in substitution of, or in exchange for any Collateral; (ii)
subject to the right of Pledgor to receive cash dividends or other
distributions under Section 3.3 hereof, (a) any sums paid in respect of the
Collateral upon the liquidation or dissolution of the issuer thereof; (b) any
other distribution of capital made on or in respect of the Collateral or any
other property distributed upon or in respect of the Collateral pursuant to any
recapitalization or reclassification of the capital of the issuer thereof or
pursuant to any reorganization of the issuer thereof; or (c) any other
Collateral the possession of which is necessary to perfect the security
interest of Secured Party therein, then Pledgor agrees to accept the same as
Secured Party's agent and to hold the same in trust for Secured Party, and to
deliver the same forthwith to Secured Party in the exact form received, with
the appropriate endorsement of Pledgor when necessary and/or appropriate
undated stock powers or assignments duly executed in blank, to
PLEDGE AGREEMENT (_____________)- Page 2
103
be held by Secured Party as additional Collateral for the Secured Obligations,
subject to the terms hereof. All sums of money and property so paid or
distributed in respect of the Collateral that are received by Pledgor shall,
until paid or delivered to Secured Party, be held by Pledgor in trust as
additional security for the Secured Obligations.
Section 2.5 Additional Securities. Pledgor shall not consent to or
approve the issuance of any additional shares of any class of capital stock or
any additional ownership interest of the issuer of any Collateral, or any
securities convertible into, or exchangeable for, any such shares or ownership
interest or any warrants, options, rights, or other commitments entitling any
Person to purchase or otherwise acquire any such shares or any additional
ownership interest (any of the foregoing herein an "Equity Right"); provided
however, Pledgor may consent to or approve the issuance of any Equity Right if
such Equity Right is granted to Pledgor and is delivered to Secured Party as
additional Collateral in accordance with the terms hereof to secure the Secured
Obligations.
Section 2.6 Additional Pledged Collateral. Pledgor shall pledge
hereunder, immediately upon its acquisition thereof, any and all additional
shares of stock, other certificates or other instruments evidencing Collateral,
including any and all shares of stock or other ownership interests of any
Person whose capital stock or other ownership interests are required to be
pledged as a result of Section 8.10 of the Credit Agreement. Pledgor agrees
that it will, upon obtaining any additional shares of stock, other certificates
or other instruments required to be pledged hereunder as provided in this
Section 2.6 or Sections 2.5 or 2.4 promptly (and in any event within fifteen
Business Days) deliver to Secured Party a Pledge Amendment, duly executed by
Pledgor, in substantially the form of Schedule 2 annexed hereto (a "Pledge
Amendment"), in respect of the additional property to be pledged pursuant to
this Agreement. Pledgor hereby authorize Secured Party to attach each Pledge
Amendment to this Agreement and agrees that all property listed on any Pledge
Amendment delivered to Secured Party shall for all purposes hereunder be
considered Collateral; provided that the failure of Pledgor to execute a Pledge
Amendment with respect to any additional property pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
Section 2.7 Further Assurances. At any time and from time to time,
upon the reasonable request of Secured Party, and at the sole expense of
Pledgor, Pledgor shall promptly execute and deliver all such further
documentation and take such further action as Secured Party may deem necessary
or desirable to preserve and perfect its security interest in the Collateral
and carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statement as Secured
Party may require.
Section 2.8 Corporate Changes. Pledgor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
Pledgor shall have given Secured Party thirty (30) days prior written notice
thereof and shall have taken all
PLEDGE AGREEMENT (_____________)- Page 3
104
action deemed necessary or desirable by Secured Party to make each financing
statement not seriously misleading. Pledgor shall not change its principal
place of business, chief executive office, or the place where it keeps its
books and records unless it shall have given Secured Party thirty (30) days
prior written notice thereof and shall have taken all action deemed necessary
or desirable by Secured Party to cause its security interest in the Collateral
to be protected and perfected with the priority required by this Agreement.
ARTICLE 3
Rights of Secured Party and Pledgor
Section 3.1 Power of Attorney. PLEDGOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS SECURED PARTY AND ANY OFFICER OR AGENT THEREOF, WITH
FULL POWER OF SUBSTITUTION, AS ITS TRUE AND LAWFUL ATTORNEY-IN-FACT WITH FULL
IRREVOCABLE POWER AND AUTHORITY IN THE PLACE AND STEAD AND IN THE NAME OF
PLEDGOR OR IN ITS OWN NAME, IN SECURED PARTY'S DISCRETION, TO TAKE, AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY AND ALL
ACTION AND TO EXECUTE ANY AND ALL DOCUMENTS AND INSTRUMENTS WHICH MAY BE
NECESSARY OR DESIRABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT AND,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, HEREBY GIVES SECURED PARTY
THE POWER AND RIGHT ON BEHALF OF PLEDGOR AND IN ITS OWN NAME TO DO, AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY OF THE
FOLLOWING WITHOUT NOTICE TO OR THE CONSENT OF PLEDGOR:
(a) to demand, sue for, collect, or receive in
the name of Pledgor or in its own name, any money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral and, in connection therewith, endorse checks, notes,
drafts, acceptances, money orders, or any other instruments for the
payment of money under the Collateral;
(b) to pay or discharge taxes, Liens, security
interests, or other encumbrances levied or placed on or threatened
against the Collateral;
(c) (i) to direct account debtors and any other
parties liable for any payment under any of the Collateral to make
payment of any and all monies due and to become due thereunder
directly to Secured Party or as Secured Party shall direct; (ii) to
receive payment of and receipt for any and all monies, claims, and
other amounts due and to become due at any time in respect of or
arising out of any Collateral; (iii) to sign and endorse any drafts,
assignments, proxies, stock powers, verifications, notices, and other
documents relating to the Collateral; (iv) to commence and prosecute
any suit, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (v) to
participate in the defense of, or if Pledgor fails to defend, to
defend any suit, action, or proceeding brought against Pledgor with
respect to any Collateral; (vi) to settle, compromise, or adjust any
suit, action, or proceeding described in clauses (iv) or (v) above,
if, in the case of clauses (v), Secured Party is conducting the
applicable defense and, in connection therewith, to give such
discharges or releases as Secured Party may deem appropriate; (vii) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the
Collateral
PLEDGE AGREEMENT (_____________)- Page 4
105
with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms as Secured Party may determine; and
(viii) to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Pledgor's expense,
at any time, or from time to time, all acts and things which Secured
Party deems necessary to protect, preserve, or realize upon the
Collateral and Secured Party's security interest therein.
THIS POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL
BE IRREVOCABLE. Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to Secured Party in this Agreement, and Secured Party shall
not be liable for any failure to do so or any delay in doing so. Secured Party
shall not be liable for any act or omission or for any error of judgment or any
mistake of fact or law in its individual capacity or in its capacity as
attorney-in-fact except acts or omissions resulting from its willful
misconduct. This power of attorney is conferred on Secured Party solely to
protect, preserve and realize upon its security interest in the Collateral.
Section 3.2 Voting Rights. Unless and until an Event of Default
shall have occurred and is continuing, Pledgor shall be entitled to exercise
any and all voting rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement. Secured Party shall execute and deliver to the Pledgor all such
proxies and other instruments as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting rights which it is entitled to
exercise pursuant to this Section.
Section 3.3 Dividends and Distributions. Unless and until an Event
of Default shall have occurred and be continuing, Pledgor shall be entitled to
receive and retain any sums paid upon the liquidation or dissolution of the
issuer of the Collateral or any dividends or other distributions on the
Collateral paid in cash or property to the extent and only to the extent that
such liquidation, dissolution, dividends or other distributions are permitted
by the Credit Agreement and applicable law.
Section 3.4 Secured Party's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral while held by Secured
Party hereunder, Secured Party shall have no responsibility for or obligation
or duty with respect to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto, including, without limitation,
any obligation or duty to collect any sums due in respect thereof or to protect
or preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor, and no refusal by Secured
Party to comply with any such request by Pledgor, shall be deemed to be a
failure to exercise reasonable care.
PLEDGE AGREEMENT (_____________)- Page 5
106
ARTICLE 4
Default
Section 4.1 Rights and Remedies. If any Event of Default shall occur
and be continuing, Secured Party shall have the following rights and remedies:
(a) In addition to all other rights and remedies
granted to Secured Party in this Agreement and in any other instrument
or agreement securing, evidencing, or relating to the Secured
Obligations, Secured Party shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code as adopted by the
State of Texas or of a creditor with a lien or charge on the
Collateral under the laws of the jurisdiction of the organization of
the issuer of any of the Collateral. Without limiting the generality
of the foregoing, Secured Party may (i) without demand or notice to
Pledgor, collect, receive, or take possession of the Collateral or any
part thereof, (ii) sell or otherwise dispose of the Collateral, or any
part thereof, in one or more parcels at public or private sale or
sales, at Secured Party's offices or elsewhere, for cash, on credit,
or for future delivery and/or (iii) bid and become a purchaser at any
public (or private, to the extent permitted by applicable law) sale
free of any right or equity of redemption in Pledgor, which right or
equity is hereby expressly waived and released by Pledgor. Upon the
request of Secured Party, Pledgor shall assemble the Collateral and
make it available to Secured Party at any place designated by Secured
Party that is reasonably convenient to Pledgor and Secured Party.
Pledgor agrees that Secured Party shall not be obligated to give more
than ten (10) days prior written notice of the time and place of any
public sale or of the time after which any private sale may take place
and that such notice shall constitute reasonable notice of such
matters; provided, however, if any of the Collateral threatens to
decline speedily in value or is of a type customarily sold on a
recognized market, Secured Party may sell or otherwise dispose of the
Collateral without notification of any kind. Secured Party shall not
be obligated to make any sale of the Collateral regardless of notice
of sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor shall be
liable for all reasonable expenses of retaking, holding, preparing for
sale, or the like, and all reasonable attorneys' fees and other
expenses incurred by Secured Party in connection with the collection
of the Secured Obligations and the enforcement of Secured Party's
rights under this Agreement, all of which expenses and fees shall
constitute additional Secured Obligations. Secured Party may apply
the Collateral against the Secured Obligations in such order and
manner as Secured Party may determine in its discretion. Pledgor
waives all rights of marshaling in respect of the Collateral.
(b) Secured Party may cause any or all of the
Collateral held by it to be transferred into the name of Secured Party
or the name or names of Secured Party's nominee or nominees.
(c) Secured Party may collect or receive all
money or property at any time payable or receivable on account of or
in exchange for any of the Collateral, but shall be under no
obligation to do so.
PLEDGE AGREEMENT (_____________)- Page 6
107
(d) Secured Party shall have the right, but shall
not be obligated to, exercise or cause to be exercised all voting,
consensual and other powers of ownership pertaining to the Collateral,
and Pledgor shall deliver to Secured Party, if requested by Secured
Party, irrevocable proxies with respect to the Collateral in form
satisfactory to Secured Party.
(e) Pledgor hereby acknowledges and confirms that
Secured Party may be unable to effect a public sale of any or all of
the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended, and applicable state or foreign
securities laws and may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire any shares of the
Collateral for their own respective accounts for investment and not
with a view to distribution or resale thereof. Pledgor further
acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to the seller than if such sale
were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a
commercially reasonable manner, and Secured Party shall be under no
obligation to take any steps in order to permit the Collateral to be
sold at a public sale. Secured Party shall be under no obligation to
delay a sale of any of the Collateral for any period of time necessary
to permit any issuer thereof to register such Collateral for public
sale under the Securities Act of 1933, as amended, or under applicable
state or foreign securities laws.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Pledgor and Secured Party and their respective
successors and assigns, except that Pledgor may not assign any of its rights or
obligations under this Agreement without the prior written consent of the
Banks.
Section 5.2 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 5.3 Notices. All notices and other communications provided
for in this Agreement shall be given or made in accordance with the Credit
Agreement.
PLEDGE AGREEMENT (_____________)- Page 7
108
Section 5.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.
Section 5.5 Headings. The headings, captions and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 5.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 5.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
PLEDGOR:
-------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
SECURED PARTY:
-------------
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Agent
By:
---------------------------------
Jorge Calderon
Vice President
PLEDGE AGREEMENT (_____________)- Page 8
109
Schedule 1
to
Pledge Agreement
Person Ownership Number of Certificate Par Value
and Interest Shares Number
Type of Entity Units or %
Interest
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Schedule 1 - Solo Page
110
Schedule 2
to
Pledge Agreement
Pledge Amendment
This Pledge Amendment, dated _____________, 19__, is delivered
pursuant to Section 2.6 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Pledge Agreement dated May 21, 1997 between the undersigned and Texas Commerce
Bank National Association, as agent, as Secured Party (the "Pledge Agreement",
capitalized terms defined therein being used herein as therein defined),
Schedule 1 to the Pledge Agreement is hereby amended to add the property
described below and the property listed on this Pledge Amendment shall be part
of the Collateral and shall secure all Secured Obligations.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
Person Ownership Number of Certificate Par
Interest Shares, Number Value
Units or %
Interest
Schedule 2 - Solo Page
111
EXHIBIT "G"
to
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Advance Request Form
Exhibit G, Cover Page
112
Advance Request Form
TO: Texas Commerce Bank National Association
1111 Fannin, 9th Floor, MS46
Houston, Texas 77002
Attention: Loan Syndication Services
re: Dave & Buster's, Inc.
With copy to:
Jorge Calderon
Texas Commerce Bank
12875 Josey Lane
Dallas, Texas 75284
Ladies and Gentlemen:
The undersigned is an officer of DAVE & BUSTER'S, INC. and is
authorized to make and deliver this certificate pursuant to that certain Credit
Agreement (the "Credit Agreement") dated as of May 21, 1997, among, DAVE &
BUSTER'S, INC ("Borrower"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("Agent"),
and the other Banks named therein. All terms defined in the Credit Agreement
shall have the same meaning herein. In accordance with the Credit Agreement,
Borrower hereby (check which ever is applicable):
___ (a) Requests that Banks make an advance under the
Revolving Loan which shall be a Base Rate Account in the amount of $
____________.
___ (b) Requests that Bank make an advance under the
Revolving Loan as Eurodollar Accounts with the amount of each Eurodollar
Account and duration of the Interest Periods with respect thereto to be as
follows:
Amount Interest Period
1. _____ Month(s)
2. _____ Month(s)
3. _____ Month(s)
4. _____ Month(s)
5. _____ Month(s)
6. _____ Month(s)
In connection with the foregoing and pursuant to the terms and
provisions of the Credit Agreement, the undersigned hereby certifies to the
Bank (in the undersigned's capacity as an officer of the Borrower and not as an
individual capacity) that the following statements are true and correct:
Advance Request Form - Page 1
113
(i) The representations and warranties contained in the
Credit Agreement and in each of the other Loan Documents are true,
correct and complete in all material respects on and as of the date
hereof with the same force and effect as if made on and as of such
date except for any representation or warranty limited by its terms to
a specific date.
(ii) No Default has occurred and is continuing or would
result from the extension of credited requested hereunder.
(iii) Since _____________, 19___,1 no event has occurred
which could reasonably be expected have a Material Adverse Effect.
(iv) After giving effect to the credit extended pursuant
to this request, the aggregate outstanding amount of the Revolving
Loans does not exceed the aggregate Revolving Commitments.
(v) All information supplied below is true, correct, and
complete as of the date hereof.
Advance Request Information
(a) Outstanding Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . $____________
(b) Letter of Credit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $____________
(c) Revolving Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000,000.00
(d) Net Availability for Credit:
Line (c) minus Line (a) minus line (b) . . . . . . . . . . . . . . . . . . . . . . $____________
(e) Amount of Requested Advance
under Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $____________
(f) Date of requested extension of
credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _______, 19__
BORROWER:
---------
DAVE & BUSTER'S, INC
By:
--------------------------------
Charles Michel
Treasurer
Dated as of:
---------------------------------------
(insert proposed date
of the requested extension of credit)
__________________________________
(1) Insert the effective date of the most recent financial statements
delivered to Banks.
Advance Request Form - Page 2
114
SCHEDULE 7.14
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
List of Subsidiaries
Name and Jurisdiction Principal Authorized Outstanding Shareholders and
Type Place of Equity Equity Percentage
Business
1. DANB Texas, Inc. Texas Dallas, TX 100,000 10,000 Borrower
(corporation) 100%
2. Dave & Buster's of Pennsylvania Philadelphia 1,000 1,000 Borrower
Pennsylvania, Inc. , PA 100%
(corporation)
3. Dave & Buster's of Illinois Dallas, TX 1,000 1,000 Borrower
Illinois, Inc. 100%
(corporation)
4. Dave & Buster's of California Ontario, CA 1,000,000 1,000 Borrower
California, Inc. 100%
(corporation)
5. Dave & Busters of Florida Dallas, TX 10,000 100 Borrower
Florida, Inc. 100%
(corporation)
6. Dave & Buster's of Georgia Dallas, TX 1,000 1,000 Borrower
Georgia, Inc. 100%
(corporation)
7. Dave & Buster's of Maryland Dallas, TX 100,000 1,000 Borrower
Maryland, Inc. 100%
(corporation)
8. Dave & Busters of New New York Dallas, TX 200 100 Borrower
York, Inc. 100%
(corporation)
9. D&B Realty Holding, Missouri Dallas, TX 1,000 1,000 Dave & Buster's 1,
Inc. (corporation) L.P. 100%
10. Dave & Buster's of Colorado Dallas, TX 10,000 1,000 Borrower
Colorado, Inc. 100%
(corporation)
11. Dave & Buster's I, Texas Dallas, TX N/A N/A 1% General Partner
L.P. interest; Borrower
(limited partnership) 99% limited partner
interest Dave &
Buster's of
California, Inc.
Schedule 7.14 - List of Subsidiaries - Solo Page
115
SCHEDULE 9.5
TO
DAVE & BUSTER'S, INC.
CREDIT AGREEMENT
Existing Investments
1. Fifty percent general partnership interest in the following joint
ventures:
a. Joint ventures created pursuant to those nine certain Foto
Morphasis Contractual Location Agreements each between
Borrower and American Alpha, Inc. dated July 10, 1997,
February 22, 1996, February 24, 1997, February 24, 1997,
August 8, 1996, October 17, 1996, August 21, 1996, June 18,
1996 and June 18, 1996:
b. The following joint ventures entered into between Borrower and
Iwerks Entertainment, Inc.:
1. D&B/Iwerks - Philadelphia Joint Venture
2. D&B/Iwerks - Bethesda Joint Venture
3. D&B/Iwerks - Ontario Joint Venture
c. The following joint ventures between Borrower and Virtual
World Entertainment, Inc.:
1. D&B/VWE - Houston Joint Venture
2. D&B/VWE - Atlanta Joint Venture
Schedule 9.5 - List of Subsidiaries - Solo Page